PROPERTY JOURNAL

An A–Z of conflict avoidance and management

Recognising and avoiding – or managing and resolving – disputes are vital skills for surveyors, to pre-empt the need for legal action. How can APC candidates demonstrate the relevant competency?

Author:

  • Jen Lemen FRICS

02 December 2022

The word DISPUTE on wooden blocks

All APC candidates need to know about the mandatory level 1 competency Conflict avoidance, management and dispute resolution procedures.

As the RICS APC Pathway Guide confirms: 'This covers the recognition, avoidance, management and resolution of disputes, involving an awareness of different dispute resolution procedures and an understanding of the[ir] application … appropriate to the area and jurisdiction of professional practice.'

Some candidates may decide to take it to a higher practical level as a technical competency, requiring practical experience of doing at level 2 or advising at level 3.

Alternative dispute resolution (ADR): this refers to methods of resolving disputes other than litigation, such as adjudication and mediation. Typically, ADR is quicker and cheaper, and it can often preserve relationships between the parties. Through the Civil Procedure Rules (CPRs), the courts encourage parties to consider ADR before proceeding to litigation. 

Bias: this is a real or perceived inclination for or against a person or group. If you are acting as an advisor, party representative or independent dispute resolver, such as an adjudicator or mediator, it is something that must be avoided. Therefore, surveyors must check for conflicts of interest before accepting any work in these capacities. The current edition of the RICS Conflicts of interest professional statement details how to identify, avoid and manage actual or potential conflicts.

Calderbank offer: this is a private and confidential offer made by one party to another party which is intended to settle a dispute. It must be a genuine offer, capable of being accepted. If the offer is not accepted it cannot be revealed to an independent dispute resolver, such as an arbitrator, until such time as the arbitrator has made their decision on the substantive dispute and all that is left is for them to decide how the costs of the arbitration are to be allocated. If the arbitrator's award is less than the amount offered in the Calderbank offer, the party which refused to accept the offer can be liable for most or all costs. It derives from Calderbank v Calderbank [1976] Fam 93, [1975] 3 All ER 333 (EWCA). 

Disputes: causes of dispute in land, property and construction are various. Disputes between landlords and tenants concerning rents, service charges and dilapidations are typical. In construction, factors which give rise to disputes include poor payment practices, a lack of communication between contracting parties, unclear documentation or contracts and poor management. However, such disputes can be avoided in a variety of ways, as detailed throughout this article. 

Early warning signs: contracting parties can adopt measures that provide early warning of emerging issues, such as reduced communication which could signal potential insolvency. Early warning signs can prove valuable in avoiding conflict arising going forward. They could be initiated through regular reporting, independent reviews and open and transparent communications between contracting parties.  

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Facilitative and evaluative mediation: mediation is essentially a negotiation to resolve a dispute, which is facilitated, or moderated, by a neutral third party. The role of a mediator is to work with both sides to help them engage in a structured and positive dialogue, with the mutual intention of achieving an acceptable settlement. There are two main models of mediation: facilitative and evaluative. 

In the facilitative model, the mediator encourages meaningful dialogue between the parties, and ensures they maintain focus on achieving a positive outcome. The mediator asks questions, draws attention to common aims, helps the parties to understand each other's positions and interests, the strengths and weaknesses of their positions, and helps them find options to resolve their dispute. The facilitative mediator effectively facilitates discussion which leads to agreement and does not normally provide personal assessments of parties' positions or recommendations for settlement. 

Evaluative mediation involves a mediator who is an expert in the subject matter in dispute and will do all that a facilitative mediator does. The mediator also provides their evaluations on the relative strengths and weaknesses of the parties' positions. An evaluative mediator can give the parties an impartial assessment of the likely outcome of the dispute if some or all the issues were to go to court. The evaluative mediator can also provide recommendations for settlement terms. The RICS Dispute Resolution Service (DRS) uses an analytical, commercial, restorative and expert mediation model (ACRE), based on the facilitative method. 

Guidance: RICS publishes extensive guidance on dispute avoidance and resolution matters, including guidance for surveyors acting as: arbitrators, mediators, adjudicators, independent experts, expert witnesses and advocates. There is also guidance on conflicts of interest for surveyors acting as dispute resolvers. RICS guidance is a statement of good practice. Essentially it is non-binding, though chartered surveyors who do not comply with published guidance should only do so if they have good reason and can adequately explain why they have not complied.

'The role of a mediator is to work with both sides to help them engage in a structured and positive dialogue, with the mutual intention of achieving an acceptable settlement'

Housing Grants, Construction and Regeneration Act 1996: this is a UK Act of Parliament which, among other things, aims to ensure that payments on construction projects are made promptly, and disputes are resolved quickly and effectively. Sections 108 and 108A of the act state that construction contracts must provide for any dispute arising under a construction contract to be decided by an independent adjudicator, at any time. 

Independent expert determination: expert determination is a method for resolving a dispute wherein an independent expert – not to be confused with an expert witness – is appointed to make a binding decision. There is no legislation governing the role, unlike in arbitration, which is governed by the Arbitration Act 1996. An independent expert will usually make a decision based on a mix of: 

  • their assessment of written or oral evidence submitted by the parties (although they do not have to consider this, depending on the terms of their appointment)

  • their personal inquiries and the application of their expertise in the subject matter of the dispute. 

It follows that an independent expert must be both impartial and an expert in the disputed subject matter, e.g. commercial rents, construction costs, etc.

Judicial process: this is the legal process which leads to a judge making a decision on a dispute. In England and Wales, the civil judicial process is governed by the CPRs which apply to all court users, including litigants (people who are in dispute), lawyers and even judges. The overarching aim of the CPRs is to make the court process, as far as possible, fair, transparent, accessible, prompt and cost-effective. 

Knowledge: this level 1 competency requires a good breadth and depth of knowledge relating to the competency description. Even though candidates may have little exposure to formal dispute resolution, they are likely to have practical experience of conflict avoidance.

Lease renewals: commercial leases will often be set for a fixed duration e.g. five or ten years or even longer. When the duration for a lease comes to an end, a tenant may not wish to move out and will endeavour to renew the lease for another term. Disputes concerning terms of renewal leases are commonplace. They can be resolved, with the agreement of both parties, by ADR, rather than going to court, typically using Professional Arbitration on Court Terms (PACT). This is a joint initiative between RICS and the Law Society. 

PACT involves referring the disputed terms to the final and binding decision of an arbitrator or an independent expert. The courts often encourage parties to consider the use of PACT to determine disputes over lease duration, rent, drafting, repair, service charge, alienation, break clauses and other terms.

Management: a key part of conflict avoidance is good management. This may involve managing instructions, for instance by raising areas of concern and planning future work; project management, such as proactively managing time, money and risk; client management; constructor management; or design team management.

Negotiation: this is a recognised form of ADR because it provides an alternative method to the courts for resolving disputes. It simply involves the parties engaging in meaningful dialogue with the joint aim of achieving a mutually agreeable outcome. No third party is involved, and the outcome is decided by the parties themselves.

Ombudsman: an ombudsman scheme involves the referral of a dispute to a neutral third party who is appointed by the government or other agency to handle disputes in a particular sector, e.g. housing. An ombudsman scheme often has a wider remit than other ADR methods because it will normally have a sector-wide role to improve standards, including eliciting feedback, gathering data, providing training, recommending reviews and publishing insights. The Property Ombudsman, for example, aims to resolve disputes between consumers and property agents and is an RICS-approved mechanism for use in regulated firms' complaints-handling procedures. 

Part 36 offer: similar to a private and confidential Calderbank offer to settle a dispute, which is made in procedures such as arbitration (see above), the CPR 36 offer, or Part 36 Offer, can be made in civil litigation proceedings in England and Wales.

Quasi-judicial process: any proceedings held in a court of law are known as 'judicial proceedings'. ADR methods such as arbitration and adjudication, which involve referring a dispute to the final and binding decision of a tribunal other than a state-sanctioned court of law, are often referred to as quasi-judicial.

Role of an expert witness: an expert witness is a person who has a high level of knowledge and expertise in a subject area and is appointed to provide testimony to a court, arbitrator or other tribunal. In this role, an expert witness has an overriding duty to the judge or other tribunal over and above any duty they may owe to the party (i.e. their client) who has instructed them to give testimony and who ultimately pays their fees. RICS has published guidance for surveyors acting as expert witnesses

Standard form contracts: a contract is essentially a record of terms and conditions that two parties have agreed to adhere to. Standard forms of contract are published to ensure consistency in the construction and engineering sector. In the UK, there are a suite of standard forms published by the Joint Contracts Tribunal (JCT), which range from contracts for minor building works through to forms designed for major projects. The Institution of Civil Engineers also publish a suite of standards for contracts known as the New Engineering Contract (NEC) forms. Unlike JCT forms, NEC standard contracts are also used widely outside of the UK. Another international standard form of contract is the International Federation of Consulting Engineers (FIDIC) form.  

All standard form contracts include ADR measures.

Three pillars of dispute resolution: there are three pillars of dispute resolution, as set out in Table 1 below.

Table 1: The three pillars of dispute resolution

Negotiation

Mediation

Adjudication

Neutral fact-finding

Conciliation

Litigation

Expert appraisal

Arbitration

Early neutral evaluation

Expert determination

Variations on neutral expert types of process

Adjudication

Consensus-building

Ombudsmen

Dispute review boards

Mediation-arbitration

Facilitative mediation

Evaluative mediation

Mini trial or executive tribunal

'An ombudsman scheme often has a wider remit than other ADR methods because it will normally have a sector-wide role to improve standards, including eliciting feedback, gathering data, providing training, recommending reviews and publishing insights'

Source: Mackie, K., Miles, D. and Marsh, W. (1995) Commercial Dispute Resolution: An ADR Practice Guide, Butterworths, London, p. 50

(Memorandum of) Understanding: this is a non-binding agreement that states each party's intention to do something such as enter into a business transaction or form a partnership. A memorandum of understanding is often used to help parties move towards more formal, contractually binding relations. It can help to avoid conflict and enable negotiations by defining the starting point, scope and purpose of the parties' mutual intentions. 

VAT: this is a tax which is added to the value of products and services. When a dispute is resolved by an arbitrator or adjudicator, or similar, it will often involve an order that one party pays another party a sum of money. It is essential to consider whether VAT will be payable on the sum. This only applies where services have been provided, rather than to true damages.

Written agreement: in ADR methods such as arbitration, expert determination or adjudication, the decision on the dispute is conveyed by the appointed neutral third party to the disputing parties in writing. In mediation and other forms of ADR where it is the parties, not the dispute resolver, who decides the outcome, it is important that the outcome is recorded in writing, sometimes referred to as a heads of agreement. Without this, there is the potential for disputes to recur, or for parties to renege on the agreed outcome. 

(Getting to) Yes: a key negotiation textbook by Roger Fisher and William Ury, published in 1981, this is on the reading list for many university courses on the topic. The book focuses on principled negotiation, whereby the parties separate people from the problem, focus on interests rather than positions, consider options for mutual gain, and use objective criteria. 

Z clauses: these are clauses that can be inserted into NEC standard contract forms to allow parties to agree additional terms and conditions, in order to cater for specific needs relating to a project and the terms of its delivery. In other contract forms, this type of clause is sometimes referred to as a boilerplate clause.

'A memorandum of understanding is often used to help parties move towards more formal, contractually binding relations. It can help to avoid conflict and enable negotiations by defining the starting point, scope and purpose of the parties’ mutual intentions'

Jen Lemen FRICS is co-founder of Property Elite
Contact Jen: Email

Related competencies include: Conflict avoidance, management and dispute resolution procedures

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