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Jo C.
Jo C., Barrister
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Experience:  Over 5 years in practice
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I am a surveyor dealing with a dilapidations claim and I wish

Customer Question

I am a surveyor dealing with a dilapidations claim and I wish to make a part 36 offer to the landlord on behalf of my client who was the tenant. I understand that if the offer is accepted, my client must agree to pay the landlord's costs. I am not clear whether that means my client would have to pay the landlord's surveyor's fees for his negotiation works up to the point that the offer was accepted, or does the payment of costs rule only apply to legal costs??
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello my name is ***** ***** I will help you with this.

Alex Watts :

For now please let me know if proceedings have been issued?

JACUSTOMER-cgywzvpj- :

Hi Alex.

JACUSTOMER-cgywzvpj- :

No proceedings have been issued as yet. The 2 surveyors (of whom I am one) have merely been involved in prolonged negotiations to date and we have reached stalemate hence my wanting to advise my client to now enter a part 36 offer. However, I do not know if this means that my client will be liable for the other surveyor's fees for negotiations to date. I know that those fees would not be recoverable if the matter was otherwise settled without going to court.

Alex Watts :

A part 36 offer applies to legal costs and disbursements

Alex Watts :

So a part 36 offer can include surveyor fees yes

Alex Watts :

If the party then fails to beat that offer if the matter goes to Court then they will be responsible for costs after the deemed date of acceptance which is 21 days

Alex Watts :

Can I clarify anything for you about this today please?

JACUSTOMER-cgywzvpj- :

Thank you Alex. So in effect, given that costs in preparation for trial are not recoverable under UK law if the matter does not proceed to court, a part 36 offer reverses that doctrine and allows the landlord to say this is what my surveyor has invoiced me up to now and as I have accepted your part 36 offer, I expect you to pay my surveyor's invoices. Is that correct?

Alex Watts :

Well yes, but the matter has not been issued yet.

Alex Watts :

A Part 36 offer can include disbursements, ie surveyor fees

Alex Watts :

But you can't charge and prepare for trial because you are not a lawyer.

Alex Watts :

Only a lawyer can claim their costs for trial etc.

Alex Watts :

Does that clarify?

JACUSTOMER-cgywzvpj- :

Thanks, ***** ***** want to be very clear. I am expecting that the landlord will accept the offer and therefore, no proceedings will be issued. However, in the usual dilapidation process, the landlord's surveyor would charge a fixed fee for preparing and serving the schedule of dilapidation. That fee is as standard, recoverable from the tenant under the lease. However, the lease will generally not allow for any additional fees to be paid by the tenant for the landlord's surveyor negotiating the settlement. That is usually paid for by the Landlord. So whilst I understand those sums can be considered a disbursement, do they now become the tenant's liability by virtue of the part 36 having been accepted, or do they only become the tenant's liability if the matter proceeds to court. (Effectively, I need to be able to advise my client that if he makes the part 36 offer, he will or will not be subject to having to pay the surveyor fees on top).

Alex Watts :

Who are you for and what is the fee related to?

JACUSTOMER-cgywzvpj- :

I am for the tenant. the landlord's surveyor has entered a fee in the schedule of dilaps of £1,500.00. If we reach an agreement without a part 36, then there is nothing else to pay the landlord's surveyor because his negotiation fees are to be paid direct by the landlord. However, if my client then becomes liable for the negotiation fees, this could top another £3 - £4k as the negotiation has gone on for a while.

Alex Watts :

Thanks. I can confirm that the tenant would ONLY be liable for the standard fee if that is what the Part 36 offer states

Alex Watts :

Nothing else

Alex Watts :

Does that clarify?

JACUSTOMER-cgywzvpj- :

I'm afraid it doesn't quite clarify because the part 36 offer is not allowed to include an offer toward fees otherwise it then ceases to be a part 36 offer having not abided by the requirements of part 36. The surveyor's fees of £1,500.00 are included in the schedule of dilapidation as his fee for preparing and serving the schedule. Under the terms of the lease, that is all he can claim against my client for. Thus negotiation fees must be paid to him by the landlord who is his client. Do you see what I mean? it is those negotiation fees that I am concerned about. I need to know if they suddenly become the liability of my client because his part 36 offer was accepted within the required timeframe. (I am popping out for 1hr but will look for your response as soon as I return).

Alex Watts :

The Part 36 offers sets out the terms of what the tenant will accept.

Alex Watts :

So it must include everything the tenant will pay for

Alex Watts :

Anything not included is not recoverable.

Alex Watts :

Does that clarify?

JACUSTOMER-cgywzvpj- :

Hi Alex,

JACUSTOMER-cgywzvpj- :

Please note the following; An offer which was made inclusive of costs was held not to be a valid Part 36 offer, under the earlier version on that rule, in Mitchell -v- James[2002] EWCA Civ 997. I copied and pasted this from another source. This is why I say that you can't make a part 36 offer inclusive of costs. I am still wondering therefore, if I make the part 36 offer on behalf of my client and the offer is accepted within the relevant time, will my client also be stuck with having to pay the surveyor's fees for all of the negotiation that has taken place.

Alex Watts :

Sorry for the delay. That matter can be distinguished because the Terms as to costs were not intended to be included in an offer to settle under Part 36 of the Civil Procedure Rules.

Alex Watts :

Therefore if you intend to include them in this offer then they are binding

Alex Watts :

Does that clarify?

JACUSTOMER-cgywzvpj- :

Hi Alex, Just got back to my desk. Thank you for trying to assist with this, but I do not think 'Mitchell can be distinguished on that basis. I have reviewed Mitchell on Westlaw and the Judge was referring to the draftsmen of the part 36 of the CPR when he said that costs were not intended to be included in an offer to settle. He was effectively saying that costs must not be included in a part 36 offer to settle because the draftsmen of the CPR did not intend for costs to form part of the offer, but instead intended costs to be dealt with separately. See below; I have included an extract from an up to date Ashurst LLP advice note on Part 36 offers and I have also included an extract from the case summary of Mitchell from Westlaw.

JACUSTOMER-cgywzvpj- :

Dealing with costs (Ashurst LLP)

The scheme of Part 36, and the automatic costs consequences that flow from Part 36, mean that a Part 36 offer cannot be inclusive of costs. In addition, it would be difficult for a court to determine whether the offer is beaten at trial. Any costs inclusive offer cannot therefore be a Part 36 offer and the effect of such an offer will depend on the court's general discretion on costs.

Westlaw abstract from the Mitchell case

The draftsman of Part 36 had not intended terms as to costs to be included in a Part 36 offers as the wording of r.36.14 was inconsistent with a term as to costs being part of such an offer.

JACUSTOMER-cgywzvpj- :

So unfortunately, I am as of yet, still no closer to knowing whether the Landlord will be able to say to my client, 'Yes I accept your part 36 offer and now here is my bill for all of my surveyor's costs which I now expect you to pay on top of your offer'.

Expert:  Nicola-mod replied 1 year ago.
Hello,
It seems the professional has left this conversation. This happens occasionally, and it's usually because the professional thinks that someone else might be a better match for your question. I've been working hard to find a new professional to assist you with your question, but sometimes finding the right professional can take a little longer than expected.
I wonder whether you're OK with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 1 year ago.

Hello Nicola, Thank you for your message. Yes indeed, I am happy to continue to wait for an answer from a better match for the question.

Expert:  Nicola-mod replied 1 year ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Customer: replied 1 year ago.

Hi,

Just wondering if no lawyers can be found who are able to deal with the question.

Thanks.

Expert:  Nicola-mod replied 1 year ago.
Hello,
I apologise as we have not yet been able to find a Professional to assist you. Do you wish for me to continue to search for someone to assist you or would you like for us to close your question at this time?
Thank you for your patience,
Nicola
Customer: replied 1 year ago.

Thank you Nicola, fine to close the question.

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