Comment on The RICS Dilapidations Guidance Note as preciser by Vivien King
We have a copy of Vivien King's comment on The RICS Dilapidations Guidance Note which you can download from here:
It really is excellent and gives a great review of the RICS Dilapidations Guidance Note.
Section 1 is the introduction.
Section 2 Clarifies such issues as the Civil Procedures Rule (the CPR), which came into effect from April 1999, and, as we are all now aware, explains that no longer can 'expert witnesses' simply line up behind their clients. Indeed, it explains how this is actively discouraged and how the CPR wants these disputes to be agreed out of court, and should they get to court, how the judge will not look favourably on any parties that have not followed the CPR.
It also looks at the pre action protocol. The Property Litigation Association's Law Reform Committee have drafted one that has been adopted by the RICS and this explains how it encourages the exchange of information, i.e. electronically, and also set up reasonable time scales (not more than two months seems to be the preferred time scale).
It also looks at the Statements of Truth that the Chartered Surveyors will have to abide by and also identifies that the penalty for signing the declaration, knowing that the facts are untrue, is a fine or imprisonment. The wording, and I quote, is: 'I confirm that insofar as the facts stated in my report are within my own knowledge I have made clear which they are and I believe them to be true, and the opinions I have expressed represent my true and complete professional opinion'.
Interestingly it identifies that costs will not necessarily follow the event and advise that the Court of Appeal's decision in Johnsey Estates 1990 Limited v Secretary of State for the Environment, Transport and Regions 2001, where one party may have won the litigation, however one party has also exaggerated, the court has discretion to award appropriately.
It also has a great quote: 'I can think of no other area of property law where exaggeration and / or understatement have been more used as tactics than relating to dilapidations'.
It also interestingly comments about building surveyors acting for landlords drawing up Schedules of Wants of Repair for the premises with no reference to the lease. Surely this is still not carried out and, equally, the opposite situation where the building surveyor is acting for the tenant and simply denying any disrepair.
Section 3 identifies the different roles of the surveyors involved in a dilapidations case:
1. the expert witness;
2. the expert;
3. the adviser;
4. the negotiator.
Section 4 is about collecting information, which is the lease and other legal documents and it also, interestingly, notes that any photos taken at the time or a schedule of repair, if applicable, and also asks the landlord's client directly what there intentions are in relation to the building.
Section 4 also looks at the lease and touches on the code of practice for commercial leases and just comments that any repair costs included in the service charges should be appropriate to the length of term and the condition and age of the property at the start of the lease.
In summary it says make sure that you are looking at the right part of the property, the repairing covenant, and looks at the word 'keep', a word that we are particularly keen on, due to the implications it has, meaning that you can be immediately required to put the premises in good repair. The case in question is Elite Investments Limited v T I Bainbridge Silencers Limited 1986.
It also goes on to advise that a tenant is not obliged to create something which was not there; although the line between a 'repair' and an 'improvement' can be a thin one. It then says that three tests need to be applied from the McDougall & Anor v Easington District Council:
1. Whether the alterations were needed to the whole or part of the structure.
2. Whether the effect of the works produced a wholly different building to that original demised.
3. The cost and effect of the lifespan of the building.
There is also an interesting bit on 'beyond repair'.
The remainder looks at the words 'keep' and 'yield up'.
Section 5 Is about preparing the schedule and the claim and emphasises that the schedule should be prepared in a format which is easily editable (yes, by both parties) and also advises that the landlord's surveyor should be expected to advise upon the quantum of the claim. In addition to the cost of the works listed in the schedule the surveyor should give thought as to whether or not the claim should also include other elements such as VAT.
Section 6 covers statutory requirements, Law of Property Act 1925, section 146 (often known as a Section 146 Notice). This section identifies the right to re-enter or forfeiture is not enforceable until a Section 146 Notice is served correctly. It also outlines that a Section 146 Notice should:
1. Specify the particular breach complained of.
2. If the breach is capable of remedy, require the lessee to remedy the breach.
3. Require the lessee to make compensation in money for the breach.
It also looks at the Leasehold Property (Repairs) Act 1938, Section 1, which entitles the Lessor to serve a counter notice within 28 days. Also the Landlord and Tenant Act 1927, Section 18 Notice is discussed, which gives rise to a Section 18 valuation; the leading case on this is Crown Estate Commissioners v Town Investments Limited 1992, which placed a ceiling on the amount recoverable as damages, which is known as a diminution in the landlord's reversionary interest due to the breach.
Section 7 looks at landlord's remedies during the term of the lease and forfeiture together with a waiver of the right to forfeit, and relief from forfeiture and proposed changes to the law.
Damages and mandatory injunction are also covered in this section.
Section 8 is about settling the action and identifies that most disputes are settled outside court.
Section 9 is venues for dispute, by way of arbitration or independent expert, or chartered surveyor.
We believe that the notes accompanied a talk that was carried out.