Dilapidations: RICS dispute resolution scheme

Sensible settlements

12 January 2018

Vivien King takes a look at the RICS dilapidations disputes resolution scheme

In 2014, RICS launched a dilapidations scheme specifically designed to allow quick and economic resolution of lease-end dilapidations disputes. It aims to put both parties on an equal footing, to keep costs down and to allow experienced parties to be represented by their usual advisors.

This all sounds great – but the scheme is rarely used. Why is this?

It is not RICS’ first attempt to introduce a dilapidations dispute resolution service. As on the previous occasion, surveyors have been trained and examined with the aim of sitting as independent experts. However, unlike their counterparts in rent review, who resolve most disputes by sitting either as arbitrators or independent experts, dilapidations surveyors have failed to agree on the use or appointment of their peers to resolve disputes.

There could be several reasons for this. Perhaps surveyors practising in the field of dilapidations simply do not know of the scheme, in which case this article might help remedy the situation. Perhaps the right people have not been trained – there are certainly some well-known practitioners who are not on the list, although several others are – but this could be resolved by parties agreeing to make a private appointment, as so frequently happens with rent reviews.

... unlike their counterparts in rent review, who resolve most disputes by sitting either as arbitrators or independent experts, dilapidations surveyors have failed to agree on the use or appointment of their peers to resolve disputes

Or perhaps the scheme is too complicated – certainly a criticism that has been made of it. But this again could be resolved by a private appointment of the independent expert or arbitrator, on less complicated terms agreed by the parties.

Advantages

What are the advantages of using an independent expert or arbitrator with knowledge of dilapidations as a surveyor? First, they have just that – experience in the field in which they are to give their determination or award.

The structure of the courts has recently been changed, with the creation of the Business and Property Court, incorporating specialist courts such as the Commercial Courts, the Technology and Construction Court, in which dilapidation cases have historically been heard, and the courts of the Chancery Division. While this enables judges with particular expertise to be better deployed, the fact still remains that a judge may not be dealing with dilapidation claims on a regular basis.

Costs

Furthermore, there is the question of costs: going to the courts is expensive. While the judge is not paid by the parties and no fee is charged for use of the courtroom, court fees themselves are now high and even with cost budgeting – a procedure whereby the court limits the costs faced by the parties – awards can often rival the claim itself.

The involvement of a third party should still be seriously considered as an alternative to the courts or in those cases where an amicable settlement is proving difficult. Why not try it?

In 2010, the Rt Hon. Lord Justice Jackson expressed concern about the issue, publishing a report that led to substantial changes in the costs of court procedures in England and Wales. He followed this with a supplemental report in July 2017 that recommends a voluntary pilot of a capped-cost regime for cases where claims are up to £250,000, which would introduce “streamlined procedures” and limit cost awards to £80,000.

Nevertheless, this is still a substantial sum. Costs involved in the appointment of an independent expert or arbitrator could be considerably less, particularly if a procedure of written submissions is adopted and – with all due respect to the profession – lawyers are kept out of the procedure.

A fee will be paid by the parties to the arbitrator or independent expert, but if there is no hearing before them, there will be no need to pay for a venue. In fact, if written submissions are adopted, along with counter-submissions if required, the whole procedure can be quick and cheap.

Most cases of dilapidations are sensibly settled between the parties or their appointed surveyors, and it is only the occasional case that ends up in court. The involvement of a third party should still be seriously considered as an alternative to the courts or in those cases where an amicable settlement is proving difficult. Why not try it?

Vivien King is a consultant to Malcolm Hollis

Further information

Download a complete “Dilapidations: RICS dispute resolution scheme” PDF