A warning to residential occupiers – when can the exemption against adjudication be thwarted?

Published 29 agosto 2019

The recent decision of the Technology and Construction Court (TCC) in ICCT Ltd v Pinto [2019] EWHC 2134 (TCC) demonstrates circumstances in which residential occupiers may find themselves bound by an adjudication decision, even where they haven’t agreed to it.

The facts

The contractor and claimant in this matter, ICCT, made an application for summary judgment to enforce the decision of an adjudicator, against the employer, Mr Pinto.  Mr Pinto had engaged ICCT to undertake some works in his basement to fix some leaks. There was no written contract or prior agreement about adjudication.  ICCT provided 12 days of labour for which it invoiced £5,380 plus VAT (including materials). The sum was not paid and no “pay less” notice was issued.  Neither party had engaged in adjudication before.  After consulting industry colleagues, ICCT decided to apply to the Chartered Institute of Building (CIOB) to find an adjudicator and an appointment was made. Following the normal adjudication process, in which both parties participated fully, a decision was made in favour of ICCT.  Mr Pinto did not pay.

The law

In the context of adjudication enforcement, it is trite law that it is not possible on a summary judgment application to resist enforcement simply on the basis that the defendant disagrees with the adjudicator’s decision.  However, there are other methods to resist enforcement – two are relevant to this case being apparent bias and jurisdiction.  The apparent bias argument was dismissed quickly as there was no evidence that the claimant had any prior relationship with the adjudicator.  The key issue was that of jurisdiction.

S106 of the Construction Act provides that there is no statutory right to adjudicate in construction contracts with a residential occupier.  On the face of it then, an adjudicator would have no jurisdiction.

The Court's decision

The Judge on well-established law that, even if there is not statutory adjudication jurisdiction, an ad hoc jurisdiction can arise where both sides engage fully in the adjudication process on the merits thereof and there has been no reservation of rights. 

There is no ban on adjudication in residential construction contracts, only that the mandatory statutory scheme does not apply.  The fact that Mr Pinto was not aware of the residential occupier’s exemption was no excuse – every person is deemed to know what the law is. The adjudicator was under no duty to tell him. There was no evidence that the adjudicator had any knowledge that Mr Pinto had not submitted to the jurisdiction. The appointment was made in the normal way and there was no reservation of rights.   Further, the adjudicator did not treat him unfairly. Every time an extension was granted, it was given, and all submissions were considered, even when late.

Comment

This case serves as a warning that, even if there is no written contract or prior agreement, parties may be bound by ‘ad hoc’ adjudications and can be caught unawares. This is particularly stark for residential occupiers who may not be familiar with the adjudication process. In order to avoid an unwanted decision it is key to make an adequate reservation of rights at the outset and preserve that position throughout the adjudication process.