The Construction Act 1996 give parties to a construction contract the right to refer a dispute to adjudication. However, section 106 excludes construction contracts with residential occupiers. The test under the Act refers to a: “construction contract which principally relates to operations on a dwelling which one of the parties to the contract occupies, or intends to occupy, as his residence.”
Further guidance on this point was recently provided in the case of Westfields Construction Ltd v Lewis. Here the Judge enforced an adjudicator’s decision, rejecting Mr Lewis’ argument that he was a “residential occupier”.
Mr Lewis argued that the adjudicator did not have the jurisdiction to decide the dispute between himself and Westfields, the contractor, because the contract concerned a house which, at the time of the contract, he said he occupied as his residence and intended to occupy in the future.
Intention to occupy
The Judge said that it is the alleged occupier’s intention at the time of the formation of the contract that matters. Mr Lewis, in fact, intended to let the property when the works were completed, and this was made known to the contractor at the time the contract was entered into. His intention remained the same post-contract. Mr Lewis could not, therefore, be said to have an intention to occupy for the purposes of the Act.
Property occupied as a residence
Mr Lewis argued that his intention to occupy the property as a residence was evidenced by the fact that he was a resident at the property at the time the contract was entered into. When considering whether property was actually occupied as a residence, the Judge stated that the Court will not over-emphasise the “snapshot position” at the date of the contract, but will regard occupation as a “continuing operation”.
The Judge remarked that it would be nonsense if someone was moving out of a house in order to rent it out or even sell it (another option which Mr Lewis accepted he was considering) but could still rely on the residential occupier exception merely because, at the precise time that the contract was agreed, he lived in the property in question.
Comment: This decision provides further guidance in interpreting the Act (the residential occupier exclusion was not affected by the recent amendments). Previous decisions have confirmed that the exclusion will not apply where there is a commercial element to the purpose of the works or where the works are to other buildings within the grounds of the main residence which are not occupied and were to be rented out. In this case, the Judge also took the opportunity to suggest that the residential occupier exclusion should be removed from the Act altogether “so that all parties to a construction contract can enjoy the benefits of adjudication” and a “commercially sensible outcomes”.
Author: James Coppinger, Head of Construction and Engineering.
If you would like to sign up to receive our monthly email updates on construction and engineering related topics like this, click here.
