How to calculate compensation for breaching the party wall act

News - 14/05/2013

Where the building owner infringes an adjoining owner’s property rights, for example by enclosing upon their wall, the surveyors may be called upon to value those infringements in an award of damages, or compensation. But how should surveyors approach this task? The Court of Appeal have helpfully given guidance on this issue in a couple of recent cases.

The first case is Seeff v Ho [2011] EWCA Civ 186 in which the Court found that the general damages should be assessed according to the principles in Wrotham Park Estate v Parkside Homes [1974] 1WLR 798 (often termed “Wrotham Park Damages”).

Essentially, it is such a sum of money might reasonably have been demanded by the claimant from the defendant in exchange for permitting the invasion of the claimant’s right.

The starting point will be 5% of the increase in value that the building owner perceives he will receive as the result of the infringement. In many cases this will nit be a large amount of money. In the Seeff case the Court of Appeal awarded £500.[pullquote_right]… it is such a sum of money might reasonably have been demanded … in exchange for permitting the invasion of the claimant’s right[/pullquote_right]

But it will not be a small amount in every case. This was demonstrated in the second case of Jones & Lovegrove v Ruth & Ruth [2011] EWCA Civ 804 in which the Court of Appeal clarified that 5% was only the starting point, and was subject to adjustment in appropriate cases. In particular:-

  • Where the adjoining owners is, on objectively reasonable grounds, more reluctant to allow the infringement; and/or
  • the building owner is more willing to pay a premium for the ability to infringe the adjoining owners rights, for example where the right to infringe is necessary to complete the development.

In the Jones case both elements were present, and the Court of Appeal found that an increase to one third of the perceived increase in value should be applied This translated to an award of £15,000.

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