A private pension fund held a multilet commerical property, the lease of one unit was ending and the tenant, a betting company, did not wish to renew.
What ensued was a large multi-billion pound company against a small private pension fund. The negotiations were drawn out, works were undertaken by the landlord, project managed by Dabinett.
The original claim was for circa £60,000, but an offer to settle was tabled by the landlord for £30,000 early on. After eighteen months of negotiations, and the tenant carrying out some works themselves, the matter was settled at £45,000.
With the lease term nearing its end Dabinett prepared a schedule of dilapidations and served this on the tenant.
Part of the claim was for the remediation of timber decay caused to the property by the tenant turning off a sump pump in the basement unit. Aside from repairs there was the necessity to decorate in accordance with the lease and to remove the tenants alterations.
The tenant undertook some works, but not the whole scope, many of the works that were carried out were to a poor standard. Where there had been former screens in place the tenant had removed these, but where there were cable holes were present wood patches has been installed.
Ultimately despite the tenant having spent some money, say £20,000, much of the work was still needed.
Negotiations started with the tenant’s surveyor and were met with an initial offer to settle at £10,000. With no meaningful progress and delaying tactics the works were tendered and then commenced.
Prior to works starting a Part 36 offer was made. There is further dicussion in the Tenant’s Guide to Leases series of articles. The crux was that an offer was made and the tenant didn’t accept, putting themselves is a difficult position, which in the end saw them settling at more than had been previously offered.
If a part 36 offer is made, not accepted by the other party, and matters progress to court then the sum of the final judgement can determine which party pays the costs post Part 36 offer. A party may successfully argue the merits of a case, but still have costs awarded against them. If the Part 36 is beaten then costs will be awarded against the other party (usually), ‘beaten’ is in the sense of the judgement being for a sum, more or less, than the Part 36. The basis being that had the offer been accepted all the costs associated with the litigation would have been avoided, therefore the party that declined the offer pays.
Works were completed after tendering to contractors and the value came in at a little over £30,000. During the works additional repairs were necessry where damage had been concealed.
Where the tenant went wrong was not getting the correct advice at the outset of the dilapidations process. The lack of advice and overseeing their own works led to the claim costing the tenant more than had actually been claimed by the landlord.
The success of the claim was down to Dabinett setting out a clear and fair claim and not wavering despite bluster from the tenant. The use of a Part 36 offer was invaluable to pressure the tenant and make the prospect of court daunting and costly. With works being undertaken the tenant was in a position where they had to argue established case law regarding repairs and decorations and there was never a realistic prospect of this being successful.
This claim was an excellent example of where a cash settlement would have been a great benefit to the tenant and where the landlord was left with a property ready to relet.
The tenant should have taken advice 12 months’ before the lease expired and been negotiating a settlement before the leae ended.
At Dabinett we can prepare dilapidation surveys for landlords as well as working to negotiate a settlement with the tenant and their surveyors. We have put together schedules on behalf of landlords and have defended large claims on behalf of tenants.
If you are a landlord or tenant Dabinett can help with dilapdiations and Part 36 offers.