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Court Urges Abolition of Building Adjudication Exceptions

The High Court has urged a change in the law after rejecting a property owner’s plea that an adjudicator had no power to rule on his dispute with a building company on the basis that he occupied the relevant property as his residence and thus fell within the rarely used exception contained within section 106 of the Housing Grants (Construction and Regeneration) Act 1996.

Old houseDescribing the dispute as ‘regrettable’, Mr Justice Coulson questioned the utility of such exceptions to the general rule that adjudication clauses are implied by statute into building contracts that do not already include them. He noted: ‘Is it not time for section 106, and the other exceptions to statutory adjudication, to be done away with so that all parties to a construction contract can enjoy the benefits of adjudication? I would venture to suggest that that would be a more commercially sensible outcome.”

After a dispute arose in respect of the refurbishment of a residential property, an adjudicator had directed its owner to pay the building company engaged in the works £17,393.01. However, the owner refused to pay, insisting that he fell within the section 106 exception and that the adjudicator thus lacked jurisdiction to rule on the dispute.

Dismissing the owner’s arguments, and ordering enforcement of the adjudicator’s decision, the court found on the evidence that his intention had been to let out the property once the refurbishment works were complete. The section 106 exception had no application to him as he was neither in residential occupation of the property at the time of the contract nor did he have any intention of taking up such occupation in the future.