The High Court has declined to grant a swift resolution to a dispute over development and excavation works at a Muswell Hill property that damaged neighbouring flats so badly they will have to be demolished and rebuilt.
As a result, a full trial will be necessary to decide how damages should be calculated. The parties are divided on the method to be used, meaning the sum could range between £500,000 and £2m.
Lea Valley Developments, a subsidiary of social housing provider Aldwyck Housing Group, is the owner of 26-30 Muswell Hill, N10, and carried out a development of 12 flats at the property, which involved major excavation works, requiring a party wall award to be made in advance.
As a result of the award under the Party Wall etc. Act 1996 made in December 2014, Lea Valley is required to “make good all structural or decorative damage” to the adjoining property at 32 Muswell Hill, a detached Edwardian house converted into six flats, owned by Thomas William Derbyshire.
However, deputy judge A Williamson QC said that it has been agreed between the parties that, as a result of excavation works carried out, the neighbouring property “had been so badly damaged by the works that it could not be economically repaired and must therefore be demolished and rebuilt”.
The judge said that the costs of demolition and rebuilding are estimated to be between £1m and £2m.
However, Lea Valley has obtained expert evidence suggesting that the damage has only reduced the value of the affected property by between £500,000 and £1m.
As a result, it says that any compensation should be based on loss of value, not the cost of reinstatement.
Derbyshire maintains that the December award lays down that compensation is to be assessed on the basis of the cost of reinstatement.
Both Lea Valley and Derbyshire sought declarations from the court that each was correct, but the deputy judge has now declined to rule on the matter at this stage.
He said that it was impossible to decide which basis of compensation should be applied without all the facts before him, which would in effect require a full trial of the dispute.
He said: “In my view, the position is that reinstatement or diminution in value may be the appropriate basis for assessing damages depending upon the circumstances. It is impossible to identify all the relevant circumstances in the abstract. Further, even where diminution in value is the appropriate measure, the cost of reinstatement may well be a useful guide or starting point to determine what the diminution in value in fact is.”
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