Captiva owned a site in Bournemouth. They contracted with Rybarn, a contractor, to construct 28 flats together with parking. The contract contained an option for Rybarn to take leases in respect of seven of the 28 flats.
Clause 3.4 of the contract provided Rybarn with an exclusive right to dispose of and retain the proceeds of sale of the flats to which Rybarn may become entitled. Clause 3.8 granted Rybarn an option to take a lease in the form attached to the contract.
Captiva had commenced adjudication, and the only issue in these proceedings was for a declaration as to whether the parties' contract was subject to the statutory right to adjudication.
Reference
Paragraph 6 of the construction contract exclusion order 1998, statutory instrument 1998 No. 648 excluded development agreements from the definition of construction contracts. Paragraph 6.1 provided:
"A contract is a development agreement if it includes provision for the grant or disposal of a relevant interest in the land on which takes place the principle construction operations to which the contract relates."
Judge Wilcox concluded that the granting of an option was a relevant interest in land for the purposes of the exclusion order. The exclusion order provided that the contract need only "include provisions for" disposal of that interest in land. The contract between the parties clearly included such provisions and so the contract was excluded from the Construction Act. As a result, an adjudicator could not have any statutory jurisdiction in respect of the claim brought by Captiva.
*Full case details
Captiva Estates Ltd vs Rybarn Ltd (In administration), 11 November 2005, [2005] EWHC 2744, TCC, HHJ Wilcox QC.
Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk
Postscript
This is the first case, that I am aware of, dealing with the exclusion order. The court has made it clear that an agreement containing an option to dispose of a part of the site to the developer or builder is enough to bring the agreement outside of the Construction Act. As a result the payment provisions, right to suspension and right to adjudication under the act will not apply to any construction contract containing a grant or disposal of an interest in a part of the land.
