The Party Wall Act and compensation for non-physical damage - Dewar Hogan

The Party Wall Act

and compensation for non-physical damage

The Party Wall Act and compensation for non-physical damage

The Party Wall Act and compensation for non-physical damage

If there is one section of the Party Walls Act which comes across a litigator’s desk more than another, it’s section 7(2).

It doesn’t sound complicated – ‘the building owner shall compensate any adjoining owner and adjoining occupier for any loss or damage which may result to them by reason of any work executed in pursuance of this Act.’ – but if there’s one thing which litigation teaches you, it is that when Wittgenstein observed that ‘anything that can be said at all can be said clearly’, he didn’t have the challenges faced by parliamentary draftsmen in mind.

For a start, any building work tends to cause the neighbour loss and damage, in the form of noise, inconvenience, unlettability, dust and what-have-you. The common law is that people just have to put up with that, unless it’s caused by a failure by the builder to carry out the work considerately. Is party wall work to be different? And if so, what was the point of section 7(1) saying that the building owner has to carry out his work in such a way as to cause as little inconvenience as possible to the adjoining owner?

In practice, this question doesn’t trouble party wall surveyors where physical damage of the type associated with works to party walls or excavations (cracks, subsidence and the like) are caused. The practice is to prepare a schedule of condition of the adjoining property beforehand, have a look afterwards to see if there’s any damage, and if there is, then as far as we know, party wall surveyors seldom hold back from awarding compensation on the grounds that the damage was inevitable, or at least not attributable to any lack of care by the building owner. And rightly so – the entire point of having a Party Wall Act at all is that works to party walls tend to damage buildings; it doesn’t seem likely that Parliament was intending to permit such works while requiring the adjoining owner to go in for the contortions – whose fault was it anyway; the builder or the developer who instructed him to do the works?, and so on – which arise when ordinary building works damage neighbouring property.

But what about the racket made by hammering at the party wall, digging machines, and so forth? Is the adjoining owner to recover for loss caused by that? An ordinary adjoining owner wouldn’t be able to; is an owner adjoining party wall works? What if the adjoining property is investment property? The owner may well find his property unlettable while the racket goes on; is he to be able to recover for that?

It is clear that an adjoining owner can recover for loss of rent while physical damage to his property is repaired. The sort of non-physical damage to which we’ve referred, which arises out of the existence of the works themselves, is much more controversial. It’s akin to economic loss caused by a tort (of which the law in principle does not allow recovery, although this principle is subject to various exceptions and is becoming eroded).

And, even if the neighbour can recover, is the recovery to be only for the notifiable works, or for the whole building programme of which the notifiable works are part? Say the neighbour is extending his property upwards, and with it the party wall. The notifiable works may include only constructing the physical envelope of the new building to be, but the whole programme may be much longer, and was only enabled to occur at all by reason of the PWA and the notifiable works. Is the Act to compensate neighbouring owners for the loss caused by the whole of the works, or only that which can be attributed directly to the notifiable works?

Again, if one goes back to physical damage, party wall surveyors seldom undertake investigation to confirm that the damage can be attributed only to the notifiable part of any excavation, and not to perhaps more extensive non-notifiable excavation – and again, understandably so. Should the works be separated into notifiable and non-notifiable components for the purpose of assessing economic damage? Was the non-notifiable work ‘work executed in pursuance of this Act’? – well, as so often with words, the answer is: in a certain light, yes, but in another way, no.

Another question: what does ‘by reason of the work’ mean? Imagine an adjoining owner whose tenants leave, say, six weeks before the notifiable works begin. He isn’t going to be able to re-let, or if he is, only at a lower rent. Can he recover for those six weeks? On the one hand, in common parlance clearly it is a loss caused by the works – assuming they happen at all, that is; nothing compels the building owner ever actually to carry them out. On the other, by a certain kind of lawyer’s quibble it could be said that the loss during the six weeks is caused not the works but by the prospect of the works.

Should this matter? At common law, if you have Japanese knotweed on your land, and the neighbour’s land becomes unsaleable as a result, you are liable for that damage, notwithstanding the fact that in a sense it is caused by the prospect that the knotweed may spread rather than the reality. Is the statutory PWA regime different?

We have seen a few cases along these lines. Based on the various counsel’s opinions we have seen (no two of which have been alike), and even the odd third surveyor’s award, all we can say, and that with some confidence, is that the biggest fool can ask a question which the wisest man cannot answer. There are many unresolved cruxes and unexplored areas in the Party Walls Etc. Act. These are some of them.