Captiva Estates Ltd v Rybarn Ltd

A construction contract is excluded from the adjudication provisions where it includes provision for the grant or disposal of a relevant interest in land on which the principal construction operations take place. The provision need not be unconditional or immediately enforceable. An option to acquire leases in completed units may constitute provision for the grant of a relevant leasehold interest, even though the option is exercisable only after specified construction stages and concerns part of the development site. Where the contract falls within the exclusion, the statutory right to adjudicate does not arise and an adjudication commenced under the Act is invalid.

The claimant landowner engaged the defendant contractor to construct 28 flats and associated parking. The consideration comprised a fixed monetary sum and options for leases of seven flats. The contractor commenced an adjudication relying on the statutory right to adjudicate under Part 2 of the Housing Grants Construction and Regeneration Act, but later abandoned it.

The claimant sought declarations that the contract was excluded from Part 2 under the Construction Contracts Exclusion Order 1998, that the adjudication was invalid, and that the adjudicator lacked jurisdiction. The central issue was whether the contractual options constituted provision for the grant or disposal of a relevant interest in the land.

1. The contract was a development agreement within paragraph 6 of the Construction Contracts Exclusion Order 1998. It therefore fell outside Part 2 of the Housing Grants Construction and Regeneration Act.
2. The words “includes provision for” in paragraph 6.2 have a wide meaning. The provision may be future, conditional, dependent on a third party, dependent on performance by one or both parties, or subject to a further document. The Order does not require an unconditional agreement.
3. The contractual arrangements, particularly clauses 3.4, 3.8 and the Third Schedule, provided for the grant of leases of seven consideration flats. On exercise of the options, the claimant would be obliged to grant the leases and its relevant estate or interest would vest in another without further consent.
4. The reference to land in paragraph 6.2 was not confined to the whole development site. The qualifying word “relevant” related to the interest in land. The options concerning seven flats were therefore sufficient.
5. The contractual provisions created an interest in land, protected by the agreement’s provision for registration as a caution or notice. They also satisfied section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, consistently with Spiro v Glencrown Properties Ltd [1991] Ch 537.
6. The court declared that the contract was excluded from Part 2. The adjudication was invalid and the nominated adjudicator had no jurisdiction. Costs and any further applications were left until the parties had received the transcript.

First-instance decision. No appellate history is stated in the judgment.