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The Party Wall Act or the Technology & Construction Court – which decides compensation in a dispute?

When it comes to the Party Wall Act, not renowned for its clarity, disputes are pretty common occurrences. What is less common is for one of them to end up going all the way to the High Court to determine the appropriate method of assessing compensation.

It all started when Lea Valley Developments Ltd entered into a Joint Contracts Tribunal Design and Building contract to build 12 houses next door to a property made up of six residential flats owned by Mr Thomas Derbyshire in Muswell Hill, London.

But things soon went wrong when in the course of excavation work, severe damage was caused to the block of flats, the tenants had to move out and it was agreed that there was no option but to demolish and rebuild the property.

Compensation

At this point, a dispute arose. Mr Derbyshire’s surveyor argued that compensation should be assessed based on the cost of demolishing and rebuilding the block, but Lea Valley protested that the correct measure of compensation was by how much the property had gone down in value as a result of the problems.

Normally, under the Party Wall Act, the resolution of any dispute falling within its remit usually culminates in the party wall surveyors making a binding award which governs any compensation payable to an adjoining owner without having to go to court.

With this as a baseline, one of the issues between the parties was whether the Technology and Construction Court (TCC) had jurisdiction to decide how the compensation should be calculated.

Inherent jurisdiction

However, the TCC decided that the dispute resolution scheme contained in the Party Wall Act did not oust its inherent jurisdiction to provide declaratory relief meaning the court was able to get involved and identify the correct measure of compensation while leaving the surveyors to determine the amount.

So although legislation contained within the Party Wall Act appears to provide a complete dispute resolution process, with no previous authority on this issue the decision suggests there may be other situations in which the court is able to intervene in assessing compensation following a dispute

For help and information on any business dispute, please contact Wards Solicitors’ business disputes specialist team.

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