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• Can I Withhold Payment?

Introduction

The circumstances in which a consumer can withhold payment from a builder were considered recently in the case of Steve Domsalla (T/A Domsalla Building Services) v Kenneth Dyason.

The contractor referred two disputes to adjudication and obtained a decision in their favour. Mr Dyason refused to pay maintaining that the sums claimed by the claimant under 3 interim certificates were not due because: there was no adjudication clause incorporated in the contract, the adjudication and withholding notice clauses were not binding on Mr Dyason, and that as such the decision was unenforceable.

The builder issued Court proceedings to enforce the Adjudicator's Decision. The main issue raised by the enforcement proceedings was whether Mr Dyason could rely on regulation 8 of the Unfair Terms in Consumer Contracts Regulations 1999 by showing that the adjudication clause or withholding notice clause was not binding on him because they were unfair clauses.

The Court had to determine whether the term caused a significant imbalance between Mr Dyason and the contractor's rights arising under the contract.

Mr Dyason contended that the provisions were unfair because he had not been involved in negotiating the contract. He had only been a nominal employer with no control over the contract which had been prepared by the loss adjuster. He had received no advice about the necessity of observing the withholding provisions. The contract administrator had been appointed by the insurers and they had owed professional duties to the insurers relating to valuation and payment but did not owe any such duties to Mr Dyason.

The Court upheld the adjudication clause but was satisfied that the withholding notice clause was unfair and not binding on Mr Dyason so that he was able to withhold monies from the builder without serving a notice of withholding payment.

This appears a surprising decision and I suggest that it is likely to be restricted to scenarios similar to the facts of this case.

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.