Claims for dilapidations against tenants are an ever constant in the UK commercial property industry, typically becoming both more contentious and adversarial during periods of reduced economic prosperity. Whilst tenants are already armed with a raft of statute and precedent law based defences, have recent changes to pre litigation protocol further assisted their position?
The Back Story
Where it began
The 2013 Jackson Review introduction of fixed cost recovery rules and subsequent evolution of same, as applicable under Table 12 of the Civil Procedure Rules (CPR), aimed to ensure litigation costs were predictable and proportionate, capping recoverable legal fees and thus seeking to deter higher volumes of, perhaps, smaller claims clogging up the courts.
The Change
Amendments to the existing
The 2023 reforms to fixed cost recovery both expanded the scope and thresholds applicable to the same, with claims up to £100,000 now included within the regime. Although claim complexity considerations also comprise a component part of the reforms, the aim of bringing more disputes within predictable cost framework may be considered to dissuade landlords from pursuing legitimate claims in the face of the potential down-side cost risk now brought about. The smaller and least complex of claims are now subject to a nominal sum cap, with those most complex and of greatest value claims, but remaining within the fixed cost remit, also subject to legal cost recovery limitations that, in all likelihood, may represent only a fraction of those legal costs that could be applicable if matters were to recourse to litigation and proceed to court.
A number of challenges are brought about by the reforms, from a dilapidations perspective, including both claim deterrent and potential for claim representation shortcomings, owing to a landlord’s need to ensure minimal legal costs are incurred. Consequently, the desirability to legal professionals operating in the dilapidations / property arena to concern themselves with such disputes could be negatively affected.
Although the 2023 fixed cost recovery reforms proposed to bring greater cost predictability, whilst likely reducing the volume of claims being determined in court, the perhaps unintended consequences are considered significant for both landlord claimants and tenant defendants. Tenants of premises often subject to claims in the order of the extended cap are likely to derive notable benefit, however, landlord claimants are now presented with a further obstacle to conclusion, even where a liability may be genuine and a claim fully substantiated.
Node Building Consultancy represent landlord and tenant clients nationwide in a dilapidations capacity. From preparing schedules of dilapidations and carefully procuring works in lieu of such, to developing effective, targeted, claim mitigation strategies, we have invaluable specialist expertise and a proven track record of success in this field. Should you require assistance with your dilapidations matters, we would be delighted to hear from you.
Claimants are now presented with a further obstacle to conclusion, even where a liability may be genuine and a claim fully substantiated.