What is the surveyors’ jurisdiction in respect of compensation under section 7(2) of the Party Wall etc Act 1996 (“the Act”), does this extend to compensation for the cost alternative accommodation, and does the adjoining owner have a duty to mitigate his loss?
As the court made clear in the case of Lea Valley Developments Ltd v Derbyshire  EWHC 1353 (TCC), the purpose of section 7(2) of the Act is to give the surveyors jurisdiction to award compensation to an adjoining owner or occupier in just the same way the court at common law awards damages in tort to a claimant. Further, the measure of compensation under section 7(2) should be approached in the same way as the court would approach deciding the quantum of damages at common law.
Consequently, the surveyors dealing with compensation under section 7(2) need also to have regard to the common law limitations on the award of damages, including the requirement for an adjoining owner to act reasonably in mitigating his losses.
In this article I deal specifically with the duty to mitigate and how this interacts with claims for the cost of alternative accommodation by adjoining owners whose property has been damaged by a building owner’s works.
The duty to mitigate applies to any claimant seeking to recover damages, and is, in practice, a duty to take reasonable steps to minimise losses caused by a defendant’s unlawful actions. Where damage has been caused to an adjoining owner’s property by the building owner’s notifiable works, should the surveyors award compensation, in addition to the cost of the remedial works themselves, for the costs of providing alternative accommodation to the adjoining owner during those works?
The cost of alternative accommodation is certainly recoverable in principle, where such costs are incurred, or are to be incurred, as a consequence of the damage caused by the building owner. But the adjoining owner is only entitled to such costs where it would be reasonable for them to be incurred, both in principle, and as to amount.
There are therefore several stages to considering whether and to what extent alternative accommodation costs might be recoverable
(1) Is it reasonable for the adjoining owner to move into alternative accommodation at all? This is a question to be answered objectively, taking into account all of the relevant circumstances. How long will the remedial works take? How much of the adjoining owner’s property will be affected by those works? How much noise, vibration, dust or smell will they create? Are there any health issues affecting the adjoining owner which causes difficulty with them remaining in their property during the remedial works? Are there any other factors which mean that the adjoining owner’s property will be uninhabitable during all or some of the works? Could the works be scheduled so as to coincide with a time the adjoining owner is going to be away on holiday? A good overall question to ask is whether, if the adjoining owner were carrying out the remedial works themselves and at their own cost, would they move out, or would they stay put?
(2) How long is it reasonable for alternative accommodation to be provided for? Even where it might be reasonable for the adjoining owners to move into alternative accommodation, it does not follow that this needs to be for the entire period of the remedial works. There may be a particularly disruptive part of the works during which it is impractical for the adjoining owner to remain in occupation, but no reason why the adjoining owner could not return for the remainder of the works. One other factor to consider is whether the entire works might be carried out significantly more quickly if the adjoining owner were in alternative accommodation – if the works would take 4 weeks with the property emptied, but 12 weeks with the owners in occupation, it may be reasonable for alternative accommodation to be provided for that four-week period.
(3) What alternative accommodation should be provided? Again, this is a question of what is reasonable in all of the circumstances. If the accommodation is only for a short period, then often a hotel or guest house may be most appropriate; if longer then it may be necessary to consider the cost of renting a flat or house. The accommodation ought, ideally, to be of similar size, location and quality to the adjoining owner’s property, but where this is impractical, a property which is small, or in a less convenient location, or of lower quality may nonetheless be appropriate.
In answering these questions, the surveyors should have in mind that the requirement on the part of the adjoining owner is to act reasonably in mitigating their losses, not to take every possible action to minimise those losses.