Home truths: Summary judgment refused as owner's defence had real prospect of success

The law

Adjudicators' decisions are binding unless and until the issue is determined by the court and, where an adjudicator's award is not adhered to, the unpaid party can seek to enforce that payment pursuant to Part 7 or Part 8 of the Civil Procedure Rules (CPR). That claim is usually accompanied by an application for summary judgment.

CPR Part 24 provides, relevantly, that the Court may give summary judgment against a Claimant or Defendant on the whole of a claim or on an issue if it considers that the party has no real prospect of succeeding on the claim, defence or issue.

The prospects of succeeding on a claim, defence or issue is subjective and a defence that the adjudicator had no jurisdiction to hear a dispute referred to it because the statutory adjudication scheme should not have applied scheme could, as we see in this case, raise the prospect of a successful defence.

The adjudication

RBH Building Contractors Ltd (RBH) brought, and won, a "smash and grab" adjudication on the basis that Mr and Mrs James' pay less notice was invalid. The adjudicator ordered that Mr and Mrs James (as the unsuccessful 'responding party') pay his fees and the £663,016.16 award (the Award).

In reaching his decision, the adjudicator also rejected Mr and Mrs James' objection to the adjudicator's jurisdiction which was raised on the basis that they, at the time of the contract, intended to occupy the property (a vast house in North Devon). There was no adjudication procedure in the parties' (oral) contract and so, if Mr and Mrs James did indeed intend to occupy the house, Section 106 of the of the Act would have the effect of disapplying the statutory adjudication right to adjudicate, causing the adjudicator to have no jurisdiction to hear the dispute.

The James' did not pay the £663,016.16 award and, given that non-payment, RBH made a Summary Judgment Application for Enforcement pursuant to CPR Part 7 and CPR Part 24.

The summary judgment application for enforcement

Mr and Mrs James successfully defended the application and also obtained a declaration under CPR Part 8 that its pay less notice was indeed valid because any reasonably objective reader who had knowledge of the contract works will have known it related to the relevant application for payment and that it set an adequate agenda for an adjudication by identifying specifically which elements of the payment application were not accepted and, briefly, why they were not accepted (each as per the established legal position).

In dismissing RBH's application for summary judgment, the TCC found that, given the evidence put forward by Mr and Mrs James, including that they sold their previous home, moved to Devon, registered locally, and joined the electoral roll there, Mr and Mrs James had a real chance of proving they intended to live in the property, making them “residential occupiers” and exempt from the statutory adjudication scheme as set out above.

The TCC also considered that it did not have the power to alter the adjudicator’s decision in relation to his fees and, consequently, Mr and Mrs James remained liable in accordance with his award.

Key takeaways

This case is a rare example of the residential occupier exception being successfully used to challenge the enforcement of an adjudicator's decision. It also reinforces the importance of clarity in pay less notices and the finality of adjudicators’ fee apportionments.