UK: Dilapidations Claims - A New Regime?

The first thing to bear in mind is that such a claim is likely to end up in the Technology and Construction Court (whether in London or outside in one of the major litigation centres). This usually means a tight timetable being imposed by a Judge who will see the case through from the first Case Management Conference up to (and possibly including) trial.

But before we even get there we should consider what strategies the landlord should adopt where premises are in disrepair.

• In our view, an early decision needs to be made as to whether you want the repairs carried out or a cash settlement. For example it is important to get your strategic thinking right before the lease ends.
• If your objective is to have the work carried out consider the landlord's self-help remedy as a way around the Leasehold Property (Repairs) Act 1938. (This Act of course restricts the ability of the landlord to forfeit on grounds of disrepair during the course of the lease.)
• If the lease includes a "self-help" clause the landlord is entitled to carry out the work and recover the costs (see Jervis v. Harris [1996] 1 EGLR 78) - costs of the repairs is a debt due under the lease; not a claim for damages under the Act. Because the tenant knows that this remedy can be expensive for him, the mere threat is often sufficiently effective. (There is no statutory cap either.)
• Subject to Human Rights Act 1998 objections this will always remain a useful threat where the lease provides. If on the other hand the landlord wants a building not in repair but a financial settlement (because he has other plans for it) then the best thing is to delay serving the dilapidations schedule until the lease has ended. (Once the lease has ended the tenant no longer has the right to do the work.)
• But before you commit your thoughts to paper (or e-mail) you must think carefully about the fact that you may have to give disclosure of all this material in any subsequent litigation. If your real motive is not repair but to maximise the damages claim where you have other plans for your building these internal exchanges before as well as after the lease ends will be disclosable in the eventual proceedings.

This must govern the way in which discussions are conducted internally.

There is a draft dilapidations pre-action protocol presently being considered by the Lord Chancellor's Department and some basic rules are emerging:

1. You will need a fully costed schedule of dilapidations. This should have the following columns:
   Item No Location Lease Covenant Breach Remedy Cost
2. You (or your solicitors) will need to prepare a fully detailed letter of claim: with which should be included disclosure of all relevant documents and any evidence available to support your disrepair and diminution in value claim.
3. You should insist on a response giving at least 2 months for the other side to deal with the claim and offering to assist with any queries they may have and to make available the property for inspection (if this is appropriate). The Court will expect you as a surveyor (or valuer) to narrow issues before proceedings are issued.
4. As a building surveyor you will need to satisfy the Court not simply that you have identified defects, but, that the defects are within the lease covenants and why they are within the lease covenants.
5. Consider, as the Claimant, a very early Part 36 offer to settle: this could put you in the driving seat, costs wise.
6. Any relevant negotiations regarding settlement should be followed by a written summary to your opposite number.
7. If the lawyers want to use a single joint expert be prepared to give suggestions as to whom to use and possible objections to others.
8. Think critically about the key Section 18 issues before your decisions are made even on the building surveying aspects - but be careful as to what you actually record in writing.
9. Remember that the tenant will be trying to coax evidence from you as to your intentions regarding the building.
10. Be aware of "survival" arguments where partial refurbishment (as opposed to reconstruction) of the building is proposed.

Remember that legal advisers need your help to narrow issues. In particular constructive assistance as to how the dilapidations issue impacts on valuation (which is always the key question).

Secondly, meetings or discussions of experts. These are specifically used to narrow issues. In contrast to what the position was before the Woolf reforms you can no longer (if it was ever permissible) be in "control" as to what you say, or don't say, concede or don't concede at such meetings. If you are acting as an independent or employed expert you need to bear this duty in mind.

These meetings are expressly "without prejudice" - your employer/client is not bound by any agreements you reach and the contents of discussions (as opposed to agreements) cannot be referred to unless the parties agree.

What can be referred to is any joint statement of experts - which is why they need to be carefully drafted as statements. Note also they are not privileged. So, if the client wishes not to endorse what you have agreed they can refuse to do so, but the agreement can still be referred to openly by the other side in court (see Robin Ellis v Malwright (1999) 1BLR 81).

Careful liaison with lawyers before joint experts meetings are vital. You need to discuss what the issues are that remain within your field of expertise and any open or without prejudice concessions that have been made by the other side's expert or more importantly by your own lawyers. It is your job to define the issues as you see them.

When drafting or agreeing a joint statement, careful consultation with your lawyers on the form of the draft should be possible; but caution needs to be exercised to avoid a lawyer-driven statement.

Meetings are encouraged at the trial- particularly in the Technology & Construction Court and Chancery Division (where most property disputes end up). These can have a critical impact on the way the Court perceives a particular case.

You will be ordered by the Judge to meet with your opposite number before the trial starts. The Judge gets an idea as to which side is being the most reasonable and can track the various differences between the parties. This is where pressure is most likely to come from clients, who maybe concerned that your concessions might have a direct financial impact on the case. Apart from the cross-examination it is the most difficult stage for the experts.

• Be prepared to make reasonable concessions.
• Beware of trick questions: "Who are you here to help?" Or, its more sophisticated form: "You are here, are you not, to put your client's case as fairly and clearly as possible?"
• Do not try to second guess the Judge or your cross-examiner.
• Ignore the textbooks that tell you to be confident and firm - diffidence often pays off.

Be aware that your role will not cease until the case ends, and you may have useful input to make particularly in assisting lawyers with cross-examination - which is perfectly permissible.