Shaw & Anor v Massey Foundation & Pilings Ltd.

An adjudicator’s decision is temporarily final and must ordinarily be paid and enforced, even where the paying party has begun arbitration on the underlying dispute. A party cannot use an arbitration stay to postpone enforcement of an adjudicator’s award. The residential-occupier exclusion in section 106 of the Housing Grants (Construction and Regeneration) Act 1996 is narrowly defined. The relevant question is whether, when the contract was formed, the party occupied or intended to occupy the dwelling that was the subject of the works. The registration or size of a wider property is irrelevant. The definition of dwelling in section 101, which applies only to Part I, does not govern the section 106 exclusion in Part II.

The appellants engaged the respondents to carry out works at East Lodge, a separate building on the appellants’ Cheshire property. An adjudicator awarded the respondents approximately £86,000. The appellants did not pay, sought a stay under section 9 of the Arbitration Act 1996, and argued that the adjudication provisions did not apply because they were residential occupiers.

The County Court refused the stay, entered judgment for £88,199.66, and later refused to set that judgment aside. The appellants sought permission to appeal against both decisions. The High Court considered whether enforcement had to await arbitration and whether East Lodge fell within section 106 of the Housing Grants (Construction and Regeneration) Act 1996.

1. Permission to appeal refused. Both applications were dismissed.

2. Absent a jurisdictional defect or material breach of natural justice, an adjudicator’s decision must be respected and enforced. Its temporary finality is unaffected by the paying party’s commencement of substantive arbitration. The paying party must pay first and argue later. The successful party’s right to enforcement, and ordinarily execution, is not displaced by arbitration: Harlow and Milner v Teasdale (No.2) [2006] EWHC 535 (TCC).

3. The respondents’ failure to issue a summary judgment application at an earlier time, or to abridge the timetable, did not justify a stay under section 9 of the Arbitration Act 1996. A contrary approach would create an arbitrary procedural race between the stay application and the enforcement application. A stay of execution may exceptionally be appropriate where enforcement has already been ordered but the successful party has delayed execution until shortly before the substantive arbitration, as in Kier Regional Ltd v City and General (Holborn) Ltd [2008] EWHC 2454 (TCC). Those circumstances were absent here.

4. The section 106 exclusion applies by reference to the parties’ intentions when the contract was formed. The burden was on the appellants to establish the exclusion. East Lodge was a separate building, was not occupied by either appellant, and was not intended to be occupied by either of them at formation. The appellants were therefore not residential occupiers of the building on which the works were carried out.

5. Section 106 contains its own, restrictive definition of dwelling for Part II purposes. Section 101’s definition applies expressly to Part I and is irrelevant to the adjudication exclusion. The court expressed no conclusion on whether East Lodge might fall within the section 101 definition as an outhouse or appurtenance. The Land Registry description and the size of the overall estate did not alter the statutory analysis.

6. The application to amend was refused because it raised new matters that had not been argued below. In any event, the proposed consumer and unfair-terms arguments could not affect the substantive result: Lovell Projects Ltd v Legg & Carver [2003] BLR 452; Steve Domsalla (t/a Domsalla Building Services) v Kenneth Dyason [2007] EWHC 1174 (TCC).

1. High Court (Technology and Construction Court) — Permission to appeal against the County Court orders was refused. Both applications were dismissed.
2. Liverpool County Court (TCC List) — HHJ MacKay refused a stay under section 9 of the Arbitration Act 1996 and entered judgment for £88,199.66 to enforce the adjudicator’s decision. He permitted an application to set aside.
3. Liverpool County Court (TCC List) — HHJ Platts refused to set aside the judgment, holding that the appellants were not residential occupiers within section 106 of the Housing Grants (Construction and Regeneration) Act 1996.