Steve Domsalla (trading as Domsalla Building Services) v Kenneth Dyason

Case reference: 
[2007] EWHC 1174 (TCC)
Friday, 4 May 2007

Key terms: 
Enforcement - JCT Minor Works - Residential Occupier - Section 106(1) - Unfair Terms -Consumer Contracts Regulations 1999 - Validity of Appointment - Abatement - Set-off

The Contractor carried out works on a domestic property under a JCT Minor Building Works Form of Contract. They applied for Summary Judgement in respect of an Adjudicator's decision in its favour. The Defendant resisted on the basis that:

1. There was no adjudication clause in the Contract;
2. Adjudication and withholding clauses were not binding;
3. There had been breaches of natural justice by the Adjudicator.

Mr Dyason was a residential occupier under Section 106(1) of the Act. His house had been badly damaged by the fire, and had been demolished. Domsalla was reinstating the property. It was Dyason's insurers that appointed the loss adjuster and advised on a selection of Domsalla as builder. The works were late, and then unfinished when Domsalla suspended as a result of disputes in respect of Domsalla's performance and non-payment. The Adjudicator found in favour of Domsalla.

HHJ Thornton QC found that there was a contract, incorporating the JCT Minor Works terms. An Adjudicator could, therefore, be validly appointed under that Contract. In this instance, even if the Contract had not been valid the parties had agreed to an ad hoc adjudication. Dyason has reserved his position in respect of a challenged relating to the Unfair Terms in Consumer Contracts Regulations 1999. The withholding notice and adjudication provision were not, in themselves, unfair under the Regulations (see Bryen-Langley Limited v. Boston [2005] EWCA Civ 973, (2005) BLR 508). However, the withholding notice provisions were unfair in this instance. That was because it was the insurers (as disclosed principal) who are concerned with payment under the terms of such notices, although it was Dyason that became personally liable under the contract as a result of the withholding provisions.

Further, the Adjudicator's action of failing to consider Dyason's defence of abatement and set off because of a lack of withholding notice was procedurally unfair. It may have been an acceptable approach in a statutory adjudication. That was because an Adjudicator under a statutory adjudication could make an unreviewable error of law and fact. In a contractual adjudication the Court could consider the error. In this case Domsalla was given permission to defend. This Adjudicator's decision was, therefore, not enforced.

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