When adjudication proceedings CAN (in very specific circumstances) apply to a construction contract with a residential occupier

When adjudication proceedings CAN (in very specific circumstances) apply to a construction contract with a residential occupier

Normally contracts with a residential occupier are exempt from the Scheme for Construction Contracts. This means that absent specific contractual terms a contractor cannot use adjudication in the event his employer unlawfully withholds payment.

However, in ICCT v Pinto [2019] 4 WLUK 289 a building company successfully enforced an adjudicator’s decision in its favour for works to a residential property even though there was an absence of contractual agreement to adjudication, as the employer’s conduct had amounted to an ad hoc agreement.

Facts

Mr Pinto engaged ICCT under an oral contract to perform works to remedy leaks in his basement. Following completion, Mr Pinto claimed that the works were defective and refused to pay ICCT. A dispute arose between the parties and it was referred to adjudication with both parties representing themselves.

The adjudicator awarded the sums claimed by ICCT and when payment was not forthcoming, ICCT applied for summary judgement to enforce the award. Where an adjudicator has made an award, the courts will enforce that decision unless it can be proven that either (i) the adjudicator had no jurisdiction to make such a decision or (ii) there has been a serious breach of natural justice.  In such a summary judgement application, the burden of proof is on the applicant, i.e. ICCT to show that the respondent, Mr Pinto has “no real prospect of success at trial” and given this, there is no other reason not to grant such judgement.

Mr Pinto raised three objections in an attempt to resist enforcement, namely:

  1. That as he was a residential occupier, rather than a commercial occupier, the adjudication process could not apply to him where adjudication had not been agreed contractually pursuant to s106 of the Construction Act and therefore the adjudicator had lacked jurisdiction;
  2. That there had been a breach of natural justice as, he claimed, the adjudicator and ICCT knew one another and therefore the proceedings were biased; and
  3. That the adjudicator had been wrong on his merits.

In relation to point (b), Mr Pinto alleged that as ICCT had addressed the adjudicator by his first name during the proceedings, and sent an email which stated that the adjudicator had come “highly recommended”, the adjudicator and ICCT must have known each other and the proceedings were therefore biased. Mr Pinto claimed that this resulted in a breach of natural justice. Judge Waksman rejected this allegation, finding no evidence to suggest that the adjudication proceedings were biased and the argument that there had been a breach of natural justice therefore failed.

In relation to point (c), Mr Pinto claimed that the adjudicator had been incorrect on the merits of the case, however Waksman J confirmed that it was not for the Court to act as an appeals hearing at summary judgement stage.

Finally and most interestingly, was Mr Pinto’s allegation (a) in which he argued that the adjudicator lacked jurisdiction as s.106 of the Construction Act does not automatically apply to residential occupiers. Mr Pinto claimed that there was no formal jurisdiction unless adjudication was expressly agreed contractually, and as this had not occurred, adjudication could not apply.

Waksman J rejected Mr Pinto’s claim, and held that although s.106 of the Construction Act does not provide for a statutory right to adjudicate for residential occupiers (as this forms one of the exclusions), there was no blanket ban on residential occupiers participating in such proceedings and ad hoc jurisdiction could in fact arise. Mr Pinto had fully engaged with the adjudication proceedings and failed to reserve any rights, thus waiving any jurisdictional objections. Wakesman J held that it was not for the adjudicator to inform Mr Pinto of his rights or of any issues and it was irrelevant that Mr Pinto was unaware of the law.

With all three of Mr Pinto’s allegations being rejected, summary judgement was granted to ICCT and the adjudicator’s award enforced.

Comment

This result of ICCT v Pinto should be a reminder to residential occupiers or those entering into building contracts with residential occupiers that adjudication is not necessarily off limits. Where a residential occupier engages in the process and fails to reserve any rights, it will not be a valid defence to claim ignorance of the law to prevent enforcement of an award.

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