The High Court has recently found that a dispute resolution clause in an agreement between a building owner and an adjoining owner can replace the provisions of section 10 of the Party Wall Act.
F&C owned 24-27 Great Pulteney Street in Soho, London. In October 2007 they entered into a deed with Dillard, who owned the adjoining property at 23 Great Pulteney Street. The purpose of the deed was to regulate their relationship whilst F & C redeveloped their property.
The deed included the following provisions:
- an obligation on F & C to “make good, repair or rectify damage” caused by the works (clause 7.2);
- an indemnity covering “loss, damage, claims and expenses relating to the structure, fabric and contents” of Dillard’s property (clause 7.4); and
- a requirement that “any dispute” relating to clause 7 be referred to the dispute resolution procedure set out in clause 12 of the deed (clause 7.5).
- a requirement that both parties to “adhere to the requirements of the 1996 Act” (Clause 11); and
- a dispute resolution procedure which set out an expert determination which would be final and binding on the parties (Clause 12).
The parties each appointed a party wall surveyor and a third surveyor was appointed. In the course of the works between 2010 and 2011 three party wall awards were produced, none of them appealed.
In April 2013, a fourth award was produced which awarded £9,350 of compensation to Dillard’s property. Dillard appealed and argued:-
- the matters dealt with by the award were covered by the 2007 deed, and should have been referred to expert determination in accordance with clause 12, not the party wall surveyors; and
- The damages should have been in excess of £500,000, rather than the £9,350 awarded.
The matter was initially listed before HHJ Bailey in the Central London County Court who decided that the deed did not oust the 1996 Act and dismissed the appeal. Dillard appealed to the High Court.
Akenhead J found that:-
- The references to “any dispute” in clauses 7 and 10 were emphatic and all embracing. Although clause 11 required the parties to comply with there was “no hint or suggestion” that these clauses 7 and 10 were subject to clause 11.
- The procedure in clause 12 was much wider than section 10 of the 1996 Act because it extended to works not “connected with any work to which [the] Act relates“.
- Parties may contractually opt out of the 1996, as they had done in the deed.
Akenhead J therefore allowed the appeal, and found that the dispute should have been referred to the dispute resolution mechanism under clause 12 of the deed, and not the party wall surveyors under section 10 of the 1996 Act.
This case was unusual in that there was a written agreement to the works long before party wall surveyors had been appointed.
This may become an increasingly common trend among developers as it will allow them to proceed with their works without being held up by party wall surveyors.
If it includes a dispute resolution clause framed in similar terms, then it will also mean that the determination by the expert is final and binding, and will remove any appeal that there might have been under section 10(17).