The Party Wall Paradox: How Power & Kyson v Shah Undermines the Precedent Set in Kaye v Lawrence

This article examines the conflicting outcomes of Kaye v Lawrence and Power & Kyson v Shah [2023] EWCA Civ 239, highlighting how the latter decision creates a legal loophole that incentivises non-compliance with the Party Wall etc. Act 1996. It argues that the integrity of the Act is compromised unless judicial or legislative clarification is provided.

I. Introduction

The Party Wall etc. Act 1996 was enacted to provide a structured dispute resolution mechanism for building works affecting adjoining properties. It aims to protect adjoining owners by requiring building owners to serve notice and engage surveyors where necessary. However, recent case law has exposed a paradox that undermines this protective framework.

II. Kaye v Lawrence: Affirming Adjoining Owners’ Rights

In Kaye v Lawrence [2010] EWHC 2678 (TCC), the court held that an adjoining owner could request Security for Expenses (SfE) under Section 12 of the Act, even where the proposed works were confined to the building owner’s land. This decision affirmed that the right to SfE is not contingent on physical access but rather on the nature of the notifiable works.

III. Power & Kyson v Shah: The Jurisdictional Limitation

In Power & Kyson v Shah [2023] EWCA Civ 239, the Court of Appeal ruled that the Act’s dispute resolution mechanism is only triggered by the service of a valid notice. Without such notice, the statutory protections—including the right to SfE—are not available. The court reaffirmed the principle: 'No Notice, No Act.'

IV. Legal Paradox and Practical Implications

The juxtaposition of these two decisions creates a perverse incentive. A building owner aware of the precedent in Kaye may choose not to serve notice, thereby avoiding the risk of an SfE request. Under Shah, the adjoining owner is then barred from invoking the Act’s protections. This undermines the very purpose of the legislation and shifts the burden onto the adjoining owner to pursue costly common law remedies.

V. Conclusion and Call for Reform

The Court of Appeal’s decision in Shah has effectively neutralised the protective precedent set in Kaye. Unless addressed through legislative amendment or further judicial clarification, the Party Wall etc. Act 1996 risks becoming a tool for avoidance rather than compliance.