Landlord Advice Companies in Litigation – Help or Hindrance?

January 30, 2020

For individual landlords unfamiliar with the courts, recovering possession from tenants must often seem like a daunting proposition. It is therefore unsurprising that many such landlords turn to the wide variety of landlord advice companies that advertise support and assistance. These advice companies often offer different ‘packages’, ranging from simply drafting letters before action to pursuing possession orders right through to judgment.

In a recent unreported case decided at a first hearing, as many such possession cases are, I was reminded that great care should be taken by those approaching these companies, as few are regulated by the SRA.

To re-state the applicable law, only authorised persons are permitted to carry out reserved legal activities, and under section 18 of the Act, an “authorised person” is one regulated or licensed by an approved body.

Section 12(1)(b) of the Legal Services Act 2007 states that ‘the conduct of litigation’ is a reserved legal activity. Paragraph 4(1) in Schedule 2 to the Legal Services Act 2007 defines “conduct of litigation” as ‘(a) the issuing of proceedings before any court in England and Wales, (b) the commencement, prosecution and defence of such proceedings, and (c) the performance of any ancillary functions in relation to such proceedings’.

The case of Kassam v Gill [2019] P.N.L.R. 3 was a judgment on appeal in the County Court at Birmingham in which the issues to be determined included whether the landlord advice company’s actions in filling in a Claim Form amounted to “the conduct of litigation” and whether if so the possession proceedings should be struck out as an abuse of process. HHJ Worster, in deciding the case, held that

  • A third party assisting a Claimant can, depending on the circumstances, amount to the performance of any ancillary functions or indeed otherwise the conduct of litigation (see paragraphs 46 and 48 of the judgment); and

 

  • Where the third party is a company charging a fee for its services, it is more likely that a Court will find that the third party has crossed the line into conducting litigation (see paragraph 48 of the judgment);

HHJ Worster concluded that the provisions of the Legal Services Act 2007 had been breached in that case, but that this did not impact the validity of the claimant’s claim for possession and that striking out the case for abuse of process would, in the circumstances, not be just and proportionate. The latter will be of some relief to the innocent landlord, although the decision to strike out is always a matter of discretion for the court and the words of the recently-retired President of the Supreme Court, Lady Hale, at paragraph [104] of her judgment in Lewisham LBC v Malcolm [2008] UKHL 43 must be borne in mind: “the court cannot be expected to give legal effect to an unlawful act.”

In my own case, in which I appeared for the tenant, the claimant landlord admitted that the landlord advice company (an unregulated and unlicensed body) had filled in the Claim Form, although the landlord had signed it, and the company had also filled in on the Claim Form its own email address and telephone number, with an individualised reference number.

The Judge found in the tenant’s favour that this assistance amounted to the conduct of litigation, that therefore the landlord advice company had broken the law, and that even though the claimant landlord was innocent it would not be just to give possession against a tenant in such circumstances. Amending the Claim Form would also not magically rectify the fact that the claim had been effectively issued by – and the litigation (there being other issues in the case) was likely to be conducted by – an unregulated body.

The Judge’s view was that this unlawful conduct was an act which the Court should not give effect to, particularly as the likely reality was that this breach of the law would not be prosecuted given the very low stakes involved – meaning that the claim being struck out on the basis that there was unlawful conduct of litigation was the best way to send a message from the Courts that the performance of reserved legal activities by unregulated bodies would not be condoned.

The Judge also considered the relatively low and fixed costs of possession claims at that stage of proceedings, and found it proportionate to the end being achieved that the claim be struck out as an abuse of process – the claimant landlord would be required to re-issue and pay a further issue fee, and potentially pay a solicitor to fill out the Claim Form, but such costs were relatively minor.

Landlords, and indeed those representing tenants, should therefore be aware that it is remarkably easy for unregulated commercial entities to cross a line into conducting litigation when assisting landlords with possession litigation, and that doing so leaves claims potentially vulnerable to strike-out applications. Justice and proportionality, although helpful at appeal level, at a first hearing are far less likely to assist the landlord and far more likely to favour the tenant. The best course for landlords unsurprisingly remains seeking advice and assistance from their local solicitors’ firms, rather than relying on generalist landlord advisers.

Callum McLean

Callum regularly appears in County Court housing lists for landlords and tenants across Sussex and the South of England.

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Employment, Family, Property and Planning, Will Disputes