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ARBITRATION

What is arbitration?

Arbitration is a procedure where the parties involved in a dispute, such as a landlord & tenant are able to refer an issue of dispute to a third party (usually an expert in the field) to resolve. This saves the disputed matter having to go before the law courts.

Section 1 of the Arbitration Act 1996 states: The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.

The parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.

Arbitration is becoming increasingly popular in the resolution of disputes between landlords and tenants because it's alternative, that of going to court is so time consuming and expensive,  the traditional court system is primarily an antagonistic process.  In the case of residential letting it would pit the landlord against the the tenant in order to determine ultimately a winner and a loser.

The Advantages of Arbitration for a landlord:  

Privacy - Arbitration tends to be a private procedure so outsiders do not have access to landlords sensitive information,  and the parties do not have the risk of bad publicity for the landlord or tenant arising from potential reports in the media.

Informality - the arbitration proceedings are much less formal than a court case and scheduling is often more flexible.

Speed - The arbitration process is usually much quicker for the landlord than a court case. However, if either the tenant or landlord decides to challenge the decision through the courts then the process will be ultimately longer and greater in cost.

Expertise - The person appointed to chair the process is usually someone with expert knowledge of actual practice in the field.  This expertise should benefit both the landlord and tenant and mean that the decision reflects that of an expert rather than a legal generalist.

Cost - Arbitration is usually a much cheaper process for the landlord and tenant in dispute than going to court.   However, the cost of an expert's fees should not be underestimated by a landlord.

Arbitration within the Small Claims Procedure in the County Court

One of the most widely used arbitration service used by landlords is that which occurs under the Small Claims procedure in the County Court.  This service has been available since 1973.   The procedure is operated by county court district judges.

Reference to arbitration is now automatic in cases involving amounts of less than £5,000, and may also be used for greater amounts when both parties agree. 

This information applies to England, Wales and Northern Ireland 

Terminology of arbitration

There are some common terms used in this item:-

  • claimant - the person making the claim
  • defendant - the person/firm against whom the claim is being made
  • the claim form - the form for starting a case
  • service - the defendant receiving papers from the court
  • enforcement proceedings - the claimant applying to the court for an order to make the defendant pay.

 

What is in this information

Landlords can start a civil legal action in the county court, or in the High Court, depending on the circumstances of the case. If the landlord's claim is for £15,000 or less, it must be started in the county court. If the landlord's case is a simple one, the county court will decide to use the small claims procedure and will allocate the case to the ‘small claims track’. If the landlord's case is defended, the court will decide what procedure should be used.

A small claims case

If a landlords has a case which is allocated a track which is not a small claims track, the landlord should consult an experienced adviser, for example, a Citizens Advice Bureau.

In most cases, the court will not order solicitors’ costs to be paid by the losing party in a small claims case, and if landlords instruct a solicitor they will have to pay the costs themself. For this reason most landlord claimants deal with a small claim without the help of a solicitor. It is possible to have the help of a friend or ‘lay representative’, for example, some Citizens Advice Bureau can offer trained advisers to help landlords with small claims. It may be possible for landlords to get legal advice (not representation) from a solicitor under the legal help scheme.

Types of case dealt with in the small claims track

When the court is considering whether to allocate a case to the small claims track, it will take into account a number of factors, but the main factor is the financial value of the case.

Financial value of the case

If the value of a landlord's case is £5,000 (£2,000 in Northern Ireland) or less, it will generally be allocated to the small claims track. However, if it is a personal injury claim, it will be allocated to the small claims track only if the value of the claim for the personal injuries themselves is not more than £1,000. If the claimant is a tenant in England or Wales, and is claiming against their landlord because they want their landlord to carry out repairs or other work to the premises and the cost of the repairs or work is £1,000 or less, the case will be allocated to the small claims track.

In Northern Ireland claims involving personal injury are dealt with by the County Court.

In some cases, even if the value of the case is more than £5,000 (£2,000 in Northern Ireland) and both parties agree, the court could allocate the case to the small claims track. If this happens the usual rule about costs does not apply and if the claimant loses the case, they may have to pay the defendant’s solicitor’s costs. However, if the claimant wins the case, the defendant could be ordered to pay the claimant's costs.

Types of claims in the small claims track

The most common types of claim in the small claims track are:-

  • compensation for faulty services provided, for example, by builders, dry cleaners, garages and so on
  • compensation for faulty goods, for example, televisions or washing machines which go wrong
  • disputes between landlords and tenants, for example, rent arrears or compensation for not doing repairs
  • wages owed or money in lieu of notice.

If a case is complex, the judge may refer it to another track for a full hearing, even if it is below the financial limit of that track.
If a landlord has a complex case they should consult an experienced adviser, for example, a Citizens Advice Bureau (CAB).

Before Landlords start applying to the courts

Landlords must try and settle a claim before taking court action. If a landlord doesn't  try to settle first, the court may penalise them. So, for example, if a television does not work, there is no point in a landlord applying to the court immediately for compensation - a landlord must contact the shop which sold it first to try to solve the problem, and only use the court if they cannot get the problem solved by negotiation. The court will expect a landlord to make their claim in writing, giving the other person a reasonable time to reply – a month is usual. Landlords should also warn them that they will take court action if they fail to reply within the given time.

Which court deals with the case 

The court action can be started in any court, but the case can be transferred. If the case is defended and the claim is for a fixed amount, the court will transfer the case automatically to the defendant’s nearest court (if the defendant is an individual, not a company). In other cases, either party can ask for the case to be transferred.

Landlords making a claim

As a claimant, landlords should start a claim by filling in a claim form. Claim forms are available to landlords from local courts, and, in England and Wales, from HM Courts & Tribunal Service website . In England and Wales, some claims for a fixed amount of money can be issued online at www.moneyclaim.gov.uk. Usually, claims will be issued, printed and sent to the defendant on the day the claim is submitted. In England and Wales, court fees for online claims must be paid by credit or debit card.

The claim form asks for details of the claimant and the defendant and how much is being claimed. The claim form includes space for the particulars of claim which should be used by landlords to set out the details of the claim, but if there is not enough room, landlords can set it out on a separate piece of paper. In some circumstances, as a claimant a landlord might need extra time to complete the particulars of claim. A landlord making a claim has the right to send the particulars of a claim to the defendant separately, but no later than 14 days after the claim form.

If the details of the case are complicated, landlords should consult an experienced adviser, for example, a Citizens Advice Bureau (CAB). To search for details of your nearest CAB, including those that can give advice by email, click on nearest Citizens Advice Bureau (CAB).

As the claimant, landlords may be able to claim interest on their claim. If so, landlords must include interest in the amount they are claiming on the claim form. There is a specific form of words landlords should use to do this.

For more information about claiming interest, landlords should go to  Her Majesty's Courts Service website and choose 'Information About...', 'Claims', and then 'Making a claim'.
If the details of the case are too complicated for a landlord to fit the space on the form, they should consult an experienced adviser, for example, a solicitor or a Citizens Advice Bureau.

In some circumstances, additional documents need to be attached to the particulars of a landlord's claim. For example, if the claim is based on a written agreement (such as a tenancy agreement,) in which case a copy of the tenancy agreement should be attached to the statement of claim.

Applying for the claim form to be issued

As the claimant a landlord should send or take two copies (three copies in Northern Ireland), of the claim form to the court where the landlord wants to start court action.  Landlords should keep an extra copy for their own records.  Landlords must also take or send the court fee. The fee depends on the amount of money claimed by the landlord. In England and Wales, landlords can find out how much the fee is from the Her Majesty's Courts Service website

In some circumstances the fee will be waived, for example, if the landlord is receiving income support, income-based jobseeker’s allowance or the guarantee credit of Pension Credit. Some landlords who are in receipt of working tax credit may also be entitled to have the fee waived.  If the landlord does not receive any of these benefits, but would be in financial hardship if they had to pay the fee, the fee may also be waived.  The court will stamp the claim form and in most cases serve it on the defendant.  It will give the landlord claimant a notice of issue, a document with the case number on it.

How the claim form is served

Usually the court will serve the claim form by sending it to the defendant by first class post. The defendant will be deemed to receive it on the second day after posting. As the claimant, if a landlord wants to serve it themself, they can ask the court to give it back to them once it has been stamped so that the landlord can serve it. There are a number of forms that must be sent with the claim form

When landlords  are defending a claim

If the defendant is not defending the case

As the landlord as defendant, if they are not defending the case, a landlord may accept that they owe the money claimed. If so, and the landlord can pay the money immediately, they should send it to the claimant directly.
As the landlord as defendant, if they accept that they owe the money, but need time to pay, the landlord as defendant can propose an arrangement, for example, that they pay the money in instalments or all the money in one lump sum at a specified future date. If the claimant accepts this offer, they will have to return a form to court requesting ‘judgment on admission’. As the landlord as defendant, if they do not keep to the arrangement, the claimant can take enforcement action.

As the landlord as claimant, if they do not accept the offer, the landlord claimant must give their reasons and a court official will decide what a reasonable arrangement should be. The court will send both parties an order for payment (‘judgment for claimant after determination’). As the landlord as claimant, if they are not happy with the order, they should write to the court giving their reasons and must send a copy of the letter to the defendant. A judge will then decide what is reasonable for the defendant to pay. In Northern Ireland, the Registrar will examine the case and decide what a reasonable offer should be. If the defendant does not keep to the arrangement, the claimant can take enforcement action.

If the defendant is defending the case

As the defendant, if a landlord is defending the case, they have to respond to the claim form and the particulars of claim within 14 days of the date of service (this is the second day after posting). If the particulars of claim were served after the claim form, the landlord as defendant must respond within 14 days of the date of service of the particulars of claim. The landlord as defendant must respond by filling in the defence form which was sent to them with the claim form.

As the defendant, if a landlord does not send a defence in to the court, the claimant can ask for an order to be made against you. If this happens, the parties involved should consult an experienced adviser, for example, a Citizens Advice Bureau (CAB)

As the defendant, a landlord can send their defence to the court. However, if a landlord needs more time to prepare a defence, they can send back an acknowledgement of service and then the defence within 14 days (the acknowledgement of service would be sent to the defendant initially with the claim form).
When the defence is returned to the court, the court will send an allocation questionnaire to both the claimant and defendant. This must be returned no later than the date specified on it. In England and Wales, as the claimant, when a landlord returns the allocation questionnaire, they have to pay a fee although this may be waived on financial grounds. The court will use the information given on the allocation questionnaire to decide which track the case will be allocated to.

The notice of allocation

In England and Wales, when the court has decided to allocate the case to the small claims track, the parties will be sent a notice of allocation.  This form will tell the parties what they have to do to prepare for the final hearing.  These instructions are called ‘directions’.  For example, the parties may be told to send copies of all the documents they intend to use to the court and to the other party at least 14 days before the hearing is due to take place. Landlords must follow these directions. If landlords don't, the case could be postponed and landlords could have to pay all the costs of the case.

There are standard directions for a number of common cases, for example, if the claim is to do with faulty goods, there are standard directions about the documents that have to be sent to the other party.  If the claimant wants to show a video as evidence, they have to contact the court to make the arrangements for the video to be shown at the hearing.

The hearing date

The notice of allocation or notice of hearing in Northern Ireland, will usually specify the time, date and place where the hearing will take place and how much time has been allowed for it.
As the claimant, if a landlord wants to attend the hearing, but cannot, they can write to the court and apply for a later date to be set. A fee is payable for this application and the court will agree only if there are good reasons from the landlord.

As the claimant, a landlord may not wish to attend the court hearing, for example, if the travel costs of getting to the hearing are higher than the landlord's claim merits. In this case, a landlord can write to the court to ask it to deal with the claim in their absence. The letter must arrive at court no later than seven days before the hearing date, and a copy must be sent to the defendant. In Northern Ireland, a defendant must attend the court hearing as their absence may be held against them. The letter will ensure that the judge take into account any written evidence that a landlord has sent to the court and the defendant.
Sometimes the court will not set a final hearing date at the allocation stage. In England and Wales, it could instead:-

  • propose that the claim is dealt with without a hearing. If the parties do not object, the case will be decided on the papers only. If the parties do not reply by the date given, the judge may treat the lack of reply as consent
  • hold a preliminary hearing. This could happen if the claim requires special directions which the judge wants to explain to the parties personally, or where the judge feels that the claimant (or the defendant) has no real prospect of succeeding and wants to sort out the claim as soon as possible to save everyone time and expense, or if the papers do not show any reasonable grounds for bringing the claim. A preliminary hearing, therefore, could become a final hearing where the matter is decided once and for all.

In Northern Ireland, a hearing is convened and a summary judgement made.

Preparing the case

It is important for landlords to prepare the case carefully - the court has to be convinced.  The following points are a general guide for landlords to what preparation should be made.  But if a landlord is not confident about how to present their case, the landlord should consider taking someone else along to help, and/or getting specialist advice first. 

The main points are:-

  • if a landlord has a low income they can use the legal help scheme (Green form scheme in Northern Ireland), to cover the cost of legal advice (but not representation) from a solicitor. This advice can include getting expert reports, for example, on faulty goods (but a report may be used in court only with the permission of the court)
  • notes about the case should be set out by a landlord in date order. It is very useful for landlords to note down what their case is, for example, the points to make, the documents which are relevant, and what they prove. A list of all documents, and other evidence is useful to make sure nothing is forgotten
  • damaged or faulty goods should be taken as evidence, if possible. If this is not possible, photographs could be used instead by a landlord.
  • evidence of expenses should be prepared and any receipts taken along by a landlord.
  • all letters (and any other relevant documents including photographs) about the case should be ready for the hearing
  • in most cases the claimant and the defendant may be the only witnesses. If the court has agreed that other witnesses can attend, they must attend. If a witness has difficulty getting time off work, it may be helpful for a landlord to serve a witness summons. The court can explain how to do this.
  • if a landlord wishes to use an expert witness, they must get the permission of the court first, and they must instruct the expert jointly with the other party in the case.

The final hearing

The final hearing is usually held in public but it could be held in private if the parties agree, or if the court believes it necessary in the interests of justice.

Hearings in the small claims track are informal and strict rules of evidence do not apply. The judge can adopt any method of dealing with the hearing that they consider to be fair, and they may ask questions of the witnesses before allowing anyone else to do so. The judge may limit the time that parties or witnesses have to give evidence.

A lay representative has the right to speak on behalf of a party at the final hearing, but only if that party attends the hearing.

If a landlord does not speak English as their first language, they might find it helpful to have an interpreter help them to put their case. The court will not be able to assist landlords in finding an interpreter.
If a landlord needs help with finding an interpreter, they should consult an experienced adviser for example, at a Citizens Advice Bureau (CAB).
 

At the end of the hearing, the judge will give the judgment. The judge has to give reasons for their judgment. The reasons must be given as simply and briefly as possible, and usually will be given orally to the parties present at the hearing. However, the judge may give them later either in writing or at a later hearing.

If a landlord is the claimant and they win the case, the landlord will get the court fees back as well as the claim, and the landlord can ask for certain expenses also. If a landlord loses, they will not get the court fees back. But it is unlikely that a landlord will have to pay any other costs.

Appeals

A landlord may appeal against a judgement in the small claims track only if the court made a mistake in law or there was a serious irregularity in the proceedings. If a landlord wants to appeal, they must file a notice of appeal within 21 days. A fee is payable by the landlord although this could be waived in cases of financial hardship.
If a landlord wants to appeal against a decision in the small claims track, they should consult a solicitor or an experienced adviser for example, at a Citizens Advice Bureau.

Enforcement of court orders

As the defendant, if a landlord loses the case and they do not pay, the claimant will have to go back to the same court to apply for an order to get the money. This is called enforcing the judgment.

As the claimant, the landlord will have to pay a fee to start enforcement proceedings.

If landlords need a judgement to be enforced they should consider consulting an expereienced legal professional for advice.

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