This article will now focus on how Valuers act for their respective parties in an attempt to resolve a dispute. Generally Valuers tend to enter into without prejudice (WOP) negotiations in regard to compensation cases through the Public Works Act 1981, or through civil disputes. These are through either the District or High Courts depending on the quantum disputed.
The Court of Appeal has ruled that the use of “without prejudice” (WOP) in communications is intended to encourage and facilitate the negotiation and settlement of disputes. Its use can help ensure that parties can make concessions and/or admissions to try to reach a settlement in the knowledge that should the settlement be unsuccessful, those concessions/admissions will not be raised in Court and used against them.
“Without Prejudice Save As To Costs” is a term used to identify that discussions and offers made to resolve a dispute cannot generally be disclosed to Courts, Tribunals, Arbitrations, etc except where the costs are being determined. This phrase does not in itself mean that discussions or conversations will be treated as being protected from disclosure. The key issue is whether the nature of those discussions and negotiations are to settle an existing dispute.
Valuers will often enter into WOP negotiations subject to instructions received through their client(s). For example, let’s say that the valuer has already undertaken a valuation on behalf of their client. Let’s also assume that a Scope of Works and Conditions of Engagement have been agreed to between the parties (in the Scope of Works there should be an agreed hourly rate the valuer will charge that will cover time spent reviewing the file, in addition to reviewing the other valuer’s report and further information acquired after the initial instruction).
Prior to the meeting, or at the start of the negotiations, it should be agreed to between the valuers/parties that the meeting is on a “without prejudice” basis. In some instances, reports/summary letters will be exchanged, or at least the difference of opinion (usually the quantum) is known. This gives the valuers the opportunity to check on a number of items or any differences. It is recommended that the valuer reviews their own report and if provided the other sides information/report.
Hence the valuer should:
- Check that the parties have the same instructions,
- From the valuation reports, check all land and building details,
- For the Land Details, have the correct titles been searched/provided? Search any interests on these titles such as any easements, covenants or encumbrances. The most up to date zoning of the property is important, especially with development sites. There have been cases where the valuer hasn’t been up to date with the current zoning, or the new structure plan for the area.
- Are there any buildings on the site, check floor areas, condition and repair, etc. Has either party had a building inspection completed on the property?
- Importantly, the sales evidence. Is there commonality between what has been used? Are the sales details correct? In some instances, we have found some sales stated in the valuation report to be either non bona fide or incorrectly stated.
- Are the parties up to date with all the information provided? Say in the case of compensation disputes, is all the information current, e.g. land requirement maps, or other professional reports. Valuers sometimes reply on the input of other professional groups such as town planners, surveyors or engineers.
During these negotiations, it is recommended that the valuers keep a list of what has been agreed to/or disputed. Even at the conclusion of the meeting (as numerous meetings can occur over a period of time), revisit and summarise the points to ensure that there is no misunderstanding. If not, there have been cases where the WOP letters written back to the respective parties differ.
Sometimes valuers agree to a single letter being sent to the parties involved. This letter is signed by both valuers, so that there is no dispute as to what has/has not been agreed to, or if a WOP recommendation is made back to the parties.
Unfortunately, we have found that a number of valuers often inform or talk to their clients about the negotiations during this phase. This is potentially a major mistake. During this phase, the valuers are in WOP negotiations, and it is imperative that these talks are confidential. In saying this, if any information or clarification is sought by the valuers, then naturally communications with the parties is required. Any extra information provided must be sent to the parties. Transparency between the parties involved is key.
Whatever is agreed/disagreed is your recommendation back to the client. It is up to each individual client whether to accept or reject the WOP offer.
Valuers relaying information back to their client during this negotiation phase could compromise their position. In some cases, we have been told that the other valuer is seeking approval from their client. The client is not the expert, you the valuer are.
During WOP negotiations, sometimes valuers may use the term “Without Prejudice Save As To Costs”. This is also known as the “Calderbank Offer”.
This effectively is a recommendation by one side to settle the dispute, at a sum they feel is appropriate. If the dispute goes before a hearing, say through the Courts or in the case of Valuers the Land Valuation Tribunal, and the outcome is less favourable to the other side compared to the Calderbank Offer being made, then the side making the offer is entitled to more of their costs being recovered. This is due to the fact that if the other side had accepted the offer, then they would have been better off, and neither side would have had to spend money taking the matter through the Tribunal or Court system.
Therefore, Valuers often play an important role in advising their clients whether or not to accept the Calderbank Offer. When the valuer/party is making or rejecting a Calderbank Offer, they are doing so as an educated bet. It is important to note that the parties are relying on the Valuers advice. Has the information gained through the WOP discussions with the other side changed your opinion, or even your initial offer? Any further evidence that is considered influential in your discussions has to be taken into account. Failing to do so may penalise your client in the future.
- Be informed and prepared prior to entering into WOP negotiations.
- If any new information is presented, don’t take it for granted that this is correct. Do your own study and analysis.
- Remember what you agree on is going to be presented back to the parties.
- Do not put yourself or the party you are representing into a compromised position, just by seeking their approval or informing them of information they shouldn’t be privy to during this WOP stage.
- The parties can choose to accept/reject the valuers recommendation.
- You the valuer are the acting expert in your field of experience, not your client.
Patrick Foote, LPMS Board Member.