Guidance from the Court of Appeal on the Party Wall Act and neighbouring basement construction
Gray v Elite Town Management Ltd  EWCA Civ 1318 (Court of Appeal, 3 November 2016)
The Appellant, Mr Gray, had constructed a basement at his property by excavating soil and installing contiguous piles around the new space. The Respondent, ETML, later decided to construct a basement under its adjoining property by underpinning the walls, including the party wall with Mr Gray’s property. Appointed surveyors made an award approving the proposed works. Two problems emerged after construction began: some of Mr Gray’s piles had deviated beneath the party wall, and the proposed underpinning involved reinforced concrete which amounted to “special foundations” for which the consent of Mr Gray, as Adjoining Owner, was required. The first award was modified by a second award altering ETML’s basement design. The parties subsequently agreed that the second award was ultra vires and a nullity. After cracking appeared on the party wall in his property, Mr Gray spent £1,320 on repairs. ETML served another party wall notice on Mr Gray, proposing underpinning of the party wall and doing work as necessary on the projecting piles. Both parties appointed professionals to act as their surveyors, although Mr Gray’s choice was not a surveyor but a trainee architect who acted in accordance with his wishes. The parties could not agree on a third surveyor, so one was appointed by the local authority. His award authorised ETML to carry out works using mass concrete underpinning of the party wall. He held, inter alia, that Mr Gray was entitled to recover his costs under s.10 of the Party Wall Act 1996 but had provided insufficient particulars to determine quantum.
Mr Gray issued two actions: a claim for a declaration that the first award was ultra vires and for £1,320 in damages, and an appeal against the third award, in particular on the basis that the third surveyor had been wrong to authorise the underpinning scheme in the third award as it caused more inconvenience to him than other possible schemes. The judge refused to grant the declaration sought, but awarded the appellant £1,320 for the cracked walls. He rejected the claim that the surveyor had been wrong to authorise the underpinning scheme, but varied the third award so as to entitle the appellant to payment under s.11(11) on the basis that the works previously carried out by him were being used by ETML. In respect of costs, he held that ETML should pay only one third of Mr Gray’s surveyor’s costs, since she had not exercised her own professional skill and had simply done what Mr Gray wanted.
The judge granted permission to appeal against his decisions on both the validity of the first award and the party wall appeal. The latter permission was, however, a nullity, pursuant to Clark (Inspector of Taxes) v Perks (Permission to Appeal)  1 WLR 17, because it concerned a second appeal in respect of which the judge lacked jurisdiction to grant permission. That matter was therefore dealt with as an application for permission to appeal with the appeal to follow if granted.
The issues on the permission application were:
- Whether s.7(1) of the Act, which obliged a Building Owner not to cause unnecessary inconvenience to any Adjoining Owner or occupier, imposed a duty on party wall surveyors to authorise the construction solution which caused the minimum inconvenience;
- Whether the scheme approved in the third award was suitable;
- Whether the appellant should have been awarded his surveyor’s full fee.
The issue on the appeal was whether the judge should have granted the declaration sought.
The Court of Appeal’s Decision
The Court of Appeal dismissed the appeal and refused the application for permission. Jackson LJ, with whom McCombe and Christopher Clarke LJJ agreed, held:
- Party wall surveyors had to have due regard to both the Building Owner and the Adjoining Owner in making an award, but there was no absolute obligation on them to authorise a design which caused the minimum of inconvenience; the s.7(1) duty concerned the manner in which construction works were carried out and did not extend to the scheme chosen, Minturn v Barry  AC 584 and Gyle-Thompson v Wall Street (Properties) Ltd  1 WLR 123 applied. Whatever a surveyor decided would inevitably cause some degree of inconvenience to both parties.
- The scheme approved in the third award was satisfactory from an engineering point of view.
- The judge had adopted an entirely proper approach in reducing the recoverable fees in respect of the appellant’s surveyor. She had been appointed to act as a party wall surveyor but had largely done what the appellant had told her to, rather than exercising her own independent view and expertise. None of the issues raised in the permission application gave rise to any point of principle or practice meriting a second appeal. Permission to appeal was therefore refused.
- There had been no worth in granting a declaration in respect of the first award’s validity. The appellant had instead been awarded £1,320 damages and there was no error of principle in taking that route to compensate him in respect of the problems arising from the works authorised by the first award. Declarations were a discretionary remedy. The judge had been entitled to exercise his discretion to decline declaratory relief.
For the judgment, please click here: Gray v ETML  EWCA Civ 1318.
Crispin Winser appeared for the Respondent, instructed by Child & Child.