Lovell Projects Limited v Jonathan Legg (1) and Lesley Carver (2)
Friday, 4 July 2003
Key terms: Part 24 - Residential Occupier - Section 106(2) JCT Minor Works - Unfair Contract Terms in Consumer Contract Regulations 1999 - European Communities Act 1972 - Repudiation - Good Faith - More than one dispute - Set-off - Liquidated Damages
The Employers were Mr Legg and Ms Carver, the owners of a dwelling house at 188a Sutherland Avenue, Maida Vale, London. An architect prepared drawings and a specification for the proposed refurbishment works to the property. The employers were residential occupiers for the purposes of the Act. Nonetheless, they entered into a contract by signing the JCT Agreement for Minor Building Works, 1998 Edition incorporating amendments MW1 - 11, which included supplemental condition D in respect of adjudication. While adjudication under the Act did not apply, the parties had agreed to a contractual adjudication dispute resolution procedure within their contract.
During the course of the work Mr Legg dispensed with the Architect's services, and appointed a contract administrator. The contract administrator "informally certified" valuation 10 and 11 by signing the valuation submitted by the contractor. On 20th December 2002 Mr Legg made it clear that he did not intend to pay any further sums to the builder. The builder then suspended work, and served a Notice of Dispute seeking an 11 week extension of time and payment of outstanding sums. The RIBA appointed an adjudicator, who decided that the Employers should pay the contractor £85,873.59.
The Employers sought to undermine the adjudicator's decision by claiming that the dispute resolution clause referring matters to adjudication within the Minor Works Contract was unfair because it caused a significant imbalance in the terms between the parties to the detriment of the Employers pursuant to the Unfair Terms in Consumer Contract Regulations 1999. They also contended that there was no dispute capable of being referred to adjudication, or that the Notice attempted to refer 3 disputes and was therefore void. Set-off was sought against the decision in respect of direct payments to a joiner, and finally they sought a stay because of the financial state of the contractor.
HHJ Moseley QC considered the Unfair Terms in Consumer Contracts Regulations 1999, and came to the conclusion that it did not assist the Employers. He said that the clause in question did not produce a significant imbalance between the parties. The clause was equally balanced between the parties as either party could, pursuant to the clause, refer a dispute to adjudication. In this regard it was not to the detriment of the Employers, but arguable to the Employer's benefit in that they could refer a dispute to adjudication which would be resolved more economically and more quickly than in the litigation or arbitration.
He also held that there was clearly a dispute at the time that the matter was referred, because the Employers had refused to pay any money, and were refusing to allow the Contractor back onto the site. The single Notice to Refer contained several matters which constituted one dispute and following the case of Ferson v Levolux no set-off was available. The reason for the Contractor's financial state was as a result of the non-payment by the Employers, and so he ordered that the full amount of the adjudicator's decision be paid.
Many thanks to Martin King of Castons for supplying a copy of the judgment.
During the course of the work Mr Legg dispensed with the Architect's services, and appointed a contract administrator. The contract administrator "informally certified" valuation 10 and 11 by signing the valuation submitted by the contractor. On 20th December 2002 Mr Legg made it clear that he did not intend to pay any further sums to the builder. The builder then suspended work, and served a Notice of Dispute seeking an 11 week extension of time and payment of outstanding sums. The RIBA appointed an adjudicator, who decided that the Employers should pay the contractor £85,873.59.
The Employers sought to undermine the adjudicator's decision by claiming that the dispute resolution clause referring matters to adjudication within the Minor Works Contract was unfair because it caused a significant imbalance in the terms between the parties to the detriment of the Employers pursuant to the Unfair Terms in Consumer Contract Regulations 1999. They also contended that there was no dispute capable of being referred to adjudication, or that the Notice attempted to refer 3 disputes and was therefore void. Set-off was sought against the decision in respect of direct payments to a joiner, and finally they sought a stay because of the financial state of the contractor.
HHJ Moseley QC considered the Unfair Terms in Consumer Contracts Regulations 1999, and came to the conclusion that it did not assist the Employers. He said that the clause in question did not produce a significant imbalance between the parties. The clause was equally balanced between the parties as either party could, pursuant to the clause, refer a dispute to adjudication. In this regard it was not to the detriment of the Employers, but arguable to the Employer's benefit in that they could refer a dispute to adjudication which would be resolved more economically and more quickly than in the litigation or arbitration.
He also held that there was clearly a dispute at the time that the matter was referred, because the Employers had refused to pay any money, and were refusing to allow the Contractor back onto the site. The single Notice to Refer contained several matters which constituted one dispute and following the case of Ferson v Levolux no set-off was available. The reason for the Contractor's financial state was as a result of the non-payment by the Employers, and so he ordered that the full amount of the adjudicator's decision be paid.
Many thanks to Martin King of Castons for supplying a copy of the judgment.