Residential adjudications: the way forward?
It is of course well established that the adjudication procedure set out in the Housing Grants, Construction and Regeneration Act (the ‘Construction Act’) does not apply to construction contracts where there is a residential occupier.
However, that did not stop the Technology and Construction Court (TCC) in the recent case of ICCT Ltd v Sylvein Pinto (2019) from ruling 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.
Mr Pinto had engaged ICCT to seal leaks in the basement of his residential property, but later refused payment on the grounds that the works were defective. ICCT referred the dispute to adjudication. Whilst unclear from the published details of the decision, it does not appear as though there was an express right to adjudicate in the agreement between the parties.
Neither Mr Pinto nor ICCT had had any previous experience of adjudication, nor were either of them represented during the adjudication, but both parties engaged fully in the process without making any jurisdictional reservations.
The adjudicator ultimately found in favour of ICCT, who then proceeded to seek to enforce the decision by way of summary judgment.
The day before the enforcement hearing, Mr Pinto objected on the basis that he was a residential occupier and therefore under section 106 of the Construction Act, adjudication couldn’t apply to him unless he’d contractually agreed to it. The judge was however not convinced and held that although section 106 precluded the automatic implication of adjudication into a construction contract with a residential occupier, it did not make adjudication in those circumstances unlawful per se and residential occupiers were free to agree to adjudication if they wish. By engaging in the adjudication process, an ad hoc jurisdiction for the adjudicator had arisen and by not reserving his rights, Mr Pinto had waived any jurisdictional objections. He therefore could not subsequently resist enforcement of the adjudicator’s decision.
The court made a point of saying the fact that Mr Pinto was unaware of section 106 did not matter, as ignorance of the law was not a defence.
This may be surprising for many contractors, who may have come to expect that adjudicating works to a residential building was out of the question. It remains to be seen whether this decision will prompt contractors to include express adjudication clauses in their standard terms, to enable a speedier resolution to non-payment disputes; or whether the risk of some residential occupiers seizing upon this process and referring all kinds of issues to adjudication may thwart any such benefit.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. For advice, get in touch with your usual Greenwoods GRM contact or scroll down to complete our enquiry form.