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  1. Wealth
June 21, 2016

Litigation – the last resort for neighbour disputes

By Spear's

Laura Checkley and Katie de Kauwe explain why the Court of Appeal advocates solving disputes without the use of litigation.

Two York neighbours who took their dispute over repair works costing £4,000 all the way to the Court of Appeal clocked up legal fees in excess of £300,000. Was it worth it?

Mr and Mrs Dijk lived in an early 19th-century terraced house in York next door to Mrs Court. They shared a private drain with her, which ran beneath both properties.

 In 2011, the Van Dijks brought an action for nuisance against Mrs Court, claiming that works she had undertaken in 2007 had blocked the drain and resulted in flooding to their property. The repairs had put them out of pocket by just over £4,000. The matter went to trial and damages of £4,227.88 plus interest were awarded to the Van Dijks in September 2013.

However, the decision has now been reversed by the Court of Appeal, which has held that the 2007 works did not amount to a nuisance. The blockage of the drain, which was what had actually caused the flooding of the Van Dijks’ property, had occurred during earlier works undertaken in 2000, a fact which had emerged in 2013. However, the Van Dijks had continued to rely on the 2007 works.

The Court considered it ‘regrettable’ that the matter had come before it owing only to the huge fees incurred: Mrs Court faced a costs bill from the Van Dijks of £229,000 and her own costs were £89,000. The Court went on to say: ‘the adjective ‘disproportionate’ is wholly inadequate to describe the combined expenditure on resolving the question of who pays a £4,000 bill’.

This is not the first time that the Court of Appeal has expressed dissatisfaction that neighbours have pursued litigation without exploring the alternatives first.

Faidi and another v Elliot Corporation 2012 concerned an action for nuisance and breach of covenant. The claimants submitted that they were being disturbed by their neighbours who had omitted to carpet their floors, which in itself was a requirement under their lease. Neither side proposed mediation until shortly before the hearing in the Court of Appeal, by which time the costs amounted to £140,134.  The Court’s frustration was clear: ‘before embarking upon full blooded adversarial litigation, parties should first explore the possibility of settlement’.

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In the Court’s view, the only parties to have benefited from the course of action adopted were the legal representatives: ‘if the parties were driven by the well-being of lawyers, they could have given half the sum to the Solicitors Benevolent Association and then resolved their dispute for a modest fraction of the monies left over.’

Whilst some people may (sometimes justifiably) feel that they have the neighbour from hell, neighbours should consider that whatever method they use to resolve their differences, they will have to go on living in close proximity to each other during the process and in its aftermath. Litigation can be lengthy, expensive and stressful. Especially where the sums in dispute are relatively modest, it may be far more beneficial, for all of those reasons, to reach a settlement outside of court.

Two common forms of alternative dispute resolution are mediation and arbitration. Both are very valid and effective ways of resolving neighbour disputes.

In mediation, the parties appoint a third party, normally an accredited mediator, to assist them in reaching an agreement. The mediator does not give a decision but simply works with the parties to explore potential ways of resolving the dispute. The parties retain control on whether or not to settle and on what terms. Mediation can be an effective (and relatively inexpensive) means of resolving seemingly irreconcilable differences by seeking practical solutions, often being solutions that the court itself would have no ability to order.

Arbitration is a more formal process. A major advantage is that it gives certainty in that the arbitrator will be asked to make a decision and that decision which will bind the parties. This contrasts with mediation where it is possible that at the end of the process the parties have not reached a compromise. As with mediation, the parties choose the arbitrator, which means that they can choose someone who would be best placed, in terms of experience, to resolve the dispute.

When it comes to disputes between neighbours, the Court of Appeal’s guidance could not be clearer: neighbours should try to settle out of court. And lawyers should advise their clients accordingly.

Laura Checkleyis a partner at Pemberton Greenish LLP; Katie de Kauwe is a trainee solicitor at the firm.

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