Lovell Projects Ltd v Legg

The contractual adjudication provisions in the JCT Minor Works Form incorporated into the contract between the homeowners as residential occupiers and the contractor were not unfair within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999
 
LOVELL PROJECTS LTD v LEGG

Technology and Construction Court
His Honour Judge Moseley QC
July 2003
 
 
The contract between the homeowners and the contractor incorporated the JCT Minor Works Form. The Construction Act 1996 did not apply to the contract because contracts with residential occupiers are expressly excluded from the Act’s operation. However, by incorporating the JCT Minor Works Form the parties agreed to contractual adjudication provisions with similar effect to those implied into construction contracts by the Act. Disputes arose which the contractor referred to adjudication. The adjudicator made an award of a specified sum of money to the contractor. The homeowners refused to pay and the contractor brought court enforcement proceedings.
 
The homeowners challenged the adjudicator’s decision on the ground that the contractual adjudication provisions should be struck down as being unfair within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999 by reason of there being a significant imbalance in the parties’ rights and obligations under the contract to the homeowners’ detriment caused by those provisions. Regulation 5(1) provides that a contract term not individually negotiated is to be regarded as unfair if, contrary to the requirement of good faith, it causes such an imbalance.
 
Judge Moseley held that the contractual adjudication provisions were not unfair. They applied equally to both parties. The decision was (merely) the consequence of the dispute concerning the non-payment of sums due under interim certificates. Also there was no limit on the kind of dispute which could be referred to adjudication. As to the requirement of good faith (1) There was no breach of the requirement of openness insofar as the adjudication provisions were fully, clearly and legibly set out in the contract and contained no concealed pitfalls or traps and (2) There was no breach of the requirement of fair dealing insofar as (a) The contractor did not deliberately or unconsciously take advantage of the homeowners’ necessity, indigence, lack of experience, weak bargaining position or any other such factor and (b) The JCT Minor Works Form was insisted on by the architect on behalf of the homeowners who were knowledgeable business people who engaged an architect and then a contract administrator and who retained solicitors and might have consulted them.
 
Advice Note
If a residential occupier enters into a construction contract which incorporates adjudication provisions similar to those implied by the Construction Act, those provisions will be binding and will not be held to be unfair within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999.
 
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