Samuel Thomas Construction v Mr & Mrs Bick (ta:-J&B Developments)
28 th January 2000
High Court at Exeter
His Honour Judge Overand
Introduction
This is an interesting example of a case because it appears so clear cut at the outset. The outcome though is very different. Mr and Mrs Bick decided to move to Devon where they bought 4 barns with the intention of converting two of them into residential properties, one for them and one for sale. Mr and Mrs Bick called themselves for the purposes of the project J&B Developments. Samuel Thomas, a local builder took on the contract. Work began in January 1999 but by April the builder was complaining that he was underpaid. J&B said that they were in delay. The builder promptly terminated all the work and applied for adjudication. J&B resisted saying that it was a residential occupier contract. However the adjudication continued and he found in favour of the builder awarding £47,000. J&B did not pay. As such the builder issued proceedings for summary judgment on the decision. This case is therefore considering this. The relevance of the case to the Housing Grants Construction and Regeneration Act 1996 is that:
The project in dispute might not be a construction contract as is defined in section 106 of the 1996 Act and as such the adjudicator may be out of jurisdiction
Two points of this section are at issue. Firstly, there was a question over whether the Act applied on the fact that the work might be on a dwelling. Secondly, there was a question over whether the Act applied on the fact that the contract might be an agreement that principally related to a dewelling.
The case is a good test of the status of a construction contract with a residential occupier. This is in terms of reference to the Act.
The following represents the issues used by the claimant and the defence and the judgment follows
Claimant
The claimant was applying for summary judgment to enforce the decision of the adjudicator, such that money owing to the claimant could be received.
The claimant argued that the barns were not dwellings and so it was not working on a dwelling and it was a construction contract. An adjudicator could be appointed as provided for in the 1996 Act.
Defence
The defence contested that the project was on a residential base and therefore the 1996 Act did not apply. As such the adjudicator was out of jurisdiction and they did not have to oblige by the decision and pay up.
On the issue of whether the contract was for work that principally related to a dwelling, the defence argued that most of the work was on the barn that would be occupied by them as their dwelling and therefore fell outside the Act. As such the appointed adjudicator was out of jurisdiction.
Summary of the Judgment
His Honour Judge Overend found in the favour of the claimant. However leave to appeal was immediately granted since this case represented a novel area and a question of statutory interpretation.
He held that a residential occupier does not have to be in occupation for a building to be residential. It was also irrelevant that when the project started the property was not properly described as a dwelling. As such the judge concluded on this point that operations on a derelict barn that at some stage becomes a dwelling is operations on a dwelling and so, the adjudicator had no right to play a role.
However on the second issue of whether the contract was for work that principally related to a dwelling, the judge accepted that if the contract was that barn alone, it would principally be a residential contract. However there was much in the way of other work and this caused some difficulty. The judge found that on balance it was not possible to say that the contract principally related to operations on the barn of the owner. It was therefore not an exemption from the Act and the adjudicator did have a right to act. Hence the decision went in the direction of the builder and summary judgment was granted.
Full Judgment
IN THE HIGH COURT AT EXETER
HIS HONOUR JUDGE OVERAND
Case No: Exeter ZN 900750
Date of Judgment: 28 th January 2000
Between:
SAMUEL THOMAS CONSTRUCTION LTD
Claimants
-and-
MR & MRS BICK (TA:- J&B ASSOCIATES)
DEFENDANTS
JUDGMENT
This is an application for summary judgment brought by the claimant based upon an adjudicator's award that was reached on 6 th September 1999 under the procedure of that well known Act, the Housing Grants Construction and Regeneration 1996, an in particular with the procedure of section 108 of it.
The background to the claim is relatively straightforward. Mr and Mrs Bick decided that they wanted to move to East Budleigh. They had sold their property, and they bought a temporary accommodation at 2 All Saint Close in East Budleigh. They did that because they were interested in buying a barn, and they had heard about the barn at Hill Farm through Mr. Cox. The tried to buy the barn in which they were interested, which was part of a number of buildings being offered for sale by the vendor. They were unable to buy the one, and so they decided to buy all that was on offer, and in stages, certainly so far as the first stage was concerned, they were going to convert two of the barns - one for their own purposes and the other for sale - aswell as converting a garage block, courtyard for access for all of the buildings which they had purchased.
The contract that was entered into with Samuel Construction was a result of a quotation on 18 th February 1999, and the quotation was for the full works at Barns A and B - B being the one in which they wanted to live, the bigger barn - the garage block for all the barns, the courtyard and the drainage for all four barns. It was not their intention to be property developers, but they were, in effect, forced down that route because they were determined to buy barn B, and it had other buildings which they had to buy with it, an they had to dispose of them as part of their plans.
The works had commenced in January 1999, and an invoice was submitted. There was a site meeting on 2 nd March in which there was a certain concentration on the progress of barn B which, on one view, was said to have been accelerated. There is an issue between the parties as to whether 2 nd March was the first time at which Samual Construction were told that barn B was the principal barn that was to be developed for the Bick's.
A JCT contract was, in due course, drawn up and signed. No issue is taken as to whether or not it was a written contract for the purposes of this application. A second invoice was raised on 31 st March. By then, or shortly after then, both parties were dissatisfied with each other, and, not to put too fine a point on it, the matter came to a head on 13 th April when the agreement was terminated. The contractors, for their part, had not received, they said sufficient moneys following the raising of the invoices. The Bick's for their part, were dissatisfied with the progress of the works.
Thus the matter came before the adjudicator, who made his award on 6 th September.
The defendants, the Bicks, took the point before the adjudicator that he did not have jurisdiction, and the point they took was a relatively straightforward one, for under section 106(1)(a), the Act relating to construction contracts is said not to apply to '(a) a construction contract with a residential occupier (see below)'. One follows the brackets to see below to subsection (2), and one reads the following: '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'.
The point was taken before the adjudicator that he did not have jurisdiction because this was a construction contract with a residential occupier.
The adjudicator considered that matter, and concluded that he had, and did so in the following terms. He said:
"The contract in question relates to more than one dwelling. One dwelling only is intended for the occupancy of one of the parties. I therefore conclude that a construction contract for two dwellings, one of which is to be occupied by one of the parties to the contract, is not a construction contract which principally relates to operations on a dwelling which one of the parties to the contract intends to occupy as a residence. I have therefore concluded that I have jurisdiction in this matter, and intend to continue with adjudication."
That is the same point, effectively, that is taken before this court in opposition to the claim for summary judgment.
It is said by Mr. Watson that this is a contract with a residential occupier in the sense that the contract was principally in relation to the conversion of barn B, which was to be residence, once converted, for the Bicks, which they did intend to occupy their residence. The remaining components of the contract were entirely secondary to the objective, which was to provide a converted residence for the Bicks, and that in those circumstances the Act did not apply, there was no jurisdiction in the adjudicator, and accordingly no possibility of summary judgment on his award.
It has been argued that a dwelling needs to be considered in relation to whether or not it is already in existence. It seems to me, however that the following approach is the correct in considering the construction of this statute in the context of this case. Firstly, a residential occupier does not have to be in occupation. That is perfectly obvious from the words "intends to occupy as his residence". Secondly, it seems to me that the fact that, when the operations commence, a property is not a properly described as 'a dwelling' is neither here nor there, provided that the operations on the item as a whole can properly be described as principally operations on the a dwelling - in other words, you start off with a derelict barn, and you intend to convert it into a dwelling. At some stage it ceases to be a derelict barn, and you intend to convert it into a dwelling; and so the question is not: "Was it a dwelling at the commencement of operations?" but: "Did the operations as a whole principally relate to operations on a dwelling?"
In this case there are operations on barn B, which was an agricultural barn which, shortly after the works commenced, was transformed into a partially constructed dwelling, or partly converted dwelling; and if the matter related to barn B alone, there would be absolutely no difficulty at all, in my judgment, in deciding that it principally related to operations on a dwelling. Furthermore, barn B, perfectly clearly, was a barn which was to become a dwelling which was to be occupied as the residence of the Bicks; so every component of subsection (2) would apply to barn B.
That is not true, however, in relation to barn A. Barn A would fail the test, because it was never intended to be occupied as the Bicks' residence, but it was, however, and it became in the course of conversion, a dwelling.
The third component of the contract was a garage block for all four barns. It seems to me that insofar as the contract related to creating a garage block for the other three barns other than barn A, none of these would have been ancillary to operations on a dwelling. The courtyard and the drainage is probably mostly relevant to barn B.
There is evidence, which is uncontested, that the valuation of the works relevant to barn B amounted to about 64/65% of the total contract sum.
I have, for my part, no difficulty in construing this statute in the context of these facts. It is not possible to say, in my judgment, on these facts that the contract principally related to an operation on barn B. It did not. It related to barn A, barn B, the garage block for all four barns, as well the courtyard and the drainage. This was a case which was not excluded under s106(1)(a), and , for what it is worth, I would approve - not in the same terms, but I would approve - the result of the adjudicator's determination of his own jurisdiction.
In those circumstances, and for those reasons, there being no other reason why an order for summary judgment should not be made, having regard to the scheme of the Act, which is to provide temporary cash - flow for builders - and I include in those remarks a reference to what is apparently the impecuniosity of the company - there will be summary judgment as prayed.