Limitation periods and the party wall act

Insights - 29/10/2014

This post started life as a discussion on LinkedIn that generated a fair bit of debate, and I thought it would be helpful to surmise what can be a particularly tricky area of law.

It commonly arise where an adjoining owner is claiming money against a building owner and so this post focuses on this scenario. Similar (but not identical) provisions apply for non-money claims (e.g. for specific performance).

What is Limitation?

The concept of “limitation” is the prescription of rules that restrict the maximum time after which legal proceedings may be commenced to enforce legal right. Put simply, it is a “use by” date for bringing legal proceedings. If a claimant does not issue proceedings before the expiration of the limitation (i.e. use-by) date then the Defendant will have an absolute defence to it.

The Limitation Act 1980

In England the Limitation Act 1980 sets out the rules which prescribe the periods within which legal proceedings may be brought.

Under section 9 of the Limitation Act a claim for monies due under a statute, such as the Party Wall Act, must be issued within six years of the date “on which the cause of action accrued”; that is, the date on which the right to make a claim arose.

Therefore, an adjoining owner who is seeking sums due under the Party Wall Act must issue proceedings within six years of the date on which their claim arose.

No Limitation on Surveyors

It is worth noting that limitation periods apply only to bringing a claim in the courts. There is no limitation period in the Party Wall Act restricting when a claim may be referred to the tribunal of surveyors.

This means that a dispute arising out of works can be referred to the surveyors at any time, even after 6 years to bring legal proceedings has expired. That said, given the lapse in time the referring party would likely face severe evidential difficulties in trying to prove their claim.

Limitation on Awards

Once an award is made there is a statutory duty on the parties to comply with its terms; for example, to pay any money that is determined to be due. A breach of a statutory duty is a “tort”, or civil wrong, that gives rise to a new cause of action, which in turn carries with it a separate limitation period.

Under section 2 of the Limitation Act the limitation period for torts is six years. If the award required payment to be made within a certain period of time it will be six years after that period expires. If no period is specified then it will be a reasonable period of time, which is likely to be fourteen days in most cases.

Section 7 of the Limitation Act, which refers to enforcement of awards, is not relevant here. This refers to statutory provision that allow awards to be enforced as if they were judgments, for example under section 66 of the Arbitration Act 1996. As above, a failure to comply with a party wall award gives rise to a claim in tort for breach of statutory duty, not a right to enforce the award.

Conclusion

If an adjoining owner wants to make a claim directly to the Courts for money dues under the Party Wall Act then they must issue the clam within six years of the date on which their claim arose.

Alternately, the adjoining owner may elect to refer the matter to the tribunal of surveyors to be determined by award, in which case the claim on the award must be made within six years of the failure to pay the sums determined to be due.