Lea Valley Developments Ltd v Derbyshire, decision of O’Farrell J (jurisdiction)

Citation: [2017] EWHC B22 (TCC)

Work done on Lea Valley Developments’ property caused extensive damage to the neighbouring flat owned by Mr Derbyshire and resulted in the need to demolish and rebuild those flats.

The hearing before O’Farrell J featured a number of procedural issues including whether it was appropriate to grant an extension of time for the filing of Mr Derbyshire’s acknowledgment of service. Lea Valley Developments had sent its claim to Mr Derbyshire’s solicitors who only later confirmed that they were authorised to accept service and, given the confusion relating to service, the acknowledgment of service was accordingly delayed. O’Farrell J held that there had been effective service and the court should grant relief from sanction for the delayed acknowledgement of service: the breach was merely a technical breach, and in any event Lea Valley Developments had been made aware that the claim would be contested such that there had been no prejudice to them.

The key issue was Mr Derbyshire’s challenge to the court’s jurisdiction to determine the basis on which damages should be valued. There was a disagreement between the parties about whether damages should be assessed by reference to the diminution of the value of the property, or the greater cost of reinstatement (that is the demolition and rebuilding of the flats).

It was submitted for Mr Derbyshire that the court had no jurisdiction to determine the basis on which compensation should be valued because under the terms of the Party Wall etc Act 1996 any such dispute would be settled by surveyors and the grant of an award which could only be challenged by way of appeal. Lea Valley Developments, by contract, submitted that the court had an inherent jurisdiction to provide declaratory relief.

O’Farrell J held that whilst the Act provides a comprehensive code by which disputes in relation to party wall matters can be determined without recourse to the courts, there was no ouster of the court’s inherent jurisdiction to provide declaratory relief. Any such ouster would require “very clear wording”, and none was present in the Act.

In considering whether the court should exercise its inherent jurisdiction or leave the matter to be resolved by the surveyors (and so grant a stay in the litigation to account for that determination), O’Farrell J commented that the issue between the parties was “narrow in compass” and ought to be capable of resolution by the court after a short hearing. Further, it was an issue of pure law and did not require extensive consideration of the facts. Finally, it was also noted that for the court to determine the basis of a valuation did not trespass on the role of the surveyors in calculating the actual value of the damages due. O’Farrell J therefore held that the court could exercise its inherent jurisdiction, and that a hearing should be held to determine the issue.

Justin Mort QC acted for the Defendant

Full Judgment

Counsel

Justin Mort QC

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