Rachel Morrish and Stephanie Jarron consider what is required of an expert’s report in a dilapidations claim
Question
I have been instructed by my client, which is a party in High Court proceedings, to prepare and give evidence to the court in an end-of-term dilapidations case on the diminution in the value of the reversion by reason of the lack of repair, ie a section 18(1) of the Landlord and Tenant Act 1927 valuation. The valuation date was four years ago. What should I include in my report to support my conclusions and how should I deal with challenges to my report on cross examination at the trial?
Answer
Bear in mind that your report is being written for the court, so you will need to be able to justify your valuations to the judge. However experienced a practitioner you are, do not rely on subjective judgments but make sure that these are backed up by objective criteria.
For your comparables, for example, you need to be able to demonstrate their relevance to the property in question: their size; location; condition; and the transaction, rather than the quoted, price of the comparable property will all be significant.
Similarly, for the property being valued, how you have arrived at your “in repair” and “out of repair” valuations must be justified. If your report was prepared some time before it is signed off, check whether better comparables might have become available and amend the report accordingly.
If, having done all that, your report is open to justifiable challenge, concede the point in your oral evidence if appropriate, as a failure to reconsider your evidence could undermine your credibility.
Explanation
Section 18(1) of the Landlord and Tenant Act 1927 provides a cap on the damages recoverable by a landlord for terminal dilapidations. It provides that such damages cannot exceed the amount by which the value of the landlord’s reversion has been diminished by reason of the breach of the tenant’s covenant to repair.
As the expert witness, you will have to consider what is the appropriate way to measure the value of the landlord’s reversion. Often this will involve considerations of comparables and then giving your analysis and reasoning behind departing from these comparables upwards or downwards.
Getting the balance right
The recent case of Consortium Commercial Developments Ltd v ABB Ltd [2015] EWHC 2128 (TCC); [2015] PLSCS 261 shows how difficult it is to get the balance right between your own subjective view and the objective approach obtained by considering comparables.
Andrew Bartlett QC, sitting as a deputy judge, discussed valuation evidence. He criticised the landlord’s surveyor for being too subjective. He pointed out that he would expect a valuer’s subjective judgment to be informed and backed up by careful reasoning based on objective criteria. The valuer had used three market letting comparables and fourteen vacant possession comparables. The judge took the view that the “lettings” comparables were of minimal assistance as they were lettings from a different business district. The “vacant possession” comparables were problematic because some involved the price quoted rather than the price achieved for the transaction, some were very different in size, some were at irrelevant locations and some were in unknown condition. This meant that the comparables could be misleading as to the “tone” of the market.
The lesson to be learned from this is to use a careful, measured judgment as to whether a property is truly a comparable or not. It is also important to make sure that when you come to sign off your report, you check again to make sure you have used up-to-date information for your comparables. In your case, where the relevant valuation date is four years ago, it is unlikely that something new will arise as the comparables are likely to be historic.
Overriding duty to the court
Consortium Commercial re-emphasises the need to remember that whichever party you are acting for, you must be independent. You owe a duty to the court which is underlined in rule 35.3 of the Civil Procedure Rules. This rule states that it is the duty of the expert to “help the court on matters within their expertise” and points out that this duty “overrides any obligations to the person from whom experts have received instructions or by whom they are paid”.
Helpful practical guidance for experts is also available in the Civil Justice Council’s Guidance for instruction of experts in civil claims.
This guidance also deals with the expert giving evidence in court and emphasises that experts should not take it upon themselves to promote the point of view of the party instructing them or engage in the role of an advocate.
You can, of course, expect to be presented with challenges to your evidence during cross-examination. Here, the best approach to take is to be prepared to consider new matters which are presented to you and to reconsider your position and possibly adjust your view.
An expert who sticks rigidly to the views expressed in his report even when presented with issues which he has not considered before will not impress a court. If you need time to consider something new, outside the pressured atmosphere of the witness box, do not hesitate to ask for time to consider something properly. Do not be afraid to concede a point. This is perfectly appropriate bearing in mind that your duty is to the court.
Rachel Morrish is a solicitor in the property litigation team at Charles Russell Speechlys LLP and Stephanie Jarron is a barrister at Enterprise Chambers
Questions on any topic can be e-mailed to egq&a@enterprisechambers.com and egq&a@crsblaw.com
