The Party Wall etc. Act 1996 (“the Act”) makes various provisions about costs, but in this article I am concentrating on those which relate to the professional fees charged by party wall surveyors and which are routinely included in awards made under section 10 of the Act.
Relevant provisions relating to costs
The relevant parts of the sub-sections of section 10 for this purpose are as follows:-
Sub-section (12): An award may determine… (c) any other matter arising out of or incidental to the dispute including the costs of making the award
Sub-section (13): The reasonable costs incurred in – (a) making or obtaining an award under this section… shall be paid by such of the parties as the surveyor or surveyors making the award determine
The general meaning of these provisions is reasonably well understood, as follows:
- The “costs of making” an award will include all of the to-ing and fro-ing which goes into producing the document entitled “award” which the surveyors eventually produce – generally speaking that is almost all of the surveyors’ time between a deemed dispute arising 14 days after service of a notice under section 3 or section 6(5), and the award itself being signed. It will include communicating with the other surveyor, obtaining and checking the relevant information for the making of the award, and the time spent actually drafting the award, or revising it;
- Where surveyors have incurred the costs of some other professional in order to be in a position to make the award in question, those fees are themselves recoverable – this will usually be structural engineer’s fees, but may occasionally be lawyers’s fees. However, one has to be careful to ensure that these are cost incurred in “making or obtaining” the award. Consequently, litigation advice, for example in relation to whether an injunction can or should be sought, would certainly not be recoverable – see Reeves v Blake  1 WLR 1;
- In all cases, the costs awarded must be “reasonable”. This means both reasonable in terms of whether the costs were incurred in the first place, but also reasonable in amount.
Lawyers are very well acquainted with the concept of reasonableness in terms of costs and fees. Surveyors, who have less occasion in their professional lives to have to engage with a process of determining the reasonableness of their fees, sometimes find this concept more tricky. It is hoped that the following principles may assist:
- The process of assessing reasonableness starts with a consideration as to whether it was reasonable to undertake the particular item or piece of work in relation to which it is now sought to recover a fee – this can be done on a very detailed approach (Was it really necessary to send that email on that day?) or a more broad-brush one (On a simple job like this, wouldn’t a dozen emails have been a more appropriate number than a hundred?). If it wasn’t reasonable to do the work, it is not reasonable to award any fee in relation to it;
- Next one has to consider the time spent, or time claimed for, and decide whether that was reasonable, in the context of the dispute. Some surveyors keep, and produce detailed timesheets, others seek to have a fee determined on a more approximate basis, albeit the latter almost always produces lower figures. Neither approach is inherently right or wrong. However, it is perfectly appropriate for the person determining the amount of a reasonable fee to have regard to the time claimed. It might, for example, be perfectly reasonable for a junior surveyor to spend considerably longer on a job, but at a much lower hourly rate. A surveyor seeking to recover a high hourly rate, on the other hand, will be expected to take a much shorter time dealing with matters. The Court of Appeal in Patel v Peters 1 WLR 179 considered it perfectly appropriate for one surveyor to reject the assessment of reasonable fees by reference to time-sheets, and to take a much more broad-brush approach. By this stage, therefore, one should have a figure based on work it was reasonable to carry out, and which a reasonable amount of time was spent doing.
- Finally, one must stand back from the dispute and consider the question of proportionality. This is a concept which is universal in consideration of fee assessment in civil litigation, but which appears generally little-known or understood amongst surveyors. A cynic might argue that this is because proportionality can have a very significantly depressing effect on levels of recoverable fees. Nonetheless, I would suggest that proportionality is very much at the centre of any consideration of reasonableness in terms of fees. In essence, and borrowing from the CPR definition of the same, the person determining the reasonableness of fees has to consider whether the amount of fees which are sought to be awarded bear a reasonable relationship to: (a) the cost of notifiable works which are the subject of the award, (b) the complexity of the dispute resolved by the award, and (c) any additional work generated by the conduct of the paying party.
Party wall matters are unusual because the same surveyors making the substantive award are usually also determining the reasonableness of their own costs of doing so. Of course, it is not uncommon for the building owner’s surveyor to refer the issue of an adjoining owner’s surveyor’s fees to the third surveyor for determination, but the general position remains that the surveyors making the award(s) determine their own reasonable fees of doing so.
Although the majority of party wall surveyors, objectively viewed, approach the assessment of reasonable fees in a sensible way, there are unfortunately a few surveyors who treat the Act as a licence to print money. I have expressed the view previously, and do so again, that the surveyor’s profession as a whole, or certainly those who practice in the arena of party walls, should be very concerned at the damage which such surveyors are undoubtedly doing to the reputation of the profession as a whole. If professional bodies do not take appropriate steps to regulate such matters, the courts and, ultimately, parliament, may do so.
However, it is possible for a certain amount of control to be exercised by other surveyors, in particular in relation to how they deal with excessive fee claims by other surveyors. I deal with some of the common tactics utilised, and my suggested approach to the same below.
Dealing with excessive claims – common tactics and answers
The most common approach taken by surveyors whose fees may be considered excessive is to insist upon their fees being determined by reference to timesheets. It is of course entirely appropriate for surveyors to keep records of the time they have spent in relation to work carried out. However, it is equally inappropriate to insist that a reasonable fee is merely the sum of the time spent multiplied by hourly rate.
In such cases, the other owner’s surveyor, or third surveyor,, whilst having some regard for the time claimed, must stand back from the dispute and consider, objectively, its value and complexity. What are the notifiable works likely to cost? What is the potential impact on the adjoining owner’s property? How complex are the notifiable works? If the figure claimed for surveyor’s costs based on a timesheet calculation appears high against such yardsticks, it should be reduced; often such reduction will be very severe.
Another tactic, consciously or unconsciously applied, is to search for, find, or simply assert, legal and construction complexities which, on an objective assessment, are simply not there. When it comes to considering the reasonableness of fees, it is incumbent upon the person assessing that reasonableness to analyse who is responsible for the continuation or escalation of any dispute. Overly aggressive or adversarial correspondence is often, although not always, a good indicator that a surveyor is ramping up disputes rather than seeking to resolve them. Appointing owners should not be expected to foot the bill for party wall surveyors feuding about their pet party wall arguments.
Surveyors should be particularly alive to the fact that assertions of unreasonable conduct by one party or surveyor against the other, are sometimes made by the most unreasonable person involved. This is a judgment much easier for a truly independent person to reach, but an objective analysis of correspondence is generally a good starting point in determining such matters.
In both of these instances, the amount of costs in fact awarded should reflect resolution of the dispute as it should have been resolved by reasonable surveyors acting reasonably, not in the unnecessarily aggressive and combative way it was in fact resolved.
On a final note, I have seen some surveyors seek a determination in an award that a particular hourly rate which they charge is “reasonable”. Such a determination is both inappropriate and, in any event, meaningless in terms of future awards in the same matter. The reason for this is that an hourly rate is only one factor in the quantification of fees. In order to determine a figure for fees payable, an hourly rate has to be multiplied by a period of time. As explained above, even then, consideration must be given as to whether the figure then produced is proportionate to the dispute in question. An hourly rate is therefore not “reasonable” in any meaningful way when it comes to determining the reasonableness or otherwise of the fee sought to be claimed and which is based upon that hourly rate. It is the whole fee claimed which must be reasonable.
I would be grateful for any input and/or comments from readers on this article.