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Limitation, jurisdiction and dispute: new party wall decision

On 19 July 2021, HHJ Parfitt in the County Court sitting at Central London handed down an extempore judgment in Park Lane Holdings Inc & Anr v Saidco & Ors (Unreported), a party wall appeal raising a number of interesting and previously undecided issues. In particular, in relation to compensation payable under the Party Wall Act 1996, HHJ Parfitt decided that for the purpose of s9 of the Limitation Act 1980, time runs from the date of damage to the adjoining owner’s property, even though the quantum of compensation requires the making of an award, and thus an award should not be paid once 6 years from the date of damage have passed.

This appeal arose out of an unusual scenario. Works to a block of flats to create four flats in place of two, on two of the upper floors, were carried out by a company, H&MUK from 2009-2013. H&MUK had possession of the two floors for that purpose from the headlessee, Park Lane Holdings. Since the works were notifiable under the 1996 Act, H&MUK as building owner served notice on Saidco, the owner of a lease of flat 54 on the floor below the works. Surveyors were appointed, and a party wall award permitting and delimiting the works, in July 2009. In late 2009, there were complaints that there had been a leak into flat 54 by reason of the works. The party wall surveyors corresponded on the leak, and whether compensation was payable, into 2012, but no award was made, and the issue went quiet. Later, in 2015, the building owner’s surveyor deemed himself incapable of acting.

Fast forward 5 years. H&MUK was in liquidation. Saidco, a Panamanian company, was suspended under Panamanian law, but the adjoining owner’s surveyor wanted to resolve what he thought was the outstanding issues. Thus in November 2020, acting alone, he made what he said was a party wall award against the headlessee in 2009, Park Lane Holdings (who had itself been an adjoining owner in the party wall process), and against the current headlessee, K Group. He awarded over £200K in compensation for the 2009 water leak, and required the provision of updated structural calculations, saying that the new flats would have to be removed if these were not provided.

Park Lane Holdings and K Group appealed on 12 grounds. HHJ Parfitt agreed on all 12. First, and perhaps most straightforwardly, he agreed that the adjoining owner’s surveyor could have no jurisdiction under the Act to make an award binding on someone other than the original building and adjoining owners, save perhaps had there been an estoppel or a waiver. The appeal succeeded on its first ground.

In addition, however, HHJ Parfitt decided a number of other points of interest.

  1. He decided that the surveyors’ jurisdiction under s10 to determine the deemed dispute which had arisen in 2009 from the service of a party wall notice did not include a later dispute as to compensation for alleged damage which occurred after the first award. The surveyors had determined the dispute before them and their jurisdiction came then to an end.
  2. Even if the Act had applied, for any surveyor to have jurisdiction under s10 to make the 2020 award there had to be a dispute between the Appellants and Saidco. The Appellants did not know there were any issues, and Saidco was suspended and could not be said to be in a dispute with anyone. There was thus no jurisdiction under s10.
  3. Even if there had been, and had the Appellants and Saidco been in dispute, new surveyors would have to have been appointed under s10(1) and it would be those new surveyors who would have had jurisdiction, not the surveyors from 2009.
  4. HHJ Parfitt also decided that party wall surveyors are subject to the requirements of natural justice. Though the precise requirements will depend on the facts of each case, here, where an award was made without the appellants knowing anything about it, the surveyor’s acts were so far outside natural justice as to make the award invalid.
  5. The surveyor could not have jurisdiction under s10 of the Act to require the provision of information; nor could he have jurisdiction to order the removal of the new flats on the 6th and 7th floors. In any event, to require their removal at this late date would be absurd.
  6. Even if the surveyors from 2009 had retained any jurisdiction over the current parties and even if there was a dispute, the adjoining owner’s surveyor could not act alone under s10(6) or s10(7) as he suggested he had. The building owner’s surveyor from 2009 had deemed himself incapable of acting. Thus until the building owner appointed a new surveyor under s10, which is the consequence of such a deeming, there was no building owner’s surveyor to refuse or neglect to act effectively so as to give the adjoining owner’s surveyor jurisdiction to act alone.
  7. Nor could any failure to act by the third surveyor, even if there had been such a failure, allow for a lone award; the effect of s10(11) was to require the appointment of a new third surveyor in those circumstances instead.

The remaining ground of appeal of note was based on limitation. It was said by the Appellants that any claim for statutory compensation under the Act was limitation barred under s9 of the Limitation Act 1980, which gives a 6 year limitation period, and an award awarding compensation 11 years after damage could not and should have been made. HHJ Parfitt agreed. He agreed that time began to run, for any cause of action arising in relation to statutory compensation, when the damage to be compensated was caused, even though the process to determine quantum was the making of an award. He made this finding by reference to similar decisions in relation to compensation for compulsory purchase. For compulsory purchase under the Compulsory Purchase Act 1965, the cause of action for compensation arose when the local authority took possession, even though the quantum is to be determined later by the Land Tribunal, so a failure to apply to the Tribunal within 6 years statute-barrred the compensation claim. Likewise, an award for compensation under the Party Wall Act 1996 cannot and should not be made more than 6 years after the damage has been suffered.

Stephen Jourdan QC and Cecily Crampin instructed by Scott Goldstein of Payne Hicks Beach appeared for the Appellants, with Cecily Crampin presenting the appeal on 19 July.

Full judgment can be viewed here

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