Party walls: payment for pre-existing damage

Louise Clark analyses a major Court of Appeal decision likely to have significant impact. Key points Compensation under the Party Wall etc Act 1996 is based on common law torts to land principles A building owner is only liable to compensate for damage caused by their works In Taylor v Jones and others; Taylor v Spriggs [2024] EWCA Civ 170; [2024] PLSCS 42, the Court of Appeal has considered whether a building owner is liable to compensate an adjoining owner for all damage to its property – including pre-existing damage – resulting directly from their works under the Party Wall etc Act 1996. The law The 1996 Act provides a statutory code where a building owner wishes to carry out work that affects adjoining owners by: building on the line of junction between their property and an adjoining property (section 1); carrying out works affecting an existing party wall or structure (section 2); and excavating within certain distances of any part of a building or structure of an adjoining owner (section 6). The building owner must give notice to the adjoining owner, who will consent or not to the proposed works. Any dispute is resolved either by the parties appointing an agreed surveyor, or their own surveyors who then select a third surveyor to determine disputed matters (section 10). A third surveyor’s award may determine the right to execute any work, the time and manner of it and any other matter arising. It is conclusive but can be appealed to the County Court. The building owner must compensate any adjoining owner for any loss or damage which results from any work executed pursuant to the 1996 Act (section 7) and the common law principles relating to the assessment of damages for torts to land apply (Lee Valley Developments Ltd v Derbyshire [2017] EWHC 1353 (TCC)). The circumstances Robert Taylor owned the lower ground floor and garden comprising Flat 1, 9 St George’s Terrace, just north of Primrose Hill, London NW1. He wished to extend his flat by building out into the garden, the back wall of which formed part of the rear wall of the building at 5 and 6 St George’s Mews, comprising flats owned respectively by Peter and Linda Jones and by Peter Spriggs. Taylor’s works involved removing stepped terracing in the garden down from about the first-floor level of St George’s Mews to lower ground-floor level, excavation of the garden, underpinning of the side and end walls – ie only part of the rear wall of 5 and 6 – and constructing a new living room with a garden terrace over. By completion of the works at the end of 2019, the low-level garden between the new living room and the rear wall of 5 and 6 was 2.5m lower than previously. Damage A pre-existing internal hairline crack on the rear wall on the first floor in 5 widened during the course of the works and new horizontal cracks appeared at ground and first-floor levels. In early 2020, the ground floors of both properties dropped and became unstable. Investigations revealed significant problems with 5 and 6 which, experts agreed, pre-dated Taylor’s works but were unknown to all: A large horizontal crack in the rear wall at the level of the damp-proof course of 20mm at each end and 80mm in the middle meant the rear wall was unsupported by its foundations for a length of more than 6m and an arch had formed between the two ends. This was due to desiccation of the subsoil, leading to subsidence under the foundations of the rear wall caused by trees and vegetation prior to conversion of the property in the 1970s. Extensive voids of up to 1.5m to 2m had also developed beneath the floor slabs and the internal masonry walls where they abutted the rear wall. These had developed since the 1970s conversions, due partly to desiccation of the subsoil and partly to settlement of the sub-base. Taylor’s works had caused the necessary movement – 2mm – to break the arch which caused the internal walls and floor slab to drop by 40mm. There was no evidence that the damp-proof course crack would have come to light and the respondents been required to underpin the rear wall without Taylor’s works. The remedial works required the internal walls to be underpinned or the foundations thickened, the voids filled and the slabs relaid. Theoretically, those works could be done without underpinning the remaining part of the rear wall of 5 and 6, but no engineer would approve such a scheme. The decisions The question of the compensation payable to the Joneses and Spriggs was referred to a third surveyor who, in August 2021, found Taylor responsible for the full extent of the subsidence to their properties. In March 2023, a county court judge, on Taylor’s appeal, upheld the decision but reduced the awards because the respondents had failed to mitigate their losses by having the works done once the awards were made. The Court of Appeal decision Taylor appealed again, arguing that he was not liable for making good pre-existing damage. The respondents were entitled to be compensated for the cost of repairing damage caused by the works. Those works were limited to the underpinning of the internal walls or thickening of their foundations, the filling of the voids and the re-laying of the slabs. While the Court of Appeal agreed that in practice the underpinning of the rear wall was “non-optional”, it was not necessary in order to repair the damage to the internal walls and slabs caused by Taylor’s works. Consequently, Taylor was not liable for those costs, which would be determined by the County Court, if not agreed. Louise Clark is a property law consultant and mediator Photo by Ave Calvar Martinez/Pexels