With only a few exceptions anyone is allowed to photograph (with either still or moving images, and with or without sound) what they like and when they like, as long as the photographer (or, for remote systems, the camera) is on public land, on their own property or where the owner of the property has given permission for photography. It's perfectly lawful to film what's going on in your neighbour's garden (or, if they leave their curtains open, even what's going on inside their house) if the the camera is on your property.
As your post clearly recognises, CCTV used by businesses must conform to a code of conduct (in order to comply with the provisions of the Data Protection Act), including the display of appropriate notices. The Data Protection Registrar (as he was then known) originally held the view that the legislation also applied to domestic CCTV installations. However, following a legal test case, the Information Commissioner (as he is now known) has revised that opinion and the website of the Information Commissioner's Office now states (quote) "The Data Protection Act does not apply to individuals� private or household purposes. So if you install a camera on your own home to protect it from burglary, the Act will not apply".
So:
(1) there was no obligation for the owner of the CCTV system to display any notices ; and
(2) the owner of that system was within his/her rights to film what was going on next door.
Chris