Can I Adjudicate if I am a ‘Residential Occupier’?

What is Adjudication?

Adjudication is the name given to a process of private dispute resolution which is very common in the UK construction industry.

Starting an adjudication against someone is similar to suing them in court, but there are some significant differences between adjudication and litigation.

However, unlike litigation (which is, in theory, available to all), adjudication is only available to certain circumstances. To understand the different circumstances, it is necessary to understand the difference between statutory adjudication and contractual adjudication.

Contractual Adjudication

You can voluntarily agree to adjudicate a construction dispute with someone.  You might agree to this because you think it would be quicker and cheaper to do so than to resolve the dispute through the courts. You can agree in advance (i.e. when you sign the building contract) or you can agree after the contract is entered into - and even after a dispute has arisen. The key is that both parties to the dispute have to expressly record their agreement that they are willing to submit to the jurisdiction of an Adjudicator deciding a dispute between them arising out of the construction work they are involved in.

Statutory Adjudication

In contrast, statutory adjudication is imposed on parties without concern as to whether or not they agree to it. Where statutory adjudication is available, one party can force the other to adjudicate, even though that other party might prefer to go through the courts. 

Statutory adjudication was introduced by the The Housing Grants, Construction and Regeneration Act 1996 (often referred to as the Construction Act 1996).  The idea was to ensure that parties to certain types of construction contract always had a quick route to resolving disputes, so that disputes do not drag on and cause long-term cash-flow problems.

There are some specific circumstances in which statutory adjudication does not apply.  One of them is where one of the parties to the contract fits the description of a ‘residential occupier’ under the Construction Act 1996.

The ‘Residential Occupier’ Exception to Statutory Adjudication

Section 106(1)(a) of the Construction Act 1996 states that Part II of that Act “does not apply to a construction contract with a residential occupier”. Since the statutory right to adjudicate is contained in Part II of that Act, this means that the statutory right to adjudicate does not exist where one of the parties to the construction contract is a residential occupier.

Meaning of ‘Residential Occupier’ under the Construction Act 1996

Section 106(2) of the Construction Act 1996 states that “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”.

“Dwelling” in this context means a house, or a flat.

Therefore, if a builder enters into a construction contract with the owners of a house or flat which the owners do (or will, after the work is completed) live in as their home, then that is a construction contract with a residential occupier. As a result, neither the builder nor the owners have a statutory right to adjudicate any disputes that might arise between them relating to that contract.

They can, however, still agree to adjudicate if they wish: there is nothing in the legislation to prevent a residential occupier having a contractual right to adjudicate.

If you would like help understanding whether you are able (or required) to adjudicate a dispute, contact Hamshaw today.