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Killing two birds with one brick: one dispute yields two useful Party Wall Act decisions

Party wall disputes may be common, but it is uncommon for them to reach the High Court. Despite the lack of clarity for which the Party Wall etc. Act 1996 (PWA 1996) has often been criticised (as alluded to in my previous blog on this Act here), it is quite rare that a case emerges under the Act which helps to clarify things.

Two decisions in the Technology and Construction Court arising from the dispute between Lea Valley Developments Ltd and Mr Thomas Derbyshire, which concerned neighbouring properties in Muswell Hill in North London, have provided clarification on not one, but two separate points.

The PWA 1996 provides an entire regime for the resolution of any dispute that falls within the ambit of the statute, which typically culminates in the party wall surveyors making a binding award which governs: conduct of the works; any compensation payable to the adjoining owner; allocation the costs of the statutory process; and any other matter arising out of or incidental to the dispute.

The dispute between Lea Valley and Mr Derbyshire related to the basis for calculating the amount of compensation payable to Mr Derbyshire in circumstances where the works carried out by Lea Valley caused so much damage to his property that the proper economic solution was for it to be demolished and rebuilt, rather than just repaired.

The first question for the court was whether it had the necessary jurisdiction to make that decision.  O’Farrell J held that the court has an inherent jurisdiction to make a declaration about a matter covered by the PWA 1996 regime, and it would take very clear wording in a statute for it to oust the inherent jurisdiction of the courts.  Unlike section 1 of the Arbitration Act 1996 (a statute passed in the same year), the PWA 1996 contains no such wording.

So, as well as the ability to deal with an appeal under section 10 of the Act, or to grant an injunction when a neighbour has failed to comply with the Act, the court has inherent jurisdiction to grant declaratory relief too.

As to what the correct measure of damages should be in the present case, Mr Adrian Williamson QC decided in the second case that the common law basis should apply. That is, the injured party should be restored to the position they would have been in had the damage not been caused. The value attributable to that was the cost of reinstating the building to its original condition, which in this case involved demolishing the existing building and rebuilding it.

In arriving at that conclusion, Mr Williamson QC drew parallels with the law of nuisance, reasoning that the cause of the damage was an action which (but for the operation of PWA 1996) would have constituted a legal nuisance, but emphasised that there is no hard and fast rule which can be applied in all cases.  The comparison might have been apt to the facts in this case, but I am not sure that the court would necessarily come to the same conclusion in every case. A different set of facts, especially about the type of property that was damaged (and the condition it was in), might have yielded a different decision.

A full copy of the case report can be found here.

This blog is based on a blog first prepared by Tim Reid for practicallaw.com.