HM Revenue and Customs (HMRC) have been unsuccessful in their appeal against a decision that a...
When building owners carry out works on their property, are they liable for damage to adjoining properties that results from pre-existing structural issues? The Court of Appeal recently provided welcome clarification on that question.
The owner of a ground-floor flat wished to extend it by building out into his garden. He served notices on owners of adjoining properties, as required by the Party Wall etc. Act 1996. The works caused the rear wall of two adjoining properties to drop by about 2 mm, which led to internal walls and floor slabs dropping by a more significant amount. However, there were structural issues that pre-dated the works, in that the rear wall was not supported by its foundations and there were extensive voids beneath the floor slabs and the internal walls.
Section 7(2) of the Act states that building owners are liable to compensate adjoining owners and occupiers for any loss or damage caused by works that fall under the scope of the Act. The issue of compensation was referred to a surveyor under the mechanism for resolving disputes contained in Section 10 of the Act. The surveyor found the flat owner responsible for the subsidence and awarded the owners of the two adjoining properties compensation totalling £381,190. The flat owner appealed to the County Court, which reduced the amount payable but concluded that he was liable for the cost of remedying the pre-existing issues.
In ruling on his further appeal against that decision, the Court of Appeal concluded that the flat owner was liable for filling in the voids beneath the damaged slabs, as his works had caused the damage to the slabs and they could not be re-laid unless this was done. However, he would not be liable for filling in the void under an undamaged slab, if that turned out to be necessary or desirable, as that would not be a need that arose from damage caused by his works. Although accepting that no contractor would agree to repair the damage to the internal walls and slabs unless the rear wall was underpinned, the Court observed that such repairs were theoretically possible. The need to underpin the wall was therefore not caused by the works and the flat owner was not required to pay for it.
Noting that the case would have to be remitted to the County Court, the Court of Appeal expressed the hope that the flat owner and his neighbours could agree the amounts payable without the need for a further hearing.
