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Hello, I am a solicitor with 20 years experience. I will try to help you with this.
No he can not do this. To do this would be the crime of criminal damage and you would be entitled to call the police as he was ding this and expect him to be arrested.
The legal position here is not clear. You have been suffering for years with the effects of water running off his property which might amount to nuisance or negligence on his part. In building a wall you seek to avoid the effects but there is a risk that you will cause puddling on his land. He might be able to argue that in building the wall with this effect you are acting negligently and causing him harm. However his remedy woud be to sue you for compensation or seek an injunction, not to smash your wall with a sledge hammer.
many thanks for the response, we thought it would be a criminal offence for him to damage our property, but just to clarify are we within our rights to build the wall inside our boundary even if this results in a puddle forming on his driveway?
The best way to deal with this is to sit down in a neighbourly fashion and try to work out a solution that works for both of you. Sadly that sounds unlikely.
I think my answer crossed your supplementary question. In short, yes you can build the wall on your land but if it causes damage to the neighbour's land then he may have a legal action against you.