The Importance of the Party Wall etc Act 1996. Court of Appeal comes down hard on developer.

When carrying out building work it is important to understand the legal obligations placed upon property owners and occupiers. Broadly speaking responsibilities will often rest with the occupier of a property whether by virtue of statute, or under contract. This may therefore include a domestic tenant under an assured shorthold tenancy (AST) as well as a commercial tenant under a lease.

The Law

One piece of legislation that is very much maligned in legal circles, and often overlooked in real terms, is the Party Wall etc. Act 1996 (“the Act”).

The Act provides a framework for preventing and resolving disputes in relation to party walls, boundary walls and excavations near neighbouring buildings. It places responsibility on a building owner or occupier proposing to start work covered by the Act, who must give adjoining owners and/or occupiers notice of its intention in the way set down in the Act. This is often referred to as a Party Wall Act Notice. Adjoining owners can agree or disagree with what is proposed. Where they disagree, the Act provides a mechanism for resolving disputes.

It should be noted that the Act is separate from obtaining planning permission or building regulations approval which may also need to be sought.

The Case

In the recent joined case of: Scandia Care Limited (1) and Rahimian (2) v Ottercroft Ltd, the importance of the Act was acknowledged by the Court of Appeal which upheld the earlier decision of the judge at first instance, whom had granted to the Claimant a discretionary injunction instead of awarding damages in lieu of a loss that had been claimed.

The case involved the development of a café with residential flats above including an external staircase as a means of fire escape, that, it was alleged infringed a right of light.

The defendants (a company and one director of that company) had commenced the works without notice to the claimant which was required by the Act. The defendants then continued to build despite proceedings being issued by the claimant seeking to restrain the works. As part of those proceedings, the defendants gave undertakings in relation the works, which they subsequently breached by continuing with the offending works.

The court took exception to this and despite finding that the infringement was minor, that no significant damage had occurred, and that the damage could be measured in money the judge at first instance somewhat unexpectedly granted an injunction. The judge held that the breach of undertakings was an overwhelming reason to grant the injunction despite failing these usual tests for an award in damages.

Injunctions are a judicial order (a court-led remedy) which either serve to restrain a person from beginning or continuing an action threatening or invading the legal right of another, or conversely compelling a person to carry out a certain act, e.g. to make restitution to an injured party.

Unhappy with the decision, the developer challenged the decision of the lower court, but the Court of Appeal unanimously upheld the earlier decision. What that meant in practice, was that a developer was told that its conduct had displeased the court(s) and instead of being told to “pay up” in compensation and it could leave the stairs where they were, the court demanded that the developer remove the staircase it had installed.

Why is this important. The case should be seen as a warning to developers, not to act in a “heavy handed” manner as was suggested here.

The Court of Appeal decided that the judge at first instance was right to consider the defendants conduct and to award an injunction even where damages could be an adequate remedy. Expert evidence indicated that there was at least one feasible alternative scheme which would have overcome the infringement at minimal (likely to be less than £6,000) cost to the defendants and as such the injunction was not oppressive to them.

Lessons learned?

This judgment as is often the case, is very much a fact-specific case and so how it much can be relied upon is uncertain? The decision of the Court of Appeal whilst capable of being challenged in the Supreme Court is still binding and therefore good law, but it is also unlikely to result in an upsurge of applications for injunctions, even in similar situations. The Act provides a cost effective mechanism for alternative dispute resolution, and so will remain an appropriate forum for such disputes.
What is clear is that the failure to serve Party Wall Notices, and a breach of undertakings given led the court in this case, to determine that the developer must reinstate the property at greater cost and much inconvenience.

Developers should be mindful that their conduct will be scrutinised and taken into account as part of the court’s decision making process. Developers should endeavour to work with adjoining owners and ensure they are advised of development plans; kept informed of progress; told about relevant time-scales; and that any objections or concerns are dealt with appropriately.

Contact Us

If you are a developer with future plans or a property owner and have concerns over nearby development, then please contact Commercial Property Solicitor Ian Bowker on 01952 297979 for a no obligation discussion.

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