Building begins a series of internet chatrooms arguments, in which top lawyers tackle legal conundrums, with the controversial Nuttall vs Carter case
Eleanor Cochrane started chat about Edmund Nuttall vs RG Carter
<<< Tony Bingham joined the chat
<<< Ann Minogue joined the chat
Eleanor Cochrane Welcome to Building's first legal chat session. We'll be discussing Edmund Nuttall vs RG Carter, in which Judge Seymour found that the adjudicator's decision in favour of subcontractor Nuttall was void. This was because the decision was based on "the Caletka report", which was evidence produced by the subcontractor after the adjudication began.

Summing up the case in April, Tim Elliott wrote: "It is important that respondents should not be ambushed, but an absolute bar on new arguments and evidence seems unduly restrictive. Some middle course is appropriate but it is difficult to see how this could be defined or applied in practice. Guidance is clearly needed. With luck, the Court of Appeal will provide it." Well, as we know, the Court of Appeal didn't. So what should it have decided?

<<< Nick Henchie joined the chat
Nick Henchie Sorry I'm late – a few technical problems logging on.

Tony Bingham There is a real possibility that the appeal would have been allowed and therefore the adjudicator's decision enforced. The approach for enforcement in this case was: A) was there a "dispute" between the parties? Answer: yes – see paragraph 38 of the judgment. B) Was it THIS dispute that was the subject of the Notice of Adjudication? Answer: yes – see paragraph 39 of the judgment. C) Did the adjudicator decide THIS dispute? Answer: yes, but if he took account of evidence by ambush then the process may have been so unfair as to become a nullity. There is no evidence that he did take account of the new report. Instead the adjudicator seems to have carried out a complete enquiry of his own.

Nick Henchie I do not see on what basis the Court of Appeal could have allowed the appeal. Although principally a policy decision, I think Seymour got it spot on in the TCC. Any other decision would have been a carte blanche for would-be ambushers. I don't agree with you, Tony. A respondent is surely entitled to know the case he has to answer – indeed the case had been rejected by Carter, and Caletka himself binned many of the grounds for extensions of time previously relied upon by Nuttall, demonstrating that Carter had been right to reject the claim.

Ann Not just the extensions but also the heads of cost … but I agree with Nick.

Eleanor How do you respond, Tony?

Tony The lesson to be learned is to canvass the arguments before we adjudicate, ie crystallise the dispute. This works in practice. It avoids complaints of unfairness or catching the other side out. In essence the referral is put into the other party's hands pre-adjudication. It is important that he then responds. I call these exchanges "position statements". This is what the judge was calling for.

Nick All a claimant has to do is make sure that it sends its claim prior to adjudicating to the respondent. Presumably the reason Nuttall didn't do this was because they wanted Carter to have as little time as possible to consider and respond to the Calekta report, something which runs at complete odds with Woolf and more importantly at complete odds with why Latham recommended adjudication in the first place.

Tony I don't think we are at odds. The important point is to avoid "issue ambush" by canvassing the issues pre-adjudication. The next point is to avoid "evidential ambush" to avoid unfairness.

Ann I also quite liked the acid comment about the adjudicator's fees – "as Mr Richard's fees in the present case indicate, adjudication is not necessarily cheap"!!

Nick I agree that on occasions adjudicators' fees get out of hand – however the solution is to agree adjudicators that are good and efficient on the contract and to avoid the lottery of an appointment. On the other hand I have sympathy with some adjudicators who are faced with a barrage of pointless correspondence and submissions from the parties' representatives (particularly claims consultants) that make their job very difficult and time consuming.

Eleanor What do you think, Ann?

Ann I think the best thing is to name the adjudicator for the project in all the agreements for the project – this reduces fees and ensures consistency of decision-making across the project.

Nick An important point to consider, particularly when talking about fees, is the extent to which Nuttall has deterred adjudicators from considering information and new disputes clearly not part of the pre-existing dispute. My experience is that where adjudicators are given the power to determine their own jurisdiction they will more often than not plough on regardless of the Carter decision on the basis that they will resolve the dispute and leave it to the courts to sort out – meaning that a lot of money can be wasted. I think adjudicators by and large will ignore this decision.

Ann That is why the parties need to agree someone sensible at the outset.

Nick Ann, do you think it is worth spelling out in the contract that an adjudicator shall not be entitled to consider arguments and evidence not previously submitted to the other side?

Ann Sorry, managed to check out by mistake … I think the least said the better because it just causes more argument. I am a firm believer in applying the scheme and leaving it at that.

Tony My experience is that adjudicators are taking jurisdictional challenges much more seriously nowadays because of potential wasted costs. The worry in Nuttall was the investigation costs by the adjudicator. Taking the initiative to establish the facts and the law can go too far. I am all in favour of true consent to a particular adjudicator. The worry is the unilateral entry of a favoured name in the contract document. It wants for true independence. Fully in favour, by the way, of Ann's point in using the scheme and blow everything else. Hurrah!

Nick I cannot agree with that – whatever happened to freedom of contract?

Tony Nick – it is on the other side of that famous coin, "oppressive bargaining power".

Adjudication is being abused by the bad guys, and it offers more scope for abuse than arbitration with little deterrent. It is repeat adjudications against one-off clients that really bug me

Ann But adjudication was supposed to be quick and simple and not too lawyer-dominated. Can we really say that is what it is delivering?

Tony Adjudication is now delivering a species of arbitration.

Nick God help us. Let's not stray in to arbitration and what a unsatisfactory form of dispute resolution that has become. Adjudication is the final decision-making process in probably 90% of UK construction disputes. Quick and simple many construction disputes are not. (Tony, I believe that the scheme can be improved upon to both parties' benefit.)

Tony It works well if the parties show their hand prior to the appointment of adjudicator. Hence pre-adjudication "position statements".

Ann What is inevitably happening is that adjudication is being abused by the bad guys and it offers more scope for abuse than arbitration with little real deterrent. It is repeat adjudications against one-off clients that really bugs me.

Tony Originally I thought the idea was to have a third party (called an adjudicator) to be an independent certifier, ie impartial QS mulling over what the client's QS said he would pay.

Nick A pre-adjudication protocol has been mooted before – if the parties were obliged to exchange position statements and then meet prior to adjudication (with the penalty being costs against them if they didn't) I reckon a fair proportion of adjudications would never see the light of day.

Tony Nick, I agree. I avoid the phrase pre-action protocol, since it sounds too much like litigation. I use position statements.

Ann But in layman's terms, isn't this what the court was requiring in the Nuttall case?

Tony Ann is right, but I still think the appeal would have succeeded.

Eleanor: I think that we've come to a good point to stop, as we're round to the case again.

Nick: Fine with me.

Tony: Fine with me too, farewell.

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Ann: Yup, am getting a bit hungry – thanks to all. Bye.

<<< Ann Minogue left the chat
Eleanor: See you all next time.