Resolution of dilapidations disputes in court of law stressful and expensive

16 January 2019
  • Dilapidations photo Cooke & Arkwright
  • Dilapidations photo Cooke & Arkwright
  • Dilapidations photo Cooke & Arkwright
  • Dilapidations photo Cooke & Arkwright
  • Dilapidations photo Cooke & Arkwright

Share this

When all else fails, the final place to resolve a dilapidations matter is in a court of law. This process however can be very expensive, stressful and disproportionate to the amount of monies in dispute. The process is likely to become drawn out and we are all aware of the phrase ‘the only real winners are the lawyers’.

Before heading to court there are a number of initial phases of the dispute which should be entered into:

  • At the end of the tenancy, if the tenant has not complied with their lease covenants in respect of repairs, decorations and reinstatement, the landlord will commission a schedule of dilapidations. This will identify the alleged disrepair, recommendations for repairs and the surveyor’s estimates of the costs involved, together with professional fees
  • The tenant, usually via a surveyor, will seek to reduce the extent and cost of the works
  • The two surveyors will try and reach an agreement to settle the claim to the satisfaction of both parties.

The extent and cost of the claim will depend on a number of factors, particularly the landlord’s intentions for the property after the termination of the lease. It is, however, in the interest of both parties to try and resolve the dispute quickly; long-winded disputes racking up professional fees are rarely satisfactory, whoever wins.

Smaller claims are usually settled by surveyors working under the ‘Dilapidations Protocol’. This is a procedure by which surveyors are required to communicate with each other in an open and transparent manner to try and resolve matters without the need for legal interventions. The old days of trying to gain advantage over the other party by withholding or inflating a claim are gone.

The protocol also requires the surveyors to explore and use alternative dispute resolution (ADR) before heading to the courts. ADR is a much quicker and less expensive method of resolving disputes. A professional with expert knowledge of dilapidations is appointed to make judgement on the dispute. They will have more detailed understanding than a judge and so will be able to settle the resolution in a much shorter time. The disputing parties are able to set the agenda and timetable for the process and therefore provide the expert with the required information in a timely fashion. Both parties agree to be bound by the outcome, therefore removing the need for further legal proceedings.

Despite this, some disputes are of such a magnitude that they will still head towards the court. In these cases, the judge will want to see that some form of ADR has been entered into prior to embarking on this consequential course of action.

Cooke & Arkwright have been providing rating valuation advice to The Welsh Rugby Union Limited (“WRU”) and Millennium Stadium plc for many years. They were recently successful in achieving substantial reductions in the assessments of the Millennium Stadium, covering both the 2005 and 2010 rating list. These negotiated reductions yielded savings of c.£3.5m which, crucially, allows the WRU to re-invest in rugby throughout Wales. They advise the WRU across the group portfolio including the National Centre of Excellence in the Vale of Glamorgan. The valuation issues across the WRU portfolio are complex requiring a high level of understanding of the funding and finances of professional sport in Wales. Cooke & Arkwright’s experience and understanding of these issues and application to the rating valuation have yielded these substantial negotiated reductions. The WRU and the Millennium Stadium entrust our work to organisations with the required levels in experience and expertise in dealing with these complex issues. I am glad to say we have this expertise in Wales. I would have no hesitation in recommending ratepayers making use of this Welsh based expertise.

Steve Phillips, Group Finance Director, Welsh Rugby Union Group