Gillian Smith v Wigan Borough Council

Costs Judge Nagalingam: Background

1. This judgment follows a request by the Defendant for an oral review of the decision of a costs officer following a provisional assessment conducted on the papers.

2. Whilst the oral review was originally requested on the basis that all assessed items would be subject to review, the parties have since focused on a single issue – being whether this claim would have been allocated to the Small Claims Track had the parties not compromised their dispute before the issue of proceedings. Mr Munro’s submissions

3. Mr Munro, on behalf of the paying party, avers that the replies are drafted as though they pre-date the implementation of CPR 46.13.

4. In so far that the Claimant references O’Beirne v Hudson [2010] EWCA Civ 52 , Mr Munro observed O’Beirne pre-dates CPR 46.13, and that CPR 46.13 effectively codified the principles the Court of Appeal set out in O’Beirne .

5. Mr Munro pressed the argument that the starting point should be to recognise that the Defendant is procedurally entitled to raise CPR 46.13, and the fact the Defendant filed an acknowledgment of service which did not contest the making of an order for costs did not preclude the Defendant from making their track allocation argument in points of dispute.

6. Mr Munro further submits that simply because an order for costs payable on the standard basis to be assessed if not agreed followed the Claimant’s Part 8 (costs only) claim, that does not prevent the Defendant from making a CPR 46.13 argument that the underlying dispute would have been allocated to the Small Claims Track.

7. In so far as the replies reference Stojalowski v Bristol City Council [2024] EWCC 30, Mr Munro submits the decision does not assist the Claimant because Stojalowski is not a costs case and is not analogous to the facts of the index matter. In particular, the case does not address arguments advanced pursuant to CPR 46.13.

8. In so far as the replies reference Birmingham City Council v Lee [2008] EWCA Civ 891 , Mr Munro again questions relevance, because regardless of the basis of the findings in Lee the index matter is still subject to the requirements of CPR 26.9 and an analysis of whether the threshold criteria for allocation to the Small Claims Track was met or not.

9. Mr Munro observed that in Lee , the Court of Appeal were not concerned with the repair costs element because by the time proceedings were issued, the repairs had been carried out. The decision focuses on what the appropriate costs order was in the circumstances presented.

10. In the index matter, a costs order has already been made and Mr Munro submits the court now needs to consider whether the claim would have been allocated to the Small Claims Track when viewed through the lens of CPR 46.13 and 26.9. In order to do this, Mr Munro says the court must look at the evidence.

11. In so far as that evidence includes the offers made, Mr Munro accepts the Defendant made a Part 36 offer to settle the claim for £1,000 as a final offer. However, he relies on all of the Defendant’s previous offers being set at lower sums, the penultimate of which was for £850 plus repairs.

12. In any event, Mr Munro does not accept that the making of the final offer (subsequently accepted as it was) precludes the Defendant from pursuing a CPR 46.13 argument that the Claimant’s costs should be limited to that which would have been permissible under the Small Claims Track.

13. He says the damages agreed are now a matter of fact, and that fact is part of the evidence the court should take into account in deciding that the claim would have been allocated to the Small Claims Track.

14. Mr Munro submits there is no authority to support the contention that the court should consider value prospectively as opposed to retrospectively. There is no dispute as to what the claim settled at, and the settlement sum is the best indicator of value when considering the question of what track a claim would have been allocated to.

15. Upon enquiry from the bench, Mr Munro clarified that the Defendant is not suggesting that the settlement sum is the only factor I may take into consideration, but rather that he simply wished to extinguish any suggestion that I cannot take the settlement sum into account.

16. In terms of evidence, Mr Munro argued the settlement sum ought to be a highly persuasive factor in determining what track the claim would have been allocated to. Mr Poole’s submissions

17. Mr Poole began by confirming that he did not author the replies and he was not instructed to slavishly stand by their content. This was not in terms of any attempt to add to the replies, but rather to now distance the Claimant from some of the arguments previously maintained.

18. In this regard, Mr Poole accepted that the settlement sum will have ‘some’ relevance to the question of value for allocation purposes, but that it cannot be the sole consideration.

19. Mr Poole submits that the various offers traded between the parties are also relevant, citing page 1 of the points of dispute for the chronology of offers exchanged.

20. Mr Poole cited the Defendant’s offer dated 28 November 2025 and their departure from prior referral to costs under the Small Claims Track only.

21. Mr Poole also observed that Part 36 does not apply in the Small Claims Track and so the Defendant’s making of Part 36 offers which excluded any reference to the Small Claims Track was consistent with the rules.

22. He observed CPR 27.2(1)(g) provides that “Part 36 (offers to settle)… do not apply to small claims”, and on this basis Mr Poole submits at least implicit acceptance of allocation to the Fast Track, in principle, was demonstrated by the Defendant’s 28 November 2025 offer.

23. As to CPR 46.13(3), Mr Poole accepts the Defendant is entitled to make their track allocation argument, but reiterated that the agreed damages was not the only factor the court should take into account when considering this point.

24. In so far as any reference has been made to O’Bierne , and additionally to Voice and Script International Ltd v Ashraf Alghafar [2003] EWCA Civ 736 , Mr Poole observed both were in fact examples of where the claim value was either overstated or miscalculated. Mr Poole observed that the index matter is not analogous in that regard because the Claimant did not overstate her claim nor is there any allegation she did.

25. In so far that allocation to the Small Claims Track pursuant to CPR 26.9(1)(b) includes a requirement that “the cost of the repairs or other work to the premises is estimated to be not more than £1,000”, Mr Poole does not pursue an argument that the cost of repairs would ever have realistically exceeded £1,000.

26. However, he observes that is only one component of the criteria for allocation to the Small Claims Track in a “claim which includes a claim by a tenant of residential premises against a landlord”.

27. Mr Poole seeks reliance on the Court of Appeal’s approach in Lee . Whilst he accepts that case concerned an interim application seeking an order for costs pre-allocation, it is also an example of the factors the court may consider when invited to determine a point on its merits.

28. In Lee , Mr Poole recognised that not only was the repair element valued at less than £1,000 but also that the repairs had in fact been concluded by the time proceedings were commenced. Therefore the specific performance element of the claim had already been concluded. He cited paragraph 19 in particular: “19. The Council inspected the property within a week, and within a month had carried out the great majority of the repairs sought. On its case, the cost of doing so (no doubt at an in-house price) was only £265. There was at that stage no court action. When, seven months later in April 2007, an action was begun by the tenant, it did not complain of any outstanding want of repair and thus made no claim for specific performance. It did claim consequential damages, which were put in the bracket £1000 - £5000.”

29. Thereafter Mr Poole cited paragraph 30 of the judgment, which is the concluding paragraph under a section titled "Access to Justice: the Funding of Disrepair Claims”, which addresses approach and poses a conceptual question: “30. Accordingly, it seems to us that we should approach this case without any pre-conceptions about the available methods of funding of cases such as these. The question is, as it seems to us, whether in order to make the rules and the protocol operate in the manner which must be intended, some order for pre-allocation costs is necessary, and if so, what.”

30. Mr Poole thereafter cited paragraph 33, which begins by suggesting that “the answer to the question posed at para 30 is clear.” and proceeds to set out: “In our view, the answer to the question posed at paragraph 30 is clear. Since the promulgation of the protocol it is no longer the case that a claim is only made (for costs purposes at least) when and if litigation is begun. On the contrary, the protocol requires a claim to be advanced initially in accordance with its terms, under a warning that there is likely to be a costs penalty if it is not. The references to costs which are contained in the protocol, and which we have set out at paragraph 15 above, clearly demonstrate that the object of the protocol is to achieve settlement of disrepair claims without recourse to litigation. Its object is very clearly that, provided the claim was justified, it ought to be settled on terms which include the payment of the tenant's reasonable costs: and costs calculated according to the track which the claim would fall to if made by way of litigation. We are unable to read the combination of paragraph 3.7 and Guidance Note 4.10 in any other way.”

31. In the index matter, Mr Poole submits that had the Claimant been required to issue proceedings she would have pleaded damages in excess of £1,000 and that without the outstanding specific performance element of the claim, the pleaded value would have been stated as £1,000 to £3,000 or £1,000 to £5,000.

32. Mr Poole additionally observed the undesirability of the Claimant having to counter with a Part 36 offer of £1,001 simply to avoid costs arguments of the type now advanced by the Defendant.

33. I queried what other evidence I was being invited to take into account, save for the parties’ respective offers. In doing so, I pointed out that a judge faced with allocation would not be made aware of any offers and would have no concluded settlement sum to benchmark allocation against.

34. Further, I observed that the bill narrative did not descend into any detail as to how any of the Claimant’s offers had been valued, nor has the Claimant lodged any letter before action, letter of claim or any other document which seeks to explain their valuation.

35. Mr Poole cited the reference in the bill narrative to the reporting of “issues of disrepair” since December 2023. Thereafter, citing the chronology set out in the bill of costs, Mr Poole observed that the letter of claim was sent on 18 April 2024. Thus he submits that the damages element of the claim was based on the undervalue on the rent paid from December 2023 to April 2024 and until such time the repairs were completed.

36. Mr Poole therefore invited me to consider the value of the claim on terms which recognised the rent the Claimant was contractually obliged to pay, less her loss of enjoyment of the property as a consequence of the issues which required repair. Mr Munro’s response

37. Mr Munro submits that I can only base my decision on the evidence before the court.

38. The starting point is that the claim was not valued at more than £1,000 and if it was, he would have expected the Claimant to provide evidence to support a valuation in excess of £1,000.

39. He says that the Claimant does not have evidence to support allocation to the Fast Track, or that the claim was realistically worth more than £1,000. The only evidence is the settlement sum and the offers and there is no evidence as to what the claim value would have been pleaded at, such that it was no good the Claimant suggesting £1,000 to £3,000 absent any evidence in support. Decision

40. One must recall at all times that the procedure for provisional assessment is designed to ensure low value costs disputes are dealt with expeditiously and cost effectively.

41. In the vast majority of provisional assessments, the decision of the court is accepted and an oral review is not required. In this case, an oral review was requested by the paying party – initially on the basis that a review of all assessed items was sought, but as of today reduced to a single issue.

42. That issue is whether the Costs Officer should have proceeded to assess the costs on the standard basis as per the main body of points of dispute and replies, or if he should have accepted Preliminary Point 1 and ruled costs as per that allowable on the Small Claims Track prevail.

43. Both parties elected to adopt a constrained approach to evidence, thus limiting the factors I am able to take into account. However, one key plank of the Claimant’s case is the wording of the offers passing between the parties. This has necessitated analysis of those offers, set out below.

44. 04/10/2024 – is a letter from the Claimant which identified various breaches and stated “it would make sense that this claim is settled before proceedings in order to avoid your client incurring unnecessary costs”. The offer proposed damages of £1,400 plus repairs to be completed by the Defendant and that “Your client will pay our client’s reasonable and proportionate legal costs subject to detailed assessment if not agreed”.

45. 07/11/2024 – The Defendant rejected the offer and stated “.. the value of the repairs in the claim are below £1,000 and the claim should be allocated to the small claims track”.

46. The terms of the Defendant’s counter-offer were a payment of £500 (less any rent arrears / costs owed), completion of the repair works, and that “The Council will pay small claims costs in respect of your client’s legal costs and disbursements”.

47. 21/11/2024 – The Claimant responded with a proposal of £1,200 plus repairs and that “The Council will pay our client’s reasonable and proportionate legal costs subject to detailed assessment if not agreed”.

48. 03/12/2024 – The Defendant made a formal Part 36 offer of £750 plus repairs and that “The Defendant will pay the Claimants reasonable legal costs, to be assessed if not agreed.”

49. 12/12/2024 - The Claimant responded with a proposal of £1,100 plus repairs and that “The Council will pay our client’s reasonable and proportionate legal costs subject to detailed assessment if not agreed”.

50. 19/12/2024 - The Defendant made a formal Part 36 offer of £850 plus repairs and that “The Defendant will pay the Claimants reasonable legal costs, to be assessed if not agreed.”

51. 06/01/2025 – The Claimant set out her damages calculation of £1,304.96 but proposed £1,109.13 to settle. Both figures excluded any repair costs element. The Claimant’s proposal dated 12/12/2024 was effectively repeated, accompanied by a new term to keep the term of any agreement private.

52. 31/01/2025 – The Defendant advanced a Part 36 offer (Form N242A dated 30/01/2025) of £1,000 plus repairs and that “The Defendant will pay the Claimants reasonable legal costs, to be assessed if not agreed.” That offer was advanced in terms that it was a “a final offer and there will be no further offers forthcoming”.

53. 04/02/2025 – An e-mail from the Claimant to the Defendant which states “Thank you for clarifying in our phone call today that the offer you have made is for The defendant to pay the Claimants reasonable legal costs on a standard basis to be assessed if not agreed. I can confirm that my client has accepted your offer”.

54. There is no doubt that the Defendant’s developing choice of words likely led to the Claimant assuming that no form of fixed costs argument would be advanced at the detailed assessment stage.

55. In all three formal Part 36 offers advanced, the Defendant used the language of “to be assessed if not agreed” regarding costs. Further, CPR 27.2(1)(g) provides that “Part 36 (offers to settle)… do not apply to small claims”.

56. The fact that the Defendant made three Part 36 offers, and made specific references to costs to be assessed if not agreed each time, might reasonably lead one to conclude that the Defendant acknowledged the likelihood of this case being allocated to the Fast Track had it been issued. That is certainly the conclusion the Claimant drew.

57. Notwithstanding the phrasing of the Defendant’s offers, the points of dispute now plead CPR 46.13(3), which provides: “Where the court is assessing costs on the standard basis of a claim which concluded without being allocated to a track, it may restrict those costs to costs that would have been allowed on the track to which the claim would have been allocated if allocation had taken place.”.

58. One firstly observes that the rule is discretionary, not mandatory. Secondly, the rule is not framed in terms which require that the settlement sum only be taken into account, but rather invites a retrospective hypothetical analysis using the language of “would have” and “if”. That analysis necessarily engages consideration of CPR 26.9(1)(b).

59. CPR 26.9(1)(b) provides that “The small claims track is the normal track for – (b) any claim which includes a claim by a tenant of residential premises against a landlord where— (i) the tenant is seeking an order requiring the landlord to carry out repairs or other work to the premises (whether or not the tenant is also seeking some other remedy); (ii) the cost of the repairs or other work to the premises is estimated to be not more than £1,000; and (iii) the value of any other claim for damages is not more than £1,000”

60. Mr Poole has helpfully indicated that the Claimant does not intend to pursue any form of argument that the cost of repairs or other work would have been in excess of £1,000.

61. However, and notwithstanding the settlement sum, he contends that the value of the Claimant’s damages claim was more than £1,000.

62. In support of this he relies on the correspondence passing between the parties, within which I observe the following.

63. On 4 October 2024 submissions were made in writing citing the Claimant’s age and vulnerability. Reference was made to existing conditions including asthma, diabetes, depression and anxiety. The Claimant’s mobility was also cited, exacerbated by recent shoulder surgery.

64. On 22 October 2024 the Defendant acknowledged that the Claimant was a “vulnerable tenant” and set out repair proposals which they accepted would take longer overall but provide better long-term outcomes. In doing so, one is bound to recognise that also meant a longer period of time until the issues complained of would be resolved.

65. In a response of the same date, the Claimant cited the absence of any proposed start date for the suggested schedule of works. This is the context in which the Claimant’s proposal of £1,400 was advanced.

66. On 21 November 2024, and in response to proposals dated 7 November 2024, the Claimant catalogued the additional inconvenience she had been put to in attempting to secure a start date for the proposed schedule of works. The Claimant also repeated her frustration, and made an improved offer of £1,200.

67. The Defendant’s first Part 36 offer was in monetary terms but did not address the concerns about by which date the works would be completed. In response, the Claimant raised concerns that the Defendant appeared to be relying on a document which suggested the repairs and been carried out, when in fact that had not.

68. In that regard, the initial offer of £750 could not reasonably be considered because the cause of action was still ongoing with no end date in sight. The Claimant set out an original date of notice of 4 December 2023 and calculated that the property would be in a state of disrepair for 70.57 weeks (having calculated what the time would be from 120 days after acceptance of any repair proposals).

69. In this regard, I observe that a settlement of £1,000 to cover 70.57 weeks of disrepair would equate to compensation of £14.17 per week for every week endured in a state of disrepair, during which time undiscounted rent payments would still fall due.

70. On 19 December 2024 the Defendant made their increased offer of £850, which if accepted included an agreement for the works to be completed within 120 days. This offer was rejected.

71. In a detailed response dated 6 January 2025, the Claimant set out the Defendant’s conduct to date. In particular, the adequacy of the inspection carried out was challenged, as well as concerns as to conduct in terms of the Claimant feeling pressured to sign off on a report which she did not feel adequately reflected the state of her rental property.

72. Accounting for the 120 day period in which to complete the repairs, the Claimant calculated the Defendant’s proposal covered a period of 74.14 weeks of sub-standard living conditions over which time rent of £5,931.20 was payable. The Claimant set out the argument that: “Taking into account the 20% rent diminution we believe it would be very easy to argue in court considering the vulnerabilities of our client and events that have thusly occurred, and in the application of the Castle v Simmons uplift, that a total damages calculation of £1,304.86 would suffice”.

73. Instead, proposals advanced were based on a reduced percentage diminution, thus the Claimant’s offer of £1,100. I also observe that offer was made at a time when the Defendant had still yet to either commence the repairs or confirm a commencement date.

74. On 30 January 2025 the Defendant’s final Part 36 offer was advanced, which allowed the usual 21 days for acceptance and set out terms for the repair works to be completed within 56 days of acceptance (in contrast to earlier proposals of 120 days).

75. As outlined above, that offer was accepted.

76. One cannot fail to observe that from the moment the Claimant first raised her concerns to the time by which a schedule of works had not only been agreed but was properly timetabled to commence, the Claimant’s cause of action remained.

77. The Claimant’s damages claim was at all times linked to the period from when her cause of action arose to when the repairs/improvements would be carried out.

78. If one takes a starting point of 4 December 2023 to 56 days after 4 February 2025, it equates to 483 days or 69 weeks. That equates to compensation of £14.49 per week during the period of disrepair (out of the £80 per week the Claimant was liable to pay in rent during that period), i.e. a diminution of around 18%.

79. What is not clear from any of the correspondence I have seen, nor from the points of dispute or any other documents the Defendant has filed, is a cogent explanation as to why I should accept that this is a claim which “would have” been allocated the Small Claims Track, save for the settlement sum agreed.

80. CPR 46.13 is a rule which is specifically constructed to invite retrospective consideration. There is no reference to the settlement sum within the rule, and one observes that such a provision would likely have been included by the legislature were the settlement sum intended to be a definitive measure of retrospective allocation.

81. Equally, CPR 46.13 does not reference “value” but in exercising my discretion, I am satisfied that I should not give the settlement sum the elevated status the Defendant would have me apply.

82. Both parties agree, and in any event I would have been bound, that consideration of CPR 26.9(1)(b) is necessary as part of the exercise envisaged by CPR 46.13.

83. CPR 26.9(1)(b) speaks of “the value (emphasis added) of any other claim for damages”.

84. Where parties agree a financial dispute by way of compromise, the settlement sum may be one measure of value but it is not definitive. Context and circumstance are important.

85. The colloquial “man of means” is far better placed to negotiate a favourable deal than a “man of straw”, because whilst the former can likely afford to wait for their compensation and hence hold out for the best bargain, the latter will come to a point earlier where their immediate needs outweigh the additional time and resources necessary to secure what a Claimant with deeper pockets may consider fair compensation.

86. In the index matter, an elderly Claimant suffering with multiple health issues (and accepted by the Defendant as vulnerable) endured over a year of uncertainty and had no choice but to pay her full rent whilst living in sub-par conditions. She had already suffered diminution for a sustained period and prior to the Defendant’s final Part 36 offer was facing uncertainty as to when the repairs would be completed and a wait of at least 4 months beyond acceptance of any proposals.

87. The terms ultimately accepted included an agreement to effect the repairs within 8 weeks, plus damages of £1,000. However, I am in no doubt that the facts and circumstances as at the date of acceptance were such that had proceedings instead been commenced, this claim would not have been allocated to the Small Claims Track on the basis that pursuant to CPR 26.9(1)(b)(iii) the Small Claims Track would not have been the normal track for a “claim which includes a claim by a tenant of residential premises against a landlord” where the value of the claim for damages would have reasonably been pleaded at more than £1,000 based on the circumstances presented at the time.

88. The Claimant accepted terms that brought her ordeal to an end, and crucially on terms where the Defendant at the very least strongly inferred no intention to argue costs on the basis of allocation to the Small Claims Track.

89. The conduct of the Defendant in this matter is such that, if permitted, future agreements would likely be imperilled due to a lack of trust between parties or otherwise result in the undesirable practice of horse-trading offers which either by pennies or a few pounds exceed the threshold to escape ‘would-be’ allocation to the Small Claims Track.

90. Further, the overriding objective is not best served by an approach to litigation which, in effect, requires Claimants to issue proceedings in order to achieve certainty as to costs recovery.

91. Faced with compelling contemporaneous evidence from the Claimant as to value, and nothing from the Defendant save for the settlement sum, I am persuaded by the Claimant’s arguments and I am therefore not minded to interfere with the outcome of the provisional assessment carried out by Costs Officer Piggott.

92. The provisional assessment is therefore final and the Defendant shall pay the Claimant’s costs of assessment, to now additionally include the costs of the oral review hearing, to be summarily assessed by way of a remote hearing with a time estimate of 30 minutes if not agreed.

93. A short order reflecting the above shall accompany this judgment when handed down.