Dealing with domestics

Last week on this page, we had a look at the brand new JCT Contract for Home Owners and Builders. Let’s call it HOB99 for short. The document, which is all good stuff, includes a special approach to dispute sorter-outing.

I promised to come back to it. Doing home extensions or indoor alterations is ever so stressful. It’s not just that the chippy brings great long lumps of wood that sit under the kitchen table but he brings his tranny blaster, too. While Mrs Bingham is listening to her beloved Archers, Mick the chippy is listening to The Who. It doesn’t go down too well. Mrs Bingham might have other complaints: “None of the lads turned up the other day and the heating and hot water are off again. And the builders merchant has just turned up with 3000 bricks and dumped them in next door’s drive.” Even the mild Mrs Bingham might get a tad peeved at all this. And when the wrong doors turn up, she lets rip. Seeds of a rift, you see. She may even become a bit tardy in paying the next cheque.

So, disputes in the domestic building business are ordinary. However, unlike almost all commercial construction work, they are not covered by adjudication under the Construction Act. I don’t really know why. Usually when things like this get to parliament, the domestic consumer attracts a great deal more attention than commercial people.

Of course, there is no reason at all why Mrs Bingham and her builder should not have “contractual” adjudication. Indeed, this new HOB99 contains a device to do just that. Either party in a dispute can go off to court if they wish. But HOB99 also says the client or the contractor can have disputes decided by an adjudicator appointed under an adjudication scheme run by the RICS or the RIBA. This is in addition to the right to go to court.

I will tell you about the RICS/RIBA scheme in a minute. First, let me remind you that if the homeowner is having a house altered or extended but does not intend to occupy it themselves, the Construction Act will apply. And if the builder or homeowner wanted to use adjudication under the Construction Act instead of the contractual adjudication in HOB99, no one could stop them.

Either party can go to court. But HOB99 also says the client or contractor can have disputes decided by an adjudicator

So, what is this hybrid adjudication in HOB99? I have got some explanatory notes produced by the RICS. First, the period for the adjudicator to apply his or her magic dust is 21 days, as opposed to 28 under the Construction Act. Optimistically, the RICS guide says: “In many cases, the adjudicator may be able to make his decision sooner, particularly if the issue is straightforward.” Hmm! Only if this angel floats like a butterfly and stings like a bee.

Furthermore, either party can call up this 21-day referee during the works or any time up to six years after the job is finished. The applicant pays a special low rate of £80 for the RICS/RIBA to appoint an adjudicator from a new list. The appointee will not be allowed to charge for more than 10 hours’ work (maximum £750) even if they go over that time.

I can immediately see a problem here. We have already learned from Construction Act adjudication that the applicant will refer a dispute to which the other party will put up its case. But frequently the respondent will try to introduce another quarrel, not referred to by the applicant when calling for the ref. Here we get jurisdiction issues creeping in. It is very ordinary for the adjudicator to require the other quarrel to be freshly referred so as to have a full 28-day period. The HOB99 contract will undoubtedly face the same problem and could attract a second 10-hour adjudication.

The RICS explains that the referee is regarded as an expert using specialist knowledge to solve the dispute. But he will also apply the law, of course. He will apply the terms of the HOB99 contract and, although he is free to conduct the process in any way he likes (as long as he is fair), he will make a binding decision that is contractually sound enough to attract enforcement in the courts. It is open to the disappointed party to take the quarrel to the courts in the usual way if it desires. Meanwhile, it must comply.