Domsalla (t/a Domsalla Building Services) v Dyason

In a construction contract with a residential occupier, contractual adjudication provisions may operate even though Part II of the Housing Grants, Construction and Regeneration Act 1996 does not apply. A later ad hoc agreement may also support the adjudicator’s jurisdiction.

Unfairness under the Unfair Terms in Consumer Contracts Regulations 1999 requires a composite assessment of significant imbalance, good faith, the circumstances of formation, the nature of the services and dependent contracts. The adjudication clause was not unfair. The withholding-notice provisions were unfair and non-binding where the consumer had no practical role in selecting, understanding or operating them.

The claimant contractor sought enforcement of an adjudicator’s decision awarding unpaid sums certified under a JCT Minor Building Works contract for reinstatement of the defendant’s fire-damaged home. The defendant was a residential occupier, so the statutory adjudication and payment regime in Part II of the Housing Grants, Construction and Regeneration Act 1996 did not apply.

The defendant argued that the contractual adjudication and withholding provisions were inapplicable or unfair under the Unfair Terms in Consumer Contracts Regulations 1999, and that the adjudicator had wrongly excluded cross-claims for defects and delay. The central questions were whether the adjudicator had jurisdiction, whether the relevant terms were binding, and whether the decision could be summarily enforced.

1. The adjudicator had jurisdiction. Article 6 and clause 8 granted a contractual right to refer any dispute to adjudication. Supplemental Condition D was principally procedural; its reference to acting for the purposes of section 108 of the Housing Grants, Construction and Regeneration Act 1996 did not restrict the contractual jurisdiction to disputes within the statutory scheme. In any event, the parties had entered into an ad hoc adjudication agreement.

2. The defendant entered the building contract as agent for the insurers, who were disclosed principals, but he was also personally liable under the contract. The insurance arrangements, payment mandate and conduct of the parties formed part of the circumstances relevant to assessing unfairness.

3. The court applied the composite test under the Unfair Terms in Consumer Contracts Regulations 1999. The terms had to be assessed at the time of contracting, by reference to good faith, significant imbalance, the nature of the services, all circumstances attending formation, the other contractual terms and dependent contracts. The adjudication provisions were not unfair.

4. Clauses 4.4.1–4.4.3 were unfair and not binding on the defendant. He had not selected or negotiated them, had no advice about them, was not involved in certification or payment, and could not operate them. They could substantially prejudice his ability to raise defects and delay claims, whereas the contractor could pursue the insurers directly.

5. The adjudicator’s decision could not be enforced summarily. The rule against reviewing an adjudicator’s error within jurisdiction applies to statutory adjudications, not to this purely contractual adjudication. The adjudicator had wrongly excluded arguable cross-claims and set-off after treating the withholding provisions as binding. Permission to defend was given.