Last Man Standing

The Party Wall etc. Act 1996 (“the Act”) came in to force on 1st July 1997 and is law in England and Wales. The Act provides a statutory mechanism for resolving disputes where the implementation of ‘notifiable’ works by one property owner (“the Building Owner”) impacts on an adjoining property owner (“the Adjoining Owner”). Notifiable works generally comprise adjacent foundation excavations, works to repair, rebuild or modify a shared ‘party’ wall and the construction of walls at, or astride, the ‘line of junction’, being the legal boundary between the lands of two or more owners.  In the event a ‘dispute’ arises between the respective property owners over the notifiable works, the Act requires both parties to appoint their own party wall surveyor, whereby the two surveyors then select a third surveyor to adjudicate any dispute they may have.  Alternatively, the parties may elect to jointly appoint a single ‘agreed surveyor’ as a neutral arbiter. The agreed surveyor or the three surveyors, as the case may be, then resolve the dispute by way of an ‘award’ which is legally binding unless rendered invalid through procedural defect or where successfully appealed by either party in the county court within 14 days of service.  

Introduction

The number of party wall cases coming before the courts for determination has increased exponentially in recent years.  Whilst the Act has now been law throughout England and Wales for 22 years at the time of publication, it is only over the last 10 years that party wall surveyors, and lawyers, have started to benefit from judicial clarification of what is often cited as being a poorly drafted and vague piece of legislation.

In 2015, one particular unreported case, heard before His Honour Judge Edward Bailey in the county court at central London, presented a set of circumstances that has arguably left the party wall surveying community with more questions than it answered.  The case of Property Supply & Development Ltd v Verity [1] (“Verity”) dealt with the somewhat calamitous consequences of various surveyors resigning from their post and the limitations of the Act in insisting on their replacement.  This has arguably been compounded by the decisions in two further cases [2], again heard by HH Judge Bailey in the county court at central London, over the following year.  Mills v Savage and Sell [3](“Mills”) and Reeves v Young and Antino [4] (“Reeves”) both considered the grounds upon which members of the statutory tribunal can or cannot be replaced.  Whilst these cases were decided in the county court and are, thus, not binding, all three were decided by the same specialist, and respected, circuit judge who has decided more cases under the Act than any other member of the judiciary.  Therefore, these cases are at least persuasive in other cases at this level and, accordingly, worthy of analysis.

The thread of commonality between these cases concerns the construction of the tripartite statutory tribunal pursuant to section 10(1)(b) of the Act, and the peculiar circumstances arising where any members of that statutory tribunal decide they no longer wish to participate in the ‘quasi-judicial/arbitral’ role they had otherwise committed to in accordance with section 10(5) of the Act.  This paper explores the implications and practical challenges faced by the practicing party wall surveyor as a result of these cases.

Construction of the Tribunal

Section 10(1) of the Act sets out the procedure for the Building Owner and the Adjoining Owner in appointing the party wall tribunal where a dispute has arisen within the meaning of the Act.  This statutory ‘practical’ tribunal may be fulfilled either by a single surveyor acting alone as a sole arbiter [5], or as a triumvirate comprising two surveyors each appointed by the respective parties, with a third surveyor selected by the two party-appointed surveyors to act as a neutral referee [6].  Section 10(1) of the Act states:

10.-(1)  Where a dispute arises or is deemed to have arisen between a building owner and an adjoining owner in respect of any matter connected with any work to which this Act relates either –

(a)  both parties shall concur in the appointment of one surveyor (in this section referred to as an “agreed surveyor”); or

(b)  each party shall appoint a surveyor and the two surveyors so appointed shall forthwith select a third surveyor (all of whom are in this section referred to as “the three surveyors”).

The only legal requirement imposed by the Act as to the validity of such appointments is that they shall be made in writing.  Section 10(2) of the Act states:

(2)  All appointments and selections made under this section shall be in writing and shall not be rescinded by either party.

The prohibition against the rescission of a party wall surveyor’s appointment enshrined in section 10(2) of the Act is sacrosanct.  This is what separates the appointment of surveyors operating in a contractual client-professional relationship - whose role can easily be terminated - from the unique ‘sui generis’ role of the party wall surveyor.  This is notwithstanding the fact the party wall surveyor may have, in parallel, an underlying contract with their appointing owner.  The impunity from termination of the statutory role by either of the parties is clearly necessary for the party wall surveyor [7] to properly fulfil their statutory role impartially and free from interference by their instructing party.  It is common in contentious party wall disputes that a party wall surveyor, acting properly in accordance with the provisions of the Act and the expectations of any associated professional body guidelines, will determine matters that do not find favour with their appointing parties.  Section 10(2) of the Act therefore preserves the sanctity of the party wall surveyor’s need to discharge their statutory duties without fear of reprisals.  However, the prohibition against the rescission of appointments means the Act has to provide an option for the appointed party wall surveyor to bring an end to their role where circumstances require.  

Reconstruction of the Tribunal

While the Act does not entitle the appointing parties to dismiss their surveyor, irrespective of any underlying contract between them, it does allow the appointed surveyor to walk away from their appointment and so end their statutory role.  Section 10(5) of the Act states:

(5)  If, before the dispute is settled, a surveyor appointed under paragraph (b) of subsection (1) by a party to the dispute dies, or becomes or deems himself incapable of acting, the party who appointed him may appoint another surveyor in his place with the same power and authority.

It is pellucidly clear that two of the scenarios cited in section 10(5) of the Act will bring an end to the appointed surveyor’s role, irrespective of that surveyor’s participation in the decision making process.  However, it is the third scenario, namely where a surveyor ‘deems’ himself incapable of acting, that is the focus of this paper.

It is also notable that the terminology adopted by the statutory draftsmen in section 10(5) of the Act departs from the largely obligatory wording utilised elsewhere throughout the Act.  Section 10(5) of the Act merely invites the appointing party to appoint a replacement surveyor should they so wish: “the party who appointed him may appoint another surveyor in his place”.  This permissive construction rather unhelpfully leaves the potential for a void in the tribunal.  This is clearly at odds with the mandatory language adopted within section 10(1) of the Act where the parties are instructed that they ‘shall’ appoint either a single ‘agreed surveyor’, or two surveyors who, in turn, ‘shall’ then select a third surveyor.  This is arguably the root of the problem that Verity has exposed.

The permissive language adopted in section 10(5) of the Act is also evident in the preceding subsection.  Section 10(4) of the Act states:

(4)  If either party to the dispute – 

(a)  refuses to appoint a surveyor under subsection (1)(b), or

(b)  neglects to appoint a surveyor under subsection    (1)(b) for a period of ten days beginning with the day on which the other party serves a request on him,

the other party may make the appointment on his behalf.

Again, the use of the word ‘may’, as opposed to ‘shall’, connotes a permissive, non-mandatory option that leaves the decision entirely at the behest of the party charged with making the appointment.

In terms of reconstruction of the tribunal, it appears the only mandatory provision is by reference to the replacement of the third surveyor, presumably to ensure at least this post is filled whilst the surveyors are seized of the dispute.  Section 10(9) of the Act states:

(9)  If a third surveyor selected under subsection (1)(b) –

(a)  refuses to act;

(b)  neglects to act for a period of ten days beginning with the day on which either party or the surveyor appointed by either party serves a request on him; or

(c)  dies, or becomes or deems himself incapable of acting, before the dispute is settled,

the other two of the three surveyors shall forthwith select another surveyor in his place with the same power and authority.

The recent cases of Mills and Reeves, both of which were decided by HH Judge Bailey in the county court at central London in the year following Verity, provide a degree of certainty to some otherwise grey areas in the Act, albeit in so doing they highlight some practical absurdities with the Verity decision.

The decision in Mills

In Mills the court had to decide on three preliminary issues arising out of three separate appeals brought by the Building Owner (Mills) against an award of the Third Surveyor and two awards made by the Third Surveyor and the surveyor appointed by the two adjoining owners either side of the Building Owner’s property (Savage and Sells).  The factual background is complex and beyond the scope of this paper; however, the judge’s remark that “a most extraordinary dispute raged” [8] in respect of the actions - and claimed fees - of the various party wall surveyors, provides some insight in to the contextual backdrop.  For the purposes of this paper, the relevant aspect of the appeal concerns the decision of the Building Owner’s first surveyor (James Hopkins) to deem himself incapable of acting pursuant to section 10(5) of the Act, and the validity of this decision.  The implication of this was, then, whether the surveyor that replaced him was validly appointed and, thus, had any jurisdiction.  This, in turn, had an impact on the jurisdiction of the Adjoining Owner’s Surveyor in acting ex parte in accordance with the provisions of sections 10(6) and 10(7) of the Act.

This preliminary issue was framed as follows:

“Whether the Appellants’ first surveyor Mr Hopkins, remains as their incumbent surveyor and/or whether the Respondents have waived any defect in his resignation and/or are estopped from so arguing that he remains the Appellants’ incumbent surveyor”.

It had been the contention of the Adjoining Owner’s Surveyor (Philip Antino) and the first appointed Third Surveyor (Charles Dawson) that aside from the fact they felt Mr Hopkins had ‘let the side down’ [9] by resigning from his post on mere cost grounds, his resignation was ineffective.  The implication of this, insofar as the Adjoining Owner’s Surveyor was concerned, was that his failure to correspond after the date of his resignation was a ‘refusal’ by him to act effectively for the purposes of section 10(6) of the Act, thereby giving the Adjoining Owner’s Surveyor grounds to act ex parte.  The Adjoining Owner’s Surveyor and the Third Surveyor had also articulated their objections to Mr Hopkins’ grounds of resignation as being a means of the Building Owner achieving what section 10(2) of the Act expressly prohibits; i.e. rescinding the appointment of their surveyor, particularly if this was in the interests of saving cost.

Central to the contention of the Adjoining Owner’s Surveyor and the Third Surveyor was their view that the grounds upon which a validly appointed party wall surveyor may resign from their appointment, other than in instances of death, is incapability predicated by a genuine inability to perform the role.  Since section 10(5) of the Act separates ‘becoming incapable’ from ‘deeming oneself incapable’, and in the absence of any evidence of Mr Hopkins’ physical incapability, their focus was naturally on the ‘deem’ provision where that surveyor is otherwise ‘capable’.  It was the view of the Adjoining Owner’s Surveyor and the Third Surveyor that to deem oneself as incapable of acting could only be done on ‘proper grounds’.  Following a detailed overview of the meaning ascribed to the word ‘deem’ found in jurisprudence, HH Judge Bailey settled upon a definition set out by Pearson LJ in R v Brixton Prison (Governor), ex p Soblen [10] by reference to the Secretary of State acting in a similar quasi-arbitral context pursuant to Article 20 of the Aliens Order 1953:

“The word ‘deems’ normally means only ‘is of the opinion’ or ‘considers’ or at most ‘decides’, and there is no implication of steps to be taken before the opinion is formed or the decision taken” [11].

Accordingly, HH Judge Bailey was satisfied that the appropriate meaning of the term ‘deems’, insofar as section 10(5) of the Act is concerned, is that a party-appointed surveyor may consider or decide they should not continue to act, even if they are capable.  He also noted that there are no words in the Act that indicate the resigning surveyor may only deem him/herself incapable of acting on ‘proper grounds’.  In reviewing the legislation, HH Judge Bailey also noted that the Act’s predecessor, The London Building Act (Amendment) Act 1939, made a similar provision at section 55, but notably only provided for two preconditions for resignation: (1) death; and (2) becoming incapable.  The additional provision in section 10(5) of the 1996 Act was, thus, presumably intended by parliament to provide an additional avenue of resignation.  In summary, HH Judge Bailey held that it is entirely a matter for the appointed surveyor to decide whether they wish to continue with their role, and if they do wish to resign by deeming themselves incapable of acting, they should be entitled to do so on any grounds they feel appropriate.

Notwithstanding this, at paragraphs 87-92 of the judgement, HH Judge Bailey provided a helpful commentary on the importance of the statutory role of the party wall surveyor, whilst reinforcing the fact this should not be taken lightly.  However, this clearly was not enough for him to decide that an appointed surveyor’s right to resign from the role must be predicated by debilitating circumstances to the satisfaction of the remaining surveyors.  Simply put, if a party wall surveyor wishes to end their appointment, then they are at liberty to do so without giving any reasons; it is not for the remaining surveyors to police whether the grounds of ‘deemed incapacity’ are satisfactory to them:

“The other surveyors have no business to be requiring explanations or demanding a resumption of acting on the part of the resigning surveyor” [12].

It is clear that the decision in Mills, on at least this aspect of the preliminary issues decided, was that any of the three surveyors appointed under section 10(1)(b) of the Act may resign from their role for any reason and on any grounds, and that they are not precluded from doing so by failing to communicate those grounds to the remaining surveyors.  The remaining surveyors must simply accept the decision and move on:

“Whatever the other surveyors think about their colleague’s action they have to accept it and proceed accordingly” [13].

It is arguable the same applies to an agreed surveyor appointed under section 10(1)(a) of the Act as the same terminology and statutory phrasing is adopted in section 10(3)(d) of the Act, albeit the consequences of an agreed surveyor resigning are more significant in that the entire process must then begin de novo [14].

Therefore, although it is clear from this judgment that the role of an appointed party wall surveyor is a serious quasi-judicial/arbitral role that should not be taken lightly, it is also now clear that the shackles of the statutory appointment are perhaps not as tight as originally considered.  Furthermore, it is also demonstrably clear that a party wall surveyor may resign when the going gets tough, often to the detriment of the parties - as shall become clear in the analysis of Verity - but that the mandatory prohibition on the rescission of appointments by the parties is perhaps now open to abuse where their surveyors unwittingly allow themselves to be ushered out of the role by being pressured to resign, particularly on costs grounds.

The decision in Reeves

While Reeves dealt with similar issues to Mills as regards the tribunal, it provides a notable contrast in the way it preserves the sanctity of the original appointment under section 10(1)(b) of the Act.  The decision in Reeves is also of significance to the decision in Verity.  In Reeves, the matter before the court, again presided over by HH Judge Bailey, was a part 8 claim for declaratory relief brought by the Building Owner (Reeves) against the award of the Third Surveyor, who was not the Third Surveyor originally selected by the respective party-appointed surveyors.

Further to a dispute arising within the meaning of the Act by virtue of the Adjoining Owner (Young) failing to consent to a notice served on behalf of the Building Owner within the prescribed response period, the parties both appointed surveyors in accordance with section 10(1)(b) of the Act.  Both of the appointed surveyors worked for the same practice, and whilst the Act does not prohibit this, HH Judge Bailey inferred his disapproval of this arrangement.  The two appointed surveyors then selected, in writing, a Third Surveyor (Alastair Redler) in order to complete the formation of the tribunal in accordance with section 10(1)(b) of the Act.  Somewhat peculiarly, the two surveyors then later recorded the Third Surveyor as being Philip Antino in the recitals of their award, which they duly served on the parties.  The reasoning for this is unclear, but it can be deduced this was done in the interests of consistency as Mr Antino had been selected as the Third Surveyor in a separate dispute concerning the Building Owner’s neighbour on the other side.  Following a sequence of post-award events, the facts of which are not relevant to this paper, Mr Antino made an award in his purported capacity as the Third Surveyor.  This award was not appealed by either of the parties pursuant to section 10(17) of the Act, but following Mr Antino’s attempts to enforce payment of his fees under that award in the Magistrates’ Court, it subsequently became the subject of part 8 proceedings for declaratory relief brought by the Building Owner.  It was the Building Owner’s position that the entire award was invalid and unenforceable on grounds of being ultra vires, thus, made without jurisdiction.

Although it was clear Mr Redler had no knowledge of his selection, as he had not been informed, this was not considered to be material.  It is perhaps not surprising this is a common occurrence since third surveyors are merely ‘selected’ - without being advised of their selection - as opposed to being ‘appointed’.  The selection of a third surveyor has parallels with the appointment of an arbitral umpire under the Arbitration Act 1996.  Accordingly, the third surveyor remains dormant until called upon to act.

The pivotal issue before the court was, therefore, whether the initial selection of Mr Redler had satisfied the provisions of section 10(1)(b) of the Act and, indeed, whether the award recital naming Mr Antino as the third surveyor had supplanted this.  Counsel for the defendants initially challenged the validity of Mr Redler’s selection by the two appointed surveyors on the basis that their letters confirming his selection had not been signed.  This was rejected by HH Judge Bailey who was satisfied that section 10(2) of the Act merely requires all appointments and selections to be made in writing, which had been the case with Mr Redler’s selection.  Accordingly, the absence of signatures did not invalidate the compliance with section 10(2) of the Act.  The defendant’s counsel then sought to argue that it was open to the two appointed surveyors to deselect and replace Mr Redler as the Third Surveyor, particularly as they had referred to him as the ‘initial Third Surveyor’.  This was successfully confronted by counsel for the claimant Building Owner who argued that the selection and subsequent deselection of a third surveyor was not permissible under the Act since the two party-appointed surveyors are effectively functus officio in their role as regards the construction of the tribunal once they have jointly selected the third surveyor in writing; section 10(2) of the Act then prohibits the rescission of appointments by either party.  Counsel for the defendants then pointed out that section 10(2) of the Act only precludes rescission of appointments by the parties; it makes no reference to the surveyors themselves.  This was also rejected by HH Judge Bailey.  In a final attempt to champion the validity of Mr Antino’s Third Surveyor’s award, counsel for the defendants sought to develop an estoppel argument constructed around the fact that the initial award made by the two party-appointed surveyors, which named Mr Antino as the Third Surveyor in the recitals, was then acted upon by the Building Owner by way of undertaking the notified works authorised by the award.  The court was reminded that this award was not appealed.  It was therefore the defendant’s contention that the claimant Building Owner was estopped from denying the selection of Mr Antino as the validly selected Third Surveyor since the award in which his selection was recorded had ultimately been acted upon.  HH Judge Bailey also dismissed the estoppel argument, not least by pointing out that the recitals of an award are exactly that, merely recitals, and not part of the operative part of the award.

It was therefore held that once a third surveyor is selected in writing between the two party-appointed surveyors, the party-appointed surveyors have discharged their statutory task and the Act provides no further means of changing that selection, other than where the circumstances arise as accommodated by section 10(9) of the Act:

“once the two surveyors have selected a third surveyor they are … functus officio the party-appointed surveyors have completed their statutory task and they are no longer able to make a further selection or undo the selection already made.  The possibility that there may need to be a further selection in particular circumstances is met by the Act at sub-section 9” [15].

In conclusion, the claimant Building Owner was granted the declaratory relief sought as the Third Surveyor award of Mr Antino was deemed to be invalid.  A word of warning was directed at all surveyors taking on party wall appointments:

“The provisions of the Act governing the appointment of party wall surveyors (including the third surveyors) are steps governed by the Act which must be scrupulously followed” [16].

It is against the backdrop of the decision in Mills and Reeves that the potential absurdities in the Act have been polarised by the Verity decision.

The Verity Decision

As HH Judge Bailey remarked from the outset of this case, it raises an interesting point as to the proper interpretation of the Act, despite the “unhappy state of affairs” [17] surrounding the facts.  Verity largely centres around a calamitous process of surveyor appointments and re-appointments, as best summarised by HH Judge Bailey:

“Whatever other problems this development has had, retaining party wall surveyors is certainly one of them” [18].

This case demonstrates the consequences of party wall surveyors perhaps not taking their statutory duties seriously, as warned by HH Judge Bailey in Mills.  

The claimant Building Owner had undertaken demolition works to their property, a former egg packing facility, in order to redevelop the site.  Shortly after demolition, works then ceased leaving only temporary protection of the Adjoining Owner’s property in place.  The Adjoining Owner’s property had a thatched roof which was vulnerable where exposed by the Building Owner’s demolition works.  As time passed, the temporary protection failed to properly safeguard the Adjoining Owner’s property from the elements and damage was suffered.  An addendum award then followed the initial enabling award to deal with matters concerning the inadequate temporary protection, damage and surveyors’ fees. The addendum award ultimately ordered the Building Owner to pay to the Adjoining Owner the sum of £15,233.80.  The Building Owner then sought a declaration from the court that the addendum award was invalid.

Although HH Judge Bailey made clear his concerns that the claimant Building Owner had expended £14,544.40 in legal costs to avoid paying the £15,233.80 under the award, he also made it clear his only duty was to decide the matter before the court, which concerned the validity of the addendum award.  He did, however, note that the case raised an interesting point on the interpretation of the Act.  

The addendum award came in to being after a perplexing process of appointments and resignations concerning the party wall tribunal.  Initially, the Building Owner appointed Mark Battram and the Adjoining Owner appointed Andrew Rysdale as their respective surveyors.  The two surveyors then duly selected Phil Cane as the Third Surveyor.  This tribunal then made the initial enabling award.  After the initial award was served, Mr Rysdale ceased to Act and the Adjoining Owner replaced him with Nicholas Brown.  Following demolition of the former egg packing facility on the Building Owner’s site, the Adjoining Owner’s Surveyor, Mr Brown, wrote to the Building Owner’s Surveyor, Mr Battram, on several occasions requesting his cooperation to make a further award.  Mr Battram did not respond effectively giving Mr Brown cause to threaten proceeding  ex parte.  However, before any further award was achieved, Mr Brown deemed himself incapable of acting.  The Adjoining Owner then replaced Mr Brown with Alex Frame who was now the Adjoining Owner’s third appointed surveyor.  A month after Mr Frame’s appointment Mr Battram deemed himself incapable of acting as the Building Owner’s Surveyor and proposed, somewhat bizarrely, that he be replaced by the Third Surveyor, Mr Carne.  Following this Mr Frame wrote to the Building Owner’s representative, Mr Lamb, requesting that they appoint a new surveyor in place of Mr Battram and should do so within ten days or he would appoint a surveyor on their behalf.  An argument then ensued by way of correspondence between Mr Lamb, who argued Mr Frame had no such jurisdiction to appoint a surveyor on the Building Owner’s behalf, and Mr Frame who argued he did by virtue of section 10(4)(b) of the Act.  At this point even the Building Owner’s solicitor joined the exchange by expressing his view that Mr Frame had no such jurisdiction to appoint a surveyor on behalf of the Building Owner.  Undeterred, Mr Frame then proceeded to appoint Steve Campbell as the Building Owner’s Surveyor pursuant to section 10(4)(b) of the Act.  Mr Frame and Mr Campbell then selected Alan Bright as the Third Surveyor before making their addendum award.  It is this addendum award that was then being appealed by the claimant Building Owner on the basis Mr Campbell’s appointment was not legally valid, meaning the award too was invalid.

To confuse matters further, the defendant Adjoining Owner engaged Stuart Frame as their barrister, the son of Alex Frame their surveyor.

From the outset, Mr Frame of counsel had to accept that on a literal reading of section 10(4) of the Act the power of either the Building Owner or the Adjoining Owner to make an appointment on behalf of the other party arises only where there is a ‘refusal’ to make, what HH Judge Bailey termed, the ‘initial appointment’ under section 10(1)(b) of the Act.  Bringing section 10(5) in to the equation, HH Judge Bailey explained that where the ‘initial’ appointee had deemed himself incapable of acting and had been replaced, and that replacement surveyor then deemed himself incapable of acting, the party they were acting for would not be ‘refusing to appoint a surveyor’ under section 10(1)(b) of the Act by failing to re-appoint, which is all that section 10(4) of the Act was designed to overcome.  Therefore, section 10(4)(b) of the Act only has application to the first appointment of surveyors at the initial formation of the tribunal.

In response, Mr Frame of counsel then sought to argue that the application of section 10(4)(b) of the Act to ‘initial appointments’ only would give rise to a ‘manifest absurdity’ in the Act.  He invited the court to move away from the literal interpretation of the Act so far adopted by HH Judge Bailey and to apply a purposive construction.  He identified several absurdities that arise by the court taking the literal ‘restrictive’ approach:

1.  The section 10(5) replacement issue – Section 10(5) of the Act is drafted such that only surveyors initially appointed under section 10(1)(b) of the Act by the parties may be replaced if they die or become/deem themselves incapable of acting, thereby leaving a void in the tribunal;

2.  The section 10(8) replacement issue – Section 10(8) of the Act is drafted such that it applies only where surveyors initially appointed under section 10(1)(b) of the Act by the parties refuse or neglect to select a third surveyor.  The implication of this being a replacement surveyor appointed under section 10(5) of the Act would not be able to use section 10(8) of the Act to select a replacement third surveyor where the initially selected third surveyor refused or neglected to act, again leaving a void in the tribunal;

3.  The third surveyor selection issue – Section 10(5) of the Act provides that the replacement surveyor should have the same ‘power and authority’ as the initially appointed surveyor, therefore, the replacement surveyors would be under no obligation to maintain the same third surveyor selected by their predecessors.

By contrast, counsel for the claimant Building Owner, Nick Isaac, pointed out that the language adopted in section 10(5) of the Act is ‘permissive’ as opposed to obligatory.  Section 10(5) of the Act states that the party who appointed the original surveyor who has now died, or become/deemed himself incapable of acting, ‘may’ appoint a replacement, but is not compelled to do so.

Whilst it is clear the third issue above has now been resolved by Reeves, which in turn deals with the curious intention of Mr Alex Frame and Mr Campbell to select a new third surveyor, HH Judge Bailey was satisfied that there is no lacuna in the dispute resolution mechanism of the Act resulting in a manifest absurdity.  Acknowledging that it is incumbent on the courts to construe the Act purposively where necessary to overcome a manifest absurdity, he was satisfied this did not arise in the present circumstances.  Turning to section 10, subsections (10) and (11) of the Act, HH Judge Bailey provided two examples of how an award may still be obtained to settle the dispute where one party elects not to replace their surveyor.  Firstly, section 10(10) of the Act allows an award to be made by the remaining party-appointed surveyor and the third surveyor.  Secondly, section 10(11) of the Act allows for the third surveyor to be called upon by either of the parties to make the necessary award.  He also reinforced the fact that it should not be open to one of the parties to thwart the process by refusing to appoint, and as such, was satisfied the Act deals with this by making section 10(5) of the Act permissive, not obligatory.  Thus, if they elect not to replace their surveyor, the award can still be made by the other two surveyors.

In closing, HH Judge Bailey did hypothesise that circumstances might well arise where the parties were precluded from progressing the dispute through the mechanism of the Act, such as the death or incapability of all three surveyors.  However, he then deferred the issue to be decided on the facts as and when the time comes.  

It is notable that HH Judge Bailey hypothesised perhaps the least probable scenario imaginable, and did not go on to consider the practical difficulties imposed by more plausible scenarios likely to be faced by the practicing party wall surveyor.  The ‘absurdities’ pointed out by the defendant’s counsel were constructed in terms of furthering the legal argument focussed around the Act’s terminology without highlighting the more obvious lacuna evident within the Act on a practical level.

The practical implications of Verity

The initial problem with the Verity decision is that if section 10(5) of the Act is to be construed permissively, meaning there is no mandatory obligation compelling a party to replace their surveyor, the tribunal is immediately unbalanced. This gives rise to a number of insurmountable difficulties:

1.         The Third Surveyor Adjudication Problem 

Section 10(11) of the Act entitles either of the parties, or either of the surveyors, to call upon the third surveyor to determine any disputed matters.  If one of the parties decides not to replace their surveyor who has either died or become/deemed themselves incapable of acting, then there are only two remaining surveyors in the tribunal. Naturally, the remaining party wall surveyor will enjoin with the third surveyor to make the necessary Award, but if they cannot resolve matters between them, who adjudicates their ‘disputed matters’?  Reeves has made clear that the third surveyor cannot be replaced in any circumstances other than in death or incapability, so it would seem the third surveyor in a two-surveyor tribunal remains extant and will clearly be partisan in determining any dispute that arises between him and the remaining party-appointed surveyor.  

2.         The Third Surveyor Replacement Problem

Section 10(9) of the Act sets out the procedure for replacing a third surveyor in the event he dies or becomes/deems himself incapable of acting.  However, the Act states that where this happens: “the other two of the three surveyors shall forthwith select another surveyor in his place with the same power and authority” [19].

The obvious encumbrance to the operation of section 10(9) of the Act  in light of Verity is that there may not be two surveyors available to select another third surveyor.  Section 10(9) of the Act expressly precludes a single surveyor selecting a new third surveyor alone, so how is the third surveyor to be replaced in the absence of two remaining surveyors?  

3.         The Ex Parte Problem

In light of the third surveyor replacement problem highlighted above, it would seem that in the absence of a single surveyor having jurisdiction to select a replacement third surveyor, the obvious solution would be for that surveyor to simply proceed ex parte as if he were an agreed surveyor, as accommodated in sections 10(6) and 10(7) of the Act.  However, aside from sections 10(6) and 10(7) of the Act, which entitle a party-appointed surveyor to act ex parte only where the prequalifying circumstances have arisen, there is no provision elsewhere in the Act providing for an appointed surveyor to act ex parte.  Therefore, if the third surveyor cannot be replaced by a single surveyor, that surveyor then derives no jurisdiction under the Act to act ex parte in the making of his award; the circumstances in which sections 10(6) and 10(7) of the Act operate cannot possibly arise due to the absence of another party-appointed surveyor refusing or neglecting to act.

4.         The Making Of The Award Problem (The Last Man Standing Paradox)

Section 10(10) of the Act expressly stipulates that an award may only be made by either an agreed surveyor (where so appointed), or the three surveyors, or any two of the three surveyors.  If, as highlighted above, the third surveyor cannot be replaced, how does the remaining party-appointed surveyor (aka ‘the last man standing’) make an award?  He is not appointed as an agreed surveyor under section 10(1)(a) of the Act and has no jurisdiction under the Act to proceed ex parte, as observed above.

Conclusion

The absurdities in the Act exposed by the Verity decision, and perhaps exacerbated by the decisions in Mills and Reeves, show, if nothing else, that the court has been inconsistent in its approach to statutory interpretation.  The adoption of a literal construction on one day and a purposive construction the next, particularly by the same judge, has seemingly only served to cloud matters at the cost of certainty and consistency.  On a practical level, the decision in Verity might be considered to have created more problems than it resolves.  While it is clear the word ‘may’ is permissive and, thus, optional, it is unfortunate neither counsel, nor the court, thoroughly explored the practical challenges that a literal interpretation of this permissive language presents.  Had this happened, then the obvious manifest absurdities the permissive wording of section 10(5) of the Act exposes might have been enough for the court to take a more purposive interpretation.

The Verity decision also highlights a flaw in the Act which does not exist in its most closely associated legislative relative, the Arbitration Act 1996.  Under this piece of legislation, the parties are free to agree that the statutory tribunal shall constitute either a sole arbitrator, or two or more arbitrators, but where two or any other even number of arbitrators is selected, there shall be an additional arbitrator who shall sit as chairman [20].  In the event of an arbitrator ceasing to hold office, the Arbitration Act 1996 sets out a procedure allowing the parties to agree on their replacement, or in the absence of this, a default procedure for replacement of the arbitrator or arbitral tribunal.  It is unfortunate that parliament elected not to adopt mandatory language in section 10(5) of the Act to ensure a three-surveyor tribunal is maintained at all times in order to avoid the absurdities highlighted above.  Had this been the case, then perhaps section 10(4) of the Act could be used by the parties or their surveyors to appoint a surveyor on behalf of the party failing to make an appointment or electing not to, as was attempted in Reeves.

It is also somewhat regrettable that despite highlighting the importance of the statutory role of the party wall surveyor, the decision in Mills concludes that appointed surveyors can decide they no longer wish to participate on a whim leaving behind them potentially far-reaching consequences for the parties.

Finally, while HH Judge Bailey did hypothesise some potential absurdities arising from his Verity decision, they were largely improbable, if not implausible.  It would seem the practical lacuna left by these decisions can only be overcome by a purposive construction of the Act.  It therefore remains for the more credible ‘last man standing’ scenario to be the subject of judicial determination on another day.

[This article first appeared in ‘Journal of Building Survey, Appraisal & Valuation’ by Henry Stewart Publications, Vol.9, No.1, April 2020].

References:

[1]  Unreported, Central London County Court, 17th December 2015.

[2]  Mills v Savage and Sell [Unreported, Central London County Court, 15th June 2016]; Reeves v Young and Antino [Unreported, Central London County Court, 3rd January 2017].

[3]  Unreported, Central London County Court, 15th June 2016.

[4]  Unreported, Central London County Court, 3rd January 2017.

[5]  Section 10(1)(a), Party Wall etc. Act 1996.

[6]  Section 10(1)(b), Party Wall etc. Act 1996.

[7]  Either acting alone pursuant to section 10(1)(a) of the Act , or as part of a three surveyor tribunal under section 10(1)(b) of the Act.

[8]  Mills v Savage and Sell [Unreported, Central London County Court, 15th June 2016] [6] Bailey J.

[9]  Ibid., [85] Bailey J.

[10] [1963] 2 QB 243.

[11]  Ibid., [315] Pearson LJ.

[12]  Mills v Savage and Sell [Unreported, Central London County Court, 15th June 2016] [98] Bailey J.

[13]  Ibid., [99] Bailey J.

[14]  Section 10(3), Party Wall etc. Act 1996.

[15]  Reeves v Young and Antino [Unreported, Central London County Court, 3rd January 2017] [30] Bailey J.

[16]  Ibid., [39] Bailey J.

[17]  Property Supply & Development Ltd v Verity [Unreported, Central London County Court, 17th December 2015] [3] Bailey J.

[18]  Ibid., [9] Bailey J.

[19]  Section 10(9), Party Wall etc. Act 1996.

[20]  Section 15(1), Arbitration Act 1996.