| Date | 3 April 2002 |
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| Judgment | Edmund Nuttall Limited -v- R G Carter Limited, TCC 21 March 2002 |
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| The Issue | The extent to which "new" facts and matters may be relied upon in an adjudication. |
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| Implication |
Whilst a party can refine its arguments for the purpose of adjudication, if it intends to rely upon facts, legal argument or expert opinion not previously canvassed, the other party must be given sufficient opportunity to respond before commencement of an adjudication. |
printSince the Construction Act came into force, there has been concern expressed by many commentators over the risk of the "adjudication ambush". This is where, prior to presenting its referral in an adjudication, a party might spend many weeks assembling new evidence, legal argument and expert opinion. This would then be sprung on the other party for the first time in the adjudication, denying it sufficient time to respond. Surprisingly however, there seems to have been very little evidence that the adjudication ambush was occurring to any great extent in practice. Of all the many court decisions concerning adjudication, only one or two have dealt with this problem. In January 2000, His Honour Judge Thornton QC had to consider this matter in Fastrack Contractors -v- Morrison Construction. Following that case, it was thought that providing the "issues" were not changed, a party would be free to provide whatever material it could assemble in support of its case in adjudication. If the issues were the same, the dispute had not changed, and there could be no jurisdictional challenge to the adjudicator's decision. This question has however been examined more thoroughly in the recent case of Edmund Nuttall -v- R G Carter. Nuttall were sub-contractors to Carter for the construction of a new civic community centre and library entitled The Norfolk and Norwich Millennium Project. The project works did not progress smoothly, and in May 2001 Nuttall submitted, together with its application for interim payment, a claim for loss and expense of approximately £2 million. Included was a claim for extension of time which comprised a list of events said to have given rise to delay. Carter responded that Nuttall had failed to demonstrate an entitlement to any additional extension of time and that, having regard to its counterclaims, the sum payable to Nuttall was a negative amount. Numerous exchanges occurred between the parties, until eventually, some four months later, Nuttall commenced adjudication. The "notice of intention to refer" defined the dispute between the parties in the broadest terms seeking a full extension of time and a revaluation of the latest interim payment. That notice was served ten days prior to Christmas (no point was taken on that) and on 4 January 2002, the referral notice was issued by Nuttall. This was accompanied by a document entitled "Norfolk and Norwich Millennium Project - Substructure and Superstructure Works Report on Programming and Excusable Delay Entitlement". This document claimed an extension of time to the date of completion of the sub-contract works (as previously claimed by Nuttall), but there the similarity ended. Many of the delay events which earlier had been indicated as having no effect were now cited as significant causes of delay, and many other events in the earlier document were now dropped. A fair number of new causes of delay were introduced. As to the monies claimed, these were substantially reduced by virtue of the fact that, though certain heads of the claim had been increased, claims for additional staff costs and disruption costs had been dropped. Carter immediately objected that it had not seen this material before. Nonetheless, the adjudicator decided that it was appropriate for him to consider the entirety of the new material and he reached his decision on the basis of it. He ordered Carter to pay to Nuttall approximately £1 million, including VAT. Carter refused and the matter proceeded to enforcement. Carter argued that the adjudicator's decision was not binding, since at the date of the notice of adjudication, the matters detailed within the referral notice had not previously been brought to their attention. Since they had not been given the opportunity of considering and then either admitting, rejecting or seeking clarification of these new claims, there was no dispute at the date of the referral notice. Nuttall responded that the dispute remained a dispute as to whether Nuttall was entitled to an extension of time and to loss and expense. The nature of the dispute was not affected by the fact that for the purposes of adjudication, Nuttall had sought to advance arguments and to rely on facts different from those previously relied on. His Honour Judge Richard Seymour concluded that a "dispute" is something different from a "claim". What constitutes a dispute between the parties is not only a claim which has been rejected, but the whole package of arguments advanced and the facts relied upon by each side. "No doubt, for the purposes of a reference to adjudication, a party can refine its arguments and abandon points not thought to be meritorious without altering fundamentally the nature of the dispute between them. However, what a party cannot do in my judgment, is abandon wholesale facts previously relied upon or arguments previously advanced and contend that because the claim remains the same as that made previously, the dispute is the same". As a matter of practical policy, Judge Seymour concluded that if adjudication did not work in this way, there would be a risk of premature and unnecessary adjudications in cases in which, if one party had a proper opportunity to consider the arguments of the other, accommodation might have been possible. In conclusion, the "dispute" referred to adjudication did not include the arguments and facts contained in the report on programming and excusable delay entitlement, which had first appeared in the referral submission. It followed that the adjudicator's decision was made without jurisdiction and was unenforceable.
CJ-0213
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