REUTERS | Mike Hutchings

Residential occupiers, second homes and adjudication

It is rare to see an individual (or a couple, as in Shaw v Massey) arguing the residential occupier exclusion (section 106 of the Construction Act 1996) applies to their contract. This is because nowadays all the commonly used standard form contracts contain or incorporate an adjudication clause. Therefore, even if an individual is, strictly speaking, a residential occupier within the meaning of section 106, they will have contractually agreed to adjudicate any dispute that arises.

Relying on the Unfair Terms in Consumer Contract Regulations 1999

In those circumstances, where the individual is genuinely a residential occupier, it is more common for them to raise a consumer argument on the basis of the Unfair Terms in Consumer Contract Regulations 1999 (Unfair Terms Regulations 1999) when they want to escape from the adjudication. Case law suggests that the adjudication clause must have been brought to the consumers attention. However, if the parties enter into a contract, such as the JCT Minor Works contract (which is commonly used for domestic projects), then the adjudication provisions are expressly included in the contract. There the question becomes one of the imbalance between the parties rights and obligations and the requirement for “fair dealing” between the parties.

These disputes are often difficult to decide and can be expensive. The end result may be that I find the responding party is a residential occupier and I have to resign, which may not please the referring party. This can lead to issues of its own.

What happened in Shaw v Massey?

Turning back to Shaw v Massey, it is difficult to understand why, in 2007, Massey opted to enter into a contract that was out-of-date and did not contain express adjudication provisions. It is not for me to speculate why but, as it happened, this was not fatal to the claim, although on different facts, it may have been. For instance, here the Shaws had a gatekeepers lodge at the end of their drive. Not common facts I’m sure. It must have been relatively easy for Massey to show the Shaws lived in the “big” house and didn’t plan to downsize (that is, there was no intention to occupy the gatekeeper’s lodge when they entered into the contract with Massey).

But what about the individual who buys a second home and doesn’t have a contract with an adjudication clause?

Although this issue hasn’t come before me, my instinct is that if the individual plans to use the second home just as a second (or holiday) home, it doesn’t matter how infrequently that occupation may be. Section 106 refers to one of the parties to the contract who “occupies, or intends to occupy, as his residence” and that will be satisfied by infrequent visits throughout the year. However, if the second home is also going to provide an income to the individual, through holiday letting, then the commercial element will change things (following Samuel Thomas Construction v Anon, unreported 28 January 2000) and prevent the individual form relying on section 106. In that case, the Scheme will be implied into the contract and both parties will have a right to adjudicate.

One thought on “Residential occupiers, second homes and adjudication

  1. Construction is the most hazardous place to work in. There are plenty more risks like overhead lifting equipment shifting heavy loads, supply vehicles, dumper truck or painful and disease of the blood vessels, nerves and joints, triggered by prolonged use of vibratory power tools and ground working equipment… That’s why safety is the most important thing to care about. Thanks for sharing such useful information!

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