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Party Wall (cases)


Damages

Common law principles apply

Lea Valley Developments Ltd v Derbyshire
[2017] EWHC 1353 (TCC)

Summary

The Court has clarified that the provisions in the Party Walls Act 1996 allowing compensation for loss and damage (s7(2) PWA 1996), is subject to the usual common law principles for assessing damages for torts to land.

Facts

The parties owned adjoining freehold properties. The claimant (C) decided to do some works and obtained an award under s10 of the PWA 1996 authorising these which included notifiable excavation works under s6. C then carried out works which undermined its neighbour’s property such that demolition and rebuilding was needed. C applied to Court for a declaration as to the correct method for assessment of damages.

(In separate proceedings D had been unsuccessful in its objection on the basis that the PWA 1996 was a comprehensive code which precluded applications to court (except limited rights of appeal against award decisions).)

The relevant terms of the s10 award stated that C was obliged to:
    "make good all structural or decorative damage to the Adjoining Owner's property occasioned by the works … If so required by the Adjoining Owner, make payment in lieu of carrying out the works to make the damage good, such sums to be determined by the Agreed Surveyor".
C argued that damages should be determined in accordance with common law principles, which enabled the court to make an award on the basis of diminution in value. D contended that the proper basis for damages was laid down in the award, which provided for assessment on the basis of the cost of reinstatement.

Decision

The Court found for C on this point and held that the common law principles which applied to the assessment of damages for torts to land were applicable.

There was no authority as to the proper construction of s7 of the PWA 1996 concerning damages. The relevant wording of the s10 award did not cover the situation that had arisen whereby complete demolition and rebuilding was required, and did not in any event answer the question of the basis upon which any payment in lieu of the making good works should be made. Therefore D was not entitled to the declarations it sought as when assessing compensation for any loss or damage payable under s7(2) of the PWA 1996, the common law principles which applied to the assessment of damages for torts to land were applicable. The application of those principles required the compensation to be such as to put the adjoining owner in the same position as it would have been had the damage to its property not occurred but also to be reasonable as between the claimant and the defendant; that what would be reasonable was highly fact sensitive and there was no rule that required an award of compensation on one basis or the other in every case. The applicable principles in tort were similar to those which applied in contract. In particular, the principle established by Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344, that where remedial expenditure was out of all proportion to the benefit to be obtained, the appropriate measure of damages was the diminution in value, also held good in tort.

The Court went on to hold, obiter, that the relevant wording of the s10 award was ultra vires as it was mistakenly based upon s2 of the PWA 1996 Act. There is no such provision in s6 and thus there was no power to include this wording in the award.

Comment

The case provides important clarification that the provisions in the PWA 1996 allowing compensation for loss and damage (s7(2)) are subject to the usual common law principles for assessing damages for torts to land. It also highlights the need for clarity when drafting a PWA 1996 award that deals with compensation for damage to a structure or land.


Duty in relation to inconvenience

The scheme

Gray v Elite Town Management Ltd
[2016] EWCA Civ 1318

Summary

The statutory duty under the Party Walls legislation that requires building owners not to cause unnecessary inconvenience to adjoining owners or occupiers concerned the manner in which works were carried out rather than the choice of the scheme.

Relevant statutory provisions

The Party Wall etc. Act 1996, section 7 (1) and (2) essentially provide that a building owner shall not exercise any right conferred on him by the Act in such a manner or at such time as to cause “unnecessary inconvenience” to any adjoining owner or occupier. They also require the building owner to pay compensation to the neighbour for any consequential loss or damage.

Facts

The owner of a residential property (G) created a basement by excavation. He decided that underpinning the party wall would constitute an unacceptable risk so he adopted an alternative construction method which he regarded as less risky but which entailed a loss of floor space in his basement. R owned the premises next door and also sought to create a basement but wished to maximise space. R served party wall notices on G. Both parties appointed professionals to act as their party wall surveyors. G appointed a trainee architect, who largely acted in accordance with G’s wishes, as his surveyor. The third surveyor, who was appointed by the local authority, issued an award which authorised R to carry out its basement excavation by underpinning of the party wall. Litigation then arose concerning the party wall awards.

First instance

The County Court, inter alia, awarded G £1,320 in respect of cracking that had appeared on the party wall to G’s property. The Court also held that R should pay only one third of G’s surveyor's costs, since she had not exercised her own professional skill and had simply done what G had wanted. G appealed to the Court of Appeal.

Decision on appeal

Party wall surveyors do not have an obligation under section 7(1) of the Act to authorise a design which caused the minimum of inconvenience. Their statutory duty related to the manner in which the works were carried out and not the scheme chosen.

Legal Costs not to be included in award

Reeves v Blake
[2009] EWCA Civ 611

Summary

Only costs in relation to the statutory dispute resolution provided for under the Party Wall etc. Act 1996 can be recovered under the award. Other legal costs on ancillary matters could not form part of the award.

Facts

B wished to carry out a development which required a notice under the Party Wall etc. Act 1996 to be served on D. An award was made and works were commenced. D believed that the works exceeded the award and instructed solicitors and counsel to draft injunction proceedings. Before they were issued, B gave undertakings. A new award was drafted which included payment by B of the costs of D’s intended proceedings. B appealed that award.

Decision

In appropriate cases costs could form part of the award; i.e. where they arose out of the statutory dispute mechanism provided for by the Act. However, the costs in the present case did not arise out of the workings of the Act. The intended injunction relied upon common law rights to restrain an injunction or nuisance. They therefore fell outside of the Act and should not have been included in the award.


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