Resi occupiers and contractors: rules on adjudication
A ruling by the Technology and Construction Court confirms there is no blanket restriction for disputes between contractors and residential occupiers to be referred to adjudication. Anjon Mallik explores the case.
When the Technology and Construction Court (TCC) ruled in favour of contractor ICCT, in the recent case of ICCT Ltd v Sylvein Pinto (2019), it gave a clear signal that it will not stand in the way of disputes between contractors and residential occupiers being referred to adjudication, if the contract provides for it.
The project itself was not particularly complex or pioneering. Pursuant to an oral contract, occupier Sylvein Pinto engaged contractor ICCT to seal leaks in the basement of his residential property. After ICCT had performed the works, Pinto alleged the works were defective and refused payment. ICCT alleged that Pinto, in doing so, had terminated the contract and referred the dispute to adjudication.
It has been well established that the adjudication procedure set out in the Housing Grants Construction and Regeneration Act (as amended), known as the Construction Act, does not apply to a construction contract with a residential occupier.
Pinto had raised this objection himself, one working day before the enforcement hearing – stating that as a residential occupier, pursuant to section 106 of the Construction Act, adjudication could not apply to him.
In response, ICCT argued that section 106 did not specifically state that adjudication in relation to contracts with residential occupiers was unlawful.
“Will residential occupiers seize upon this process and refer complaints about defects or incomplete works to an adjudicator?”
Indeed, residential occupiers are free to agree to adjudication and many standard form contracts intended for works for residential occupiers include adjudication clauses.
By engaging in the adjudication process, the TCC said that Pinto could not subsequently resist enforcement of the adjudicator’s decision. An ad-hoc jurisdiction had arisen as a result, and by not reserving his rights, the occupier had waived any jurisdictional objections. That Pinto was unaware of section 106 of the Construction Act did not matter, ignorance of the law not being a defence.
Impact of the case
This ruling makes it clear that there is no blanket ban on adjudication concerning work to a residential dwelling. This will come as news to some contractors who thought otherwise and had historically tried to resolve their disputes through a sometimes lengthy court process.
Will more and more contractors now be tempted to include express adjudication clauses in their contracts with residential occupiers? The practicalities of doing this would be easy. For example, a contractor could include a provision for adjudication within its own standard terms and conditions on the reverse of a quote. If the quote was accepted and formed the basis of the contract between the parties, the contractor’s terms and conditions would apply – and the right to adjudicate would arise.
Any contractual right to adjudicate must, though, be afforded to both parties. So, the key question for contractors is whether the advantage of being able to refer its claims to adjudication is enough of an attraction. Most claims by contractors will relate to non-payment of monies, where adjudication is tempting as it will be far speedier to get a resolution than through the court process.
On the other hand, will residential occupiers seize upon this process and, at the first sign of a dispute, refer any issues and complaints they have about defects or incomplete works to an adjudicator? In which case, contractors could be faced with a plethora of claims from disgruntled occupiers.
Anjon Mallik is a partner and construction specialist at law firm Gordons