Adjudications & Residential Occupiers…Is It Time For A Change? Are They Best Served By Being Excluded From Adjudication?

The law relating to adjudications exclude residential occupiers. Should this change?

S.106 of the Housing Grants, Construction and Regeneration Act 1996 (Act) provides that the Act will not apply to a construction contract which relates to operations on a dwelling which one of the parties occupies or intends to occupy, as his/her residence.

Adjudications and residential occupiers

Case law

In the case of Westfields Construction Limited v Clive Lewis [2013] EWHC 376 (TCC) 1 WLR 3777,  there was an application to enforce an adjudication award. The nature of the dispute was whether the defendant could rely on the s.106 exceptions as he said that he was a residential occupier, whereas the claimant argued that the defendant did not occupy the property at the time the contract was made.

It was decided that, occupation cannot be seen as a single snapshot in time but instead it required the on-going occupation. In the alternative, even if the snapshot test was correct, the defendant failed to prove that he was in occupation on the date the contract was made.

Judge Coulson also commented on the costs that both parties had incurred in arguing the s.106 exception:

“Adjudication in construction contracts is generally thought to have worked well, and it has certainly reduced costs. Is it not time for s.106, and the other exceptions to statutory adjudication, to be done away with, so that all parties to a construction contract can enjoy the benefits of adjudication? I would venture to suggest that that would be a more commercially sensible outcome than that which has been achieved, for both parties, in these enforcement proceedings.”

In a more recent case of ICCT Ltd v Pinto [2019] EWHC 2134 (TCC), the point about residential occupiers referring a dispute to adjudication was raised once again.

In this case, there was an oral contract in which the contractor was engaged to seal leaks in the basement of his residential property. Due to alleged defects in the works, the contract was terminated and the contractor referred the dispute to adjudication.

As a result of the decision in this case, it became clear that there was no blanket ban on adjudication concerning works to a residential dwelling. This allows parties to avoid lengthy, drawn out and expensive Court proceedings.

If the parties have fully engaged in adjudication proceedings then jurisdiction could arise, allowing the adjudication process to continue and avoiding the lengthy and expensive process of Court proceedings.

Comments

It has been 6 years since the comments were made by Judge Coulson in the Westfields case, but we have not yet seen any changes to the Act in respect of residential occupiers.

The ICCT case, further demonstrates that as there is no blanket ban on residential occupiers to go through the adjudication process, they are free to do so to achieve a decision in a cost effective and timely manner.

It is becoming common for construction contracts to include an adjudication provision whether that is in respect of a commercial property or a residential property. If a residential occupier signs one of these contracts, it allows them to reap the benefits of pursuing a claim through adjudication despite being a residential occupier who would otherwise be excluded by the provisions of the Act.

It is clear that the adjudication process has its advantages as it is cost effective and a decision can be given within 4 to 6 weeks by the adjudicator. As such, residential occupiers should be allowed to benefit from the adjudication process.

Adjudications And Residential OccupiersHow Nelsons can help

Anika Zahid is a Solicitor in our expert Dispute Resolution team, specialising in construction.

If you have any queries in relation to the subjects discussed in this article, please contact Anika or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.