Building surveying: dilapidations
14 June 2013
Do you have a dilapidations case that is proving tricky to resolve through negotiation? Vivien King suggests that alternative routes might provide answers
Most dilapidation disputes settle through negotiations. However, some claims will not lie down despite the parties' best endeavours. So rather than allow a dispute to fester or waste time in unfruitful discussions, why not consider alternative dispute resolution (ADR)?
Alternative to what? To court proceedings – the most expensive, time-consuming and frustrating exercise in which one is ever likely to be involved. Service of a schedule of dilapidations within a reasonable time (generally 56 days after termination of the relevant tenancy) is the first step required by the courts' Civil Procedure Rules Pre-Action 'Dilapidations Protocol'. The rest of the Protocol and Rules are closed books to many surveyors because, although it is a claim in law, a dilapidations dispute rarely ends up in court. However, if not settled by negotiations, it is to the courts that the dispute is, ultimately, destined.
There are, however, many stopping places along that route. The courts actively encourage parties to settle their arguments and avoid litigation long before proceedings are commenced. The Dilapidations Protocol states (paragraph 8) that litigation should be a last resort. If one acts prematurely, the courts will consider such action in any award for costs.
If proceedings are commenced, the courts continue to prompt the parties to consider mediation and other forms of dispute resolution. Indeed, they may be required to provide evidence that alternative means of resolving their dispute have been considered (paragraph 8 of the Protocol). RICS also encourages ADR in section 12 of the latest Dilapidations guidance note and on its website the RICS Dispute Resolution Service (DRS) states:
"For many years, the Dispute Resolution Service of the RICS has been able to appoint both arbitrators and experts on dilapidations disputes. We have taken this one step further and we now have a panel of dilapidation specialists who are trained to act as independent experts. These specialists all have many years of practical experience and have amassed a wealth of knowledge in this area."
While these statements are not disputed, the DRS reports that its potential appointees remain sadly underutilised. Why? Building surveyors and valuers use their own profession to settle arguments in other arenas, e.g. party walls and rent review, so what makes the dilapidations arena so different?
The most quoted reason is that the majority of cases settle through negotiation. Others say that a case may not settle because the dispute revolves around a legal issue. But these factors arise in other arenas, too. Could the real reason be that building surveyors in particular do not understand what ADR is and what the potential advantages of its use can be? Or is it felt that because a claim for dilapidations is a multitude of different claims (very often involving hundreds of different items) then the ADR system is not an appropriate forum to resolve disputes?
ADR relates to a range of processes involving the use of a third party aimed at dispute resolution. The third party may be:
- a mediator whose task is to bring together the parties within a structured discussion forum – the mediator facilities negotiation, they do not judge
- a conciliator is similar to a mediator but is enabled to propose a solution
- an arbitrator takes submissions from the parties and finds some middle path between the cases
- an independent expert uses their expertise in resolving a dispute by adopting inquisitorial methods, although they may take the parties’ submissions when making their findings.
There are other methods linked with particular industries, e.g. adjudication is primarily used within the construction industry. And what are the advantages of such processes as opposed to appearing in a courtroom before a judge?
- the third party is usually from the relevant field – a judge may not be
- while one pays the third party and not a judge, ADR is generally less structured and therefore cheaper than the court route
- ADR is private and the findings will not be reported
- it is quicker and much more within the control of the parties with regards to timing, venue, etc
- mediation in particular may find a resolution ‘outside the box’, i.e. a settlement route outside the confines of the dispute.
ADR is worth consideration. Why not try it with those cases that just will not settle?
Vivien King is a Consultant to Malcolm Hollis
Related competencies include: T051