Party Wall etc Act 1996 – Compensation – Appellant carrying out works to property causing damage to respondents’ properties as adjoining owners – Surveyor awarding compensation under 1996 Act – County court upholding decision on liability but reducing quantum – Appellant appealing – Whether appellant liable for cost of repairing pre-existing damage – Whether judge erring in decision on costs – Appeal allowed in part
The appellant was the leasehold owner of flat 1, 9 St George’s Terrace, London NW1. The respondents were respectively the owners of two mews properties to the rear of the appellant’s garden and were “adjoining owners” for the purposes of the Party Wall etc Act 1996.
The appellant carried out work in the garden of his property. He was the “building owner” and liable to compensate any “adjoining owner” for any damage to them by reason of any work executed pursuant to the 1996 Act.
The appellant’s works caused the rear wall of the respondents’ properties to drop by about 2mm, but that in turn caused the internal walls and floor slabs to drop by 40mm. That was attributable to significant pre-existing defects to the respondents’ properties, but experts agreed the rear wall would have to be underpinned for the remedial works to take place.
Awards were made by a surveyor under the 1996 Act requiring the appellant to pay each of the respondents substantial sums as compensation. The appellant’s appeals to the county court were heard together. The judge upheld the appellant’s liability to compensate the respondents but varied each award by reducing the quantum. She ordered the appellant to pay 75% of the respondents’ costs.
The appellant appealed contending that: (i) the judge erred in holding him liable for the cost of repairing the pre-existing damage; and (ii) the decision on costs was wrong in principle and/or irrational.
Held: The appeal was allowed in part.
(1) The 1996 Act provided a statutory code which applied where a “building owner” wished to carry out certain works that could affect “adjoining owners” (as defined in section 20), namely, where they wished to build on the line of junction between their property and an adjoining property (section 1); wished to carry out works affecting an existing party wall or structure (section 2); and proposed to excavate within certain distances of any part of a building or structure of an adjoining owner (section 6).
In each case, there was a procedure for the building owner to give notice to the adjoining owner to consent or not to the proposed works, and for any dispute to be resolved in accordance with section 10. An appointed surveyor would make the necessary award which might determine the right to execute any work, the time and manner of executing any work, and any other matter arising out of the dispute. Such an award was conclusive but might be appealed to the county court, which might rescind or modify it as it thought fit: Shah v Power [2023] PLSCS 45; [2023] 1 WLR 2830 considered.
(2) Section 7(2) of the 1996 Act required the building owner to compensate an adjoining owner for “any loss or damage” which “may result by reason of” any work executed in pursuance of the Act. That was the language of causation. Where, as in the present case, the issue was one of physical damage to the adjoining owner’s property, the first question was to identify the damage caused by the works.
There was no doubt that the damp proof course crack, the fact that the rear wall was unsupported by its foundations, and the voids under the floor slabs, were not caused by the appellant’s works.
The respondents’ wish to repair their properties was reasonable and they should be compensated by awarding them the cost of repairing the damage caused by the works. However, there was a further question whether any deduction or allowance should be made for “betterment”, ie, the fact that the repairs would give the adjoining owner something better than they had before the damage occurred.
(3) It was for the defendant who sought a deduction from expenditure on the ground of betterment to make out their case. It had to be shown that the claimant had a choice and could have mitigate their loss at less cost. If the route to mitigation chosen was more costly than an alternative, a case would have been made out for a deduction. But if it showed that there was no other choice, the betterment had to be seen as incidental and there would be no ground for it to be deducted.
A distinction needed to be made between benefits in the form of money (or which the claimant could reasonably be expected to realise in terms of money) and non-pecuniary benefits: Harbutt’s Plasticine Ltd v Wayne Tank and Pump Co Ltd [1970] 1 QB 447 and Sartex Quilts & Textiles Ltd v Endurance Corporate Capital Ltd [2020] PLSCS 40; [2020] Bus LR 1729 7 considered.
(4) In the present case, the expert evidence was clear: theoretically the remedial works could be done without underpinning the rear wall, but no engineer would approve such a scheme and no contractor was likely to agree to carry out the work. Therefore, the underpinning was non-optional; and it had not been shown that to do the work now saved the respondents the cost of having to do it later.
In reality, the respondents had a defective building long before the appellant carried out his works; although those works brought the defect to light which had made it necessary for them to do something, it was not caused by the appellant or his works, and the 1996 Act did not require him to pay for remedying it.
The case would be remitted to the county court to find how much of the cost of the works allowed by the judge was attributable to work for which the appellant was not liable.
(5) It would be necessary to re-consider the costs of the county court proceedings in any event. However, the judge was entitled to regard the respondents as the successful party. They succeeded in establishing that the appellant’s works had caused the relevant damage to their properties. The judge described that as the central issue, and the Court of Appeal was in no position to say that she was wrong. If the respondents had failed on that issue, they would have recovered nothing. As it was, they recovered substantial amounts.
Nicholas Isaac KC and Richard Miller (instructed by Cripps LLP) appeared for the appellant; Howard Smith (instructed by Child and Child Law Ltd) appeared for the respondents.
Eileen O’Grady, barrister
Click here to read a transcript of Taylor v Jones and others; Taylor v Spriggs
