What has changed from the draft protocol?
I am a surveyor who regularly acts on behalf of landlords and tenants in negotiating dilapidations claims. I have been using the Dilapidations Protocol for a number of years in my handling of such claims, but I hear that the protocol is now “law”. Is that correct and, if so, have there been any changes from the draft protocol which I used to follow?
Answer
A draft pre-action protocol for terminal dilapidations claims (prepared by the Property Litigation Association with input from the RICS) has been in circulation since spring 2002 and was last updated in 2008. It was only recently adopted as a formal pre-action protocol under the Civil Procedure Rules, on 1 January 2012. The protocol aims to govern how parties should liaise with each other (and conduct themselves) when dealing with dilapidations claims prior to any court proceedings being issued, for example setting out the type of information which should be exchanged between parties and a reasonable timetable for consideration of such evidence.
Although the formally adopted protocol is much shorter than the original, the substance of the two is much the same. Many of the changes simply aim to keep it concise and/or avoid overlap with the CPR protocol on general pre-action conduct. There have also been some changes of language, such as referring to “send” rather than “serve”. In addition, it has been made clear that “surveyor” includes “any other suitably qualified person” and the protocol refers to a landlord’s “quantified demand” rather than a “claim”, so as to differentiate it from a formal claim under the CPR.
The key change is that the tenant’s initial response to the schedule of dilapidations served by the landlord must now contain a signed endorsement to confirm that:
? the works detailed in the response are all that were reasonably required for the tenant to remedy the alleged breaches of its covenants or obligations;
? any costs set out in the response are reasonably payable for such works; and
? account has been taken of what the tenant, or tenant’s surveyor, reasonably believes to be the landlord’s intentions for the property.
Where appropriate, the response should also state (with particulars) whether the tenant believes that any items in the landlord’s schedule or quantified demand are likely to be superseded by any works to be carried out by the landlord, or the landlord’s intentions for the property.
The landlord’s surveyor must still sign an endorsement on the schedule of dilapidations which he/she prepares, to confirm that the works set out are reasonably required to remedy breaches, that any costs included within the schedule are reasonable and that full account has been taken of the landlord’s intentions for the property. However, the protocol now refers to the fact that the surveyor’s endorsement of the landlord’s intentions relies upon (at least to some extent) information given by the landlord and there is even provision for the landlord to give the endorsement itself.
Not worth following for small claims?
Many of the claims which I negotiate are relatively small in value and the costs involved with following the Dilapidations Protocol would be disproportionate to the amount involved. What will happen if I do not follow the protocol and simply try to negotiate with the tenant?
Answer
As with all CPR pre-action protocols, sanctions may be imposed where a party fails to comply with the substance of the new protocol for dilapidations claims. While the courts will be reluctant to penalise minor breaches which do not prejudice the opposing party, they are likely to take into account any serious non-compliance by either party.
The CPR protocol on pre-action conduct provides that the courts may consider the proportionality of the steps taken compared to the size and importance of the matter. Some surveyors dealing with a dilapidations claim which is relatively low in value may seek to conduct matters in a slightly different way from that envisaged by the protocol in order to minimise costs. Such an approach is not necessarily fatal to any subsequent formal claim or defence and may well be justified to a court if necessary. However, surveyors who take this approach need to bear in mind the importance of ensuring that their conduct adheres to the spirit of the protocol.
For example, the court will want to see that each party has provided sufficient information to enable the opposing party to understand the issues. It will also expect the parties to have made reasonable efforts to try to settle the claim. If a claim cannot be settled and a party has concerns about its failure to comply with the pre-action protocol, the protocol should be revisited to assess any key areas of weakness.
A landlord who has failed to comply with the protocol will generally have time on its side to remedy the position before it issues the claim. Tenants are in a more difficult position, since they can never be entirely sure when a claim will be issued by the landlord. Tenants’ representatives may therefore want to adhere closely to the provisions of the protocol which are relevant to them. In the event that either party finds itself in a dilapidations claim before the court where there have been more than simply technical failures to comply with the protocol, it faces the very real possibility of costs penalties – even if eventually successful in its claim or defence.
Emma Humphreys is a partner at Charles Russell LLP and Robert Duddridge is a -barrister at Enterprise Chambers
