Judicial Guidance on challenging the fee of a Party Wall Act Surveyor - Shamim Amir-Sidddique -v- Kowaliw and Gigonkowaliw ( 2018 )

The recent County Court decision in Shamim Amir-Sidddique v Kowaliw and Gigonkowaliw ( 2018 ) has offered some well overdue judicial guidance on the steps to take when appealing the quantum of fees awarded to a party wall surveyor.

Facts 

The facts are pretty straight forward.  

The Building owner decided to convert the loft in her property to provide further habitable space, work which also involved the removal of the chimney breast in the first floor front room.  This was clearly  work  that engaged the Party wall Act, though the building owner was hoping the Adjoining owner would return the courtesy she had previously afforded when similar works were undertaken by the Adjoining Owner without Party Wall engagement.   

This did not happen, and the Building Owner was forced to serve a party wall notice.  There then followed some acrimonious exchanges over the appointment of the Adjoining Owner's surveyor, mainly as a result of the Building Owners wish for the Adjoining Owner’s surveyor to act as a jointly appointed surveyor.  The  Adjoining Owner refused, and the Building Owner was forced to appoint a surveyor of her own.   An award was then issued, and the works were completed.  The award provided for the Building Owner to pay the fees of £1500 and her own surveyors fees of £595 and £180 ( the latter relating to the surveyor she had first appointed). 

Even though having regard to the extent of the work undertaken the fees did not appear on the high side, the Building Owner appealed the fees aspect of the award 

The matter came before HH Judge Bailey, a Judge with a wealth of experience in party wall disputes. He acknowledged that although there were judges like himself who could drawing on experience, express a view on the reasonableness or otherwise of fees, it was necessary for a party who sought to challenge feed, to come to the court armed with expert evidence, and to also, before the hearing, provide the adjoining owners surveyor with the opportunity to be joined as party, and to be heard on the issue.

He explained:

‘Given the sum at stake, and the cost of mounting an evidence-based challenge to the fees the Appellant’s approach is understandable, but it puts the court in an impossible position. The jurisdiction of the court under s 10(17) of the 1996 Act is plainly wide enough to vary that part of an Award which covers the fees of the party wall surveyor. But the court has to act on evidence and give reasons for any decision. There is an additional complication where a party wall surveyor’s fees are challenged by an appellant. The respondent to the appeal will often have no particular interest in the outcome of the challenge to the surveyor’s fees. Accordingly the party wall surveyor whose fees are being challenged may find that his interests are not being properly protected. Where a party wall award appeal includes a challenge to a surveyor’s fees it is important that this is flagged up in the interim stages of the appeal. The surveyor concerned should then be given an opportunity to apply to be joined to the appeal as a second respondent so that he may take part in the appeal, be required to give disclosure where appropriate, and be permitted to adduce any evidence he wishes in support of his fees’. 

The Court laid down some guidelines on the evidence it would expert to see when a party was challenging the reasonableness of fees, and in short this entails the need for expert evidence on the  following:

1. What would a reasonable party wall surveyor charge per hour  for the work in question. The Judge found that ‘There is, incidentally, no clear guidance from any authoritative source on charging rates for party wall surveyors, in contrast to the position in other professions’, and,

2. Analysis of the relevance and reasonableness of time spent on each item of work undertaken by the surveyor ( in effect to determine the reasonableness under s10 (13) ( see below) ).  This the Judge stated would involve the building owner obtaining a third party disclosure order against the adjoining owner surveyor to obtain his time sheets, documents, workings and other relevant papers. HH Judge Bailey acknowledged that there could be circumstances where the adjoining owner would be required to pay part of the fees of his own surveyor.
   

The Court commented that there are no principles upon which the surveyor or surveyors should act when making awards of costs when exercising their powers under s10(12) and (13) of the 1996 Act.  Looking at liability the Court noted the Act provides, in s 11(1), that except where there is specific provision to the contrary “expenses of work under this Act shall be defrayed by the building owner”. 

HH Judge Bailey reminded us that are provisos to this general  provision:

‘First the fees in question must be reasonable, see s 10(13). The building owner need not pay the adjoining owner’s surveyor’s fees where they are unreasonable in amount because, for example, the surveyor has sought to charge too high a hourly rate, or has charged for unnecessary work, or has taken an unreasonable amount of time to do the work that he has done. 

Secondly, the building owner will not be required to pay the adjoining owner’s surveyor’s costs when these have resulted from unreasonable conduct either on the part of the adjoining owner or the surveyor. The adjoining owner must act reasonably.’

On this second proviso the Judge made specific reference to the case of Manu v Euroview Estates Ltd [2008] 1 EGLR 165, 176G, as detailing examples of the type of conduct that might persuade a court, namely:

‘ taking pedantic and difficult points, making repeated requests for unnecessary information, insisting on obtaining unnecessary or unnecessarily extensive reports from structural engineers, and in conduct apparently designed to hinder or delay the making of an award’

HH Judge Bailey added that :

‘The conduct of any individual has to be set against the standards to be expected generally throughout society’  

In the case the Building Owner argued 1) the Adjoining Owner’s refusal to reciprocate the courtesy she had previously afforded, and 2) the seeking of conditions on work that fell outside of the scope of the Act, and 3) the opposition to the Adjoining Owner surveyor acting as a jointly instructed surveyor, all amounted to conduct that would justify visiting all of the fees incurred on the Adjoining Owner.  The Judge was not persuaded on 1 and 2, but did consider it was unreasonable for the Adjoining Owner to refuse to allow the surveyor to act for both, and therefore directed the the Adjoining Owner pay the Building Owner’s surveyor's ( second ) fees.

Practical Lessons

Hourly Rate 

If you are looking to challenge either on appeal, or on making submission to a third surveyor, the hourly rate charged by a surveyor make sure you adduce expert evidence, perhaps from a few  different surveyors.  In this case the Adjoining Owner actually reduced his hourly rate from £250 to £210 when it came to calculating his fee for the making of the award.  This compares pretty favourably to the hourly rate of some surveyors,  that can be as high as £350 per hour. 

Unnecessary work ( e.g non party wall work) and or taking too long to complete work

This will involve a close and forensic look at the work undertaken by the surveyor after the surveyor has produced his working papers, either voluntarily, or by order.  The expert would be able to comment on the necessity of each element of work and having regard to the hourly rate charged assess whether the time taken to undertake the work was reasonable or otherwise. 

Conduct of the party 

This would in part be covered by the approach referred to above, and an expert would no doubt be expected to comment on whether as a result of the conduct of the appointing owner when compared to the standards expected ‘throughout society’, any work had taken place and/or  taken longer  to undertake. 

Though not mentioned in the judgment it is clear that when looking at reasonableness the question of proportionality is also an important factor to take into account.  

Adding the Surveyor 

If there is to be a challenge of the surveyors fees there is a need to ensure that before the hearing of the appeal, probably on directions, that the surveyor is given the opportunity to be joined as a party so that he/she can be heard.   The question of  seeking discovery of the surveyors papers should also be considered at this stage. 

Conclusion 

In this case having regard to the nature of the works and complexity of the dialogue between the parties  the fees did not seem particularly high,  and the writer is surprised an appeal was launched.  The Building Owner seems fortunate to have succeeded, albeit on one of the three grounds, and it would be interesting to see how the costs of the appeal were apportioned. 

David Pett  Solicitor 

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

S10 (10) of the Party Wall Act 1996 and the Exploitation of the Building Owner

Dispute 

No where in the Party Wall Act 1996 ( ‘Act’) is a ‘dispute’ defined.   

The Collins Dictionary defines a ‘dispute’ as ‘an argument or disagreement between people’.   

If on serving a party wall notice the adjoining owner assents to the proposed  notifiable works, there is not of course a dispute, whereas if there is no response within 14 days of  service a dispute is ‘deemed’ to exist.  A disagreement will also arise of course, if the adjoining owner expressly objects to the proposed works. 

The existence of a ‘dispute’ is important for two reasons.  Firstly, without one there is no jurisdiction for a surveyor to be appointed, and secondly a deemed or existing dispute is a prerequisite for the making of a party wall award.  

As for appointment, RICS issued Guidance Notes on the Party Wall Act states:

'The full extent of the dispute should be given upon which subsequently appointed or selected surveyors can determine’ 

Even where the adjoining owner has assented at the outset,  the Act can still be engaged if during or following the completion of works a ‘dispute’ arises.   The relevant provision is S10 (10) of the Act  and provides the surveyors' tribunal is competent to make awards on matters which are in dispute between the parties and which are also connected with work to which the Act relates. 

The surveyors also have the power to determine any other matter that may arise out of the dispute which has been referred to them or which is in some way incidental to it

Their appointment is fundamental to achieving the purposes of the legislation and is widely credited with avoiding disputes between neighbouring owners that might otherwise result in litigation. The surveyors’ authority and power to make awards is not derived from their contractual appointment, but from the the provisions of the Act.  Failure therefore to follow the requirements of the Act can render an award invalid. 

What happens when a dispute or deemed dispute arises following service of the Notice?

The usual course when a dispute arises, or is deemed to have arisen, following service of the Notice, is for surveyors to be appointed, and for there to be an award, or party wall agreement put in place to regulate the works before they commence.   Usually, this will also provide a mechanism for the resolution of further disputes should they arise.  

The s10 (10 ) appointment 

The position becomes a little less clear when the adjoining owner having assented at the outset   subsequently decides to look to challenge the continuation of the works. On the face of it this triggers a dispute and the opportunity to engage the s10 (10) dispute resolution process emerges. 

However, it does not necessarily follow that just because the adjoining owner has decided for whatever reason to raise a concern a party wall dispute arises. 

There may be a number of reasons for the development. For example, the adjoining owner may have suffered some damage to their property during the course of the notifiable works, and becomes nervous about the prospect of the building owner making the work good, or offering compensation.  The adjoining owner may, by way of a further example, have become fed up with the building owner’s builder taking advantage of previously agreed access rights.   

On the face of it these examples suggest a disagreement, and per se would justify the establishment of the s10(10) process.  However, in both cases the situations could have easily arisen through nothing other than a misunderstanding, and or, without the building owner’s prior knowledge, especially if a contractor is involved.   

Furthermore, for there to be a disagreement there needs to be a difference in views, and if on enquiry the building owner accepts the view of the adjoining owner can it really be said that a dispute exists.  Clearly if one party accepts the position of the other there is no need or justification for the party wall dispute resolution provisions to be invoked.  

It is the uncertainty surrounding the adjoining owners change of heart that often exposes a building owner to the risk of financial exploitation by the ‘cowboy’ party surveyor who often circles looking for opportunities of this type. 

More often or not a building owner is forced due to pure ignorance of the workings of the Act to accept the appointment of the adjoining owner’s  surveyor, even though there is no actual dispute present.  It is only once the surveyor has bedded him or herself in that a dispute is then created to justify the appointment, and the massive fee accumulation that will inevitably follow. Its not too long before the building owner finds him or herself caught up in a protracted, very  expensive and, more to the point, totally unnecessary process, and one from which there is no escape. 

So what can be done if this imprisonment occurs?  

For there to be an award there needs to be an existing dispute.  This is clear from the present tense of the language used in s10 (10). 

This was made clear by HH Judge Bailey in the judgment he delivered in Mohamed and Lahrie and Antino and Stevens (2017) when dismissing the notion that the making of an award is always a necessary feature of the s10(10) process:

‘The argument that the 1996 Act requires the surveyors to proceed to an award even where the parties have reached agreement would be wholly against the general principle that parties who are sui juris are free to make such agreements as they wish to make, provided that they are not illegal in nature. It is also against the clear policy of the CPR for the court either to restrain two parties from reaching an agreement on any subject matter which has been referred to party wall surveyors under the 1996 Act, or to hold unlawful and therefore unenforceable any agreement they do happen to make, simply on the basis that a reference has been made to the surveyors. Very clear statutory words would be required before the court would act in this way, and there are no such words in the 1996 Act’.

If therefore the building owner agrees with the views/demands of the adjoining owner no dispute can be said to exist, and the need for an award ceases.  

In so far as the fees of the adjoining owners surveyor is concerned, even though there would be a strong argument to justify refusal to accept liability ( on the basis there was no dispute available in the first place to justify the s10 (10) appointment), this could ironically be viewed as a dispute,  and result in the making of an award. The best advise would be to offer and pay a small, but reasonable fee, and to then leave the adjoining owner to decide whether or not to run the cost risk of a third surveyor referral. 

Practical Advice 

If notifiable works are to be undertaken always serve a valid party wall notice. 

If the neighbour objects, or does not respond, look to find out why, and wherever possible establish a party wall agreement to regulate the proposed work, and to provide a mechanism for resolution to cover the possibility of a dispute arising in the future.  This will due to the decision in Mohamed ( above)  reduce the risk of exposure to the cowboy surveyor, and also the probability of facing a huge fee liability. 

This advice should equally be followed even if your neighbour consents to the works.  It is not uncommon for long standing neighbours to fall out, often for reasons unconnected with the build,  such as pure jealously.  By having in place an agreement to provide for the resolution of any dispute that might arise later will make it very difficult for s10(10) to be invoked. 

If there is no agreement in place, and a prima facie dispute follows assent, then find out what has gone wrong, and fix it quickly.  Don’t let a dispute develop, and make sure that if the adjoining owner surveyor decides to unilaterally appoint him or herself, that you make it clear there is no disagreement.  Follow this up with a written agreement, and ensure this has provision built into it to resolve any future disagreement that may arise.  This may mean swallowing your pride, and making concessions beyond normal expectation, however do bear in mind that entering the party wall arena can often be  akin to handing the adjoining owner’s surveyor a winning lottery ticket. 

David Pett - Solicitor 

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

The Insurance Distribution Directive and Conveyancing - Are you ready ?

The Insurance Distribution Directive (IDD) will introduce  as from the 1st October, 2018 a new regime for those involved in insurance sales, even if selling insurance is not your primary business.

The IDD is designed to strengthen insurance customer protection, and will also apply to all businesses involved in the insurance supply chain, including where insurance is sold alongside other products.

So this will cover, for instance, the proposal and supply of defective title indemnity insurance. In this article I will look at the role adopted by most conveyancers when it comes to acting as a facilitator of indemnity insurance products. 

The SRA advised: “All firms should therefore assess their own individual practices and make sure they are… able to comply with the revised rules.”  The SRA has yet to issue confirmation of final rule change, though this is expected to be published shortly. 

Suppliers of indemnity insurance have also been slow off the mark to provide guidance and revised documentation even though these changes were due to be introduced back in February of this year. 

What is meant by insurance distribution activities?  

This will cover advising on and proposing contracts of insurance as well as carrying out work preparatory to the conclusion of contracts of insurance.  Most conveyancers who facilitate  indemnity insurance will fall within the category of “Ancillary Insurance Intermediary’. That is service providers and distributors of goods who distribute insurance products on an ancillary basis.

What are the requirements for engaging in insurance distribution activities as an ancillary insurance intermediate?

There needs to be evidence of registration with the your regulator to undertake such activities. 

Those involved need to be of good repute and possess  appropriate knowledge and ability to advise on and propose insurance products.   

This will entail training on products and on what formalities need to be addressed when engaging with clients.  The specific requirements for individuals to undertake 15 hours CPD relating to the provision of Insurance Intermediary Activities do not apply.

A  manager must be appointed to ensure compliance and records must also be kept to demonstrate  compliance. 

What are the rules on remuneration?

The IDD is keen to avoid conflict of interests when it comes to advising and supplying insurance products.    

This will therefore prevent a conveyancer from making  any arrangement by way of remuneration, sales targets or otherwise that could provide an incentive to the conveyancer or their employees to recommend a particular insurance product to a client when the solicitor could offer a different insurance product which would better meet the client's needs.

This will also mean a conveyancer will to be able to be paid a commission  or other advantage  for the supply of indemnity insurance without full accountability to the client. 

What information needs to be given to the client at the point of the retainer?

The client care agreement will need to be reviewed. Precise and clear information on the what what the conveyancer can do and not do under the IDD needs to be given.  The conveyancer’s regulator must be stated and the complaints procedure for dealing with complaints about the provision of and advise on insurance products must  be made clear. 

What information must be given before the indemnity insurance cover is put into force?

The requirement for a demand and needs statement remains and is extended. 

(a) sets out the client's demands and needs on the basis of the information provided by the client;

{b) where a recommendation has been made, explains the reason for recommending that contract of insurance;

(c) reflects the complexity of the insurance contract being proposed;

There is an obligation  to also provide the client with objective and relevant information about the insurance product in a comprehensible form to allow that client to make an informed decision while taking into account the complexity of the insurance product and the type of client. This shall be provided by way of a standardised insurance product information document ("IPID") on paper

The IPID 

This will be supplied by the  indemnity insurance supplier and shall include:

(a) information about the type of insurance;

(b) a summary of the insurance cover, including the main risks insured, the insured sum and, where applicable, the geographical scope and a summary of the excluded risks;

(c) the means of payment of premiums and the duration of payments;

(d) main exclusions where claims cannot be made;

(e) obligations at the start of the contract;

(f) obligations in the event that a claim is made;

(g) the terms of the contract including the start and end dates of the contract; and

(h) the means of terminating the contract.

What obligations are there when recommending to a client which insurance cover to run with?

Where a conveyancer recommends a contract of insurance, the client must be informed this is made on the basis of a fair analysis of the products available within the market.  This will involve looking at a  sufficiently large number of insurance contracts to enable a recommendation of a product which would be adequate to meet the clients' needs.   This will for example involve looking at the extent of the cover, whether the cover has an escalation clause, the rating of the insurer within the market and the conditions of the cover.  In other words making sure the client can make an informed decision about the product. 

If you are only using one provider of indemnity insurance the time may have come to look to other providers for comparable products or to a provider that can supply you with a list of  number of similar products for selection. 

Conclusion 

In practice if an indemnity policy is required it is often requested by the buyers conveyancer. If this is the case and you are acting for the seller given the above you should be saying it is for the buyers conveyancer to look for the policy and to determine which policy would be suitable for their client.  It would not be appropriate nor advisable for the buyer’s conveyancer to allow the buyer to accept a policy put forward by the seller without checking its suitability and carrying out an analysis of the market. 

If a policy is required the key is to ensure the client is presented with all of the information required under the IDD and is left to make the decision on which policy  designed to address the relevant defect he or she wishes to take out.   Providing  the appropriate policy required to address the defect is correctly identified  one should be  looking to only provide general advice to clients on the difference in insurer ratings and   the benefits of escalation clauses  when proposing insurance options. It should be made clear that cheaper cover may not always be the best option. 

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

‘Buyer Beware’ - Tips to avoiding post completion issues.

We all like to imagine our dream homes being exactly the way we envisaged upon completion.

Being able to move in with no issues and taking our time to replace items such as the boiler and improve rooms such as the kitchen and bathroom. Unfortunately our dreams are not always a reality on completion.

The unfortunate reality of purchasing a property in England and Wales is that the risk is  entirely with the buyer. It is for the buyer to inspect everything in as much detail as possible and for the buyers Conveyancers to raise adequate enquiries to eliminate as much of the risk as possible. This is really where your detection skills are put to the test.

We cannot stress enough the importance of inspecting the property as thoroughly as possible. Ensuring you not only view the property but test the items within it. Asking the seller to switch on the heating in the middle of summer can seem a bit excessive however it will reduce any doubt over the state of the boiler - a costly post completion situation we all too commonly see. Ask the seller, when was the boiler last serviced, if this was not within the last 2 years or if they do not have the report it may be worthwhile asking for it to be serviced prior to exchange of contracts.

Another equally important factor is to ensure that you commission a home buyer survey prior to exchange. It may seem daunting looking at the results but as your conveyancers we can view the home buyers survey and advise on any specific issues to be concerned with. If  necessary we can then raise further enquiries with the sellers solicitors. Our recommended  surveyors can assist and details can be found on our website : www.mjpconveyancing.com 

Finally if there is anything that is of particular concern to you but you do not feel this has been dealt with during the course of the enquiries do let us know. Once exchange has taken  place the seller is not obligated to respond to any further enquiries and it is therefore  important anything you wish to raise is dealt with pre exchange.

Post completion issues really can hinder your enjoyment of purchasing a new property, do  not be caught out inspection is the important key.

 

For further advice on post completion issues please do not hesitate to contact our dedicated  team - completions@mjpconveyancing.com or sophie.goodman@mjpconveyaning.com

Sophie Goodman

Trainee Solicitor

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com