London Building Acts (Amendment) Act 1939 –– Party wall award –– Ex parte award –– Whether surveyor entitled to make ex parte award –– Adjoining owner –– Statutory tenants –– Whether statutory tenants capable of being owners entitled to protection of 1939 Act
The appellant building owner constructed a new building, access to which required the demolition of a building that adjoined the respondents’ premises. The respondents were statutory tenants, for the purposes of the Rent Act 1977, of the building they occupied. Between 1996 and 2000, several awards and addendum awards were made, within the meaning of the London Building Acts (Amendment) Act 1939, relating to works affecting the respondents’ property. A number of issues arose between the parties, one of which was whether the respondents should be temporarily rehoused during the works to their property. On 2 February 2000 the respondents’ appointed surveyor, believing that the appellant’s appointed surveyor was not going to agree the outstanding issues, made an ex parte award dealing with those matters. The appellant appealed against the award, contending that: (1) the respondents’ surveyor was not entitled to have made the ex parte award, which was bad on its face; and (2) the respondents could not be “owners” for the purposes of the 1939 Act (as defined in section 5 of the London Building Act 1930), and, accordingly, they were not entitled to the protection of its provisions. The respondents maintained that the appellant was estopped from raising the first of these issues.
Held: The appeal was allowed. (1) A surveyor who wishes to avail himself of the provisions of section 55(e) of the 1939 Act, and make an ex parte award, must comply strictly with the formalities of the Act. That means that the surveyor can rely upon either a refusal or a notice that complies with the provisions of the Act, or, where appropriate, upon both grounds. The relevant grounds must be expressed accurately in the ex parte award. There was no reference in the award to a neglect to act by the appellant building owner’s surveyor after a written request. The ex parte award referred to a ground that the respondent’s surveyor did not rely upon, not to a ground that he did rely upon. It was bad on its face and invalid. On the evidence, the appellant’s surveyor had not refused to act or neglected to act effectively for 10 days prior to the award. (2) The definition of “owner” in the 1939 Act is limited to those who hold legal interests in land of a duration greater than one year. The respondents, as statutory tenants, were not “adjoining owners” for the purposes of the 1930 Act. If any estoppel by convention arose by reason of the parties having treated the respondents as being entitled to the benefit of the 1939 Act prior to February 2000, the appellant was entitled to resile from that position.
The following cases are referred to in this report.
Brown v Minister of Housing and Local Government; Ford v Minister of Housing and Local Government; Wandsworth Borough Council (Sutherland Grove) Compulsory Purchase Order, Re [1953] 1 WLR 1370; [1953] 2 All ER 1385; 52 LGR 34; 4 P&CR 111
Hiscox v Outhwaite (No 1) [1991] 2 WLR 1321; [1991] 3 All ER 124; [1991] 2 Lloyd’s Rep 1, CA
India (Republic of) v India Steamship Co Ltd (The Indian Endurance) (No 2) [1998] AC 878; [1997] 3 WLR 818; [1997] 4 All ER 380; [1998] 1 Lloyd’s Rep 1, HL; [1997] 2 WLR 538; [1996] 3 All ER 641; [1996] 2 Lloyd’s Rep 12, CA
Norwegian American Cruises A/S v Paul Mundy Ltd (The Vistafjord) [1988] 2 Lloyd’s Rep 343, CA
Stephen Bickford-Smith (instructed by Berwin Leighton Paisner) appeared for the appellant; Michael Kennedy (instructed by Winckworth Sherwood) represented the respondents.
Giving the judgment of the court, JUDGE CRAWFORD LINDSAY QC said: The appellant in this case appealed against the award of a Mr Julian Robert Davies made on 2 February 2000. On 15 September 2000 Judge Green QC directed that two preliminary issues be tried, namely whether:
1. the award was made without jurisdiction, because the appellant’s surveyor had not (as alleged by the respondents) refused or neglected to act effectively for 10 days prior to the award, as required by section 55(e) of the London Building Acts (Amendment) Act 1939 or section 10(6) of the Party Wall etc Act 1996; and
2. the award was made without jurisdiction, in that the respondents did not, at any material time, fall within the definition of “owner” under section 5 of the London Building Act 1930 or section 20 of the Party Wall etc Act 1996.
It is accepted, for the purpose of these proceedings, that Mr and Mrs Wassef are statutory tenants of the house at 25 Graham Terrace, London SW1. 25 Graham Terrace is a house and garden, and one flank wall adjoins a passageway over which is constructed 21 Graham Terrace. This property belongs to the Grosvenor Estates. The passageway leads to what was formerly a large garage at 23 Graham Terrace. The appellant has constructed a new building on the site of the former garage building, and, in order to complete these works, 21 Graham Terrace, which is adjacent to 25 Graham Terrace, had to be demolished. Work of underpinning had to be carried out to the party wall at the rear of no 25 Graham Terrace and also to the back addition. Prior to the building of 21 Graham Terrace, it was discovered that the main part of 25 Graham Terrace rested on top of the tunnel built over the underground.
At the trial of the preliminary issues, I heard evidence from Mr Martinson, Mr Keith Edward Johnson and Mr Davies. Their witness statements were before me, and all relevant documents, subject to a few additional documents that were added to the bundle in the course of the proceedings, were annexed to various witness statements.
The ex parte award prepared by Mr Davies is at p233 in bundle 3 of the documents. Whether it be valid or invalid, it is agreed that it sets out the issues that, at that stage, were in contention between Mr Davies and
Between 1996 and 2000 the following awards were made:
| (a) | First award: Partes: Subject: Surveyors: |
24 July 1996 Frances Holland — Wassefs Demolition of 21 Graham Terrace and support of air space between 19 and 25 Graham Terrace Mr Harding and Mr Davies |
| (b) | Original award: Parties: Subject: |
24 August 1996 Frances Holland — Wassefs (1) Demolition of those parts of 23 Graham Terrace built into the party wall and making good of party wall (2) Underpinning of part of party wall to enable adjacent ground level to be lowered (3) Provide retaining foundations Mr Harding and Mr Davies |
| (c) | Addendum award: Parties: Subject: Surveyors: |
22 September 1998 (Addendum to first award) Frances Holland — Wassefs (1) Underpinning of party wall to back annex and garden wall of 25 Graham Terrace (2) Compensation Mr Johnson and Mr Davies |
| (d) | Reconstruction award: Parties: Subject: Surveyors: |
22 September 1998 Frances Holland — Wassefs Reconstruction of 21 Graham Terrace (award to be null and void if work is not commenced within nine months) Mr Johnson and Mr Davies |
| [This award expired and was never implemented.] | ||
| (e) | Third surveyor’s award: Parties: Subject: Surveyor: |
15 July 1999 Frances Holland — Wassefs (1) Level of compensation following damage to rear boundary-party wall (2) Indemnity for alleged effective underpinning Mr Poole |
| (f) | Second reconstruction | |
| award: Parties: Subject: Surveyors: |
24 December 1999 Frances Holland — Grosvenor Estate Reconstruction of 21 Graham Terrace Mr Johnson and Mr Murray |
|
| (g) | Ex parte award: Parties: Subject: Surveyor: |
2 February 2000: the award in dispute in this preliminary issue Frances Holland — Wassefs (1) Rectification of damage (2) In absence of guarantees re-execution of underpinning (3) Execution and payment for reinstatement works (4) Relocation (5) Compensation for inconvenience and loss Mr Davies |
I express my thanks to Mr Michael Kennedy, counsel for the respondents, for preparing this detailed schedule of the relevant awards.
Mr Anthony Poole, the third surveyor, at p189 in his award of 15 July 1999, stated:
Underpinning through the party wall will be subject to a guarantee by the building owner for a period of 20 years. Such guarantee will be in the form of a guarantee by the contractor backed by insurers and in the joint names of the Building and Adjoining Owners.
By February 2000 it had not proved possible for this guarantee to have been provided. This was one of the outstanding issues between the surveyors, as were the issues of whether Mr and Mrs Wassef should be relocated during the works of reinstatement, and the nature and extent of the works of reinstatement.
In November 1999 it was suggested that Mr and MrsWassef were statutory tenants and therefore were not deemed to be owners under the provisions of the Act.
This matter was referred to by Mr Poole in a letter to Mr Johnson and Mr Davies, dated 15 November 1999. This information resulted in the second reconstruction award, dated 24 December 1999, being made between the school and the Grosvenor Estate. Mr and Mrs Wassef were not parties to this award.
The two relevant witnesses called were Mr Johnson and Mr Davies. Statements from both were before me. Mr Johnson was extensively cross-examined by reference to the documents, which, to a very large extent, spoke for themselves.
In his oral evidence in chief, Mr Johnson said that the guarantee could not be obtained. After the issue as to whether Mr and Mrs Wassef were adjoining owners had been raised, he perceived his role was to continue under the original awards; disputes outstanding were to be agreed. The parties did not know the full extent of the damage to 25 Graham Terrace until works at 21 Graham Terrace were completed. After receipt from Mr Davies of the draft addendum clauses, prepared on 7 July 1999, he responded to Mr Poole. Mr Poole responded and suggested that he, Mr Johnson and Mr Davies should meet on 9 September. This meeting did not take place. Mr Davies questioned whether Mr Poole was the right person to be the third surveyor. When dealing with the issue of alternative accommodation, Mr Poole stated:
Having read the correspondence I am of the opinion that bearing in mind the restricted size of the house and all other factors it would be reasonable to include a claim for alternative accommodation…
After he had written the letter of 23 September 1999, it did not appear to him that Mr Davies was anxious to resolve the disputes by the third surveyor. When referred to the letter of Mr Davies dated 21 January 2000, Mr Johnson said he was interested in progressing the issues in respect of reinstatement costs. He believed that relocation costs were not applicable: he did not consider the works merited relocation. No relocation payments had been made to Mr Madley, who was the owner of 19 Graham Terrace, where they had similar problems to 25 Graham Terrace.
Para 2.1 of the ex parte award sought to add obligations to the earlier award of 21 August 1996. Items iii, iv and v under para 2.1 of the ex parte award had to be done. In relation to subpara vi, design support work was provided, and items vii and viii were proper heads to be included. In relation to para 2.2, in respect of the guarantee, Mr Johnson had been provided with no evidence at that stage that the underpinning was failing. It was totally pointless to undertake new underpinning. The items at para 10.1 of the ex parte award had been largely agreed between Mr Johnson and Mr Davies. Relocation referred to under para 10.1 remained an issue. Mr Johnson did not believe such a claim was valid.
In respect of the underpinning, the subject of the addendum award of 22 September 1998, it did not go according to the method statement. It was subject to the third surveyor’s report of 15 July 1999. He received a copy of a letter sent by Mr and Mrs Wassef appointing Mr Davies as their surveyor. By a letter dated 24 February 1999, as he thought Mr Davies was going slowly, he made the threat of invoking the ex parte procedure. He could also have referred matters to the third surveyor. It was his view that an ex parte award was how matters were
Mr Davies, in examination in chief, accepted that it was prudent not to carry out reinstatement works to 25 Graham Terrace until the works at 21 Graham Terrace were completed. There was no reason why the works could not be agreed. The reference to the building owner in para 1.1 of the ex parte award was to Mr Johnson. Mr Davies stated that Mr Johnson had refused to act. Following the letter of 21 January 2000 written by Mr Davies, the response he was given was that Mr Johnson was not prepared to issue an award. When surveyors are trying to agree an award, the threat of an ex parte award brings matters to a head. Mr Davies’ feeling was that it was unreasonable to act ex parte without telling somebody. It would be unjust to do so. The disputes between him and Mr Johnson were set out in the draft award. Mr Johnson was not prepared to agree relocation costs unless they were shown to be necessary. The third surveyor considered they were necessary. Mr Davies agreed that it was foolish to start works of reinstatement until the works on 21 Graham Terrace were completed. The mechanism could have been agreed. On the issue of insurance, there was a problem in obtaining the guarantee because various parties had been involved in the underpinning and no guarantees were enforced. The problem arose because work had been carried out before the insurance company’s involvement. The underpinning was undertaken in an unprofessional manner, which led to substantial movement in the rear addition of 25 Graham Terrace. The design and manner of construction of the underpinning were open to criticism. As at 13 January 2000, Mr Davies could not tell if the underpinning was unsatisfactory. The letter of 21 January led to a response. Mr Johnson referred to access. Relocation was fundamental to access. When it was suggested initially to Mr Johnson that he could not say someone was refusing to act when they were not prepared to agree with him, he said he thought that was an arguable point. When asked specifically “you can’t say someone is refusing to act because they disagree with your claim”, he agreed with the question, and when asked why he assumed that Mr Johnson was refusing or neglecting to act, Mr Davies referred to the passage in the letter of 21 January 2000 when Mr Johnson stated:
I am therefore somewhat surprised to see that you proposed to act ex parte in this matter, particularly as there appears not to be a need for an Award at this point in time between our respective parties.
With regard to his authority, he was of the view that service of the notice was within the general scope of his authority. He said that he and Mr and Mrs Wassef discussed the letter. He would, he said, have been bound to discuss the letter with them. When questioned further, Mr Davies said that he could not remember whether he told Mr and Mrs Wassef specifically that he was writing the letter.
Statutory provisions
Section 55 of the London Building Acts (Amendment) Act 1939 states:
Where a difference arises or is deemed to have arisen between a building owner and an adjoining owner in respect of any matter connected with any work to which this Part of this Act relates the following provisions shall have effect:––
(e) If a surveyor appointed under sub-paragraph (ii) of paragraph (a) of this section by a party to the difference or if a surveyor appointed under paragraph (d) of this section refuses or for 10 days after a written request by either party neglects to act the surveyor of the other party may proceed ex parte and anything so done by him shall be as effectual as if he had been an agreed surveyor.
Section 5 of the London Building Act 1930 states:
“Owner” includes every person in possession or receipt either of the whole or of any part of the rent or profits of any land or tenement or in the occupation of any land or tenement otherwise than as a tenant from year to year or for any less term or as a tenant at will.
Both counsel made written and oral submissions. Upon the issue relating to the ex parte award, the letter purporting to give 10 days’ notice was dated 21 January 2000. Mr Johnson responded by two letters of 21 January 2000, and he wrote a further letter dated 25 January 2000. There is no reference in the letter of 21 January 2000 to Mr Johnson having refused to act, and it is clear that Mr Davies sought to rely upon the part of the section that refers to a surveyor neglecting to act effectively for 10 days. As indicated above, there was a response within the 10-day period. The covering letter dated 2 February 2000 refers to Mr Johnson having “refused to consider the matter of relocation compensation and the matter of the insurance backed guarantee awarded by the third surveyor”. Under para 1.1, there is reference to “the building owner’s refusal to act”. Thus, we have the position that Mr Davies’ letter of 21 January 2000 makes no reference to a refusal to act. Thereafter, within the 10-day period, Mr Johnson did act as is set out in the correspondence to which I have referred. When the award was drawn up, it relied upon a refusal to act. Such a refusal would not have required a 10-day notice. The 10-day notice is the precursor to it being alleged that the surveyor has neglected to act effectively for 10 days prior to the award. In my judgment, there is no evidence to suggest that Mr Johnson at any stage refused to act. Quite to the contrary, he continued the discussion in the correspondence. With regard to the assertion that Mr Johnson neglected to act, Mr Kennedy said that where a response is deliberately ineffective, there has been neglect to progress matters, and, accordingly, an ex parte award can be issued. I do not accept that the passage in the letter of 21 January 2000 written by Mr Johnson, where he states:
I am therefore somewhat surprised to see that you propose to act ex parte in this matter, particularly as there would appear not to be a need for an Award at this point in time between our respective parties…
is a deliberately ineffective response or an ineffective response. The battle lines had been drawn, and neither surveyor was persuaded by the
Mr Bickford-Smith further relied upon his submission that there must be a written request to act from the building owner to the defaulting surveyor. A surveyor could make such a request if he or she were authorised to do so. The letter, however, only authorised Mr Davies to serve the notice or make the ex parte award. After conclusion of submissions, Mr Kennedy told me that there was in fact a letter of authority on this particular point, and I agreed that I would defer my decision until I had received a copy of the letter and, if appropriate, written submissions on this aspect of the case from counsel. I received a letter, dated 31 January 2000, from Mr Wassef to Mr Davies, in which Mr Wassef says:
we want to kick start without any further delay the matter of relocation and associated costs and get an agreed award as soon as possible in order to allow us to find accommodation.
I consider this letter authorised Mr Davies to issue the ex parte award.
I turn now to consider the second preliminary issue. Mr Kennedy submits that “owner” includes every person in the occupation of any land or tenement otherwise than as a tenant from year to year or for any less term, or as a tenant at will. Accepting that Mr and Mrs Wassef were statutory tenants, they were, said Mr Kennedy, in a better position than a tenant from year to year or for any term less, or a tenant at will. He conceded that a lodger would be in an excluded category. It was not in dispute that a statutory tenant is in occupation of the relevant premises. The case of Brown v Minster of Housing and Local Goverment [1953] 2 All ER 1385, he said, supported his general submissions. It is noteworthy that Mr Bickford-Smith later said that the case supported his general submissions. In Brown, Barry J held that a statutory tenant was an occupier within the meaning of Schedule 1 to the Acquisition of Land (Authorised Procedure) Act 1946, and, accordingly, a statutory tenant was entitled to notice of a compulsory purchase order. This case was subsequently overruled by statutory enactment. Mr Kennedy relied upon pp1390 and 1391, and, in particular, submitted that the passage at p1390C-D was reflected in Mr Bickford-Smith’s skeleton argument and was, for the reasons set out by Barry J, to be rejected.Mr Bickford-Smith submitted that Brown concerned giving notice of a compulsory purchase order so that a statutory tenant could object to the proposals. The subject-matter of that case was accordingly entirely different from the present. The subject-matter of the 1939 Act is concerned with the creation of positive property rights. The rationale is that the procedure for appointing surveyors applies to each owner. The awards are made in relation to each owner, and there is an interest in limiting those entitled to be treated as owners under the legislation. The legislative purpose is to protect property rights superseded by the provisions of the statute. Thus it reduces certain common law remedies and provides rights that would not necessarily be available at common law. Equally, an occupier is recognised by the provisions of sections 50(2)(d) and 51(2) of the 1939 Act, and he can, accordingly, participate in the procedure, which can lead to an award.Mr Bickford-Smith relied upon para 26 of his skeleton argument. A statutory tenant remains in occupation pursuant to the provisions of the statute. He has a right to compensation, and he can, if necessary, sue for nuisance during the course of the building works. The Act is limited to those who hold a legal interest in land of a greater duration than a yearly tenancy. Hence the excluded categories of monthly or weekly tenancies and tenancies at will. I have reached the conclusion that Brown can be distinguished upon the grounds relied upon by Mr Bickford-Smith. I also agree with his submission that the definition of owner in the 1930 Act is limited to those who hold legal interests in land of a duration greater than one year. Accordingly, I conclude that Mr and Mrs Wassef are not adjoining owners for the purposes of section 5 of the 1930 Act.
I turn next to consider the estoppel submissions. Mr Kennedy made the general point that from 2 April 1996 until early November 1999 all parties proceeded upon the basis that Mr and Mrs Wassef were adjoining owners. On the definition of the limits of estoppel by convention, he referred me to the extracts from Chitty on Contracts in his skeleton argument, and to various authorities. In Hiscox v Outhwaite (No 1) [1991] 3 All ER 124, Lord Donaldson said at p135a:
For present purposes all that need be said is that his judgment is authoritative for the proposition that estoppel by convention is not confined to an agreed assumption as to fact, but maybe as to law, that the courts give effect to the agreed assumption only if it would be unconscionable not to do so and that, once a common assumption is revealed to be erroneous, the estoppel will not apply for future dealings.
In Republic of India v India Steamship Co Ltd (The Indian Endurance) (No 2) [1996] 3 All ER 641, Staughton W said at p652J:
In our judgment it is essential that the assumption be agreed for there to be an estoppel by convention: but agreement need not be express and may be inferred from conduct, or even from silence.
In the earlier authority of Norwegian American Cruises A/S v Paul Mundy Ltd (The Vistafjord) [1988] 2 Lloyd’s Reports 343, Bingham LJ said at p352:
In my judgment questions of what is just and conscionable inevitably arise in this area, as Mr Levy fairly conceded. Thus the court is not so rigid and inflexible as to insist on the parties being held to an assumed and incorrect state of fact of law when there is no injustice in allowing a party to resile therefrom… Further if the estoppel applies it will do so only “for the period of time and to the extent required by the equity which the estoppel has raised.” Thus once a common assumption is revealed to be erroneous the estoppel would not apply to future dealings between the parties.
There is no doubt, and it is not contended to the contrary, that the parties operated upon the common assumption that Mr and Mrs Wassef were adjoining owners. The appellant contends that it is not unconscionable to allow it to resile from its position. I agree with this submission. The respondents have had the benefit of the awards already made in their favour, and of moneys paid to them pursuant to those awards. They have their rights as occupiers in any event. It is not suggested that the appellant wishes to resile from the status quo in relation to the earlier awards. I agree with that view, and it seems to me that, in any event, the awards between 1996 and 1998 reserve the possibility of further awards being made. What was described as “new business” during the course of submissions is not to be approached upon the basis that Mr and Mrs Wassef are adjoining owners. On the other hand, although I have ruled that the ex parte award is invalid, it nevertheless sets out in detailed form the remaining issues between the parties. I consider that, in relation to the resolution of those remaining issues, the surveyors should continue to negotiate, and Mr and Mrs Wassef should be treated as adjoining owners in respect of those outstanding disputes.
Accordingly, I have reached the view that Mr and Mrs Wassef do not fall within the definition of owner, pursuant to the provisions of section 5 of the London Building Act 1930 or section 20 of the Party
In the circumstances, I declare that the award was made without jurisdiction, because the appellant’s surveyor had not, as alleged by the respondents, refused to act or neglected to act effectively for 10 days prior to the award, as required by section 55(e) of the London Building Acts (Amendment) Act 1939 or section 10(6) of the Party Wall etc Act 1996. Accordingly, the respondents will pay costs of the hearing of these preliminary issues, such costs to be subject to a detailed assessment in the absence of an agreement and to be paid within 14 days of the conclusion of the detailed assessment or agreement. As there is no authority directly on the point that I have been asked to consider, I shall grant leave to appeal.
Appeal allowed.
