CAREER PROSPECTS FOR VALUERS AND QUANTITY SURVEYORS IN ALTERNATIVE DISPUTE RESOLUTION CRESA - SCHOOL OF BUILT ENVIRONMENT FACULTY

OF ARCHITECTURE, DESIGN AND DEVELOPMENT (A.D.D.) 14TH MARCH 2013 PAUL NGOTHO BA (Land Econ), MISK, RV, MRICS, FCIArb ARBITRATOR & CHARTERED SURVEYOR TEL: 0728130925 Email: ngothoprop@yahoo.com Website: ngotho.co.ke A) The Kenyan Valuation & Quantity Surveyor Areas of Training, Operation & Typical Disputes Valuation and quantity surveyors undergo all-round training in building technology, law of contract, torts and real estate, making them the ideal dispute resolvers in real estate and construction disputes. They are involved in Building Construction, Maintenance, Project Management; Property Valuation, Sales, Letting and Management. Many contractual disputes arise in those areas, for example: Rent level, arrears, penalties/interest, date from which rent is payable, rent deposit, rent reviews, tenancy renewals, surrender, sub-letting, extensions, lettable area, use and abuse of communal areas and car parks. Deposit interest, tenants tendency to consider it as rent, Service charge (office, apartment blocks, gated communities) apportionment to tenants, which items are included, % payable by a particular tenant, treatment of voids. Disputes between tenants, neighbourhood nuisance. Condition at commencement and end tenancy. Management/repairs during tenancy and standards of maintenance, security, cleanliness. Disputes with consultants, service providers and staff. Disputes in Estate Agency price, area, completion date, interest on deposit, estate agent's commission, disbursements, mis-description. Disputed contract sums, cost and time over-runs, cost attributed to variation of works, cost of carrying out unauthorised works, price escalations, delays/failure in paying contractors. Disputes about his own and other consultants' professional fees Internally among partners and directors in professional firms or externally with consortia and joint venture partners. 1

B) Alternative Dispute Resolution (ADR) - Definition ADR is a collective term for all procedures that are used for resolving disputes out of court (and without violence!). Basically means the avoidance of litigation. Examples: Negotiation, Mediation, Expert Determination, Adjudication, Dispute Adjudication Boards (DABs) and Arbitration. C) Advantages of ADR over Litigation Saving time by adoption of quick procedures and limiting the options of appeal. Saving money depends on choices and procedures adopted by parties. Privacy held in private. No public records. Finality depending on the actual procedure chosen by the parties. Binding legally enforceable like any court judgement Flexibility parties have the opportunity to choose the venue, language, a person with the relevant expertise to solve the dispute. D) Specific ADR Procedures Definitions and Roles 1. Negotiation The parties in dispute discuss the problem and usually reach a solution, which might or might not become a legally binding contract. Property Managers, Estate Agents and Project Managers negotiate daily. Managing agents normally represent landlords are in rent negotiations. Tenants do not usually engage professionals and usually end up paying dearly. 2. Mediation The parties in dispute meet to find a solution with a neutral third party, called a mediator, acting as a facilitator. The mediator acts as a catalyst and does not suggest solutions. 3. Expert Determination The parties agree to refer the dispute to an expert, whose decision is final. The expert chosen uses his own expertise and is not bound to take or consider evidence from the parties.

 Sample Clause in lease: If the parties cannot agree on the rent payable during the renewal of the lease, then the market rent payable shall be determined by a n independent valuer appointed by the Chairman of the Institute of Surveyors of Kenya (VEMS Chapter) on application by either party. The valuer's determination shall be final and binding 4. Adjudication Adjudication involves the quick resolution of a dispute. An adjudicator is appointed immediately a dispute arises and must make a decision within 28 days of his appointment. An adjudicator's decision must be complied with until it is overturned by an arbitrator or a court. 5. Dispute Adjudication Boards (DABs) This is a more sophisticated form of adjudication in which normally 3 adjudicators are appointed at the commencement of large building and civil contracts. They attend all site meetings and make routine inspections in order to familialise themselves with the project in order to resolve a dispute quickly once it arises. 6. Arbitration This is a court-like process in which a neutral third party, called an arbitrator, listens to the evidence from both sides and gives an award (ruling), which is final, legally binding and enforceable. Valuation and Quantity Surveyors, due to their broad-based training and depth of expertise in property matters are the ideal arbitrators of property disputes. For the avoidance of doubt, it is not necessary for one to be a lawyer to become an arbitrator. A person trained as a professional arbitrator can arbitrate other types of disputes e.g. insurance, sale of goods, etc. Sample Arbitration Clause in a lease: Any disputes arising from this contract shall be resolved by an arbitrator nominated jointly by the parties or appointed by the Chairman of the Chartered Institute of Arbitrators (Kenya Branch) on application by either party E) Other Roles and Opportunities for Valuation Surveyors 1. Expert Witness in Arbitration (and court) The expert witness is called to give expert opinion by one of the parties, both parties jointly or by the arbitrator/court His responsibility is to assist the arbitrator, tribunal or court, regardless of who appointed him. Must disclose if he wishes to play an advocacy role but must not play an advocacy role if he is called as an an independent expert. Expert Witness is not to be mistaken for Expert Determination 3

2. Party Representative Representing a party as lay advocate in arbitration and tribunals, (BPRT, Compulsory Acquisition, ISK Disciplinary committee, VRB, etc) Role involves preparation of Claim and Defence. One must be familiar with the procedural requirements of the arbitrator or tribunal. Role usually played by lawyers, who might not understand or articulate technical matters sufficiently. 3. Tactful use of the ADR provisions in the contract in order to: Advise the client accordingly Avoid needless litigation Instruct the client's advocates accordingly Avoid the panic reaction to rush to court or to defend yourself there if sued. 4. Putting Appropriate ADR/Arbitration Clauses in Contracts For example, the tenancy agreements, leases, management contracts, service contracts and terms of engagement for substantive valuation services. The JBC contracts used in private and public works in Kenya and the FIDIC contracts used in World Bank and donor funded projects all have ADR clauses. F) Recommended Professional Training Anyone wishing to play a role in ADR must acquaint himself or herself with the following areas, among others, in order to be confident and effective: the specific ADR procedure one wishes to be involved in; Arbitration Act of Kenya 1995 (Amended 2010); Arbitration Practice & Procedure, how to give, take and treat evidence and how to draft Draft Procedural Directions and Writing Awards to professional standards. The Chartered Institute of Arbitrators (Kenya Branch) Tel 0722200496 and email:info@ciarbkenya.org offers courses on ADR. The earlier in life one starts the better. Please send an email to ngothoprop@yahoo.com or visit www.ngotho.co.ke for further information. Thank you. Asanteni sana. Shukran jazilan! Eero kamano!! Thengi mno!!!
Paul Ngotho 2013