PROPERTY JOURNAL

Why surveyors are key to disrepair counterclaims

Landlords seeking to recover rent arrears that have accumulated during the pandemic may themselves be subject to disrepair counterclaims from tenants. What role do surveyors play in the process?

Author: Andrew Brookes

25 October 2021

With rent arrears on residential property having risen during the pandemic, it is likely that there will be an increase in court claims by landlords seeking to recover possession. Surveyors can play a crucial part of this process, though, if the tenant raises issues about disrepair.

A tenant cannot defeat a claim for possession on the basis of a valid section 21 notice, the no-fault procedure; however, if a claim is brought on the basis of rent arrears, a tenant can seek to defend it by establishing that the landlord has breached their obligation to repair.

Nearly all residential tenants will have the benefit of repairing covenants implied by section 11 of the Landlord and Tenant Act 1985, as well as express terms in the tenancy agreement. In addition, most tenants now also have additional rights granted by the Homes (Fitness For Human Habitation) Act 2018.

Under the 2018 Act, the tenant can defend a claim for possession made on the grounds of rent arrears, and counterclaim for breach of the repairing covenants. This is known as a disrepair counterclaim.

Basis for counterclaims

In a disrepair counterclaim, a tenant may be entitled to compensation from the landlord for breaching the obligation to repair, and this can be set off against the rent arrears to reduce or cancel the debt. Compensation can include both special damages – for example, for the cost of replacing possessions ruined by damp – and general damages, for what is termed 'distress and inconvenience'.

The courts have confirmed in Wallace & Others v Manchester City Council [1998] 30 HLR 1111 and English Churches Housing Group v Shine [2004] EWCA Civ 434 that general damages are calculated as a proportion of the rent paid for the period of disrepair. Such damages can mount up, particularly if the disrepair has lasted for a long period of time or the rent is high.

If the rent arrears are eliminated then the claim for possession is defeated. It may even be that the amount of the counterclaim exceeds the rent arrears, so a net payment is due to the tenant. If the tenant is the overall winner they may be entitled to recover their legal costs as well as the net compensation payment.

As well as compensation, if there is disrepair that has not been remedied by the time of settlement or trial, the counterclaim may also include a claim for specific performance of the repairing covenants or an injunction. The stakes for both tenants and landlords are therefore high.

Surveyors as expert witnesses

Surveyors play a crucial role in evidencing disrepair counterclaims. They are able to give expert evidence on the condition of a property, provide an opinion on whether particular items amount to disrepair, and advise on remedying defects and the cost of doing so. In all but the simplest cases the parties will need the guidance of a surveyor, and the counterclaim will stand or fall on the evidence they provide.

While the pre-action protocol for housing conditions claims does not apply to counterclaims, it is nevertheless useful for surveyors to refer to this because it sets out clearly what is expected of them in the context of a disrepair claim. Its annexes also include a precedent letter of instruction and schedule of disrepair that can be amended to include the circumstances of a counterclaim.

As with all expert witness work before the civil courts, it is essential for a surveyor to remember that their primary duty is to the court rather than the party instructing them. That means the surveyor has to be independent of that party.

For the court to accept a surveyor's report as expert evidence, this needs to comply with the provisions of part 35 of the Civil Procedure Rules (CPR). While a detailed discussion of the rules is outside the scope of this article, any surveyor accepting instructions to act on a disrepair counterclaim needs to be fully familiar with these.

When instructed by the tenant, the surveyor may only have limited time to inspect the property and prepare a report because the court claim for possession is likely to be under way already, and there will be a hearing scheduled or time limits with which the tenant has to comply. If the report identifies disrepair then that report will be used by the tenant and attached to their defence and counterclaim, which they will file with the court and serve on the landlord.

After the defence and counterclaim are filed, the court will usually give directions for the disposal and further progress of both claim and counterclaim. Claims generally proceed under part 55 of the CPR, as described below, but the courts can modify or change that procedure, particularly where the alleged disrepair is substantial.

The court has the option to appoint the tenant's surveyor as a single joint expert, or allow the landlord to rely on their own expert survey evidence. If each party is allowed to rely on their respective surveyors' evidence, the court will generally direct them to discuss their reports with a view to narrowing any differences and finding out what substantive matters remain at issue.

'In all but the simplest cases the parties will need the guidance of a surveyor, and the counterclaim will stand or fall on the evidence they provide'
Trial

If there is a dispute between the surveyors as to whether particular items amount to disrepair, or the landlord wishes to proceed in their attempt to obtain possession, there may be a trial.

The pandemic prompted the government to make extensive modifications to the procedure for possession claims, as set out in part 55 and accompanying practice direction. Practice direction 55C and the overall arrangement for possession proceedings document set out a new court process in force from 20 September 2020 until 30 November 2021, which is called the interim period.

There is now a  review by the judge on  the papers at least 28 days before the substantive hearing. There is no live evidence at a review appointment, the main purpose of which is to allow the tenant to take free advice from a duty advisor, and provide an opportunity for a judge to approve any settlement agreed between the parties. However, the court would certainly consider the scope of any counterclaim at that point.

At present, there is a renewed emphasis on mediation, and sometimes the surveyor may be involved at that stage if there is any question about whether there is an ongoing disrepair and how long it would take to remedy it.

If there is a substantive hearing, the default position where the claim proceeds under part 55 of the CPR is that it be carried out in person. This means that a surveyor who is required to give oral evidence would need to attend court themselves to be cross-examined on their report, just as before the pandemic.

However, the parties can agree, subject to the court's consent, for the hearing to be held remotely. In a remote hearing, the surveyor would give evidence by video link and be subject to cross-examination by the other party  or their barrister. The courts are now accustomed to virtual hearings, and it seems likely that these will continue – at least for some cases – even after the pandemic.

Expertise in demand

In conclusion, the importance of the surveyor in disrepair counterclaims cannot be underestimated. Whether the possession claim succeeds or fails will depend in large part on the expert evidence they give on the condition of the property in question.

Surveyors with the experience and inclination to do expert witness work in the civil courts may therefore find themselves in much demand over the coming months and beyond.

Andrew Brookes is a partner with Anthony Gold solicitors

Contact Andrew: Email

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