Following the introduction of the Personal Injury Portal in August 2013, personal injury claims are far less profitable for lawyers and claims management companies.

Housing disrepair claims on the other hand are not affected by the portal. These cases are often valued at up to £3,000 per year* of disrepair, but more complex cases can be worth considerably more, particularly if they include injury or illness.

These claims tend to be uninsured and are usually settled out of court so statistics on claims numbers and values are hard to come by. At Arthur J. Gallagher however, we are seeing increasing volumes of these claims being gathered by claims management organisations and sold on to solicitors.

We have heard from our customers that housing estates are being targeted by ‘door knockers’: claims management companies who go from door to door looking for potential claims. This can be a very effective tactic as high volumes of claims can be overwhelming, forcing the association to offer settlement easily rather than incur the time, cost and reputational implications of dozens of court appearances.

Successful claims breed more claims so it is obviously important to defend as many as you can.

What makes a housing association liable for disrepair?There are several ways in which liability can attach under the disrepair protocols. Primarily these involve a failure to meet your repairing obligations.

This can fall under three categories:

• Contractual - breach of the landlords covenants in the tenancy agreement

• Statutory - breach of section 11 of the Landlord and Tennant act 1985 or Section 4 of the Defective Premises Act 1972

• Common law - Nuisance or Negligence

THIS BULLETIN EXPLAINS WHAT YOU CAN DO TO MINIMISE THE FINANCIAL IMPACT OF DISREPAIR CLAIMS.

JANUARY 2016

HOUSING DISREPAIR: THE NEW PERSONAL INJURY

“ We have heard from our customers that housing estates are being targeted by ‘door knockers’...

JANUARY 2016 HOUSING BULLETIN

The majority of the evidence upon which a disrepair case hangs will be within the tenants property. Traditionally however, an association will rely on the tenant to give ‘acceptable notice’ of any disrepair and will include this requirement in the tenancy agreement.

Unfortunately such contractual obligations do not provide protection:

• A failure to notify you simply constitutes a breach in the tenancy agreement; it does not absolve you of your own duties.

• What constitutes ‘acceptable notice’, even if defined in the contract, can vary significantly from what you might expect.

• You can become aware of issues in other ways.

It is important to remember that your repairing obligation under the Landlord and Tenant Act is owed “if the landlord knows (whether as a result of being notified by the tenant or otherwise) or if he ought in all circumstances to have known of the relevant defect”.

In other words: Was there a defect? If so, did you know or should you have known?

Was there a defect?The most important factor is that there has to be disrepair present and that it fell within your duty to repair. This may not be as simple as it appears, for example, disrepair claims often relate to damp and can usually be rejected where the tenants actions or inaction are primarily responsible. However, even where ‘lifestyle’ is a factor, it is not always the only factor and it can be difficult to tell without the involvement of a specialist.

It is always a good idea to obtain a surveyors report on potential damp and copy in the tenant, particularly where the issue is lifestyle related, as this report will serve as an excellent defence.

Did you know?It is important to understand that the courts consider all staff, including contractors to be your eyes and ears. This is not simply a metaphor for a general requirement for watchfulness though. If an employee is told of a problem by a tenant, you are considered to be aware of it regardless of whether this is the ‘correct’ means of notification.

Staff or contractors will often refer tenants with disrepair problems to the association’s generic repairs procedure. However, should the tenant fail to do this, you are still deemed to know of the problem and therefore be under a duty to repair.

You will almost always be in a better defensive position, if staff are given clear instructions to either assist the resident in reporting the issue then and there, or to report the issue themselves.

Another helpful measure is that all staff and contractors who attend a property or have contact with the tenant by telephone should ask if there are any issues outstanding or unreported which need to addressed and record the answer. Not only does this ensure that you identify these issues, but where a tenant says no, it generates evidence which can be used to defend against later claims which assert that the issue is long term and has previously been reported.

Should you have known?The case Hannon v Hillingdon 2012 makes it clear that the presence on site of an employee or contractor is sufficient to assume notice of a defect which would have been visually apparent to them regardless of their reason for attending. In other words, if somebody was in the property on your behalf and should have seen the issue and reported it, then you “ought in all circumstances to have known of the relevant defect”.

It should be made clear to all staff that they must formally report evidence of damage or disrepair and they must formally record doing so.

The same criteria apply to contractors so it is important that the contract is clear regarding these duties, and that they too have a means to report the issues properly, and are trained in those means.

A visually apparent defect seen during a visit is not the only way you can be found to have “ought to have known” about a defect. For example, if recurring problems are discovered in several similar properties then the courts would expect the remaining properties to be reviewed for the problem. Failure to do so would effectively leave you open to an argument that you “ought to have known”. Equally, where a disrepair occurs in communal system such as the water supply to a block, a failure to carry out a routine inspection programme would be considered circumstances where you could/should have known about the issue.

JANUARY 2016 HOUSING BULLETIN

Repair - AccessAssuming that there is a defect and that it is properly identified, a disrepair claim can still be successful if the repair was incomplete, not carried out in a timely manner, or not handled appropriately.

First and foremost, this means gaining access to the property and here the tenant has a duty to provide reasonable access to their property to address the problem.

A common problem is that tenant may not be present for an agreed appointment or may simply not grant access. While this may help your defence of a disrepair claim, it does not remove the duty to repair and neither does it require the tenant to report the issue again. It is therefore not sufficient to simply deliver a ‘visit card’ and await further contact from the tenant. As soon as you become aware of a problem the duty is, and remains yours.

However, should you regularly continue to attempt access and properly document every missed appointment or refused access without giving up, this should constitute reasonable evidence of a reasonable attempt to discharge your duty.

It has been argued that, as you have legal options to gain access under the terms of the tenancy agreement, a failure to use these is evidence of liability. Realistically however, taking this level of action would only be expected by the courts if they considered the repair to be necessary to address a hazard to the resident or their visitors.

Repair – CompletionAnother common issue relates to the systems used to schedule repairs. Where multiple contractors are used, or surveyors attend initially to scope works, the system will often show the initial work as complete when in fact the repairs have not been carried out. A second job will then be created for the repairs which will set a new deadline.

In some cases jobs are automatically closed on the day of attendance by the contractor, regardless of complexity or the time actually needed for completion. This can result in systems which show target dates being consistently met whilst the repairs are behind schedule.

Where systems require each stage of the process to be closed off, further tasks should consider that the deadline for full completion

runs from the date of notification, not the date the last task is generated. The courts would consider it reasonable to check completed jobs, particularly from contractors on the next day to ensure that the job is actually complete.

Where there is a legitimate reason for a delay, it must be recorded on the system to ensure you can evidence that the delay was reasonable and beyond your immediate control.

MitigationIt is always important to consider anything that can be done to minimise disruption to tenants.

Dehumidifiers, portable heaters and other equipment can all make life easier for the tenant but they can also result in increased fuel bills, particularly where the issue takes some time to resolve. In the event of a claim this additional cost will almost certainly be included in the schedule of costs so any help you can give in the first instance will avoid the cost escalating if the claim goes to court.

Rechargeable WorksOften the resident may be at fault for the disrepair and we often encounter situations where the resident has been asked to rectify the issue themselves. This may appear to be a logical and sensible solution but leaves you vulnerable to litigation.

It is important to remember that Strict Liability applies under the Defective Premises Act and there is no allowance for the cause of the defect. A Court is not concerned with how the defect or hazard came about, only with when you became aware of the issue and what action you subsequently took.

You should always consider a number of factors before asking a tenant to deal with a disrepair:

• Is the tenant likely to actually carry out the works?

Where the tenant has caused damage resulting in disrepair, you may seek to evict the tenant, using the tenant’s failure to address the damage to support this eviction. In fact by not addressing the issue yourselves and recharging the cost, you may be giving the tenant cause to make a counterclaim which will prevent the eviction.

• Can you do the work more effectively than the tenant?

If you are able to solve the issue more economically and quickly than the tenant, then doing so and recharging the tenant will avoid the possibility of a claim and provide evidence that you have taken the most appropriate action and minimised cost to the resident.

• Is the tenant likely to have sufficient funds to carry out the repairs?

Sometimes that tenant may not be able to afford the repairs. If so, it is entirely reasonable for you take charge, undertake repairs and recharge the tenant a sum they can afford. This then avoids any delay and the potential that the disrepair might continue indefinitely.

• Is there any possibility that the issue constitutes a hazard?

Purely cosmetic issues are not a concern but anything that presents a risk of injury, ill health or reduction in the utility of the property is ultimately in your interest to address, as it could lead to litigation which will almost certainly be more expensive than the cost of repair.

JANUARY 2016 HOUSING BULLETIN

* Wallace v Manchester 1998 is the precedent setting case producing the calculation often used as the basis for quantum in housing disrepair, though not exclusively, and with potential for other heads of claim and damages in some circumstances hence: “are often valued” and not “are valued”

This bulletin is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this bulletin we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained. You should not act upon (or should refrain from acting upon) information in this bulletin without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this bulletin, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

Arthur J. Gallagher Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: Spectrum Building, 7th Floor, 55, Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909.

The courts are typically unconcerned by your exercising your right to repair and recharge, but very concerned with residents being left to address disrepair issues themselves. Should the tenant fail to repay these recharges then you may have grounds for eviction. Requiring the tenant to address the issue themselves is more likely to result in a counterclaim which would halt an eviction.

EvidenceThe following documents will typically be essential in defending these claims:

• Any information provided to the tenant relating their duties and your own. These documents form the basis of the contract between you and will be vital to determining any contractual breach:

> Tenancy agreement > Tenant handbook > Repairs and maintenance policy > Repairing protocols

• Documents relating to works carried out at the property, previous visits to the property which could be considered by the courts to constitute an ‘inspection’. Note that all of these documents will be stronger if you include the question relating to outstanding or other unreported issues mentioned earlier:

> Repairs and maintenance logs > Any documentation/reports connected with the

maintenance logs > CP12 gas safety documentation > Visit records > Inspection records

• Documents recording communication with the tenant:

> Tenancy file > Complaints records

• Documents which set the scene or explain the reasons behind any previous actions. These are very useful in showing that any past actions were the properly considered:

> Any specific internal reports or email communications relating to the issue in question, tenant or property

> Details of any issues with rent > Details of any vulnerabilities > A list of individuals in the organisation who have regular

contact with the tenant about tenancy issues.

Disrepair claims are here to stay as they are replacing injury claims as a source of income for claims lawyers. By taking some relatively straightforward precautions you can protect yourself as much as possible.

Contact your usual Arthur J. Gallagher representative. www.ajghousing.com

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About Arthur J. GallagherFounded in 1927, Arthur J. Gallagher & Co. has become one of the largest, most successful insurance broking and risk management companies in the world. With extraordinary reach internationally, our parent group employs over 20,000 people and provides services in more than 140 countries. Outside the US we are known as Arthur J. Gallagher and wherever there is an issue of risk, we’re there for our clients. We are a business without barriers – working together to create solutions that drive value and competitive advantage for our clients. Our people, our depth of technical knowledge and our global reach will deliver unrivalled advice and coverage expertise.