Birmingham City Council v Lee [2008] EWCA Civ 891: Pre-Allocation Costs in Housing Disrepair

A tenant complains about disrepair. Solicitors become involved and follow the Housing Conditions Protocol. The landlord then carries out the repairs. By the time proceedings are allocated, the repair claim has disappeared and only a relatively modest damages claim remains.

The Defendant says:

The case is now a small claim, so the claimant cannot recover ordinary legal costs.

That is the problem at the centre of Birmingham City Council v Lee [2008] EWCA Civ 891. And almost eighteen years later, it remains highly relevant.

The Court of Appeal recognised the obvious difficulty with allowing the eventual track position to wipe out reasonable costs incurred while the claimant was pursuing a materially different case. The important principle was that a tenant who properly follows the Housing Disrepair Protocol should not lose the ability to recover reasonable costs simply because the Protocol succeeds in getting the repairs carried out before allocation.

That principle has recently been considered again. In Court v Beyond Housing Ltd, a County Court appeal judgment handed down on 12 February 2026, HHJ Robinson BEM held that although the specific CPR provisions relied upon in Birmingham had changed, the underlying principle had not.

For claimant Housing Disrepair firms, that makes Birmingham v Lee far more than an old citation. It remains a practical costs issue.

The short answer

Where:

• the claimant had a genuine Housing Disrepair claim;
• outstanding repairs formed part of that claim;
• the claim at that stage was capable of attracting the costs consequences of the fast track;
• the claimant properly pursued the matter through the Protocol;
• and the landlord then completed the repairs before allocation,

the subsequent disappearance of the repair claim did not necessarily mean the claimant lost the reasonable costs incurred in achieving that result.

In Birmingham itself, the Court of Appeal ordered that, if the claimant ultimately succeeded, she would have her costs on the fast-track basis up to the date the repairs were completed.

But that does not mean every Housing Disrepair claimant automatically gets fast-track costs until the repair date. The actual claim, liability, value, Protocol compliance and procedural history all matter.

And even where the Birmingham principle applies, recoverability does not mean every cost claimed is reasonable or proportionate. The Court of Appeal expressly said so.

What happened in Birmingham v Lee?

Mrs Lee was a secure tenant of Birmingham City Council. Her solicitors sent a formal Housing Disrepair Protocol Letter of Claim on 16 August 2006. It set out the alleged defects and the history of notice and foreshadowed a damages claim.

The Council inspected quickly and completed the great majority of the repairs within approximately a month. At that point there were no court proceedings.

When proceedings were eventually issued around seven months later, there was no longer any claim requiring the Council to carry out repairs. The proceedings were therefore concerned with damages.

That created the costs problem.

At the earlier stage, while repairs remained outstanding, the claimant’s case potentially fell outside the small claims regime. By the time the court came to allocate the proceedings, the repairs had already been completed and the remaining damages claim fell within the small claims track under the rules then in force.

The question for the Court of Appeal was essentially this: should the landlord completing the works during the Protocol process deprive the claimant of costs which were reasonably incurred in getting those repairs carried out?

Why the Protocol was so important

The Court of Appeal’s reasoning cannot properly be understood without the Protocol. The tenant could not simply ignore the pre-action process and immediately issue proceedings merely to preserve a more favourable costs position.

The Protocol was intended to:

• encourage early notification;
• give the landlord an opportunity to investigate;
• encourage repairs;
• avoid unnecessary litigation; and
• keep the costs of resolving the dispute down.

Those remain express aims of the current Pre-Action Protocol for Housing Conditions Claims (England), which also still contains an unusually direct costs provision. Paragraph 11 states that where the tenant’s claim is settled without litigation on terms which justify bringing it, the landlord will pay the tenant’s reasonable costs.

That is important context. The claimant should not be put in the position where following the Protocol successfully destroys the costs recovery which would have existed had proceedings simply been issued earlier. We deal with paragraph 11 in its own right in pre-action costs in housing disrepair.

The Court of Appeal’s central concern

If no protection existed for the costs incurred before the repairs were completed, the Protocol itself could operate to the claimant’s disadvantage. The landlord could carry out the works after receiving the Protocol claim, removing the specific-performance element, and the remaining litigation could then fall within the small claims track.

The Court described the need to prevent the Protocol from becoming a means of preventing recovery of costs reasonably incurred in achieving the repairs. Its central proposition was straightforward:

If a tenant has a justified claim and following the Protocol gets the necessary work done, reasonable costs of achieving that result should not simply disappear because the repair claim has succeeded before allocation.

What order did the Court make?

The Court of Appeal did not simply leave the issue open for the trial judge. It considered that uncertainty could itself encourage unnecessary litigation over costs.

Instead it made an order preserving the relevant costs position up to the completion of the repairs. The claimant was to have her costs in the cause on the fast-track basis up to 26 September 2006, the date the work was completed. If she ultimately succeeded, those costs would be available. If she failed on liability, she would recover nothing. Costs after that date remained governed by the later small claims position.

That distinction is critical. Birmingham was not giving the claimant a guaranteed costs cheque merely because solicitors had become involved. The entitlement remained tied to the claimant succeeding.

Why Birmingham v Lee still matters in 2026

This needs careful treatment, because the CPR has changed considerably since 2008. The Court of Appeal’s order referred to CPR 44.9(2) as it then stood. That provision no longer exists. A later provision at CPR 46.13(2) was itself subsequently omitted from the rules.

So it would be wrong to copy the 2008 judgment and tell practitioners simply to make an application under the same rule number today.

But two sub-rules of CPR 46.13 do survive, and both matter here.

That is precisely why Court v Beyond Housing Ltd is so useful: it addresses these changes directly rather than leaving practitioners to guess.

Court v Beyond Housing Ltd: Birmingham revisited in 2026

The facts brought the Birmingham problem back into focus. The claimant sought both:

• damages; and
• specific performance requiring remedial works.

The repairs were subsequently completed. By the time of allocation, the parties agreed that the remaining case should proceed on the small claims track. The claimant nevertheless sought an order preserving costs incurred before the repairs were completed on the fast-track basis.

The District Judge refused, holding that once allocated to the small claims track the case had always been a small claim. The claimant appealed.

HHJ Robinson BEM allowed the appeal. The identified error was that characterisation — treating the claim as having always been a small claim, rather than applying the structured approach CPR 26.9 requires and giving effect to binding authority. The order was varied to provide that, pursuant to CPR 44.2(1), the claimant shall have her costs in the case on the fast track for costs incurred prior to completion of repairs.

CPR 44.2(1) is the court’s general costs discretion. That is the modern route, and it is not the rule number the 2008 order used.

The rules changed. The principle did not.

For practitioners the point cuts both ways.

Do not treat Birmingham as obsolete merely because the particular CPR number quoted in the 2008 order has been repealed. But equally, do not cite the repealed provision as though it remains the current procedural route. The modern analysis rests on the current CPR and the court’s costs discretion.

The current Housing Disrepair small claims rule

Under CPR 26.9(1)(b), the small claims track is the normal track for a claim by a tenant of residential premises against a landlord where the tenant seeks an order requiring the landlord to carry out repairs or other work, the cost of those works is estimated at not more than £1,000, and the value of any other claim for damages is not more than £1,000.

That matters because Housing Disrepair does not simply follow the ordinary £10,000 small claims limit in CPR 26.9(4) when outstanding repairs are being sought. Where the claimant seeks an order requiring repairs and either figure exceeds its £1,000 threshold, the small claims track is not the normal track under 26.9(1)(b). The court must still consider the broader allocation factors, but those thresholds remain highly important.

Why the date the repairs were completed matters

Birmingham is fundamentally about a claim which changes during its life.

That change can alter the track analysis and therefore the costs consequences, so the exact completion date may become extremely important. The file should establish what works were outstanding, when they were requested, what the expert identified, what the landlord agreed to do, when each material repair was completed, and whether any works remained outstanding.

This is not merely factual background. It defines the period for which the Birmingham costs protection is sought.

Do not wait until detailed assessment

This is one of the strongest practical lessons from Court v Beyond. The judge observed that it would have been preferable for the appellant to have raised the issue as an alternative position, in the event the claim were allocated to the small claims track, in the allocation questionnaire — giving the court proper notice.

The claimant succeeded on appeal, but the appeal itself might have been avoided. The practical rule is short: raise Birmingham before allocation. Do not assume the Costs Judge can repair the position later.

What to put before the allocation hearing

A practical section does not need to be long. It should make the issue obvious:

• whether repairs remain outstanding and, if completed, the completion date;
• whether the Housing Conditions Protocol was complied with;
• a short chronology of the relevant pre- and post-issue steps; and
• whether, if the claim is allocated to the small claims track, the claimant seeks a direction preserving the earlier costs position, and whether the Defendant agrees.

Adapt the wording to the case. The point is that the issue should not arrive as a surprise.

Birmingham is not a route to manufacture fast-track costs

A claimant cannot artificially inflate the repair value, the damages, the relief sought or the apparent complexity simply to create a costs entitlement. Court v Beyond expressly recognised the danger of inflated valuations and the potentially serious consequences of advancing them.

The argument works where the case genuinely had the relevant character at the relevant time. It is not a device for converting a small claim into a costs-bearing case retrospectively.

The claim must actually justify the costs position

Birmingham is sometimes reduced to “repairs were over £1,000, therefore fast-track costs”. That is too simplistic. Relevant questions include:

• Was there genuinely actionable disrepair?
• Had the landlord been given notice, and had reasonable time to repair expired?
• Were proceedings or the Protocol claim justified?
• Were repairs genuinely outstanding, and what was the reasonable value of the works?
• What damages were properly in issue, and was the relief sought genuine?
• Was the Protocol followed, and did the claimant ultimately succeed?

Birmingham protects justified costs. It does not eliminate the ordinary scrutiny of the claim.

What about a claim that settles before proceedings?

This is a related but distinct issue. Birmingham involved proceedings and an eventual allocation question. Where a claim settles pre-issue there has been no allocation, so the starting points are paragraph 11 of the Protocol, the terms on which the matter settles, and whether the claim justified being brought.

Where a later dispute arises about which track the claim would have occupied, that is the territory of CPR 46.13(3) — the surviving hypothetical-allocation provision. Do not treat Birmingham as though it answers every pre-issue costs dispute by itself. The mechanics of recovering where nothing was issued are a separate question from this one, and turn on paragraph 11 rather than on allocation.

Birmingham and Smith v Wigan

Smith v Wigan Borough Council concerned a different procedural question: the retrospective assessment of the track where a claim settled pre-issue. Its modern point is that the settlement figure is not necessarily definitive of the track to which the claim would have been allocated.

That complements Birmingham.

• Birmingham says do not ignore the earlier character of the claim merely because repairs were later completed.
• Smith says do not treat the eventual settlement figure as though it reconstructs the entire case.

Different stages, similar warning: look at the actual claim and the actual circumstances, not simply the figure that happened to remain at the end.

Birmingham does not mean all pre-repair costs are recoverable

This is probably the most important qualification. The Court of Appeal expressly separated entitlement to recover costs from the amount properly recoverable, saying it had not been dealing with quantum and warning that the costs still required careful scrutiny.

Proportionality still applies. Fast-track treatment did not mean disproportionate costs should simply be allowed.

Technical property work needs scrutiny. The Court warned against assuming that work such as preparing a schedule of disrepair was reasonably performed by a solicitor if it could have been carried out more economically by someone in the building or surveying field — an observation that remains directly relevant to surveyor fees, technical schedules, solicitor and expert allocation, and duplication.

Birmingham does not protect excessive hourly rates, duplicated work, unnecessary counsel, excessive correspondence, poor delegation, unreasonable expert fees or disproportionate time. It preserves the costs issue. It does not decide every item in the Bill.

Housing disrepair sits outside the mainstream FRC regime

There is another reason this matters commercially. CPR 45.1(4) provides that Sections VI and VII of Part 45 do not apply to a claim or counterclaim which relates, in whole or in part, to a residential property or dwelling and which includes a claim for possession, disrepair or unlawful eviction, save where it arises from a boundary dispute.

So a reference in Birmingham or Court v Beyond to costs “on the fast-track basis” should not be translated into the ordinary modern FRC tables that apply to most other fast-track claims. That makes the distinction between small claims costs and preserved costs on the fast-track basis commercially significant. We deal with the wider question in whether HDR claims are still standard basis.

Three worked examples

Repairs completed before allocation

Proceedings are issued seeking £2,500 damages and an order requiring works estimated at £3,000. Before allocation the landlord completes the repairs, leaving damages only, and the court allocates to the small claims track.

The analysis should not begin and end with “it is now a small claim”. Consider whether the repair relief was genuine when proceedings were issued, whether the claim was then outside the normal small claims scope, whether the Protocol was followed, whether the repairs were completed as a consequence of the claim, and whether a direction should preserve the pre-completion position — raised at allocation, not months later.

Repairs were always worth under £1,000

The claimant seeks £700 damages and repairs reasonably valued at £500. The fact repairs remain outstanding does not by itself take the claim outside the special provision: CPR 26.9(1)(b) expressly provides for small claims treatment where both figures remain within their £1,000 limits. Citing Birmingham does not change those figures.

Repairs completed during the Protocol

The landlord completes all repairs after the Letter of Claim and before proceedings. That may be a very good result for the tenant, but the route to costs is not automatically the order made in Birmingham, because there has been no allocation. The starting points are paragraph 11, the settlement terms, whether the claim justified being brought, and CPR 46.13(3) if the track question arises.

The three dates to record

Together those define the character of the claim, the costs chronology, the point at which the position changed, and the period for which a direction may be sought.

What the Bill of Costs should do with a Birmingham direction

If the order preserves costs to a particular date, the Bill should make that boundary easy to understand: the operative order, the date to which the preserved costs apply, the date repairs completed, the subsequent costs regime, and the work falling either side of the line.

Do not make the paying party or the Costs Judge reconstruct the distinction from hundreds of entries. The Bill should reflect the order that actually exists.

Why it matters in costs negotiations

A paying party may make a costs offer based entirely on the eventual damages figure or the final small claims allocation. Where a valid direction preserves an earlier costs period, that approach may substantially understate the receiving party’s entitlement.

The opposite applies too. A direction is not a reason to refuse sensible reductions to individual unreasonable items. Entitlement and quantum remain separate questions.

What Birmingham v Lee does not decide

It should not be stretched beyond its proper role. It does not decide that:

• every Housing Disrepair claim attracts fast-track costs;
• repairs worth more than £1,000 automatically guarantee costs;
• every pre-action cost is reasonable, or every surveyor fee recoverable;
• the eventual damages figure is irrelevant;
• Protocol non-compliance does not matter;
• the repealed CPR 44.9(2) is still the current procedural route;
• or that a claimant can wait until detailed assessment before raising the issue.

Its real proposition is narrower and stronger:

A claimant who properly pursues a justified Housing Disrepair claim should not automatically lose reasonable costs incurred while obtaining repairs merely because the repair element is completed before the later track position is determined.

Five lessons for 2026

• The claim can change character. A case with outstanding repairs is not necessarily the same case, for allocation and costs purposes, once those repairs are done.
• Following the Protocol should not itself destroy costs recovery. That is the heart of Birmingham.
• Raise the costs issue before allocation. Court v Beyond makes this especially important.
• Use the current CPR. The old rule quoted in Birmingham has gone; 46.13(1) survives and CPR 44.2(1) is the modern route.
• Winning the entitlement argument does not win the Bill. The costs still have to be reasonable and proportionate.

That last point is sometimes forgotten. Birmingham preserves the opportunity to recover costs. It does not protect poor costs from assessment.