Arcadis UK Ltd v May and Baker Ltd (t/a Sanofi)
|England & Wales
|The Hon Mr Justice Coulson
|27 February 2013
| EWHC 376 (TCC), EWHC 87 (TCC)
|Queen's Bench Division (Technology and Construction Court)
|Case No: HT-12-402
|27 February 2013
 EWHC 376 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Coulson
Case No: HT-12-402
Ms Catherine Piercy (instructed by SGH Martineau LLP) for the Claimant
Mr Samuel Townend (instructed by CKFT Solicitors) for the Defendant
Hearing date: 20 February 2013
This is an application by the claimant to enforce the decision of the adjudicator dated 2 October 2012. Although the sum claimed is just £17,393.91 plus interest, the application has been hotly contested. There are seven witness statements, including four from the defendant alone. In addition, and unique in my experience, the parties were permitted (pursuant to an order of Akenhead J dated 21 December 2012), to call oral evidence. There was extensive cross examination; indeed the hearing took so long that this judgment had to be reserved. Such a lengthy enforcement process might not be thought to be in keeping with the principles of fast and uncomplicated justice central to construction adjudication.
Another unusual feature of the dispute was the nature of the issue that divided the parties. It was unconnected to the merits of the claim. Instead, the defendant employer asserted that the adjudicator did not have the jurisdiction to decide the dispute between himself and the contractor claimants because the construction contract was in respect of a property at 3, Cavendish Avenue, London NW8 9JD ("the property"), a house which, at the time of the contract, he said he occupied as his residence and intended to occupy in the future. The defendant therefore relied on the exception at section 106 of the Housing Grants (Construction and Regeneration) Act 1996 ("the 1996 Act"). The claimants contended that the defendant did not occupy the property at the time the contract was made and/or that his intention was always that the property would be refurbished so that it could be let for commercial purposes. Thus the claimants maintained that the residential occupier exception did not apply.
As noted in Section 2 below, cases concerned with the s.106 exception are rare. This is because most construction contracts — even those relating to works carried out for residential occupiers — are let on standard forms, which contain bespoke adjudication provisions. This is therefore one of those rare cases where the construction contract was in writing, but did not contain any express agreement to adjudicate. Ordinarily in such cases, of course, the adjudication provisions in the 1996 Act would be incorporated, and the burden was therefore on the defendant to demonstrate that the exception provided by s.106 of the 1996 Act prevented their incorporation in this case. If the defendant was right, the adjudicator would have no jurisdiction; if wrong, the defendant would have no defence to this claim.
I set out the relevant law in Section 2 below, and in Section 3, I provide an outline chronology. Then at Section 4 I go on to make findings of fact as to when the contract was made and whether or not the defendant occupied the property and/or intended to occupy the property as his residence. My conclusions are set out in Section 5 below.
THE RELEVANT LAW
Section 106 of the 1996 Act provides as follows:
" 106 Provisions not applicable to contract with residential occupier.
(1) This Part does not apply—
(a) to a construction contract with a residential occupier…
(2) A construction contract with a residential occupier means 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.
In this subsection 'dwelling' means a dwelling-house or a flat; and for this purpose—
'dwelling-house' does not include a building containing a flat…"
Ms Piercy was right to submit that there is no reported case in which a defendant, seeking to resist the enforcement of an adjudicator's decision, has successfully relied on the s.106 exception. There are only three cases in any event. In chronological order, they are:
The contract in question concerned the refurbishment of one barn so that the employers could live in it, and another barn (and other buildings) which were being refurbished for sale. The circuit judge upheld the adjudicator's decision that, where one dwelling was to be occupied and the other was not, the contract could not be said "principally to relate to operations on a dwelling which one of the parties to the contract intended to occupy".
(b) (TCC); .
In that case the defendant company's attempt to rely on s.106 failed. I said it was difficult to imagine how a company could ever be a residential occupier, the word 'residential' conveying a requirement for a real person to be living in the house or flat in question. Furthermore, the defendant company was engaged in property development, which was its stated purpose.
In this case the works were being carried out to a lodge building that formed part of a large country estate. The Shaws did not occupy the lodge and did not intend to live there, so the exception was found not to apply. As to the issue of intention to occupy, I concluded, at paragraph 26 of the judgment, that what mattered was the employer's intention at the time of the formation of the contract. In the present case, neither side sought to dissuade me from that view.
There is a dispute here, which did not arise in any of the three cases noted above, as to whether, at the time that the contract was made, it could be said that the defendant occupied the property as his residence. I deal with that issue in Section 4 below. But Ms Piercy properly raised an antecedent question: at what point should the court assess whether or not the defendant/employer occupies the property as his residence? Is it the date of the formation of the contract? Or is it, as she suggested, important to regard occupation as a continuing operation, and not to overemphasise the snapshot position at the date of the contract?
The issue has potentially significant consequences in the present case. In the course of his clear submissions, Mr Townend argued that, if he could demonstrate the defendant's occupation of the property as his residence on the day that the contract was made, the defendant could rely on the s.106 exception, regardless of what he said was the separate (disjunctive) category of those who intended to occupy. But Mr Townend properly accepted that this argument would lead to the anomalous result that a defendant/employer who occupied at the date of the contract could rely on the exception, even if the proposed works were expressly to permit resale, development or refurbishment for rental purposes, and the employer would never again live — or intend to live — at the property.
Mr Townend also accepted that an employer in the position of the defendant could not occupy as a resident more than one property at the same time. That concession seems to me to be rightly made. In my view, it highlights the limited nature of the category of employers caught by the exception.
Section 106 was intended to protect ordinary householders, not otherwise concerned with property or construction work, and without the resources of even relatively small contractors, from what was, in 1996, a new and untried system of dispute resolution. It was felt that what might be the swift and occasionally arbitrary process of construction adjudication should not apply to a domestic householder. In this way, s.106 excluded adjudication in respect of construction works carried out for those who occupied and would continue to occupy as their home the property that was the subject of the works (even if they had to move out when those works were carried out), or who had bought the property and intended to live there when the construction works were completed.
Whilst I remain of the view that the date of the formation of the contract is particularly important in any consideration of any alleged 'intention to occupy', I consider that Ms Piercy was right to say that 'occupation' is an ongoing process and cannot be tested by reference to a single snapshot in time. "Occupies" must carry with it some reflection of the future: it indicates that the employer occupies and will remain at (or intends to return to) the property. Thus the evidence about the position at the date that the contract was made has to be considered in the context of all of the evidence of occupation and intention, both before and after the agreement of the contract. Above all, s.106 needs to be approached with commonsense: it ought to be plain, on a brief consideration of the facts, whether the employer is or is not a residential occupier within the terms of the exception.
The parties entered into a construction contract in respect of the refurbishment of the property in February 2012. The relevant contractual document was the claimant's quotation of 14 February 2012. There is a dispute as to when the contract was made which I deal with under Section 4.2 below. There is also a dispute to when the defendant moved out of the property to his new home at Flat 7.2, Lancelot Place, Knightsbridge, SW7 ("the Knightsbridge flat"). The defendant says that he moved out on 24 February; the claimants say it was earlier than that. I deal with that dispute under Section 4.5 below.
A dispute arose in respect of the defendant's non-payment of...
To continue readingRequest your trial
Summary of principles from recent NEC cases
...that may impact upon the construction industry. We hope that you will find it useful. Arcadis UK Ltd v May and Baker Ltd (t/a Sanofi)  EWHC 87 (TCC) NEC3 Engineering and Construction Contract Where two adjudications between the same parties were on very similar issues, the second adju......
Five Practice Points We Have Learnt About Adjudication In The Last Six Months
...in one adjudication be placed before an adjudicator in a subsequent adjudication? Arcadis UK Ltd v May and Baker Ltd (t/a Sanofi)  EWHC 87 (TCC) In certain circumstances, In the Arcadis case, Mr Justice Akenhead did not hesitate in finding that it was neither improper nor contrary to ......
Is A Previous Adjudicator's Decision Binding?
...UK Ltd v May and Baker Ltd  EWHC 87 (TCC) Once again, a recent jurisdictional challenge case shows the Courts' reluctance to interfere with an adjudicator's The Facts May and Baker Ltd (trading as Sanofi-Aventis) engaged Arcadis UK Ltd to carry out works at its site in Dagenham, under......