The Court of Appeal, in the case of Power & Kyson v Shah  EWCA Civ 239, has confirmed that the dispute resolution procedure set out in the Party Wall etc Act 1996 (the Act) does not apply in circumstances where the building owner fails to issue a notice under the Act.
By way of a recap, under the Act:
- a “building owner” must notify any “adjoining owners” of works which are “notifiable” under the Act. In essence, this relates to any building work near or on a shared property boundary (i.e. the "party wall"); and
- where a building owner has served such a notice, an adjoining owner can then refer any disputes relating to the party wall works to the surveyors appointed as part of the party wall process - who have the power to determine such disputes and make compensatory awards.
In this case, Mr Shah engaged builders to undertake works on his property, which his neighbours alleged involved the partial removal of a chimney breast (which were notifiable party wall works) (the Works). However, Mr Shah did not notify his neighbours about the works in accordance with the requirements of the Act. The neighbours engaged a party wall surveyor, who then purported to appoint a surveyor to represent Mr Shah (under the default procedure under the Act, where a party fails to appoint a surveyor).
The two surveyors engaged in the dispute resolution procedure under the Act and jointly decided that (i) the Works were notifiable under the Act and (ii) Mr Shah was required to compensate the neighbours and pay the surveyors’ fees. Mr Shah declined to do so – and his failure to pay ultimately led the surveyors to commence these court proceedings.
Mr Shah contended that the surveyors were not entitled to make any award, because (i) the Works were not notifiable under the Act, (ii) he had not, in fact, served a notice under the Act in respect of the Works and (iii) the dispute resolution procedure under the Act therefore did not apply.
High Court decision
The High Court construed the Act broadly – finding that the purpose of the Act was to stop party wall disputes between neighbours from ending up in court, thereby avoiding the disproportionate costs inevitably involved in such court proceedings. The High Court decided that the Act was worded widely enough such that the dispute resolution provisions of the Act would apply even where the building owner had failed to issue a notice under the Act. It was enough that notifiable works were being carried out (regardless of whether or not a notice was, in fact, issued).
Court of Appeal decision
The Court of Appeal disagreed with the High Court and decided that the application of the dispute resolution procedure of the Act was contingent on the building owner first issuing a notice under the Act. It is only by such a notice being issued that the provisions of the Act (including the dispute resolution procedure) are engaged.
Whilst the Court of Appeal accepted that one purpose of the Act was to provide a cost-effective dispute resolution procedure that did not require costly court proceedings, another equally important purpose was to encourage parties to notify neighbours about proposed party wall works – which similarly played a role in helping to avoid disputes from arising.
Mr Shah had been advised that the Works were not notifiable under the Act, and despite the fact that it turned out this advice was incorrect, the Court of Appeal’s decision meant that the neighbours could not rely on the provisions of the Act to appoint surveyors or engage in the dispute resolution procedure under the Act.
What options are open to adjoining owners where a building owner has failed to serve a notice?
The effect of the Court of Appeal’s decision is that adjoining owners will not be able to rely on the provisions of the Act to protect themselves when, whether deliberately or otherwise, a building owner undertaking party wall works fails to serve the necessary notice.
Such a building owner is, however, still likely to be committing a trespass and/or a nuisance – the remedies for which will all still be available to an aggrieved adjoining owner. Accordingly, the Court of Appeal mentioned the ability to apply for an interim injunction to stop the works, pending the service of a notice under the Act and the engagement of party wall surveyors.
That being said, having to rely on these common law remedies – in the absence of the quick and cost-effective dispute resolution provisions of the Act – can be both costly and risky.