What’s new with party walls?

The 7th Edition of the RICS Guidance Note on Party Wall Legislation and Procedure was published in August last year, and became effective from 1 December 2019. It arrives eight years after the 6th Edition and addresses a number of developments that have arisen since, such as new RICS professional conduct rules and recent case law. The new edition contains a number of subtle changes in tone, as well as updating its content to reflect recent clarifications and fine-tuning of the Party Wall etc Act 1996 (the Act). Some of the formal language has been dropped in favour of a plain English lexicon and there is subtle encouragement towards a less adversarial approach to party wall work. For example, there is a new suggestion in the section on service of notices that it may be appropriate to advise owners to allow more time for replying to notices, particularly over holiday periods, with the commentary “such courtesy would allow for a friendlier approach to be adopted”. Separately there is a new section on ex-parte awards, asserting that they are not common and surveyors should first carefully consider whether one is appropriate. Some of the most significant revisions to the Guidance Note are outlined below. New professional conduct section The most obvious change in the new edition is the inclusion of an entire section dedicated to professional conduct, right at the start of the Guidance Note. Some of the content existed previously, but the editors clearly decided to emphasise the importance of the surveyor’s role and duties. Perhaps this stemmed from the rumoured increase in complaints to the RICS in relation to those holding themselves out as party wall surveyors. Certainly, several recent cases have highlighted serious errors of judgment on the part of surveyors, either unaware of the hefty responsibility that comes with the appointment or, worse, deliberately exploiting that appointment. In his judgment in Wellter v McKeeve (Central London County Court, 27 November 2018), Judge Bailey included an entire section entitled “The approach to their task of the party wall surveyors” in which he set out a number of core duties, such as acting impartially and professionally. Pressure imposed on party wall surveyors by their appointing owners was also relevant in that case, an issue dealt with thoroughly in the new Guidance Note, which now makes clear that “appointing owner” is the right terminology, and “client” is not. Jurisdiction  There are several new references to what a party wall surveyor can and cannot do as part of his statutory appointment. Surveyors are warned “to be careful not to authorise works outside of the Act” and there are a number of mentions of boundaries – which often fall into a dispute while addressing notifiable works. The Guidance Note now adds boundaries to its list of issues that surveyors have no jurisdiction to address in an award (alongside crane oversailing and easements). It suggests that these neighbour disputes could be the subject of separate instructions. The case of Fenton v Lewis (Central London County Court, 18 July 2018) clarified that where an award states there is a party wall it is not binding the parties to such legal status anew, but is instead a necessary observation for the founding of the jurisdiction of the surveyors. Electronic service The revised Guidance Note makes reference to the slightly ambiguous position resulting from Knight v Goulandris [2018] EWCA Civ 237; [2018] EGLR 19 and the only piece of legislation introduced since 2011 (the Party Wall Act Electronic Communications Order 2016) which amends section 15(1) of the Act. The amendment extends the methods of service under the Act to include electronic service, as long as the recipient has stated a willingness to be served that way. The case (in which the relevant notice was served before the 2016 Order) provided that electronic service could be good service in any event. Surveyors are alerted to the issue because the brief 14-day period for appealing awards can mean the service date is critical.  Fees and arrangements with appointing owners There have been a number of cases dealing with recovery of surveyors’ fees in the party wall process, and several new points are made to reflect lessons learned. In particular, surveyors are advised to agree terms and conditions with their appointing owners in advance, so that they can still recover costs even if the notice is withdrawn by consent. In Mohammed and another v Antino and another (Central London County Court, 13 December 2017) Judge Bailey said the “wise surveyor will ensure his appointment contains a term requiring payment of fees for work properly done”. The Guidance Note translates this as “prudent surveyor” – an upgrade from the rest of its contents, which are generally about reasonableness rather than prudence.  There is also a recommendation to warn appointing owners that they can increase surveyors’ costs by making “excessive demands” – an experience which is unfortunately not uncommon. The Guidance Note now contains confirmation that the remedy of enforcing payment of sums ordered in an award through the Magistrates Court can include surveyor’s costs – reflecting the decision in R (on the application of Farrs Lane Developments Ltd) v Bristol Magistrates Court [2016] EWHC 982 (Admin). Issues not addressed  There are a number of problems that arise in practice but which are not yet addressed by the Guidance Note. Two such significant and difficult issues that arise fairly often in practice include assessment of damage and dealing with insurers. Damage and causation In R (on the application of Subramaniam) v City of London Magistrates Court [2019] EWHC 1240 (Admin) an award was made covering the quantum of compensation payable, but it did not determine whether the works caused the damage (or a proper measure of loss). As a result, the award provided no requirement for immediate payment as the cause of the damage was still in dispute (as had been raised by a new building owner surveyor). The importance of avoiding this mistake is not highlighted in the Guidance Note. Rather it states: “… such compensation is payable in respect of any loss or damage suffered by the AO [adjoining owner] or occupier that has been caused by works…” Practitioners should remember to step through the key stages of assessment: damage; cause; repair/remedy; cost; compensation. All of these should be clearly stated in one award or a series of awards if a dispute on damage has been raised. How to deal with insurers While it might be quite a task to address this in the Guidance Note, it would be helpful and timely to guide the “prudent surveyor” through a case that is twinned with an insurance claim. While there is increased focus on the surveyor’s role as an impartial administrator of dispute resolution under the Act – and the ethical behaviour required – the permutations and nuances can lead to a high degree of uncertainty, due in part to the number of players that can be involved. In addition to owners and surveyors there may be loss adjusters, expert consultants, solicitors, etc. The usual four interested persons can turn into 10. Given that level of interest and uncertainty, the most important dialogue – that must resist all unnecessary scrutiny and influence – is that of the two surveyors. However, the commercially strong insurance process that will run alongside the statutory process under the Act can be difficult to reconcile. A firm of insurers may: 1. Adopt a usual say-nothing, issue-nothing approach. 2. See the Act as expedient, adding certainty, and legally binding. 3. Or, not trust the Act and guide all matters toward litigation. 4. Have suitable expert consultant surveyors/engineers for opinion and suitable designers and a project team for remedial works. 5. Target its usual repair solution, which will be based on what is due under the policy and not the loss for any damage under the Act. 6. Await the outcome of an award to decide on its next actions. 7. Settle the invoices of the surveyors dependent on policy. 8. Request one of the two surveyors to be its expert witness. Unfortunately, there is no confusion-busting branded website for reference should a party wall surveyor be in uncharted waters, and inclusion in the RICS Guidance Note would help. Collaboration is key The obvious conclusion given the high degree of uncertainty is for the surveyors to work together, keeping those underlying duties front-of-mind and then stepping together through the minefield to resolve the dispute and create an award. Their language should be co-operative, even if the external influences are not.  What is evident is that the new Guidance Note speaks with an increased authority and confidence. It has moved forward and those practising in the area should ensure that their service is enhanced in turn. Summary of main changes New section dealing with professional conduct No precedent schedule of condition Guidance on serving notices electronically Clarity on what is outside the surveyor’s jurisdiction No reference to solicitors holding escrow monies as AML rules now prevent this Helena Davies is a partner in the property litigation team at Brabners LLP and Stuart Traynor is a director in the building consultancy team at Avison Young and practising party wall surveyor. They are both members of the Pyramus and Thisbe Club