The judgment in the case of Westfields Construction Ltd v Lewis ( EWHC 376) has raised questions over the utility of section 106 of the Housing Grants, Construction and Regeneration Act 1996 ("the Act").
This case concerned an applicaton to enforce an adjudicator's decision. The contract between the parties concerned refurbishment of a property belonging to the defendant and contained no adjudication provision. The dispute concerned the defendant's non-payment of a valuation, the value of the claim being relatively modest - £17,393.01 plus interest. At a previous adjudication, the defendant had objected to the jurisdiction of the adjudicator, stating that he was a residential occupier as defined by the Act under section 106, but the adjudicator rejected this argument and ordered the defendant to pay the contested sum to the claimant. When the claimant sought to enforce the adjudicator's decision in the High Court, the defendant argued again that he was a residential occupier. A wealth of evidence was produced which included correspondence from the defendant confirming that he intended to let the property once refurbished, although the defendant argued that this statement was untrue and had been made with the intention of encouraging the claimant to complete the works more quickly. The defendant's argument was rejected, and the judge enforced the adjudicator's decision.
In his judgment, Coulson J queried the utility of the exception that the defendant had relied on, asking:
"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 than that which has been achieved, for both parties, in these enforcement proceedings"
While it has been conceded in the legal press that "other exceptions" (such as those in section 105(2) of the Act and in the Construction Contracts Exclusion Order 1998 (SI 1998 No 648)) may well no longer be of practical use in the construction industry, queries have been raised regarding the merit of abolishing the section 106 exception. The costs of adjudications relating to residential occupiers and small builders could be disproportionate, particularly if adjudicators are working with parties who are representing themselves and have little knowledge of the issues involved in their dispute. Furthermore, parties to such contracts may not see adjudication as the best method of resolving their dispute, and a more practical and less legalistic approach such as, for example, expert determination might be more attractive to them