Birmingham v Lee revisited in allocation appeal

The appeal in Fishwick v Gentoo Group Limited was heard by His Honour Judge Freedman at The County Court at Newcastle-upon-Tyne, who overturned a first instance ruling and gave strong guidance on the proper application of CPR 26.9(1)(b) and Practice Direction 7A paragraph 3.6.

The case in brief

The Claimant, Ms Fishwick, brought a claim against her landlord, Gentoo Group Limited, for significant disrepair at her rented property. The pleaded value of the works exceeded £1,000 and a formal Letter of Claim was issued under the Pre-Action Protocol for Housing Conditions Claims. Liability was admitted by the landlord following receipt of the Letter of Claim.

At first instance, the District Judge had allocated the case to the small claims track (SCT) and refused the Claimant’s application for fast track costs up to allocation. The Claimant appealed.

The key legal issue

The central issue on appeal was whether the district judge had erred in allocating the claim to the small claims track in circumstances where the judge had determined that the claim for damages was likely to be worth less than £1,000 where:

• At the point of issuing the claim, the value of the works justified fast track allocation
• Although works had been carried out to the property, the claim for specific performance had not been extinguished altogether
• The claim form sought damages exceeding £1,000.00 but limited to £5,000.00.

The appeal required close analysis of CPR 26.9(1)(b) and Practice Direction 7A paragraph 3.6.

The judgment: fast track costs recoverable

HHJ Freedman allowed the appeal. He held that the Deputy District Judge had erred in allocating the claim to the small claims track. The Judge ruled that:

• The proper starting point for the consideration of allocation is CPR 26.9(1)(b) and Practice Direction 7A paragraph 3.6
• The claimant was plainly looking to recover more than £1,000.00 for the costs of repairs and more than £1,000.00 in general damages, although works had been done prior to allocation which potentially limited the value of any outstanding works to a sum below £1,000.00
• Nevertheless, the district judge fell into error when concluding there was no ongoing claim for specific performance.
• The period for which the Claimant was seeking damages was a four and a half year period and so it would be surprising if she did not recover more than £1,000.00 for the period.

Accordingly, the Claimant’s claim was re-allocated to the fast track and directions for trial were given.

Why this decision matters

This ruling provides vital confirmation that the starting point (and often the end point) when considering allocation in housing conditions claim is CPR 26.9(1)(b) and Practice Direction 7A paragraph 3.6, meaning:

• Where there is a claim for specific performance and/or a claim for damages brought
• One or both of those claims have a realistic value of more than £1,000.00

The normal track for the purposes of allocation is the fast track. The decision reinforces that Claimants should not be deprived of fair costs recovery when their claim satisfies the requirements of the rules.

Implications for disrepair litigation

• The value of a claim as pleaded is the starting point – where the claim form places a realistic value on the claim for specific performance and/or damages, such should inform the allocation decision
• The distinction between allocation and trial preserved – unless the value placed on a claim is unrealistic, judges should not engage in depth consideration as to its value
• Costs fairness upheld – tenants remain entitled to fast track costs where the claims justify it.

Commentary

The decision adds to a growing body of Circuit Judge authorities reaffirming the correct procedural route to allocation in housing conditions claims.

The underlying facts bear similarities to a case on which I am currently instructed, where the claimant is challenging the court’s decision to allocate the matter to the small claims track and to decline a pre-allocation costs award under Birmingham City Council v Lee. It will be interesting to see if that case reaches the same conclusion, or whether the court distinguishes the facts and arrives at a different outcome.

Craig Leigh is Founder & Managing Director of 8PP.