£1,000 Housing Disrepair Settlement Does Not Automatically Mean Small Claims Costs: Smith v Wigan Borough Council

A familiar argument in Housing Disrepair costs disputes runs like this: the claim settled at £1,000, so the claimant’s costs should be restricted to Small Claims Track levels. Smith v Wigan Borough Council [2026] EWHC 660 (SCCO) is a direct answer to it. Costs Judge Nagalingam held that the settlement sum is one measure of value but is not determinative, and that on the facts this claim would not have been allocated to the Small Claims Track at all.

For claimant firms the point is commercially significant. A large proportion of Housing Disrepair claims settle pre-issue for modest damages figures, often because the tenant wants the repairs done and the landlord negotiates hard on the money. If a £1,000 compromise automatically dictated Small Claims Track costs, a great deal of properly incurred pre-action work would be reduced to almost nothing.

Quick answer

No — a Housing Disrepair claim settling pre-issue for £1,000 plus repairs does not automatically restrict recoverable costs to Small Claims Track levels.

Under CPR 46.13(3), where a claim concludes without allocation, the court may restrict costs to those that would have been allowed on the track to which the claim would have been allocated. That is a discretion, not a formula. In Smith the court treated the settlement sum as relevant but not definitive, and looked instead at the whole picture: the Claimant’s contemporaneous valuation, the length of the disrepair, the tenant’s vulnerability, and the Defendant’s own conduct in negotiation.

What happened in Smith v Wigan Borough Council?

The Claimant, Gillian Smith, was an elderly and vulnerable tenant of Wigan Borough Council. She brought a Housing Disrepair claim against the Council as her landlord in respect of disrepair at her home, together with damages. The matter was dealt with in pre-action correspondence under the Pre-Action Protocol for Housing Disrepair Cases and settled before proceedings were issued.

The Defendant made three Part 36 offers during that correspondence. The final offer, dated 30 January 2025, provided for the specified repairs to be completed within 56 days and for payment of £1,000 in damages, together with the Claimant’s reasonable legal costs, to be assessed if not agreed. The Claimant accepted on 4 February 2025, following a call which confirmed that costs were to be paid on the standard basis.

The costs then went to provisional assessment. The Defendant argued that because damages had settled at £1,000, CPR 46.13 should be applied to restrict the Claimant’s costs to Small Claims Track levels. That argument failed on provisional assessment, and the Defendant requested an oral review. It failed again.

The chronology in short

The legal framework: CPR 46.13(3)

The starting point is CPR 46.13(3). Where the court is assessing costs on the standard basis in a claim which concluded without being allocated to a track, it may restrict those costs to the costs that would have been allowed on the track to which the claim would have been allocated if allocation had taken place.

Three features of the rule did the work in this case.

1. The rule is discretionary

The rule says the court may restrict costs. It does not say it must. That alone defeats any suggestion that a settlement below a threshold produces an automatic consequence. The judge treated CPR 46.13 as a provision specifically constructed to invite retrospective consideration of the position, not as a mechanical trigger.

2. The question is hypothetical and retrospective

The court is not asking what the case settled for. It is asking a different question:

Had proceedings been issued and the claim allocated, which track would it have been allocated to?

That requires the court to look back at the claim as it stood at the relevant time — what would have been pleaded, on what material, and with what supporting evidence — rather than reading the answer off the compromise figure.

3. The rule does not mention the settlement sum at all

This was one of the more useful observations in the judgment. CPR 46.13 makes no reference to the settlement sum, and it is not framed in terms requiring that the settlement sum alone be taken into account. Had the rule-makers intended the settlement figure to be the definitive measure, they could have said so. The judge declined to give the settlement sum the elevated status the Defendant contended for.

The Small Claims threshold in Housing Disrepair claims: CPR 26.9

Under CPR 26.9(1)(b), a tenant’s claim against a landlord for repairs or other work to residential premises normally falls within the Small Claims Track only where:

• the estimated cost of the repairs or other work is not more than £1,000; and
• the financial value of any other claim for damages is not more than £1,000.

Both limbs must be satisfied. Paying parties frequently cite the threshold as though it resolves the question by itself. It does not. The real issue is what the claim would properly have been pleaded at, not what it eventually compromised for — and the repairs limb has to be addressed as well as the damages limb.

Why the Claimant succeeded

1. There was a contemporaneous damages calculation

This was the decisive evidential feature. During the life of the claim the Claimant had calculated damages on rent diminution principles across the disrepair period and arrived at a figure above the £1,000 threshold. Having valued the claim at £1,304.96, she had proposed a negotiating range in the region of £1,100 to £1,200, with an argued uplift reflecting her vulnerability.

The court described that material as compelling contemporaneous evidence. Critically, it was uncontradicted: the Defendant produced no valuation evidence of its own.

The lesson for claimant firms is blunt. A file which shows only the final compromise figure gives the court nothing to work with. A file which shows a reasoned valuation, arrived at before settlement and put to the other side, gives the court exactly what CPR 46.13 asks for.

2. A long disrepair period and a vulnerable tenant

The court considered the wider circumstances rather than the final figure in isolation. The disrepair ran for approximately 69 weeks and affected an elderly and vulnerable tenant. In Housing Disrepair, duration, severity, the rooms affected and the impact on the individual occupier all bear on what the claim was genuinely worth — and therefore on where it would have been allocated.

3. The Defendant’s own conduct undermined its argument

The Defendant had made three Part 36 offers, each referring to the Claimant’s reasonable legal costs being assessed if not agreed. Part 36 does not apply to claims proceeding in the Small Claims Track: CPR 27.2(1)(g). The court considered that a defendant deploying Part 36 machinery, alongside standard basis costs wording, might reasonably be taken to have acknowledged the likelihood of Fast Track allocation.

A paying party cannot comfortably negotiate on Fast Track terms and then argue Small Claims Track costs once the bill arrives.

4. The evidential burden sat with the paying party

The Defendant advanced the restriction, so it needed cogent material to support the hypothetical allocation it was contending for. It pointed at the settlement figure. That was not enough. On the evidence the judge was satisfied that, had proceedings been commenced, the damages claim would reasonably have been pleaded at more than £1,000, and concluded that on the facts and circumstances as at the date of acceptance the claim would not have been allocated to the Small Claims Track.

The provisional assessment therefore stood, and the Defendant was ordered to pay the costs of the assessment and of the oral review it had requested.

The policy point: settling just under the threshold

There is a wider theme in the judgment worth keeping in mind when arguing these disputes. If a settlement figure at or just below a threshold automatically dictated the costs track, it would create an obvious incentive to negotiate to just under the line in order to secure a costs advantage. That would discourage sensible compromise, damage trust between parties who settle regularly with one another, and work against the overriding objective rather than with it.

That reasoning is useful in Replies, because it reframes the argument. The paying party is not simply applying a rule; it is asking the court to reward a negotiating tactic.

What Smith v Wigan does not decide

It is as important not to overstate the case as it is to use it.

• It does not mean every pre-issue Housing Disrepair settlement at £1,000 or below escapes a CPR 46.13 restriction.
• It does not abolish or dilute CPR 46.13; the discretion remains available.
• It does not make the settlement sum irrelevant — it remains one measure of value.
• It does not guarantee standard basis recovery in every low-value disrepair settlement.
• It is a first instance decision of the Senior Courts Costs Office, persuasive rather than binding.

What it does establish is that the exercise is discretionary, holistic and fact-sensitive, and that the compromise figure does not answer it on its own. For claimant firms that is a materially better position than a rigid settlement-sum approach — provided the file supports it.

Practical implications for claimant Housing Disrepair solicitors

1. Do not concede on the settlement figure alone

Where a claim settles for £1,000 plus repairs, do not accept that the bill must fall to Small Claims Track levels. Review the valuation history, the disrepair period and the offer correspondence before conceding anything. This is one of the more common Points of Dispute arguments in Housing Disrepair costs, and it is frequently overstated.

2. Value the claim properly, in writing, before you settle

If the claim is genuinely worth more than £1,000 in damages, say so during the life of the claim and show the working. Useful material includes rent diminution calculations, the duration of the disrepair, the rooms affected, the severity of the conditions, vulnerability evidence, loss of amenity analysis and any expert or medical context. A valuation created after the paying party raises CPR 46.13 carries far less weight than one created at the time.

3. Evidence the repairs limb as well as the damages limb

Allocation in tenant repair claims turns on the estimated cost of the works as well as the damages. Surveyor reports, schedules of works, disclosure, inspection evidence and repair cost material all matter. A claim with £1,000 damages and £4,000 of works is not a small claim, and the file should be able to prove it.

4. Preserve the offers chronology in full

Keep the Letter of Claim, every offer and counter-offer, all Part 36 offers, the acceptance correspondence, and any attendance note recording what was agreed about the basis of costs. In Smith, a call confirming standard basis costs formed part of the picture.

5. Watch the paying party’s wording

References to “reasonable legal costs”, to costs being “assessed if not agreed”, and the use of formal Part 36 offers are all inconsistent with a Small Claims Track case. Where a defendant has abandoned earlier express Small Claims Track wording, that shift is worth recording.

6. Build the argument before the bill is challenged

The receiving party is in a far stronger position where the file already contains the valuation reasoning, the disrepair chronology, vulnerability evidence and clean offer wording. Do not start assembling that case when Replies are being drafted.

What this means for costs drafting

Smith is a presentation case as much as a legal one. The Claimant won because the file contained a reasoned, contemporaneous valuation and a clean offers chronology, and because that material was put in front of the court properly.

When responding to a CPR 46.13 argument, the bill, supporting papers and Replies should draw together:

• the chronology of notice, inspection and disrepair;
• the repairs element and its estimated cost;
• the claimant’s contemporaneous valuation and the basis for it;
• vulnerability and impact evidence;
• the full chronology of offers, including any Part 36 offers;
• the paying party’s own language about the basis of costs;
• and a clear explanation of why the claim would have been pleaded above the threshold.

Serving a bill and hoping the point goes away is not a strategy. The same discipline that keeps a bill safe from technical challenges to its validity applies here: the argument has to be visible on the papers. Where the underlying claim settled pre-issue and only costs remain in dispute, the route to assessment is usually CPR 46.14 costs-only proceedings under Part 8, and the valuation material should be ready before those proceedings are issued — not least because the court fee increases from 13 July 2026 have made a failed costs-only application more expensive than it used to be.

How to maximise recovery after Smith v Wigan

• Keep a valuation trail. Do not let the file show only the final compromise figure. Evidence the higher value contended for during negotiations.
• Preserve vulnerability evidence. Age, disability, ill health, respiratory conditions, young children in the property and any enhanced impact should be documented.
• Evidence the repairs element. The works threshold matters as much as the damages threshold, and is more often overlooked.
• Keep the offers clean. Retain offers, acceptances and settlement wording in full, including the costs wording.
• Be alert to Part 36. If the paying party used Part 36, the significance of that under CPR 27.2(1)(g) should not be overlooked at the costs stage.
• Get the rates right. Standard basis recovery still has to survive the usual challenges, so the 2026 Guideline Hourly Rates and grade justification need to be addressed in the bill.
• Involve a specialist costs team early. The earlier the file is reviewed, the better the prospects of presenting the case coherently and avoiding unnecessary concessions.

Why this matters for claimant firms in 2026

Many claimant firms are carrying large Housing Disrepair caseloads with repeated modest settlement figures, and paying parties have become adept at converting those compromises into a costs argument. Smith is a useful authority against that approach, and it sits alongside the wider position that Housing Disrepair claims can still attract standard basis costs in 2026. It is also worth reading with the costs consequences of a breached Housing Disrepair settlement in mind, since the same files often generate both arguments.

The decision does not make low-value files automatically profitable. It does mean that a well-evidenced file cannot be reduced to Small Claims Track costs simply because the damages compromised at a round number.

How DMD Costs can help

DMD Costs works with claimant solicitor firms on Housing Disrepair costs from bill preparation through to settlement. We assist with:

• Bills of Costs and Precedent S electronic bills;
• Points of Dispute and Replies;
• CPR 46.14 costs-only proceedings under Part 8;
• standard basis recovery arguments;
• CPR 46.13 track-restriction disputes;
• proportionality, hourly rate and surveyor fee challenges;
• detailed assessment preparation;
• and negotiation through to settlement.

If you are facing an argument that a low-value Housing Disrepair settlement must attract Small Claims Track costs only, send us the file — the settlement and offer correspondence, the valuation material, the surveyor evidence and the costs order. We will review the position and set out the strongest available recovery case.

Key takeaway

The shortest summary of Smith v Wigan Borough Council is this: a £1,000 Housing Disrepair settlement is not the same thing as a £1,000 Housing Disrepair claim.

The settlement sum is one measure of value. What the claim would have been pleaded at, on the evidence available at the time, is another — and under CPR 46.13 it is the one that decides the track. Keep the valuation trail, and that distinction can be worth the whole bill.

Source: Smith v Wigan Borough Council [2026] EWHC 660 (SCCO), Costs Judge Nagalingam, decision on oral review, March 2026. See also CPR 46.13 (costs following allocation, re-allocation and non-allocation), CPR 26.9 (scope of the Small Claims Track) and CPR 27.2(1)(g) (Part 36 does not apply to small claims).