Joelson Wilson
Thursday 02 February 2012

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Dilapidations

The dilapidations protocol relates to the procedure which the parties must follow in connection with claims for damages for the physical condition of a property at the termination of the lease.

The parties must still consider ADR under Civil Procedure Rules and the Courts will take into consideration the parties’ conduct when deciding costs.

Background

Pre-action protocols were generally introduced in 2000 in which one of the aims of the Civil Procedure Rules was to encourage settlement between parties.

The dilapidations protocol was introduced for this purpose and to prevent exaggerated claims by Landlords.

Over the last 12 years the Dilapidations Protocol has developed with the latest version coming into force earlier this year.

The latest changes have been implemented in order to keep the protocol concise and avoid repetition. The changes also bring the protocol wording in line with other protocols.

The ChangesIn addition to the protocol being shortened and amending the language the main changes are as follows:

1) The Landlord’s endorsement has changed. The Landlord’s endorsement is a few lines which provide further details in respect of the claim. The endorsement must include:

• Confirmation that all works are reasonably required to remedy the Tenant’s breaches;

• A statement making clear what the Landlord’s intentions are at the end of the term, i.e. whether the Landlord intends to demolish the property;
• A statement providing that the Landlord’s surveyor has taken into account the Landlord’s intentions. This is to avoid the surveyor stating that items need replacing, if in fact the Landlord will be removing these items at the end of the term;

• Confirmation that any costings are reasonable.

2) The Tenant’s surveyor must also provide an endorsement in the Tenant’s response. The introduction of this endorsement is to ensure that the Tenant’s surveyor is acting correctly when producing costings for the works. The endorsement includes:

• Confirmation that the works detailed in the Tenant’s response are all that is reasonably required to remedy the alleged breaches of covenant;

• A statement confirming that the costings are reasonable. This is to prevent the Tenant’s surveyor deliberately setting low cost estimates as a means of negotiation for the claim;

• A statement providing that the Tenant or the Tenant’s surveyor has taken into account the Landlord’s intentions.

3) The diminution requirements have not changed but have been summarised:• The starting point is that a valuation is not required if the Landlord has carried out the works;

• The starting point is that a valuation is required if the Landlord has not commenced any works;

• The starting point is that a valuation is required if the Landlord has carried out some but not all of the works.

Non-compliance

Where the Court is looking at sanctions for non-compliance with the protocol, the Court will be more concerned that the parties have complied in substance with the requirements. The Court is less concerned with minor issues and will simply consider these issues in awarding costs as a matter for the trial judges’ consideration.