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24th April 2017

The Party Wall Act 1996 – Assessment of Compensation and Civil Courts’ Jurisdiction

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On 19 April 2017 Mrs Justice O’Farrell sitting at the Royal Court of Justice held that the court had an inherent jurisdiction to determine the appropriate method of assessing compensation following a dispute under the Party Wall Act 1996 (“the Act”), notwithstanding the fact that the Act provides a comprehensive code by which such disputes could be determined by a surveyor.

The case is Lea Valley Developments Ltd v Derbyshire [2017] (unreported) which facts can be summarised as follows: In 2014, Lea Valley Developments Ltd entered into a JCT Design and Building contract to construct 12 houses adjacent to the property owned by the defendant which comprised of six residential flats. That required a notice of excavation works under the Act to be given to the defendant. Severe damage was caused to the defendant’s property, and the tenants had to vacate. It was accepted that the property would have to be demolished and rebuilt. The dispute arose as the parties were unable to agree the method of assessing compensation due to the defendant. The defendant’s surveyor argued that compensation should be assessed by reference the cost of demolition and rebuilding; the claimant’s position was that the correct measure of compensation was by reference to the diminution in the value of the property. One of the issues between the parties was whether the court had an inherent jurisdiction to deal with matters related to the Act and determine how compensation should be calculated.

When it comes disputes connected with any work to which the Act relates, section 10 of the Act provides a complete code by which such disputes can be determined without recourse to the court. Accordingly, where there is a dispute between a building owner and the adjoining owner, in the absence of consent, such a dispute “shall” be settled by surveyors. Under s.10(12) the powers give to a surveyor are very wide, and include determining matters incidental to dispute. That incorporates the power to award the appropriate compensation. The defendant, therefore, argued that the court had no jurisdiction to determine how compensation should be assessed and the issue should be dealt with by a surveyor. The Court disagreed. For the court’s inherent jurisdiction to be ousted there had to be clear wording to that effect. There was nothing in the Act prohibiting the court from participating in any dispute. Therefore, it has been confirmed that the court has an inherent jurisdiction to identify the appropriate methodology to be adopted by surveyors, but still leaving the amount of compensation to be determined by the surveyor.

For more information please contact Anna Gora on 01604 463113 or click here to email Anna.