Who do you serve notice on when you come across an adjoining building with multiple owners i.e. Flats?
Serving Party Wall Notice on a building in 'multiple' ownership.
This article represents Lee Kyson’s views on the subject matter and although it is a reasoned explanation it should not be interpreted or construed as giving any advice, as each scenario must be determined on its own merits. I am not aware of any court precedence to either support or contradict the content. This article, although slightly amended since, was originally published in the Faculty of Party Wall Surveyors’ Newsletter in their Winter 2017 publication and it relates from the perspective of notice being served on one building owner. If the building owner were to be surrounded by several properties of multiple occupancy then his situation could be compounded to the extent of the costs incurred in fulfilling his statutory obligations causing his proposed work to be impractical.
This question has arisen at forum meetings on several occasions and has never received a concise answer, not as far as his writer is aware anyway; comments received from other surveyors appear to confirm this. Party structure Notices may require a different approach as there may be other factors associated with such notices. In essence this article precludes matters concerning Party Structure Notices in regard to the ‘Building’.
Section 20 of the Act 'Interpretation' commences by telling us that 'In this Act, unless the [context] otherwise requires,....' this could be a double-edged sword in that Leaseholders are classified as owners, however, in the following scenario, all part of the same 'property', taken in [context] could the leaseholders also be defined as 'occupiers' for the purpose of serving notice and following the Act?
If we create a scenario whereby the adjoining freeholder owns the structure and there are multiple flats -say 3- in leasehold ownership. I would suggest serving on the freeholder.
If notices are served on all adjoining owners i.e. freeholders and leaseholders, then the building owner may well have a situation whereby the freeholder appoints his own surveyor and the three leaseholders all appoint their own, but different, surveyors. There could potentially be four Awards in the making if all the Adjoining Owners are treated as ‘Owners’ and are served notice, thereby leading to the possibility of having four different Third Surveyors selected. If this is what Parliament intended then surely if a Third Surveyor (10(1)b) is required for the two surveyors, then we would need another two tiers of surveyors to arbitrate over the ‘Third Surveyor’, two ‘Fourth Surveyors’ and then one ‘Fifth Surveyor’... is this a spin off from pyramid selling?
If damage is caused this could lead to an absurdity whereby one owner wishes to settle for cash and get their own builder in; another wants the contractor to put it right; another just wants the cash; who gets the cash/work, if for example cash is agreed, then what if they cannot agree on a builder?
Four adjoining owners and their respective surveyors could all be wanting different solutions, with the possibility of four Third Surveyors unable to reach agreement either.
How do we avoid this situation arising and prevent the building owner being exposed to unnecessary costs?
I believe there is a possible solution which is written within the Act, depending upon how you read it...
If, say, section 3 is taken literally:
S3.- (1) Before exercising any right conferred on him by section 2 a building owner shall serve on [any] adjoining [owner] a notice (in this Act referred to as a "party structure notice") stating-
The dictionary definition for [any] is:
'..used to refer to one or some of a thing or number of things, no matter how much or how many.' S3 (1) clearly does not say 'all'.
[owner] is singular.
Lee Kyson’s understanding from reading the Act is that if notice is served on the freeholder (one of many owners - owners as defined by the Act) the other owners and occupiers are covered by:
7.- (1) A building owner shall not exercise any right conferred on him by this Act in such a manner or at such time as to cause unnecessary inconvenience to [any] adjoining owner or to [any] adjoining occupier.
Irrespective of whether a notice and, say, an award was to be served on only one adjoining owner (the free holder), all other ‘owners‘ still benefit from that Award, as their status of being owners or occupiers has not changed by their not being named in or having not been served a notice or award. Does section 7(1) only apply to owners who are a party to an Award? I believe not as I would not expect to serve notice or Awards on occupiers as well, but they are still covered by 7(1) as are 'any owners'.
So, if one or more [any] of the Adjoining Owners suffers unnecessary inconvenience they have the right to claim. This would also apply to 7(2).
7.- (2) The building owner shall compensate any adjoining owner and any adjoining occupier for any loss or damage which may result to any of them by reason of any work executed in pursuance of this Act.
If we also look at section 6(10)
'Nothing in this section shall relieve the building owner from any liability to which he would otherwise be subject for injury to [any] adjoining owner or [any] adjoining occupier by reason of work executed by him.'
Whereby, we can see that it is clearly intended to protect all adjoining owners and occupiers regardless of number. An argument recently put forward by an adjoining owner’s surveyor (Jan 2019) is that irrespective of there being an Award in place with the freeholder, a leaseholder who does not have an Award specifically between him/her and the Building Owner must litigate under common law to make a claim. This cannot be right, there is no requirement to serve notice, or an Award, on occupiers, albeit they are mentioned in the Act, have a vested interest which is recognised and allows them to have any issues of injury, damage etc. to be dealt with under the auspices of the Act. If his interpretation is correct then, as there is no Award between the building owner and occupiers they too would have to pursue any claim by way of litigation. The Act is specific in that it mentions owners and occupiers. The adjoining owner’s surveyor is very keen to pick up three more appointments from the leaseholders.
A point to note is that this writer does not believe it necessary to pursue a path of litigation, as there are several high court decisions that clearly state that one of the purposes of the Act was to prevent recourse to the court - or law as it is written in Hansard. Therefore, the path taken by this writer has always been to utilise the provisions of the Act.
Again, this tells us that if the Act is invoked then all owners and all occupiers are covered by s6(10) it is not incumbent upon all owners being served notices and perhaps culminating in multiple Awards, there is no need, one should suffice. However, multiple schedules of condition may be prudent.
If we look at section 6(9)
On completion of any work executed in pursuance of this section the building owner shall if so requested by the adjoining [owner] supply him with particulars including plans and sections of the work.
we are told that the building owner is to supply the adjoining [owner] again this is in the singular, however this does seem to be the nature of section 6 as 6(5):-
In any case where this section applies the building owner shall, at least one month before beginning to excavate, or excavate for and erect a building or structure, serve on [the adjoining owner] a notice indicating his proposal and stating whether he proposes to underpin or otherwise strengthen or safeguard the foundations of the building or structure of the adjoining owner.
which tells us to serve on [the adjoining owner], multiple owners are not envisaged, section 6(3) is identical in also referring to the adjoining owner.
This scenario does change in S6(10), as previously stated, whereby it is clearly intended to protect all adjoining owners and occupiers regardless of number.
The correlation continues with Section 1 works and serving Notices, once again the Adjoining Owner is in the singular until we come to S1(7)
Where the building owner builds a wall wholly on his own land in accordance with subsection (4) or (5) he shall do so at his own expense and shall compensate [any] adjoining owner and [any] adjoining occupier for any damage to his property occasioned by
Once again, we can see that the intention is to protect [any] adjoining owner or [any] adjoining occupier. If this was not the intention, then it would say [the] adjoining owner.
Searching through section 2 we find that there are references to 'the building of [the] adjoining owner', however benefits are once again conferred upon [any] owner.
Generally, the rest of the Act refers to 'the adjoining owner' in the singular.
This leads me to believe that the adjoining owner is intended to be in the singular after all a husband and wife are both owners under the Act in the same way as leaseholders, but we do not serve separate notices on both the husband and wife.
Obviously serving notice on all 'owners' is the best business case for party wall surveyors but, is it the correct way when in comparison a competent surveyor could carry out a RICS level 3 survey of the whole property for a fraction of the cost that would be incurred by several party wall surveyors appointed to deal with the schedules of condition, which may only be for the insertion of two or three steel beams into a party wall.
My understanding is that the Act is, from the Building Owner’s perspective, an enabling Act giving him rights that supplant common law; on the other hand, the Act protects the interests of the Adjoining Owner(s) and Occupier(s) and it should be asked in what way are their interests not protected if there is only an Award with the Freeholder.
In a somewhat less complex scenario in 2017 I served notice on the freeholder of an adjoining property and was subsequently threatened, by the leaseholder, with court action, if I did not serve a separate notice on them as a leaseholder. I explained that they were covered by the Act, but this did not appease them. I explained the scenario to my appointing owner who supported my view and simply said 'let them take the matter to court, what are they actually going to achieve?'. An award was agreed with freeholder's surveyor and served on the freeholders with a copy forwarded to the leaseholders. The notifiable works were completed without any further action being taken, I believe the leaseholders were co-operative. Strangely enough the leaseholders obtained permission from their freeholder and decided to carry out a loft conversion themselves but applied my principle of only serving notice on the adjoining freeholders.
Also, in 2017 I assisted a building owner who served notices himself on five adjoining owners, all of whom dissented.... I was involved in five different Awards, which were for three steel beams resting in the Party Wall. He was fortunate in that the adjoining owners who did not appoint me as agreed surveyor appointed surveyors who concluded matters amicably and sensibly.
In conclusion is it any wonder that building owners seek to circumvent the Act if faced with the possibility or prospect of six surveyors to oversee the work that an agreed surveyor or two surveyors at most, could quite comfortably accomplish?
Furthermore, it must be asked in what way are leaseholders disadvantaged by an Award concluded with the Freeholder? They are in effect a party to the Award in that they are covered in respect of damage, injury and unnecessary inconvenience. If Awards were concluded with all leaseholders there could be conflicting Awards to the detriment of other leaseholders and the freeholder, let alone the complications in the event of a dispute; and where does it end? given that a building may be many stories in height encompassing many adjoining owners.
I have been reviewing the clauses that could be put in an award to clarify the protection afforded to the leaseholders.
Subject to the relevant provisions of the Act make good forthwith all damage to the Adjoining Owner’s property occasioned by the said Works in materials to match existing and to the satisfaction of the Two Surveyors; or at the request of the Adjoining Owner, make a payment to the Adjoining Owner in lieu of the Building Owner’s contractor making good the Adjoining Owner’s property in such sum agreed and determined by the Two Surveyors to represent the cost thereof. For the protection of any leaseholders affected by such damage the sum agreed or awarded is to be utilised for the expeditious repair of the damage.
Ensure that the leaseholders of any flats within the requisite distance as defined by section 6(1) + (2) are provided with a copy if this Award.
In the event of any damage being caused to the fabric of the building this will be repaired. In the event of damage or injury being caused within the building then the leaseholders and/or occupants have a right to be compensated in accordance with sections 6(10), 7(1) + 7(2) of the Act.
1. 6(1) Nothing in this section shall relieve the building owner from any liability to which he would otherwise be subject for injury to any adjoining owner or any adjoining occupier by reason of work executed by him.
2. 7(1) A building owner shall not exercise any right conferred on him by this Act in such a manner or at such time as to cause unnecessary inconvenience to any adjoining owner or to any adjoining occupier
3. 7(2) The building owner shall compensate any adjoining owner and any adjoining occupier for any loss or damage which may result to any of them by reason of any work executed in pursuance of this Act
Should any claims arise the Two Surveyors are to be notified immediately and in the event that the matter is not agreed between the Building Owner and the Leaseholder(s) and/or Occupiers the Two Surveyors will settle the matter insofar as their jurisdiction allows. It should be noted that personal injury will almost certainly be beyond the jurisdiction of the Two Surveyors.
It should also be noted that costs may be apportioned to any party by the Two Surveyors. I would be grateful to receive any comments on the above or suggestions for any clauses.
I would be grateful for any comments good or bad! or suggestions especially in relation to adding clarity to advising leaseholders that they are covered.