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Party Walls – no notice, no Act!

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24th March 2023

Katie Gray discusses the Court of Appeal decision in Power & Kyson v Shah [2023] EWCA Civ 239 and the impact it has on the Party Wall Act 1996.

When it comes to the Party Wall etc.. Act 1996 (PWA 1996), very few cases have ever troubled the Court of Appeal. That is probably a testament to the practicality of the PWA 1996 and the wide powers given to the parties’ appointed surveyors to resolve disputes before they ever see the inside of a courtroom, as well as the strict test for appeals of party wall awards. However, the lack of authority in this area, and the reliance by many on the “accepted practice” of party wall surveyors (which may or may not be justifiable under the PWA 1996) can make it difficult for lawyers to advise clients caught up in a party wall dispute.

One of the most frequently encountered problems arises when a building owner, carrying out works to which the PWA 1996 applies, does not intend to invoke the PWA 1996 at all. Many a property lawyer will have been involved in a dispute where a client’s neighbour has excavated for foundations or removed a chimney breast in ignorance (or wilful defiance) of the need to serve notice under the PWA 1996 and to have any dispute resolved by way of a party wall award. In those circumstances, there has long been a question about whether an adjoining owner may rely on the dispute resolution procedure set down by section 10 of the PWA 1996, or whether they are left with common law remedies only.

That question was recently answered by the Court of Appeal (CA) in Power & Kyson v Shah [2023] EWCA Civ 239, in which Nicholas Isaac KC and I acted for the appellants. Like many of the appellate decisions in this area, the proceedings started out as an attempt by party wall surveyors to recover their fees from a recalcitrant building owner (Mr Shah), who had failed to serve any notices before beginning work and, indeed, maintained at all times that his works were not notifiable under the PWA 1996 at all. The adjoining owners, having suffered damage as a result of the works, appointed a party wall surveyor, who himself appointed a surveyor for Mr Shah under the default procedure under the PWA 1996. The two surveyors together made a party wall award requiring Mr Shah to compensate the adjoining owners for the damage and to pay the fees of both surveyors. When the fees went unpaid, the surveyors sought to enforce the debt in the Magistrates Court, at which point Mr Shah contended that, notice having not been served, the PWA 1996 did not apply and the party wall award was void.

On appeal to the High Court, it was argued for the appellants that a purposive construction to the PWA 1996 had to be taken. The purpose of the PWA 1996 is to avoid disputes and to resolve what would otherwise be burdensome and disproportionate neighbour disputes coming before the court. The PWA 1996 is widely worded, and does not require notice to be served before the PWA 1996 can be invoked – all that is required is a matter which is connected with any work to which the PWA 1996 relates and which is in dispute between the building owner and adjoining owner.

The CA disagreed. A purposive approach “has a natural limit: merely because a statute was intended to achieve a general result does not mean that its individual provisions have to be interpreted as providing for that general result if the language used by Parliament simply does not warrant or justify it” (Paragraph 23, Power & Kyson v Shah [2023] EWCA Civ 239). Though keeping disputes out of court was one of the purposes of the PWA 1996, so too was the requirement for the building owner to serve notice before carrying out notifiable works – thus preventing disputes arising in the first place. In fact, if anything, the service of the notice was critical to that purpose because the timing of the notice allowed the works to be agreed in advance.

Accordingly, if no notice is served by the building owner before they carry out works that would be notifiable under the PWA 1996, then the adjoining owner has no remedy under the PWA 1996 and is left with common law remedies only; namely the right to bring claims in trespass, nuisance and negligence, and the right, if appropriate, to seek an injunction.

That conclusion leads to a number of practical consequences of which lawyers practising in this area ought to be aware. First, an adjoining owner wishing to rely on the PWA 1996 when their neighbour is in the process of carrying out notifiable works is entitled to apply for an interim injunction to stop works pending the service of a notice and the making of a party wall award. That application will need to be made urgently and usually ex parte. This is not a particularly attractive option for an “innocent” adjoining owner who will not only have to meet the initial legal costs of the injunctive proceedings, but will also have to give an undertaking in damages (which is likely to be a significant amount of money if the building owner is a property developer). It remains to be seen how much latitude courts will be prepared to give to an adjoining owner in this situation.

Secondly, it is of the utmost importance to obtain a schedule of condition of the adjoining owner’s property at the earliest opportunity. This would normally be dealt with by the party wall surveyors before the making of a party wall award but is often overlooked in legal proceedings until the need to exchange witness statements or Scott schedules and can make it very difficult to prove damage.

Thirdly, the issue of costs needs to be considered. It is clearly much cheaper for parties to rely on the dispute resolution procedure laid down by the PWA 1996 than to have to run disputed legal proceedings. It seems to me very arguable that a building owner who has elected not to serve notice under the PWA 1996 and has left the adjoining owner with no remedy other than at common law, ought to be liable for indemnity costs.

Though it is fantastic to have such a detailed and important ruling from the CA on the application of the PWA 1996, I cannot help feeling that the decision is, in effect, something of a developer’s charter. Many ordinary people lack the means and the appetite for risk to issue legal proceedings, and still less proceedings for urgent injunctive relief. A developer may well feel that the decision not to serve a party wall notice has, all of a sudden, become more commercially attractive.

This article first appeared in the Property Litigation column in Practical Law in March 2023.

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