Building contract – Dispute – Adjudication – Defendant employing claimant to refurbish property – Dispute arising as to payment – Defendant objecting to referral to adjudicator – Adjudicator making award in favour of claimant – Claimant commencing enforcement proceedings – Whether adjudicator having jurisdiction to decide dispute – Whether defendant entitled to rely on residential exception in section 106 of Housing Grants (Construction and Regeneration) Act 1996 – Judgment for claimant
The defendant engaged the claimant to carry out a refurbishment of his property. The construction contract was in writing but did not contain any express agreement to adjudicate.
A dispute arose concerning payment for the works done and the matter was referred to adjudication. The defendant objected to the jurisdiction of the adjudicator on the ground that he intended to occupy the property once the works had been completed and therefore fell within the exception in section 106 of the Housing Grants (Construction and Regeneration) Act 1996, which provided that the relevant adjudication provisions were not applicable to a contract with a residential occupier.
The claimant contended that the defendant had not occupied the property at the time when the contract was made and/or had always intended that the property would be refurbished so that it could be let for commercial purposes.
The adjudicator concluded that the defendant was not a residential occupier and went on to decide that the defendant should pay the sum of £17,393.91 plus interest to the claimant within seven days. No such payment was made and, in answer to the enforcement proceedings, the defendant again disputed the adjudicator’s jurisdiction, although the defendant had not moved back into the property but continued to occupy a different property as his residence.
Held: Judgment was given for the claimant.
(1) Section 106 was intended to protect ordinary householders, not otherwise concerned with property or construction work and without the resources of even relatively small contractors, from what was, in 1996, a new and untried system of dispute resolution. It was felt that what might be the swift and occasionally arbitrary process of construction adjudication should not apply to a domestic householder. Thus, section 106 excluded adjudication in respect of construction works carried out for those who occupied and would continue to occupy as their home the property that was the subject of the works, even if they had to move out when those works were carried out, or who had bought the property and intended to live there when the construction works were completed.
(2) While the date of the formation of the contract was important in the consideration of any alleged intention to occupy, “occupation” was an ongoing process and could not be tested by reference to a single snapshot in time. The word “occupies” carried with it some reflection of the future, indicating that the employer occupied and would remain at, or intended to return to, the property. Above all, section 106 needed to be approached with common sense: it ought to be plain, on a brief consideration of the facts, whether the employer was or was not a residential occupier within the terms of the exception.
(3) On the facts of the present case, objectively ascertained, the defendant had failed to show that he intended to occupy the property as his residence. That finding was fatal to the entirety of the defendant’s case on section 106. As a matter of common sense, the residential occupier exception did not apply to the defendant because he was undertaking the works so that he could rent the property out on a commercial basis. He was not intending to occupy the property as a residential occupier and section 106 was not engaged. Since occupation was not to be tested by a single snapshot in time but required ongoing occupation, including, if appropriate, an intention to occupy in the future, the defendant had not demonstrated that he occupied the property as his residence for the purposes of section 106. On that basis, the challenge to the adjudicator’s jurisdiction fell and the claimant was entitled to the sum sought by way of summary judgment.
(4) Even if the “snapshot” test were the right approach to ascertaining occupation, the defendant had not made out, on the balance of probabilities, that he was occupying the property as his residence at the time that the contract was made.
Catherine Piercy (instructed by SGH Martineau LLP) appeared for the claimant; Samuel Townend (instructed by CKFT Solicitors) appeared for the defendant.
Eileen O’Grady, barrister
