Disrepair Disputes

Debra Wilson (née Mo), Partner
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Debra Wilson looks at some common misconceptions surrounding the Pre-Action Protocol for Disrepair, and explains how the system can be made to work properly

The Pre-action Protocol for Disrepair came into force on 8 December 2003. It was the result of a Working Group consisting of a committee of landlord and tenant representatives funded by the Law Society. At the consultation stage in January 2001 there were many responses, overwhelmingly from landlords. In devising any Protocol for both interested parties, there has to be an element of compromise.

Approximately six months into the operation of the Protocol, my experiences of handling an extensive number of disrepair actions (predominantly for tenants, but also landlords) indicate that there are some misunderstandings as to the way the Protocol should work. If the Protocol is to work, some fundamentals have to be understood.

Fundamentals

A Protocol will succeed if it enables more claims to settle before the issue of proceedings. The vast majority of disrepair claims do settle before trial.

Broadly, the way the Protocol is supposed to work is that normally a solicitor will send or receive a letter with a summary of factors that support the claim, giving details of the defects and financial loss. The defendant has 20 working days to reply. If the defendant denies liability, the claimant should serve a schedule of losses with copies of supporting documents. Once the parties have agreed on an expert whom they both trust, they will send either a joint letter or separate letter of instruction to the expert for the preparation of a report for use by the court. In the event that proceedings are issued, the only remaining preparatory steps will normally be exchange of witness statements and filing of pre-trial checklists, the parties having given disclosure of relevant documents pre-issue. Cases are therefore conducted very much on a ‘front loaded’ basis with considerable investigations and consideration of the evidential elements of the case, pre-issue. Landlords’ representatives should therefore appreciate the importance of an appropriate response, in an effort to minimise costs.

Problematic practices

Responses on the part of the defendant should promote the specific aims of the Protocol.

In responding to a letter of claim, the Protocol states that the landlord’s reply should include:

(a) disclosure of all relevant documents; and

(b) a response on the question of the instruction of an expert.

Furthermore, at para 3.5.2(a)(i):

"1) Whether liability is admitted and if so, in respect of which defects. If liability is disputed in respect of some or all of the defects, the reasons for this.

2) Any issues regarding lack of notice of the repair or regarding difficulties in gaining access to undertake repairs.

3) A full schedule of intended works including anticipated start and completion dates and a timetable for the works.

4) Any offers of compensation.

5) Any offers in respect of costs."

The Protocol stipulates at 3.5.2(b):

"On receipt of the letter of claim (whether or not an early notification letter was sent), the landlord may provide a response to the issues set out at para (a) above either:

(i) within 20 working days of the date of the receipt of the letter of claim; or

(ii) within 20 working days of the date of receipt of the report of the single joint expert or date of receipt of the experts’ agreed schedule following a joint inspection."

The problem is that many defendants are interpreting the Protocol as requiring no response in the first instance, other than to send contractors to inspect and invariably for works of repairs to be undertaken as quickly as possible, without consultation with the tenant’s representative. In many instances, this has meant inappropriate works of repairs which do not remedy the defect, but do cover up evidence of disrepair.

The Protocol makes provision for instances where evidence is likely to be covered up, under the heading ‘Urgent Cases’. The Protocol does not prevent a tenant from instructing an expert at an earlier stage other than by agreement, where it is necessary to preserve evidence.

The problem with the landlord drawing up a schedule of works and attempting repairs, without consultation, is that it leaves no opportunity for agreement on liability. Tenant’s representatives are compelled to instruct their own experts in order to preserve the evidence. This leads to the kind of mistrust returning which was the basis upon which the concept of the appointment of a single joint expert was conceived. When the Protocol was being drafted there was no enthusiasm from either landlord or tenant’s representatives for a single joint expert. Landlords invariably want input from their own sources, be it from their in-house surveyor, or builder who has previously been appointed to undertake works. There has always been a general suspicion about surveyors appointed by tenant representatives. As a compromise in drawing up the Protocol, the provision as to experts aims ultimately at the appointment of a single joint expert. What is problematic however, is the failure on the part of some defendants to recognise that the aim is to consult on the appointment of an expert; to identify that expert; and to understand that its engagement is premised on the expert’s understanding for impartiality.

The correct interpretation of the Protocol must be that both parties should agree to the works, and not simply for the landlord to respond by commissioning repairs. Otherwise, the provision at para 3.5.2(b)(ii), which allows 20 working days to respond from the date of receipt of the single joint expert’s report or the agreed schedule of works following joint inspection, would be redundant.

The Protocol aims "to promote the speedy and appropriate carrying out of any repairs which are the landlord’s responsibility" (my emphasis). Less haste to undertake repair works may promote an earlier resolution to disputes about the execution of works of repairs. The current approach by many defendants causes the opposite effect of keeping costs down. Parties become involved in convoluted arguments about causation and liability, because the evidence is no longer present. When works of repairs are done without agreement or consultation, it more often leads to claimants having to obtain evidence through other means – video or photographs; entries from the tenancy file of works done, and so forth; all of which are never as good as the actual evidence of disrepair in seeking to establish liability.

Impartiality

The confidence that should be placed in the appointment of a single joint expert is exemplified by the essential reform sought to be achieved by Civil Procedure Rules Pt 35. As the Court of Appeal stated in Mutch v Allen [2001] EWCA Civ 76:

"This new regime is designed to ensure that experts no longer serve the exclusive interest of those who retain them, but rather contribute to a just disposal of disputes by making their expertise available to all. The overriding objective requires that the court be provided with all relevant matter in the most cost effective and expeditious way".

Disposal

The aim of the Protocol, "to avoid unnecessary litigation", will only work if defendants respond to the issues about repairs properly. Once there is agreement over the nature of works needed to remedy a problem, it would be for the paying party (ie the landlord) to select the method for remedying disrepair, subject to that selection being "reasonable": Gibson Investments Ltd v Chesterton plc [2002] EWHC 19 (CH) 11 January 2002. In that case, however, the Court of Appeal stated that the work which the liable party selects "… must be such as a competent, careful surveyor or other appropriate professional person would advise as being appropriate" and depending on circumstances, an obligation to repair will not be met unless the proposed work will remedy the problem "once and for all".

Furthermore, for effective disposal of a case, it has to be understood that the specimen letters and appendices documents were not devised to be adhered to rigidly. There has to be intelligent use of the specimen letters, tailored to the specific case, if the Protocol is not to be turned into a perfunctory process which both parties consider has to be undergone, simply to avoid any possible sanctions later.

Sanctions

The specimen letter of claim is largely adopted by claimants, with regards to its reference to endeavouring to agree a single joint expert and early disclosure. The times when a claimant will risk a costs order for not consulting about the appointment of an expert, so as to risk that report being irrecoverable from the defendant, is far less likely than the risk to the defendant who does not respond appropriately about the appointment of an expert. If a claim proceeds to litigation, the court will expect all parties to comply with the Protocol as far as possible. The sanction being the court’s power to order parties who have unreasonably failed to comply to pay costs or be subject to other sanctions. Where there is a variation to the Protocol, the court normally will require an explanation. The defendant to a disrepair action should only be resorting to litigation where it is not agreed that repairs are the liability of the landlord. Sensible discussions on such issues can only proceed upon the parties attempting to agree a schedule of works, preferably prepared by a single joint expert.

Conclusion

The views expressed in this article arise from my experiences as to how the protocol is operating between parties. I would welcome any comments or observations from other practitioners: d.wilson@anthonygold.co.uk  or call 020 7940 4000.