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There are issues involving the Party Wall etc. Act 1996 when it comes to airspace development, some of which are not always clear to developers. Edward John explains how problems arise, picks apart some of the tricky situations that developers are likely to encounter and offers a few tips for dealing with them

Developers need to be aware that their existing rights as owner are curtailed by the Act, which imposes a requirement to serve notice prior to carrying out certain work and have it authorised by an award.

The first problem with the Party Wall etc. Act 1996 is its name. The parliamentary draftsman who named the Act used laudable economy of effort by sticking in an ‘etc.’, possibly through the boredom which the Act is prone to induce. They could well have called the Act the ‘Party Walls and Structures Procedure Act 1996’(which would at least be more accurate and is a little shorter than the Housing Grants, Construction and Regeneration Act 1996, which was enacted the same year, and less ambiguous that the London Building Acts (Amendment) Act 1939, which formed the building blocks from which the Party Wall etc. Act 1996 was built).

It therefore tends to take people by surprise when they learn – occasionally the hard way – that works to a supporting structure (even one which appears quite a way from a boundary or a horizontal structure) can still be covered by the Act.

The Act giveth and the Act taketh away

The second big problem is the widely-held (and wrong) belief that the Act is entirely permissive – which is to say some people believe that its only function is to permit acts which would otherwise be a trespass or a nuisance.

It does indeed do that – most works permitted by the Act’s procedures would in fact otherwise amount to trespass or nuisance on the part of the developer. However, the Act also prohibits works which would otherwise be permitted under common law or in contract, unless the procedures in the Act are followed. Developers need to be aware that their existing rights as owner are curtailed by the Act, which imposes a requirement to serve notice prior to carrying out certain work and have it authorised by an award, even where adjoining owner consent would not be required under common law and even where there is a contractual right to do the work.

No contracting out of the PWA 1996

The second point is particularly important. If the Act applies to a developer’s proposed works, the developer (even if it is also a landlord) cannot simply point to rights reserved under the lease allowing it to undertake works and an exclusion of claims in nuisance.

There is no ‘contracting out’ procedure. The works will either fall within the Act and the procedural steps need to be followed, or they will not. If the works fall within the Act, or there is a risk that they might, then as a precautionary step, developers should serve the notice.

Having said that, Section 3(3) of the Act does provide that:

Nothing in this section shall –

(a) prevent a building owner from exercising with the consent in writing of the adjoining owners and of the adjoining occupiers any right conferred on him by section 2…'

Where there is prior written consent from all adjoining owners and occupiers to Section 2 works (which, broadly-speaking, covers work to existing – as opposed to new – party walls and structures), the right can be exercised without an award. A general consent to landlord’s works reserved in the reddendum of a lease simply won’t cut it, however.

Any such agreement must be specific to the works in question – which is evident from the statutory duties imposed on the developer under s7(5) of the Act:

  • to execute the works in accordance with such plans, sections and particulars as may be agreed between the owners (or in the event of dispute determined by an award under Section 10); and
  • not to deviate from those plans, sections and particulars except such as may be agreed between the owners or their surveyors (or in the event of dispute determined by an addendum award in accordance with Section 10).

There is also a statutory duty on the developer to make good damage caused to adjacent owners’ property, fittings and furnishings – which may not be contracted out of – and which for prudence’s sake ought to include an agreed schedule of condition of the adjoining land.

Note that a developer cannot rely on any prior written consent from the adjoining owner to works under ss1 (broadly speaking, building on the boundary line) and s6 of the Act (adjacent excavation works to support a new building or structure within three or six metres of the boundary line). In those cases, notices have to be served, the procedures followed and an award obtained.

Does airspace development affect party walls?

Except in the case of upward development of vacant, standalone buildings, almost all airspace developments risk involving some degree of work to party walls and party structures.

Party walls are a very specialist area and it is important to take expert advice from a party wall surveyor and lawyer with experience in that area in the early stages of the development. Provided the procedures under the Party Wall etc. Act 1996 are adhered to, most disputes can be avoided or resolved, albeit at a cost of time and money (invariably at the developer’s expense).

Many of the works required as part of an airspace development may affect party walls or structures, which could include:

  • tying-in of the airspace development to the existing party structures of the building;
  • penetrating the roof in order to provide access to the new development;
  • the creation of new accessways through the building;
  • any strengthening or additional work to the structure within the building to support the new development;
  • work to strengthen or add to the foundations; and
  • access such as scaffolding on neighbouring land and/or crane oversail for notifiable works.

What does an airspace developer need to do?

Clearly the extent to which a developer needs to engage with party walls is project-specific and specialist professional advice should always be sought.

Fundamentally, there are two issues to consider when deciding whether the Party Wall etc. Act 1996 is engaged:

  • is the structure (or proposed structure) a party wall or a party structure as defined in Party Wall etc. Act 1996?; and
  • does the work fall within a category covered by the Act?

In both cases, the devil is in the detail, but basically:

  • ‘Party walls’ are generally easier to identify: they are a part of a building which sits within and across multiple areas of land held by different owners and a wall which separates buildings belonging to different owners.
  • A ‘party structure’ (other than a party wall) is slightly less identifiable: it is a floor, partition or other structure separating buildings or parts of buildings, including horizontal structures between flats or offices in a block. This could, for example, include ceilings, floors, joists and structural reinforcement work.

What needs to be done?

The developer should take professional advice on the correct notices to serve well in advance to enable the lawful exercise of the rights permitted by the Act. Notices should:

  1. 1. Be served on the correct adjoining owner(s) a minimum of one or two months (depending on the type of notice) before the date on which the proposed work will begin.
  2. 2. Be served not earlier than the date 12 months before the works are scheduled to commence in earnest.
  3. 3. Identify the name and address of the party serving (the developer).
  4. 4. Identify the nature and detail of the proposed work including, in cases where special foundations are proposed, a number of details.
  5. 5. Identify the date on which the proposed work will begin.

If no counter-notice is served within 14 days, the adjoining owner is deemed to have dissented to the party structure notice. In those circumstances, a dispute is also deemed to have arisen between the building owner and adjoining owner, and the dispute resolution mechanism under s10 immediately comes into play.

Where there is no response and the deemed dispute arises, the developer can appoint a surveyor to act on behalf of the non-responsive adjoining owner(s). That newly appointed surveyor will act on behalf of the adjoining owner(s) in the party wall procedure as if they had: (a) chosen to dissent, (b) appointed their own party wall surveyor, and (c) sought to agree an award on reasonable terms.

Resolving disputes

The Act has a unique dispute resolution mechanism by which a form of quasi-arbitrator called an ‘agreed surveyor’ or ‘third surveyor’ is appointed from the outset and nominated within a party wall award to deal with any disputes even before any have arisen.

The third surveyor’s functions are to:

  • make a determination on any issues requested by either surveyor or either owner;
  • resolve disputes, give advice and direction; and
  • make a decision as to an award.

With this process, the aim is deal with disputes as quickly as possible with minimal expense and delay to the development.

Even if party wall works are dealt with by written consent under s 3(3) of the Act rather than by an award, it is still possible to appoint surveyors to deal with any issues that might subsequently arise, and refer the dispute to a third surveyor. The case of Onigbanjo v Pearson [2008] makes it clear that the ability to appoint a surveyor under s10(4)(b) is not limited to the situation where there is dissent from a notice. The third surveyor can also be appointed where the party wall works proceed by written agreement.

Timing of service of notices

It is really important to take advice from a specialist early on in the process, but when it comes to serving the notice under the Act which kicks off the process, it is important – to paraphrase Goldilocks – not to start too early or too late. A good project manager will schedule it into the GANTT chart at the right time.

Not too late

For each of the sections, a party wall or structure notice needs to be served at least one month before the proposed works begin (for notices under section 1 of the Act) and two months before the date on which the proposed works will begin (for notices under section 3 and 6 of the Act).

Not too early

As indicated above, notices under the Act cease to have effect if the work to which they relate has not begun within 12 months of service of the notice. If not, the building owner will lose the rights to which the notice relates. It is important to ensure that there is nothing on the critical pathway of the development which will prevent the work starting within 12 months. There is no point, for example, in a developer serving a notice under the Act, when the developer also needs to serve an 18-month notice under paragraph 31 of the much-maligned Electronic Communications Code to terminate a code agreement to remove a telecoms mast from the roof space before works can start.

Although Section 5.1 of the RICS Practice Statement on party walls (7th edition) suggests that some of those time limits may be overridden ‘by agreement between the owners’, it is not clear that there is any statutory basis for that guidance.

When it's time to sell

Developments of airspace are frequently undertaken by granting an airspace lease to the developer – and it is important that the right notice is served by the correct person.

It is also worth bearing in mind that notices under the Act are: personal, ie not binding on successors in title, and not transferable. Although it is not unknown for party wall agreements to be expressed as being for the benefit of successors in title under the Contracts (Rights of Third Parties) Act 1999, it is doubtful whether such an agreement would be compatible with the Act.

If the entity which is going to carry out the airspace works is not the present owner, but has contracted to buy or has an agreement for lease of the development land, it is possible for the purchaser to serve the notice in its own name (or in joint names with the existing owner) before completion of the purchase. Section 20 of the Party Wall etc. Act 1996 defines the ‘building owner’ as ‘an owner of land who is desirous of exercising rights under this Act’.

The definition of ‘owner’, however, includes:

… a purchaser of an interest in land under a contract for purchase or under an agreement for a lease, otherwise than under an agreement for a tenancy from year to year or for a lesser term.

Party wall awards and party wall agreements are not interests in land and cannot be assigned. As the case of Observatory Hill Ltd v Camtel Investments SA [1997] made clear, a party wall award or agreement is not registrable against the title of either the development land or the adjacent owner’s land.

In that case (which related to the party wall provisions in the London Building Acts (Amendment) Act 1939), it was confirmed that a party wall award was not a registrable interest in land. An adjoining owner who had the benefit of a party wall award under the 1939 Act was held to be unable to enter a caution on the register of the development land as such an owner was not ‘a person having an interest in land’.

So, where the works have either not started or are not complete and either the developer or the adjoining owner changes, then it is prudent to re-serve notices and seek a fresh agreement or award.

Where notifiable works started without an award or agreement

If a developer starts works for which a notice is required under the Act without following the Act’s procedures, it risks an adjoining owner applying for an injunction to prevent the works from continuing or even requiring them to be dismantled.

If this kind of error comes to light, there are a couple of ways to try to bring the works back into compliance:

  • if the works are works under s2 of the Act to existing party structures, the parties can resolve the non-compliance with a written agreement as Section 3(3); or
  • alternatively, if agreement is not possible, serve notices as soon as possible. If there are injunction proceedings already on foot, it may be possible to apply to have them stayed pending the outcome of the party wall process.

Conclusion

The Party Wall etc. Act 1996, despite its name, can apply to development upwards into airspace above a building. Although the procedures under the Act do permit acts which can be a trespass, the Act in effect also prohibits works which would otherwise be permitted under common law. This can pose a threat to the timing of the development if not followed carefully. Professional advice from a specialist party wall surveyor needs to be sought early on because it is not always obvious where the Act applies.

Although leases sometimes reserve to landlords the right to carry out works to party walls and structures, those rights are not sufficient on their own to amount to an agreement to carry out party wall works. Notably, the Act cannot be ‘contracted-out’ of.

The special dispute resolution process under the Act where disputes are referred to a third surveyor is a quick and usually low-cost process with a determination by a specialist surveyor, even where the works are by agreement rather than by award.

Timing is also crucial – notices need to be served in good time to allow the procedures to be followed and any disputes resolved, but there is a ‘sell-by’ date – the works have to be started within 12 months of the notice being served.

Where the airspace is subject to an agreement for lease or there is an agreement to sell to a developer, the ‘owner’ who serves the notice may not be the current owner. Party wall awards do not create interests in land and are neither transferable nor registrable.

If a developer finds itself realising late on that it has failed to serve the correct notices, it should do so as soon as possible and try, where possible, to reach agreement with adjoining owners and occupiers.

Cases Referenced

  • Observatory Hill Ltd v Camtel Investments SA [1997] 1 EGLR 140; [1997] 18 EG 126
  • Onigbanjo v Pearson [2008] BLR 507