Security for expenses part 1 – Types or work

Analyzing financial data

This is the first of two posts that look at Security for Expenses and, in particular the type of works for which security may be available and the forms in which the security may take.

Under section 12 of the Party Wall etc. Act 1996 (“the 1996 Act”) the adjoining owner may serve a notice on the building owner requiring them to give security for expenses.

The methods of giving security is not prescribed in the 1996 Act, and so it is open to the parties to agree the form the security will take, or if they cannot agree, the surveyors shall determine it. However, before considering the amount of security and its form, we must first consider its purposes.

Although it has no express definition, the term “expenses” is referred to in section 11 of the 1996 Act. It relates to monies payable in respect of:-

  • the cost of building a new party wall under section 1(3)(b);
  • the cost of underpinning, thickening, raising, making good or demolishing and rebuilding a party wall under section 2(2)(a) or (b);
  • an allowance for disturbance and inconvenience to the occupier if adjoining premises are laid open under section 2(2)(e);
  • The cost payable by the adjoining owner of maintaining the height of a party wall where the building owner wishes to reduce its height under section 2(2)(m); and
  • making good any damage to the adjoining owners land caused by works under sub-sections 2(2)(a), (e), (f), (g), (h) and (j).

This appears to be a detailed list for which the 1996 Act expressly provides security may be requited.

Applying the rules of statutory interpretation expressio unius est exclusio alterius (“the express mention of one thing excludes all others”) it may be that the Court would interpret this as an exhaustive list of the works for which security for expenses may be required.

Sometimes a list of terms in a statute is intended to be illustrative, rather than exhaustive. This is usually indicated by the usage of a word such as “includes” or “such as”. An example of this is section 20 of the 1996 Act, where the definition of “owner” is followed by “includes” indicating an illustrative, not exhaustive list.

However, in the case of section 11 none of the words that might indicate an illustrative list are present and so it may mean that this is effectively a complete list of all of the items for which security for expenses can be requested.

It follows, therefore, that there is no general right to security – in particular, there is no right to security in respect of the statutory indemnity in section 7(2) of the 1996 Act.