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As featured in the Journal of Building Survey, Appraisal & Valuation
The Party Wall etc. Act 1996 is a unique piece of legislation, as it applies a dispute resolution process for works affecting neighbouring owners that is administered by surveyors, and not by the Courts or through formal arbitration procedures. This gives surveyors appointed under the Party Wall etc. Act 1996 a statutory role and it is therefore important that surveyors properly understand the extent of that role, the responsibilities that come with it and the limits of their jurisdiction. This article examines case law to explain key issues of the surveyor’s role in detail. Much of that case law is from the County Court which means that it is not binding on other courts, but as many of those judgments make reference to decisions of higher Courts they give valuable guidance to surveyors about how the Courts understand the surveyors’ role.
Many of the decisions result from Courts deciding that actions of a surveyor were incorrect, which shows the importance of not taking for granted that the regular practice of other surveyors is necessarily correct.
This article focusses on the role of surveyors when each owner appoints their own surveyor. Many of the points will of course also apply to Agreed Surveyors.
The role of the appointed surveyors under the Party Wall etc. Act 1996 is set out in S.10 of that Act. Surveyors will only have a statutory role when the operation of the Party Wall Act is invoked. S.10(1) states that the parties shall either concur in the appointment of one surveyor, or each appoint a surveyor “where a dispute arises or is deemed to have arisen between a Building Owner and an Adjoining Owner in respect of any matter connected to work to which this Act relates”. Unless a dispute arises or is deemed to have arisen, then surveyors can only act for an owner in a consultancy capacity and not in a statutory role. A dispute cannot arise under the Party Wall etc. Act 1996 unless a notice has been served by a Building Owner expressing an intention to undertake work governed by the Act and an Adjoining Owner either disputes that notice or fails to respond within 14 days for notice served in respect of works under S.2 or S.6 of the Act. If no notice has been served, then no dispute under the Act can arise.
The basis for this was explained in the case of Kaye -v- Lawrence 20101. This judgment explained that the purpose of the Act is to grant to a Building Owner the right to undertake specific works as defined by the Act. In order to do so, the Act has the effect of suspending any common law right to undertake those specified works. The right to do those works is then dependant on following the procedures of the Act which involves serving notice and completing the dispute procedure in the event of a dissent. If works are undertaken without serving notice, then those works will be unlawful.
Many surveyors have interpreted the wording of S.10(1) to mean that a dispute can arise or will be deemed to have arisen when an owner has not served notice but undertakes works that require notice. That this is incorrect has recently been set out clearly in the case of Shah -v- Power & Kyson 20202. In this case, an owner undertook works that his neighbours believed should have required notice under the Act. They appointed a surveyor to represent them under the Act, appointed another surveyor for the Building Owner under Section 10(4)(b) and the two surveyors issued an award granting compensation. That award was appealed, and the Judge decided that where no notice has been served the rights and obligations of the parties are governed by the common law, because the procedures under the Act have not been triggered. That includes the dispute resolution mechanism. Therefore, in the absence of notice the two surveyors were acting outside their jurisdiction. This could be seen as being unfair to Adjoining Owners whose only recourse to a neighbour undertaking works unlawfully and causing damage is to take action in the Courts, but the Judge was not impressed with surveyors believing they have to assume jurisdiction on the basis of that being necessarily better than involving the Courts. It shows the important of surveyors providing clear advice on jurisdiction to a neighbouring owner at the outset so that they can act correctly in good time and avoid wasted costs.
As the surveyors will only have jurisdiction when notice is served, then surveyors do not have jurisdiction to make an award retrospectively, dealing with works that took place before a notice was served but for which a notice was then served at a later date. In that case, the surveyors only have jurisdiction to deal with the matters arising from that notice and in respect of work yet to be undertaken. This also means that surveyors do not have jurisdiction to deal with works that may have been correctly notified but have then been completed before the surveyors have issued an award. The surveyors cannot effectively require the Building Owner to carry out works in any particular manner if those works have already been completed, and the Act gives surveyors no enforcement powers to make a Building Owner change completed works. If the Adjoining Owner believes that such works are inadequate or would cause harm, then they need to seek remedy through the Courts for breach of the Party Wall Act. However, should such work cause damage to an Adjoining Owner’s property, then because notice was served originally the surveyors do have jurisdiction to award on the remedy for such damage.
Of course, surveyors are not always appointed in response to a Party Wall Act notice. An Adjoining Owner is entitled to consent to a notice which then allows the works to take place after the expiry of the statutory notice period without involvement of surveyors. However, that does not remove the right of an Adjoining Owner to have surveyors appointed to resolve later disputes that arise. This was established in the case of Onigbanjo -v- Pearson 20083 where the Adjoining Owner consented to the original notice and damage was then caused by the works. The Adjoining Owner appointed a surveyor and because the Building Owner did not do the same, appointed a surveyor for the Building Owner under S10(4) of the Act and the surveyors issued an award for compensation. As the parties were in dispute about that damage the Court ruled that it was correct for surveyors to be appointed and to issue an award determining that dispute. The key issue is that there was an original notice that started the procedure under the Act.
Whilst the operation of the Party Wall etc. Act 1996 requires a notice to be served in the first instance, once the Act does apply then the dispute resolution procedure under S.10 will have priority over the Civil Courts. The Court cannot act to resolve the dispute and only has jurisdiction to act once an award is issued by appointed surveyors and is then appealed by one of the owners. This was the outcome in the case of Lea Valley Developments Ltd -v- Derbyshire 20174 where the Court refused to determine a preliminary issue on how surveyors should determine compensation for damage and required this to be referred back to the appointed surveyors to determine based on the actual facts of the particular case.
The jurisdiction of the appointed surveyors is set out in S.10 of the Party Wall etc. Act 1996. This states that the surveyors shall settle any dispute by award and an award may determine: –
In order to determine the right to execute the proposed work, the surveyors often need to determine whether the Act does correctly apply to that work. The surveyors do have jurisdiction, for example, to decide whether they consider that a wall is a party wall as defined by S.20 of the Act, determine whether a new wall proposed under S.1 of the act is up to or astride the boundary, or decide whether proposed excavations come within the depth and distance definitions of the Act. It is not necessary for surveyors to satisfy themselves beyond any doubt that the Act applies, as they can make a decision based on a reasonable assessment of the information available to them. If the right of a Building Owner to undertake works is disputed by an Adjoining Owner, say on the grounds that the proposed works will be to a wall which the Adjoining Owner believes stands entirely on their own land, then the surveyors should consider that claim and if they are able to decide one way or another, state so in their award. If they are unable to decide with any certainty, then they are not required to refuse to issue an award until that matter is settled between the owners. As the Building Owner has served notice giving intention to use the wall as a party wall, and as the surveyors are unable to say that the Building Owner is wrong to do so, then they are obliged to issue an award and it will be the responsibility of the Adjoining Owner to either appeal that award or to seek an action in trespass in common law together with an injunction preventing an award being implemented until the trespass action is determined by the Court. In such a situation, it would be good practice for the surveyors to advise the Building Owner that whilst an award has been issued on the basis that the Building Owner is correct, if the wall is in fact not a party wall, then implementing the award could constitute a trespass. They should also advise the Adjoining Owner that the award does not override their right to seek an action in trespass in common law.
The surveyors can only issue an award in relation to matters in dispute. Frequently, that is relatively straightforward as Adjoining Owners tend to state a blanket dissent to a notice allowing all notifiable works to be dealt with by the surveyors as dispute items. However, if an Adjoining Owner were to agree to some of the proposed notifiable works and dissent only to some, then the surveyors will only have jurisdiction over the matters in dispute. This is important when disputes arise later in the process, such as damage caused by notifiable works. The surveyors do not have automatic jurisdiction to award in relation to repairs and compensation and they need to first establish that a dispute has arisen. Any claim of damage or compensation should be notified to the Building Owner who will then have the opportunity of seeking to agree the appropriate remedy with the Adjoining Owner. Only if agreement cannot be reached and a dispute arises will the surveyors then have determination to determine that. In practice, both Building Owners and Adjoining Owners are often happy to let the surveyors simply deal with damage claims from the outset, but that should not be automatically assumed by the surveyors.
The surveyors should also be careful to ensure that they are not awarding on matters outside the strict scope of the Party Wall etc. Act 1996. A common error is to set conditions on matters separate to the strict party wall works such as timings of delivery to site, or controls on noisy work to the building separate from the party wall, for example breaking up concrete slabs connected to a party wall but away from the wall itself, or works cutting into supporting walls within blocks of flats where these may be supporting a party wall, but are not part of the party wall structure itself.
The surveyors also have no jurisdiction to award on costs incurred outside the Party Wall Act process. This was made clear in the case of Reeves -v- Blake 20095 where it was determined that, whilst surveyors can award legal costs properly incurred in relation to the party wall process itself, they have no jurisdiction to award liability for costs incurred in contemplation of litigation when the Adjoining Owner sought an injunction to prevent the Building Owners works taking place without award. Such legal costs were the responsibility of the Courts and not the appointed surveyors. The same applies to claims such as for loss of rent, where a tenant leaves or demands a rent reduction as a result of being adjacent to a building site. If that loss of rent was the direct result of notifiable work under the Party Wall etc. Act 1996 then it is within the jurisdiction of the surveyors. However, if the claim is as a result of building works generally, such as if a tenant leaves before work even starts on site, then that claim would be a common law claim against the Building Owner in relation to the project generally, not a valid claim under the remit of the Party Wall etc. Act 1996.
Whilst the jurisdiction of an appointed surveyor must strictly be limited to matters under the Act, the appointed surveyor must act correctly and with personal responsibility. As established in the case of Longmire -v- Maldura 20156, an appointed surveyor cannot delegate their responsibility to a colleague or assistant. In that case the assistant mistakenly signed the award and the appointed surveyor had to show that he was in fact fully aware of the facts and had personally authorised the content of the award. It is reasonable and practical, particularly in large practices, for appointed surveyors to be assisted in their statutory duty and for that assistant to review proposals and communicate directly with their counterpart surveyor. However, the appointed surveyor must take responsibility for actually approving and agreeing the content of an award and failure to do that will make the award invalid. The assistant has no authority to make statutory decisions such as agreeing the third surveyor or issuing a 10-day request to act.
When acting as an appointed surveyor, the surveyor must act impartially and when two surveyors are appointed, they must act together as a practical tribunal to issue a fair award and not take improper instructions from their appointing owner. As stated in the case of The Chartered Society of Physiotherapy -v- Simmonds Church Smiles 19957, which dealt with an appeal against a third surveyor’s award, a surveyor must not act without regard to the interests of the party that has appointed them. It is therefore important for the surveyors to properly understand the intents and concerns of their appointing owner and then make an award that is lawful and fair. As stated in the judgment in Gyle-Thompson -v- Wall Street (Properties) Ltd 19748 “the approach of surveyors to those requirements ought not to be casual”.
The requirement for an Adjoining Owners’ surveyor to be properly impartial was emphasised in the case of Gray -v- Elite Town Management 20179 where the Adjoining Owner appointed an architect with little experience or knowledge of the Party Wall etc. Act 1996 as his surveyor. That surveyor then allowed her appointing owner to use her as his mouthpiece rather than act impartially. This was clearly criticised in the decision and also affected the ultimate decision on costs.
When a Building Owner and Adjoining Owner each appoint their own surveyor, the first duty of those surveyors is to select a Third Surveyor. The Act then requires the three surveyors, or any two of them, to settle a dispute by award although, in the majority of cases that award is settled by the first two appointed surveyors. Indeed, it is common practice for the two surveyors to not inform the Third Surveyor of his/her selection, on the basis that it is rare for the Third Surveyor to be called upon to act and otherwise the more commonly selected Third Surveyors would spend an inordinate amount of time receiving and responding to such notifications.
Either of the appointed surveyors can ask the Third Surveyor to act with them to make an award and the Act imposes no restrictions on the Third Surveyor agreeing to do that. However, several County Court decisions including Mills -v- Savage 201610 have stated that it would be improper for a Third Surveyor to act in that capacity without informing the sidelined surveyor and taking account of any representations that surveyor may have. Professional bodies such as the RICS are also likely to consider a Third Surveyor taking inappropriate action to cut out and then take work from another chartered surveyor, without good reason and following due process, to be unprofessional behaviour.
The Third surveyor can also act alone if either of the parties or either of the appointed surveyors calls upon the Third Surveyor to determine a disputed matter. Section 10(11) of the Act states that if called upon, the surveyor “shall make the necessary award”11.
The Third Surveyor can only deal with the matters referred to him. If that is a specific question about, for example, the right to construct a particular detail, then the Third Surveyor has no jurisdiction to act on his own to determine anything else.
However, once a referral is made to the Third Surveyor, it does seem that the Third Surveyor has jurisdiction over the matters referred and it is not then open to the two appointed surveyors to make an award on that particular disputed point. This was the decision in the case of Rega -v- Mills 202012 where the judgment stated that once the dispute was referred to the Third Surveyor, the Third surveyor was under an obligation to issue an award under S.10(11). Until such time as he does so, the party appointed surveyors have no jurisdiction and are not entitled to issue their own award.
In that case, the matter was complicated by the Third Surveyor effectively refusing to act. Therefore, S.10(9) came into effect and the other two surveyors were immediately obliged to select another Third Surveyor in his place. The referral by the Adjoining Owner to the Third Surveyor remained valid and the two appointed surveyors still had no jurisdiction to issue their award until the replacement Third Surveyor had determined that referral.
The party appointed surveyors should be careful in their selection of a Third Surveyor, as once selected in writing, that selection cannot then be changed unless the Third Surveyor declares himself unable to act. That was made clear in the case of Reeves -v- Young, Young & Antino 201713 where the two party appointed surveyors first agreed on a Third Surveyor selection but then put the name of a different surveyor in their award. When that second Third Surveyor made an award the Court determined that the award was not valid because he was not the correctly selected Third Surveyor. That was despite the second Third Surveyor having no reason to know that someone else had originally been selected.
Sections 10(3) & 10(5) of the Party Wall etc. Act 1996 permit an agreed surveyor or party appointed surveyor to deem themselves incapable of acting and sets no conditions on their right to do so. It would seem logical that such a surveyor should actually be incapable of acting, rather than simply not wishing to do so, but the difference between those can be difficult to prove. Indeed, it is not within the jurisdiction of one appointed surveyor to challenge and refuse to accept a deemed incapacity by the other surveyor. This was stated in the case of Mills -v- Savage 201614 where the Adjoining Owner’s surveyor had sought to dispute the right of the Building Owner’s surveyor to declare himself unable to act further.
Where an appointed surveyor does declare themselves unable to act, there is no obligation on their appointing owner to appoint a replacement. S.10(5) of the Act states that if one of two appointed surveyors declare themselves unable to act, then the party who appointed him may appoint another surveyor in their place. The key word is “may” which makes that provision optional rather than mandatory. In that case, the dispute must then be determined by the remaining appointed surveyor and the Third Surveyor. This has the anomaly that the Third Surveyor has the ability to act alone to make an award if there is disagreement between the appointed surveyor and Third Surveyor. However, for the Third Surveyor to act alone, they do need to receive a request by the appointed surveyor or either owner under S.10(11). In the absence of such a request, the Third Surveyor must act fairly with the appointed surveyor as part of the practical tribunal.
S.10(9) of the Act gives the Third Surveyor the right to deem himself incapable of acting. In that case, the two party appointed surveyors should immediately select an alternative Third Surveyor or seek an appointment from the Appointing Officer of the relevant local authority in the event that they are unable to agree. As determined in Rega -v- Mills 202015 if there has been a referral to the Third Surveyor then the two surveyors cannot proceed to make an award themselves until a replacement Third Surveyor has been selected and the details of that replacement notified to both Appointing owners.
As a result of the dissent to a Party Wall Act notice, the rights and obligations of both owners in relation to the notifiable works are delegated to the appointed surveyors to determine. The owners can make representations to the surveyors, which the surveyors are required to reasonably consider, but the ultimate decision on the disputed matters will be made by those surveyors. However, the appointing owners can always override the jurisdiction of the surveyors by reaching agreement between themselves. This was made clear in the case of Mohamed & Lahrie -v- Antino & Stevens 201716. In that case, the two owners had reached agreement to set aside the statutory procedures of the Act, and to refer matters that were in dispute between them to an independent expert. The Adjoining Owners’ surveyor and the Third Surveyor did not agree that the owners had the right to remove their jurisdiction in that way and expressed an intention to issue an award on matters in dispute. The Building Owners therefore commenced proceedings against those two surveyors seeking an injunction to prevent them acting. The Court agreed that the surveyors did not have jurisdiction to act because the owners had effectively settled disputes under the Act between them, meaning there was no longer a dispute to be determined by the surveyors under S.10.
It is important for appointed surveyors to take account of this when considering actions such as making a referral to a Third Surveyor. Before doing so, they should inform their own appointing owner of the reason for their disagreement and give their owner the opportunity of either conceding the point or seeking agreement directly with the other owner.
Section 10(13) of the Party Wall etc. Act 1996 gives the surveyors the right to determine which of the party or parties shall be responsible for paying the reasonable costs in making an award, reasonable inspections of work to which the award relates and any other matter arising out of the dispute. Such costs include the fees of the appointed surveyors. Therefore, the surveyors have a clear right to determine their fees as the costs of the award and this does not need to be a matter in dispute between the owners for them to do so.
There has been a misconception that each owner is responsible for paying the fees of their own appointed surveyor and that in the case of a Building Owner not paying an Adjoining Owner’s surveyor’s fees, then that surveyor must seek recovery of the fee from their own appointing owner. That is not correct as determined in the Judicial Review case of Farrs Lane Development Ltd (R on the application of) -v- Bristol Magistrates Court 201617. In that case the Building Owner’s surveyor pursued an action in the Bristol Magistrates Court for payment of his fees as awarded and the Magistrates Court determined that he was not entitled to do bring the action as he was not a party to the awards. The surveyor then appealed that by means of a judicial review. The High Court determined that the Act allows the surveyors to determine that a party must pay the surveyor’s fees as a cost of the award and such costs must then be paid directly to the surveyor.
As the Farrs Lane judgment identified, this can lead to potential anomalies such as where an agreed surveyor awards themselves excessive fees and the only remedy for the Building Owner is to appeal the award against the Adjoining Owner, making the Adjoining Owner the respondent to an appeal over fees for which he or she has had no responsibility. The Judgment identifies that the Court rules do allow a Court to make cost orders against non-parties and surveyors do need to be aware of that if acting improperly in their own interests.
The fees awarded must therefore be reasonable. It is not sufficient for an appointed surveyor to claim that simply because they have incurred time acting, all that time should then be paid for by the Building Owner. Similarly, it may be of no consequence that a surveyor charges their fees at a high hourly rate if the overall fee being claimed is reasonable for the nature of the dispute. This approach formed the decision in the case of Patel -v- Peters 201418 where the Adjoining Owner’s surveyor claimed a high fee and provided lengthy and detailed timesheets to justify that. The Building Owner’s surveyor refused to spend the time reviewing the timesheet and insisted that the fee had to be at a level which was reasonable for that award. The Adjoining Owner treated that as a refusal to act under S.10(6) and proceeded ex parte. On appeal, the Court determined that the Building Owner’s surveyor had not refused to act because requiring an alternative method of assessing the fee was an effective response and set aside the ex parte award. The approach of assessing a reasonable fee that could be different to the actual time incurred by the Adjoining Owners’ surveyor was a reasonable alternative approach. Surveyors should therefore ensure that they only claim fees at a level which is reasonable and if they are being required to incur excess time at the request of the Adjoining Owner, then they should obtain the agreement of the Adjoining Owner to pay for that time.
The question of reasonable hourly rates was also addressed in the case of Reeves -v- Young, Young & Antino 201719 where the purported Third Surveyor issued an award with a requirement that any further involvement by that surveyor would incur further fees at a rate of £350 per hour. That had the effect of making that rate binding on both owners unless the award was appealed in that respect. The Judge identified that this was a high hourly rate and that, if it were to be reasonable, would be justified only where the surveyor could demonstrate particular expertise. However, even if he could, it was unreasonable for the rate to be set in advance in relation to matters that had not yet arisen and which may not justify that rate. For that reason, surveyors should not include hourly rates as an advance obligation on the owners in relation to further disputes and should only charge fees based on rates and incurred time that are appropriate for such future disputes.
The role of appointed surveyors is effectively complete when they issue an award, apart from any future actions they award for themselves, such as further inspections of the properties. An appeal of an award must be made by one owner against the other owner and the surveyors will not be a party to any such appeal. Therefore, a surveyor is not obliged to incur time explaining their actions in issuing an award or to be involved in the legal process of the appeal. In legal terms, the appointed surveyors are the first instance tribunal and it is a principle in law that the first instance tribunal is not a party to an appeal against their decision and cannot be called as a witness to such an appeal. The author has experienced this first-hand when acting as Third Surveyor in a matter that was appealed as Foxland Management Ltd -v- Redab Finchley Ltd 2016 and was served notice to appear as a witness of fact by the Building Owner. On application to the Court, the Judge ruled that it was inappropriate for the Third Surveyor to be called and quashed that order.
Similarly, on one of the many appeals against awards in the cases of Chliaifchtein -v- Wainbridge Estates Belgravia20, the Adjoining Owner sought to bind the Building Owner’s surveyor and Adjoining Owner’s surveyor as respondents to an appeal on the basis that they had acted in breach of their statutory duty. On application to the Court, the Judge refused that application and determined that the Building Owner could be the only respondent.
This does not mean that the appointed surveyors cannot seek to become parties to an appeal however, and it appears that they can do so if appropriate, such as in relation to appeal against their own fees. However, in most cases where surveyors have been a party to litigation that has been in litigation outside the scope of the Party Wall etc. Act 1996 such as action to prevent the surveyors acting when they have no jurisdiction to do so.
Whilst the Party Wall etc. Act 1996 gives appointed surveyors primary jurisdiction to resolve disputes under the Act, that jurisdiction is strictly limited to works for which the Act requires notice and then only in disputes between the owners about those proposed works. It is therefore important that surveyors accepting appointments under the Act properly understand the detail and operation of the Act and the scope and limits of their jurisdiction. The Courts will require correct administration of the Act and will set aside awards made improperly. However, the correct administration of the statutory role will ensure that the Building Owners are able to undertake their proposed works with due regard to the rights and obligations of both owners.
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