Party Wall Fees: excessive fees and who pays
This article looks at probably the most contentious element of the party wall process: fees. Who pays them and how much is reasonable? The common-held belief that the building owner is obliged to settle without question is challenged here.
A neighbour can dissent and require an award, and for a loft build or extension, there are few reasons why the award cannot be served by an ‘agreed surveyor’.
It can be frustrating when the ‘agreed surveyor’ option doesn’t work out. There can be several reasons for this, though if we go back to Lord Lytton’s words regarding the intention of the Act, it was anticipated that the agreed surveyor option would be more widely used than it is. It is a failure of the act that building owners are having to pay thousands of pounds in fees when the matter can be dealt with by one surveyor, instead of two.
If the adjoining owner wants his own surveyor, then he can have it, and in the past, this has always been at the expense of the building owner.
Times may be changing however, with the recent case of Amir-Siddique v Kowaliw (2018) where a Judge found that the adjoining owner should pay the building owner’s surveyor’s fee. The adjoining owner dissented to a party structure notice and appointed his own surveyor. He then refused to allow his surveyor to act as the agreed surveyor. The Judge agreed that he was within his rights to refuse, but not on the basis that the building owner had to pay the additional costs associated with having two-surveyors.
Judge Bailey stated ‘in light of the fact that the unreasonable behaviour of the adjoining owner has caused the building owner to incur the wholly unnecessary cost of the building owner’s surveyor’s fee, I consider that it is just to allow the appeal so that the adjoining owner is liable to pay the building owner’s surveyor’s fee’.
Unfortunately, surveyors have been slow to act, and too many building owners are paying fees for two surveyors, perhaps unnecessarily. This behaviour is often supported by their very own surveyor who stands to lose out if promoting the agreed surveyor option.
If an adjoining owner dissents and appoints their own surveyor, has the building owner, as the person expected to pay, been advised by his surveyor that the agreed surveyor route may be a possibility? If not, why not? By withholding this information, a surveyor can secure himself a fee. Not all surveyors are willing to act honourably, and the number of surveyors offering to step aside to save the building owner some money are few. Such behaviour is simply not being challenged, and the important case of Amir-Siddique v Kowaliw has had little tangible impact on the conduct of surveyors and adjoining owners.
As a rough guide, for a loft or extension build, adjoining owner surveyors charge anywhere from £700 plus VAT to £1,500 plus VAT in London.
Fees vary hugely, though London fees are generally the highest in England and Wales. If the fee charged is excessive, the matter can be referred to the third surveyor. This referral should NOT delay the serving of the award, as a clause can be inserted awarding a certain amount with the remainder to be determined by the third surveyor. The third surveyor will look at various factors, such as whether the time expended by the adjoining owner’s surveyor is reasonable.
Being ‘expensive’ is different from being ‘unreasonable’. Going to the Third Surveyor costs money. The losing party is likely to have to settle the Third Surveyor’s fee, and the fees for both the Building Owner’s Surveyor and the Adjoining Owner’s Surveyor, for making their referrals. A party to the dispute can make the referral, however, if making a referral, the objective is generally to win, by having the Third Surveyor find in your favour. The quality of the submission to the Third Surveyor must be succinct.
The shocking thing here, is that you can have a greedy surveyor who is effectively immune from justice, as it will be his appointing owner who pays for a referral in the event that the surveyor’s fee is found to be excessive. There has been a great example by a now retired third surveyor who actually apportioned costs against the greedy surveyor, though this is not likely to have been legally permissible. There is a sense of immunity when it comes to excessive fees, and there is a general unwillingness to tackle the issue directly. Those who administer the Act, including professional bodies, could do much more to instil confidence. Surveyors have the privilege of policing themselves, so perhaps they could embrace this by being more transparent with fees. Professional bodies could advise on reasonable fees for different types of jobs and make this information public. It is appreciated that many jobs are unique, however for standard residential work, much of it is repetitive, so there is no need to complicate matters to inflate fees.