Clarity in Party Wall Awards
Party wall awards are common place in construction projects. Neighbours cannot prevent lawful works to party walls, but they can affect how and when the works are carried out.
Late last year, the Royal Institution of Chartered Surveyors (RICS) released the 7th edition of its Party Wall Legislation and Procedure Guidance Note. The provisions of the updated Guidance Note are effective from 1 December 2019 and it applies to RICS members and firms regulated by RICS. This 7th edition of the Guidance Note is the first update for over eight years and contains a number of important changes, including a more concise draft precedent award.
The recent decision in R on the application of Subramanian v City of London Magistrates Court  EWHC 1240 (Admin) highlights just how important clarity is when drafting any award. Uncertainty can lead to time consuming – and expensive – satellite litigation.
The case involved a dispute between neighbours about a party wall.
In 2013, the Subramanians served notice on the Stewarts in accordance with the Party Wall etc. Act 1996 (“Act”) setting out that excavation works were to take place. The Stewarts did not consent so a ‘dispute’ was deemed to have arisen. In accordance with Section 10 of the Act, each party appointed their own surveyor and those surveyors also appointed a third surveyor. The surveyors made an award which resolved the 2013 dispute.
Notwithstanding that the Subramanians’ works were carried out in accordance with the surveyors’ plans, damage was caused to the Stewarts’ property. Both parties appointed surveyors in accordance with the Act to make an award in respect of the damage. They had reached agreement on all principal matters apart from a disagreement in relation to the Stewarts’ kitchen. As a consequence of the works, it was believed that the Stewarts’ kitchen floor had become tilted. It was necessary to remove the cabinetwork to rectify this issue but in doing so would mean removal of the various units. The costs of replacement cabinetwork was estimated at £104,600. The Subramanians objected as they argued, via their surveyor, there should be a discount because the Stewarts’ would effectively gain brand new cabinets for their kitchen (which were not new when they were damaged).
Third surveyor’s conclusions: 2017 Award
The third surveyor was asked to make a determination in respect of the replacement cabinetry and his referral included three related considerations;
- Whether the cabinetry needed to be replaced or whether it could be repaired;
- If replacement was required, whether a discount should be made to reflect the gain of brand new cabinets; and
- The liability for various costs.
The third surveyor determined that the cabinetry did need replacing, but a discount of 25% should be made to take account of the gain of brand new cabinets. The amount to be paid by the Subramanians to the Stewarts was a total of £85,950 inclusive of VAT (with costs and fees split between the parties). This was known as the “2017 Award”.
The Subramanians then appointed a replacement surveyor. In his view the issue with the floor of the Stewarts’ property was not caused by the works. At the time of judgment, that dispute remained to be determined.
Effect of the 2017 Award
The parties did not agree on the interpretation of the 2017 Award, which consequently led to court proceedings.
- The Subramanians argued that the 2017 Award was only an interim determination and restricted to the issues in dispute at the time. They contended the 2017 Award only dealt with valuing the loss – liability still needed to be proved.
- On the other hand, the Stewarts argued the 2017 Award was binding and that it was a final determination of the only outstanding matters in dispute at the time. The 2017 Award was said to have effectively settled the whole issue of liability.
The wording of the 2017 Award was argued to support both interpretations.
The Court held that the 2017 Award was to be a binding determination only on the value of the replacement cabinetwork.
Clarity is key
The issue here was the lack of clarity. The court judgment stated that “Precision is required in resolving party wall disputes”. Had the 2017 Award by the third surveyor made it clear exactly what was covered, the dispute could have been avoided.
Often surveyors make awards in evolving situations. When a referral is made to a third surveyor, the scope needs to be made clear. Any uncertainty on the part of the third surveyor or the parties must be clarified before the award is finalised. As the judgment also stated “A surveyor’s award has to say what it means…Legal certainty is the whole point of surveyor awards”.
This article was written by Joe Edwards and appears in the Spring edition of our construction, engineering and projects publication, Construct.Law. For more information, please contact David on firstname.lastname@example.org or +44 (0)1483 252 619.