Party wall – Award – Measure of compensation – Section 7(2) of the Party Wall etc Act 1996 – Parties’ surveyors agreeing award under 1996 Act – Addendum award made following resolution of dispute about remedial works by third surveyor – Whether respondent intending to sell property at date of addendum award – Whether amount payable by appellant assessable by reference to diminution in value of respondent’s property or cost of carrying out work – Whether appeal brought out of time – Appeal allowed
The appellant and the respondent owned adjoining properties. The appellant served notice on the respondent of his intention to carry out works to his property that required an award under the Party Wall etc Act 1996. Both parties appointed surveyors who agreed an award under section 10 of the Act, authorising some works to be carried out at the appellant’s property.
The respondent subsequently alleged that the works had caused damage to her property. A third surveyor, appointed under section 10(1)(b) of the Act, made an award following a disagreement between first two surveyors as to the failure of the appellant’s surveyor to provide structural engineering drawings and calculations in order that the respondent’s surveyor could confirm whether or not the property was structurally secure. The third surveyor set out a course of action towards preparation of a schedule of remedial works, preparatory to agreeing a sum for the cost of repairs. That award was not appealed and the original surveyors made an addendum award, agreeing that the works carried out by the appellant had caused the damage to the respondent’s property, and that the sum of £71,430 plus VAT reflected the value of the required remedial works.
The appellant appealed against the addendum award, contending that the surveyors had been wrong to find that the repairs to the respondent’s property were required as a consequence of his works. The court was asked to determine: (i) whether the respondent had intended at the date of the addendum award to sell her property; (ii) if so, whether the amount payable by the appellant under the addendum award had to be assessed by reference to the diminution in value of the respondent’s property, rather than the cost of carrying out the work; and (iii) whether the appeal should fail as it was in reality an appeal against matters decided in the third surveyor’s award, which had not been appealed in time.
Held: The appeal was allowed.
(1) On the evidence, the respondent had not decided whether to sell at the date of the addendum award. While she had entertained the possibility and taken steps both to show interested parties around the property and to look herself, the fact that there had been no real progress in either buying or selling the property was supportive of indecision, rather than a settled decision to sell having been taken at any stage.
(2) Under section 7(2) of the 1996 Act, the building owner had to compensate any adjoining owner for any loss or damage that might result by reason of any work executed in pursuance of the Act. The reference in section 7(2) to compensation reflected the general principle in tort at common law that diminution in value was the well established usual measure of damages where land had been damaged, rather than the cost of repair. In general, the principle was one of compensation and not punishment and care had to be taken not to award a windfall. There was a distinction between the owner’s obligation to make good under the Act, which was governed by sections 2 and 11(8), and his obligation to compensate under section 7(2). Compensation had to be in accordance with general principles, particularly in a case where there had been no decision whether or not to do the works. In those circumstances, there would be a significant risk of over-compensation if the cost of repairs were significantly higher than the diminution in value.
(3) The third surveyor had been tasked with a particular disagreement between the surveyors, different from the issues in the addendum award. Although he had set out a method for them to follow, he was not entitled to bind them and they had not considered themselves bound; they had departed from the methodology set out in the award, in that neither professional fees nor alternative accommodation were included in the addendum award. Nothing could be read into the word “addendum”, which was a common term for an additional award rather than an indication of it being part of the third surveyor’s award. In any event, circumstances had changed by the time the addendum award was made. The surveyors expressly set out that there had been no indication that the works would be carried out. The award should, at that stage, have been made in accordance with established general common law principles on the basis of diminution in value, and the surveyors were not bound to decide otherwise by the third surveyor’s previous award in relation to a different issue.
Nicholas Isaac (instructed by Child & Child Solicitors) appeared for the appellant; Aaron Walder (instructed by Cogent Law, of Croydon) appeared for the respondent.
Eileen O’Grady, barrister
