Most dilapidations disputes are settled privately between the parties, with the assistance of their surveyors. However, any dilapidations dispute has the potential for determination by the courts, therefore, the surveyors should be mindful of possible future litigation throughout their involvement. Surveyors are engaged by their respective clients to engage in negotiations with the other party, or their surveyor, to resolve the differences, find common ground or decide a settlement figure acceptable to both parties. It is normal for negotiations to be held on a ‘without prejudice’ basis so that the parties can explore possible settlement options without prejudicing their position on disputed issues at any future tribunal.
It is the surveyor’s job to commence negotiations in an objective, honest, polite, constructive, and professional manner, acknowledging that others may hold valid opinions that differ from their own. Surveyors should ensure they are able to justify their opinions. The courts encourage parties to consider and engage in Alternative Dispute Resolution (ADR) in advance of litigation. A party who fails properly to consider the option of ADR, or fails to respond to a request to engage in ADR, is likely to be at risk of a punitive costs award by the court. The main types of ADR are:
- independent expert determination
- arbitration and
- early neutral evaluation.
If litigation cannot be avoided, the surveyor may be asked to take on an appointment as an expert witness to report to the court. If the surveyor is engaged in this way, they should expect to be asked to meet the other party’s expert witness to:
- narrow differences
- prepare a joint statement together
- prepare a report for the court
- potentially give evidence to the court in person and
- be cross-examined during the hearing.
Offers to settle can be made at many different stages of a dilapidations dispute (i.e. during discussions, during ADR, before or during litigation). A settlement agreement should be in writing, identifying:
- the parties (i.e. the landlord and the tenant)
- the relevant lease and
- the Schedule of Dilapidations and Quantified Demand to which the settlement applies.
- be open, i.e. not marked ‘without prejudice’
- be stated to be in full and final settlement of the dilapidations claim
- deal with every part of the dilapidations claim, including, where appropriate, any interest and costs
- state the date by which:
- any payment pursuant to the agreement is to be paid and/or
- if appropriate, works are to be conducted, inspected and signed off (including, if appropriate, a procedure for agreement and signing off of any ‘snagging items’).
- be dated and
- be signed by each party, or signed for and on behalf of each party by a duly appointed surveyor, lawyer or agent authorised to bind the party for whom they sign.