Commercial property disputes

Commercial property disputes are disagreements or conflicts related to commercial real estate property. These disputes typically involve businesses, investors, landlords, tenants, or other entities engaged in commercial property transactions or operations.

These types of disputes can have significant financial implications and may disrupt business operations. Resolving these disputes often requires specialised knowledge of commercial property law, contract law, landlord-tenant law, and litigation strategies.

Commercial property disputes can arise for various reasons and may involve complex legal issues. Some common examples of commercial property disputes include:

Lease disputes:

These disputes arise between commercial landlords and tenants regarding lease agreements. Issues may include rent arrears, lease renewal terms, repairs and maintenance responsibilities, alterations to the property, or breaches of lease covenants.

Rent reviews:

Disputes may occur when it’s time to review the rent under a commercial lease. The parties may disagree on the proper interpretation of rent review clauses, market rent assessments, or the applicability of rent increases.

Breach of contract:

Commercial property disputes can stem from breaches of contracts related to property transactions, development agreements, construction contracts, or property management agreements.

Property ownership disputes:

Conflicts may arise over ownership interests in commercial properties, such as disputes over title, boundary issues, adverse possession claims, or competing claims to ownership.

Development disputes:

Disagreements may occur between developers, contractors, subcontractors, or local authorities regarding planning permissions, building regulations, planning permission, environmental issues, or construction defects.

Restrictive covenants:

Restrictive covenants in commercial property refer to contractual agreements that impose limitations or obligations on how a property can be used or developed. These covenants are typically included in deeds or lease agreements and aim to protect the interests of the property owner or surrounding properties.

Common examples of restrictive covenants in commercial property include limitations on building height, signage, noise levels, or the types of businesses allowed to operate on the premises. Violating a restrictive covenant can lead to legal consequences, such as injunctions or damages, so it is essential for commercial property owners and tenants to understand and adhere to these restrictions.

Easements and rights of way:

Disputes may arise over easements or rights of way affecting commercial properties, such as disputes over the extent of rights, obstruction of access, or interference with utility easements.

Tenant insolvency:

In cases where commercial tenants become insolvent or go into administration, disputes may arise regarding the rights and obligations of the parties, including rent arrears, lease termination, or assignment of leases.

Service charge disputes:

Conflicts may arise between commercial landlords and tenants over service charges for maintenance, repairs, insurance, or other shared expenses associated with the property.

Given the complexities involved, parties engaged in commercial property transactions or facing disputes should seek legal advice from experienced commercial property solicitors or lawyers to protect their interests and pursue favourable resolutions.

 

Commercial property dispute resolution

Commercial property dispute resolution involves various methods aimed at resolving conflicts related to commercial property in a timely and cost-effective manner. These methods include negotiation, mediation, arbitration, and litigation. Each approach has its own advantages and may be suitable depending on the nature of the dispute and the preferences of the parties involved.

Negotiation:

Negotiation is often the first step in resolving commercial property disputes. Parties or their legal representatives engage in discussions to identify areas of agreement, explore potential solutions, and reach a mutually acceptable resolution. Negotiation allows parties to maintain control over the outcome and can often result in a quicker and less costly resolution compared to formal legal proceedings.

Mediation:

Mediation involves the appointment of a neutral third party, known as a mediator, who assists the parties in reaching a settlement. The mediator facilitates communication, helps parties explore their interests, and guides them toward a mutually acceptable agreement. Mediation is a voluntary process and can be particularly effective in preserving business relationships and avoiding the adversarial nature of litigation.

Arbitration:

Arbitration is a more formal alternative to mediation, where an impartial arbitrator or panel of arbitrators is appointed to hear evidence and render a decision. Arbitration proceedings are less formal than court litigation but still result in a binding decision. Arbitration offers parties flexibility in selecting procedures, scheduling hearings, and choosing arbitrators with expertise in commercial property matters.

Litigation:

When negotiation, mediation, or arbitration fails to resolve a commercial property dispute, parties may resort to litigation by initiating legal action through the court system.

Litigation involves presenting the dispute before a judge or tribunal, who will hear evidence, consider legal arguments, and render a decision based on applicable law.

While litigation can be time-consuming and costly, it provides a formal mechanism for resolving disputes and obtaining enforceable judgments.

In England and Wales, the courts actively encourage parties to consider alternative dispute resolution (ADR) methods such as mediation or arbitration before pursuing litigation. Participation in ADR may be mandatory in some cases, and parties who unreasonably refuse to engage in ADR may face cost consequences in subsequent court proceedings.

 

Commercial property litigation costs

 

Legal costs of commercial property litigation will usually include Court fees, expert fees (such as Surveyor fees) and Solicitor’s legal fees, usually charged at an hourly rate. The Solicitor’s hourly rate will depend on the Solicitor’s location, qualifications, and experience.

The way in which costs are assessed, or the type of costs order made, depends upon where the property case is being heard.

If Court proceedings have been issued in a Civil Court, the costs will be governed by the Civil Procedure Rules.

The general rule of thumb here is that the loser pays the winner’s costs. Thus, the unsuccessful party will be required to pay the costs of the litigation and their opponent’s costs.

When such a costs order is made for detailed assessment, a Bill of Costs will be drafted by the successful party and served with a Notice of Commencement, so that the parties can negotiate on the level of costs which are reasonable to be paid in relation to the litigation.

The Bill of Costs will usually include an hourly rate fee for all the time taken to deal with the litigation. If there are disputes between the parties in property litigation costs, which relate to the Civil Procedure Rules, the matter will go through detailed assessment proceedings, and the costs will be assessed by the Court, should no agreement be reached between the successful and unsuccessful party.

Most property litigation is carried out in the First-Tier Tribunal (Property Chamber). The general rule where the litigation is within the First-Tier Tribunal is that each party will bear their own costs.

There are some exceptions to this rule whereby different costs orders can be made by the First Tier Tribunal where the following legal provisions apply:

• If there is a written contract between the parties allowing costs to be claimed from one party to another.
•  Where an Act of Parliament allows for costs to be recovered inter partes.
•  Where a legal representative or a party has acted unreasonably in bringing or defending the proceedings which has resulted in increased costs being incurred.

Unreasonable behaviour is covered by Rule 13 of the Tribunal Procedure Rules 2013. It falls for the Tribunal to decide whether a party has acted unreasonably. 

Where a party has unreasonably increased their costs, this can give rise to a wasted costs order.

A wasted costs order can be made when a party’s conduct increases costs and are usually made against legal representatives themselves for their conduct of the case. Once costs are agreed, these are generally payable within 14 days.

 

How can ARC Costs assist?

If you require assistance with a commercial property dispute, ARC Costs would be happy to introduce you to a specialist commercial property dispute lawyer from our network. The solicitors in our network assist with a wide range of commercial and property matters.

ARC Costs are a team of Costs Draftsmen and Costs Lawyers dealing specifically with the issue of costs within a number of legal areas such as commercial property litigation costs.

If you have been ordered costs in your favour, to be paid to you by your opponent, we can assist in preparing a detailed Bill of Costs for the costs which you have incurred. We will assist in serving this Bill of Costs legally to your opponent and can negotiate on your behalf in order to ensure maximum recovery of your costs.

If a costs order has been made against you and you are required to pay costs in a property litigation dispute, once you have been served with a Bill of Costs, we can assist in raising Points of Disputes to any costs which are unreasonable and excessive within the Bill of Costs. As well as drafting compliant Points of Dispute on your behalf, we can negotiate with the receiving party to ensure you are not paying for any unreasonable costs.

As Costs lawyers, we can also represent you at detailed assessment proceedings irrespective of whether you are the paying party or the receiving party. This will include assisting you in preparing for a hearing where costs will be assessed as well as representing you at that hearing should you wish us to do so.

If you wish to discuss your costs query further, please contact us on 01204 397302 or info@arcccosts.co.uk.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.