Neighbours of a building development site in Għajnsielem noticed that excavation works next door were not being carried out according to the method statement submitted by the architect. The works were in preparation for the construction of basements on three levels, 16 apartments and three penthouses.
After formally notifying the Building and Construction Authority (BCA), and following the submission of a new method statement by the developers, the neighbours noticed that excavation works were carried out swiftly close to the boundary wall and consequently, a hole was made in the same wall which led to their own property.
The neighbours felt that this invaded their privacy and such works were of serious prejudice to the stability of the boundary wall. They further alleged that the works were still not being done in accordance with the new method statement.
They once again reported to the BCA and also filed for a warrant of prohibitory injunction. Following several judicial intimations filed between the parties; the neighbours filed a lawsuit before the law courts in Gozo seeking damages.
The defendants contested, the suit, and even contested the forum where it was filed.
Clause 20 (2) Subsidiary legislation 623.06 ‘Avoidance of damage to third party Property Regulations’ directs third parties suffering damages from others’ development to refer their case to arbitration.
Indeed, any dispute regarding building construction, not being one in connection with a claim for personal injuries but being a dispute arising from damage to third-party property resulting from construction activity on a contiguous site shall be referred to arbitration, provided that the damage incurred by the third party does not impair the stability of his property nor endangers its users; or the cost of damages being claimed by the third party does not exceed one million euro (€1,000,000).
In a preliminary judgement delivered on the 28th October 2022, case ref number 105/2021 BS, the court rejected the defendants’ preliminary defence, by which they had claimed that the court did not have jurisdiction to decide the case, since according to them, the dispute should be decided in arbitration. The defendants who brought this preliminary plea, based their argument on article 20 (2) of S.L. 623.06.
The Court of Magistrates (Gozo) in its superior jurisdiction cited local jurisprudence in its preliminary judgement and specifically noted that mandatory arbitration is the exception to the rule. The court stated that the competent forum for cases concerning civil rights, is indeed the ordinary courts.
Following a detailed study of S.L.623.06, and the Arbitration Act, the court highlighted that the regulation includes a provision which excludes mandatory arbitration in the following circumstances: where the damage impairs the stability of third party property, when it endangers users, or where the claim exceeds one million euro.
The court further highlighted that the subsidiary legislation itself made several references to the liquidation of damages by ‘a court of law or arbitral award’; and so the possibility of a judgement being delivered by a court of law was not to be ruled out by mandatory arbitration in cases regarding building construction.
Moreover, the court found that the alleged damage and consequential damages on which the plaintiffs based some of their claims referred to damages caused by all or some of the defendants in the plaintiff’s property, which weakened the stability of their own property. The plaintiffs also claimed that the works impeded on their enjoyment of their own property.
In terms of the regulation cited by the defendants, the competence of the court to determine this issue could not be considered as excluded.
The court furthermore remarked that a different decision to that taken by it by in this preliminary judgement would also give way to further delays to the issue between the parties, and so the court ordered that the case continues to be heard on the merits.
Rebecca Mercieca is an Associate, Azzopardi, Borg & Associates Advocates.