Lea Valley Developments Ltd v Derbyshire

Property – Party walls – Measure of damages – Jurisdiction – Claimant obtaining award authorising works under section 10 of Party Wall Etc Act 1996 – Defendant’s adjoining property damaged by works – Issue arising as to measure of damages – Defendant applying for declaration that court lacked jurisdiction or stay pending determination by surveyors of compensation – Whether court having jurisdiction – Whether stay of proceedings being appropriate – Applications dismissed The claimant was the freehold owner of a property in Muswell Hill, London. The defendant owned the adjoining property which consisted of flats, let out on assured shorthold tenancies. The claimant carried out building works, including notifiable excavation works under section 6 of the Party Wall etc Act 1996, authorised by an award under section 10 of the 1996 Act. The award contained at para 4(D) a requirement that the claimant should: “Make good all structural or decorative damage to the adjoining owners property occasioned by the works… If so required by the adjoining owner, make payment in lieu of carrying out the works to make the damage good, such sums to be determined by the agreed surveyor”. The works caused damage to the defendant’s property and it was agreed in principle that the property had been so badly damaged that it could not be economically repaired and had to be demolished and rebuilt. The claimant’s position was that, in the circumstances and for the purposes of section 7(2) of the 1996 Act, the correct measure of compensation in respect of the damage suffered by the defendant was by reference to the diminution in value of the property. The defendant argued that it was by reference to the cost of demolishing and rebuilding the property. In proceedings to determine the basis on which damages should be assessed, the defendant sought, amongst other things, a declaration that the court lacked jurisdiction to determine the matter; or alternatively, if it had jurisdiction, an order staying the claimant’s claim pending a determination by the surveyors of the outstanding issues in relation to compensation. Held: The applications were dismissed. (1) The scheme of the 1996 Act was that where there was, as in this case, any dispute as to the works proposed to be carried out on or near to a boundary, following notice issued by the claimant in the absence of consent by the defendant, a dispute was deemed to have arisen. Section 10 provided that such a dispute should be settled by an award made by two of the surveyors or in the event that they cannot reach agreement, the third surveyor. The Act provided a comprehensive code by which any disputes in relation party wall matters could be determined without recourse to the courts. Section 10 (12) was very wide terms. It enabled the surveyors not only to determine the works that might be carried out and the manner in which they might be carried out, but also any other matter arising out of or incidental to the dispute, including the power to award the appropriate compensation in accordance with section 7. It was clear that the award was to be conclusive, subject to a right of appeal. The rights of appeal were in very broad terms and entitled the parties to a complete re-hearing on appeal. The court had power to rescind the award or modify the award in such manner as it thought fit. It was not limited to challenges based on errors of law or a want of jurisdiction. (2) The court had an inherent jurisdiction to provide declaratory relief under section 19 of the Senior Courts Act 1981 and as set out in CPR 40.20. For the inherent jurisdiction to be ousted would require very clear wording which did not appear in section 10 of the 1996 Act. Although it was clear that the intention was to enable the parties to have their disputes resolved without recourse to the courts, it did not go so far as to exclude the power of the court in appropriate circumstances to grant such relief as might be appropriate on the facts of any particular case. In the present case, there was no such prohibition on the court participating in determining any dispute and the very wide powers of appeal indicated that that was not a matter in which Parliament felt the need to exclude the court’s power to grant relief in appropriate circumstances. The award in this case was in fairly clear and straightforward terms. It was final and conclusive in accordance with section 10(16), no appeal having been started by either party to overturn or modify its terms. The claimant was asking the court to determine a narrow issue and ought to be capable of determination by the court after a relatively short hearing. Given the agreement on the key facts, the question was one of law and interpretation of the first party wall award and section 7(2) of the Act. It did not require determination by the court of any extensive factual or expert issues. If that issue were to be determined, it would not be trespassing on the role of the surveyors under the 1996 Act, it would simply be identifying the appropriate test that the surveyors should adopt when making their assessment. The court would not be determining the dispute as to the amount of compensation, but simply be determining the appropriate interpretation of the law, the award and the Act so as to enable the surveyors to move forward and settle the further award. (3) The advantage of having the point determined was that it could narrow the issues between the parties and leave the surveyors to determine the facts and figures based on the reports that were already available. Although that would not exclude the possibility of any appeal, it was likely to dispose of the key dispute. Given that this matter could be determined by the court in short order, it was the sort of issue that was appropriate to be dealt with by way of a Part 8 claim. Nicholas Isaac (instructed by Devonshires Solicitors LLP) appeared for the claimant; Justin Mort QC (instructed by Child & Child) appeared for the defendant. Eileen O’Grady, barrister Click here to read transcript: Lea Valley Developments Ltd v Derbyshire