Tim Reid, senior associate, Hogan Lovells:
The existence of section 12 of the Party Wall etc. Act 1996 (PWA) is often overlooked and yet its importance should not be. It confers on both a building owner and an adjoining owner the right, in certain circumstances, to require the other to give security for the expenses that may be incurred when works are carried out on their land or to their property.
Kaye v Lawrence
In Kaye v Lawrence, the High Court considered the meaning of section 12. It arrived at a common sense interpretation, but first the facts.
Briefly, a dispute under section 10 of the PWA arose after the building owner served a party wall notice under section 6. The surveyor appointed to deal with the dispute refused to include in his party wall award a requirement that the building owner take out an insurance policy in respect of the potential damage to the adjoining owner’s property. He said the issue of security could only arise if the building owner was carrying out works on the adjoining owners property, which he wasn’t. The adjoining owner disagreed, and the matter ultimately ended up before the court.
Ramsey J in the TCC arrived at a common sense interpretation:
- A building owner who intends to carry out works that the PWA relates to can be reasonably requested to give security to an adjoining owner in respect of inconvenience, losses and damage the adjoining owner may suffer.
- That the works are to be carried out exclusively on the building owner’s land does not mean adjoining owners will not suffer loss and inconvenience.
- That the works are carried out under section 6(1) and 6(2) (which govern excavation within 3 or 6 metres of the adjoining owners land) rather than under any other section of the PWA, should be no bar to seeking security for those losses.
A reminder about section 12
Kaye v Lawrence is a useful reminder of the very existence of section 12, which many adjoining owners and, to a lesser extent, building owners, fail to take advantage of.
In my experience, the tail-end of many disputes under the PWA relate to:
- The amount of compensation that the party wall surveyor has awarded to the adjoining owner under section 7(2) in respect of unnecessary inconvenience, loss and damage.
- The adjoining owner’s claim for damages arising out of the building owner’s failure to comply with the award or the PWA itself.
If the adjoining owner has exercised his rights under section 12 and security is already in place to cover part or all of the compensation and damages sought, his negotiating position when trying to reach a compromise will be much stronger than would otherwise have been the case. Once the section 10 dispute is resolved or the party wall surveyor has made his determination, it is simply a question of releasing part or all of the security to the party entitled to receive it (which will usually, but not always, be the adjoining owner).
This is a serious advantage for anyone trying to recover compensation that has been awarded to them under section 7. It can be contrasted with what happens if the paying party refuses to pay compensation, where it is very likely that the receiving party will have to bring a claim in the County Court for breach of statutory duty before being able to enforce the party wall surveyor’s award.