| Date | 16 March 2005 |
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| Judgment | William Verry (Glazing Systems) v Furlong Homes Ltd, TCC 13 January 2005 |
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| The Issue | Whether a responding party can submit new material in its response to adjudication. |
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| Implication |
The jurisdiction of an adjudicator is dictated by the referring party's notice of intention to refer and the responding party is entitled to put forward whatever case it chooses which responds to the case being made against it. |
printIn March 2003, William Verry (Glazing Systems) entered into a subcontract with Furlong Homes to design, supply and erect curtain walling, cladding, soffit and fascia installations for approximately £1.1 million. Completion of the subcontract works was planned for November 2003, but the works were delayed and continued well into 2004. Furlong granted Verry extensions of time to February 2004, but Verry maintained that it was entitled to a much longer extension. In July 2004, by which stage the subcontract works were almost completed, Verry submitted a claim for an extension of time to the end of June 2004, accompanied with its draft final account. Furlong responded some six weeks later to the effect that it did not consider that the extension of time previously granted by them should be amended and that liquidated and ascertained damages would be applied to Verry's account. Two weeks later, in what might be seen as something of a reverse ambush, Furlong commenced adjudication against Verry. The adjudication was to deal with the entirety of the dispute concerning the final account including variations, extensions of time, loss and expense and liquidated damages. As to the extension of time dispute, the notice of intention effectively indicated that the adjudicator would be requested to decide that the extension of time previously granted remained correct. The adjudication proceeded and with the agreement of both parties the overall timescale of the adjudication was extended to seven weeks. During this period, an issue arose concerning the response submitted by Verry. This contained a newly prepared extension of time claim which now requested an extension to the end of July 2004. In essence, the headings under which Verry sought an extension of time remained largely unchanged, but the narratives describing the background for each event was new and certain dates had changed. Furlong immediately objected that this document should not be taken into account by the adjudicator on the basis that it had not been previously seen by Furlong and therefore could not be contained within the jurisdiction of the adjudicator. Initially the adjudicator agreed with those contentions and confirmed that he was debarred from considering any new submissions put forward in the response. The adjudicator noted that he considered himself bound by the guidance contained in the Nuttall v R G Carter case. In that case, enforcement of the adjudicator's decision had been refused in circumstances where the referring party had put forward a new claim for extension of time based upon the report of an expert programmer. Verry replied however to say that the Nuttall case was quite different to these proceedings and was only relevant to the party making the claim. The referring party could only refer to adjudication a claim which had already been raised. Here however, it was the responding party that was making points which had not been made before. This, Verry argued, was entirely legitimate. The adjudicator considered the point again and concluded that Verry was entitled to rely on all of the matters set out in its response. Accordingly, he continued with the adjudication and, having taken account of all the material supplied by the parties, decided that Verry was entitled to a full extension of time. For better or for worse, Furlong had clearly thought that there was an advantage to be gained in starting an adjudication which encompassed all the disputes relating to the final account. They had taken a risk which had effectively backfired. It now became necessary to seek to resist enforcement of the adjudicator's decision. They argued either that the adjudicator did not have the jurisdiction to consider what they now called Verry's "new claim" for extension of time, or that dealing with that claim had led to unfairness and a substantial risk of injustice. Judge Coulson concluded on the evidence that Verry's response did not represent a new extension of time claim. It was merely a refinement or enhancement of the existing submissions. On that finding, the adjudicator was entitled to have taken into account Verry's submissions and his decision would stand. However, Judge Coulson went on to consider whether the adjudicator would have had jurisdiction to take the submissions into account if he was wrong on that point and the respondent's submissions were indeed to be regarded as a new claim. As a matter of commercial common sense, the judge considered that the adjudicator would have been perfectly entitled to take into account any such new material. If Furlong had wished to restrict the adjudication to the dispute and the material in existence six months earlier they could have done so, but the notice of intention to refer was clearly drafted to embrace the entirety of the final account disputes, including the entitlement to extension of time as it now stood. This was a completely open ended and unqualified request for the extension of time to be dealt with by the adjudicator. Judge Coulson commented that he was considerably strengthened in his analysis of the point that Verry was responding to the claim; it was not the referring party. Verry had to defend itself as best it could against the suggestion that it was only entitled to a limited extension of time. It was not to be taken as having agreed that in some way it could only defend itself with half a shield relying on some matters of fact but not upon others. In conclusion the adjudicator was correct in taking into account the further submissions of Verry. Furlong had had sufficient time to deal with those new submissions and therefore the adjudicator's decision was binding upon the parties.
CJ-0510
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