Communication and Negotiation

Question 1

What may good negotiation skills include?

Answer 1

Agreeing your client’s objectives and negotiating strategy before the start of the negotiations

Detailed research and preparation and undertaking a SWOT analysis

Preparing your ‘win-win’ and fallback positions and areas of common ground

Deciding what points you can give on and what points are non-negotiable

Understanding the other party’s position

Creating a constructive environment for the negotiations

Considering the method of communication (‘phone, email or meeting)

Developing a partnership/collaborative approach, rather than an adversarial approach

Recognising the achievement of your best position for agreement

Always maintain communication between the parties

Walk away when you need to

Question 2

What is the most appropriate form for ADR for Service Charge Disputes?

Answer 2

New leases and lease renewals should provide for ADR for service charge disputes.

The RICS Standard recommends either mediation or independent expert determination.

Both procedures involve the appointment of an impartial person who is knowledgeable and
experienced in the subject matter of the dispute.
Parties who choose to use mediation or independent expert determination often do so
because the procedures are usually quicker and more cost-effective than litigation, they are
also private and confidential.
If the parties cannot agree on the identity of their mediator or independent expert, or need
further information about dispute resolution procedures generally, they can seek assistance
from the RICS Dispute Resolution Service (DRS).
Whether the issues in dispute are technical or surveying, valuation or legal, RICS DRS can
advise the parties of a suitable person(s) who they can agree to appoint. Alternatively,
RICS DRS can appoint an appropriately qualified and impartial mediator or independent
expert if the parties cannot agree who to appoint, and they require a neutral and objective
appointment to be made

Question 3

Mediation for SC

Answer 3

In mediation, the role of the mediator is to foster a negotiated settlement between the parties. The mediator’s function is not to impose a decision, but to facilitate and structure discussions between the parties and guide them to a mutually acceptable outcome.

The mediator can, if the parties wish, provide recommendations on how their dispute could be
settled.

Mediation is particularly helpful where parties wish to maintain friendly relationships with
each other and/or want to avoid getting embroiled in a potentially confrontational process.

Mediation, unlike many other forms of ADR, seeks to achieve compromise that satisfies both
parties, and it is often described as a ‘win-win’ procedure.

Mediation proceedings are usually conducted on a ‘without prejudice’ basis. This means
that the discussion remains confidential, and the parties cannot use what has been said or recorded in the mediation in any subsequent legal proceedings, and the mediator cannot be called as a witness in any subsequent court proceedings. The process is informal. A mediation hearing often lasts no more than one day, which makes it more cost-effective compared to court, and the parties usually agree to share the costs of the mediation between them.

A mediated settlement is generally recorded in a formal agreement, which contractually
binds the parties to the outcome.

Question 4

Independent expert determination for SC

Answer 4

Independent expert determination involves the appointment of an impartial person who is highly proficient in the subject matter in dispute.

The independent expert’s function is to gather information and evidence from the parties and make their own enquiries to arrive at a decision on the dispute.

Where parties refer a dispute to the decision of an independent expert, they will normally
enter into a contractual agreement to be bound by the decision of the independent expert.

A decision cannot normally be challenged unless it can be shown it is founded on a manifest error. In practise, it is unusual for an independent expert’s decision to be overturned by the
courts.

Independent expert determination is particularly useful at resolving disputes involving questions around the valuation of property and/or costs of works carried out.

The fees of an independent expert are usually split equally between the parties, unless
they both agree that the independent expert will decide who will be responsible for paying their fees. Other costs, such as expenses incurred by the parties in preparing their case and instructing professional or legal representation, are usually split between the parties equally,
unless they both agree that the independent expert will apportion responsibility for paying the costs between the parties.

This professional standard encourages parties to agree that independent experts provide reasoned determinations when dealing with service charge disputes. Like other forms of ADR, expert determination is private and confidential to the parties involved in a dispute.

The contents of a reasoned determination will only be known to the parties involved in the dispute. It cannot automatically be disclosed to other tenants. It does not follow that a reasoned determination will be helpful to other tenants, unless one or both parties to the
determined dispute agree to disclose their expert’s determination.

One possible way to achieve consistency in decisions by third parties on service charges is for the same independent expert to be appointed on subsequent disputes.

Question 5

How did you determine they could pay faster?

Answer 5

I reviewed the tenant’s turnover information and creditsafe report, which showed a high increase in profits and improved credit position. I also conducted the profits test by calculating the full amount the tenant was due to pay including rent and service charge with the associated increase included and checked the tenant’s net profit was at least 3 times the overall rents, which it was.

Question 6

What was your negotiation strategy?

Answer 6

My strategy was to conduct a full review of the tenant’s information and assess the viability of early repayment.

My client wanted urgent repayment of their arrears and the tenant wanted more time than they needed, so I negotiated at 12 month repayment plan, which halved the proposed time but did not put unnecessary pressure on the tenant that could force them into further default.

I provided reasoning behind my decision with the calculations, which I checked with a qualified accountant before handing over.