The Party Wall Etc. Act 1996 governs relations between adjacent owners of premises, where one owner wishes to undertake works to an existing party wall, or to build or excavate within the vicinity of it.
Developers will be familiar with the service of Party Wall Act notices and aware that, ordinarily, surveyors are appointed and a party wall award is made to approve works and protect the interests of both parties.
Occasionally, an adjoining owner (or his appointed surveyor) is dissatisfied with the proposed scheme of works. In that case, the process under the Act can become protracted and, in the worst case, hostility can delay or threaten to delay the progress of works.
The Court of Appeal recently handed down judgment in the case of Gray v Elite Town Management, in which the court considered the meaning of section 7(1) of the Act, which imposes a duty on building owners not to cause “unnecessary inconvenience” to adjoining owners/occupiers by their construction works. The Court of Appeal ruled that this duty concerns the manner in which construction works are carried out and does not extend to the choice of scheme. In other words, the scheme itself does not have to be the one which causes the minimum of inconvenience to adjoining owners/occupiers.
The court also upheld a reduction in costs recovery against an adjoining owner whose appointed surveyor did not exercise independence or her own expertise.
While this is good news for developers, the background to the case provides a cautionary tale on the pitfalls that can emerge during dealings under the Act.
The appellant, Mr Gray, was in the business of restoration and refurbishment of buildings of historical or architectural interest. He was of the view that development works should be ‘sensitive’.
In the 1980s, Mr Gray’s family acquired two properties on a residential Mews in Knightsbridge. In 2001, Mr Gray decided to excavate the basements of both properties. Before doing so, he researched and evaluated the risks of movement of the party wall, and determined that underpinning the party wall would constitute an unacceptable risk. He therefore decided to adopt an alternative construction method which, in Mr Gray’s own words, was “more costly but less risky”, and entailed a loss of floor space in the basement.
An offshore company – the respondent in the case – owned the premises adjacent to one of Mr Gray’s mews houses. It too sought to excavate its basement and in 2012 served party wall notices on Mr Gray. The offshore company did not have the same concerns as Mr Gray about underpinning the party wall. The purpose of its basement excavation was to maximise space.
Both parties appointed professionals to act as their party wall surveyors. Mr Gray felt, from previous dealings with party wall surveyors, that none would give due consideration to his views. On this basis he appointed a trainee architect, who acted in accordance with his wishes, as his surveyor. A third surveyor was appointed by the local authority in order to produce an award.
Mr Gray was unable to persuade the third surveyor to authorise a scheme which mirrored his own. Accordingly, an award was issued which authorised the respondent company to carry out its basement excavation using mass concrete underpinning of the party wall.
A series of acrimonious events followed, culminating in litigation. Ultimately, three party wall awards were made. The second was agreed to be invalid; the first was held by the County Court to be invalid in part, but valid to the extent that it supported the third award; and the third award, which authorised underpinning, was approved by the County Court.
Mr Gray appealed from the County Court to the Court of Appeal. He was not content that the scheme under the third award was appropriate, because it was not the scheme which caused the least inconvenience to him.
Mr Gray’s appeal relied upon the wording in section 7(1) of the Act, which states, “A building owner shall not exercise any right conferred on him by this Act in such a manner or at such time as to cause unnecessary inconvenience to any adjoining owner or to any adjoining occupier”.
Mr Gray argued that any scheme which caused more inconvenience to the adjoining owner than an alternative viable scheme must be considered to cause “unnecessary inconvenience” for the purposes of section 7(1), and should therefore not be authorised.
The Court of Appeal held that, while party wall surveyors must have due regard to both the building owner and the adjoining property owner in making an award, there is no absolute obligation on them to authorise a design or scheme which causes the minimum of inconvenience. The section 7(1) duty concerns the manner in which construction works are carried out and does not extend to the scheme or construction solution chosen. The scheme authorised in the third party wall award was satisfactory from an engineering point of view, and the award was upheld in spite of the potential for an alternative scheme which, Mr Gray considered, would cause less inconvenience to him.
The court accepted that whatever a surveyor decided would inevitably cause some degree of inconvenience to both parties.
The Court of Appeal also considered whether the County Court was entitled to reduce Mr Gray’s surveyor’s fees.
Party wall surveyors are expected to act with independence and impartiality. In finding that Mr Gray’s surveyor had not exercised her own professional skill, but had instead acted at Mr Gray’s direction and without sufficient independence, the County Court found that she was not a “surveyor” for the purposes of the Act and reduced her recoverable fees by two thirds. The Court of Appeal upheld that approach.
On the whole, the issuing of party wall notices and the ensuing process should proceed smoothly in respect of most large developments.
On occasions when hostilities do arise, if the circumstances permit, this decision of the Court of Appeal could be used to give leverage to developers to expedite a settled resolution.
The case also serves as a warning to party wall surveyors, who should retain their independence, rely on their own expertise and exercise their own judgment in party wall cases, rather than act as a mere cypher of those instructing them.
Gray v Elite Town Management Ltd, Court of Appeal Civil Division, 3 November 2016, unreported