A recent ruling on a dispute over an extension of time could have a significant impact on the use of adjudication in the construction industry.
Adjudication has been seen as a simple, quick and cheap way to resolve complex disputes, but the case of RG Carter -v- Edmund Nuttall, heard in March 2002, may mean changes to the way that cases should be approached.

This case concerned a claim by a subcontractor (Nuttall) against a main contractor (Carter) for an extension of time to complete subcontract works and for payment of loss and expense in respect of delays.

Initially submitted in May 2001, the claim was rejected by Carter in a statement sent to Nuttall on 7 June 2001; Carter assessed that sums payable were of a negative amount because of Carter's alleged counterclaims against Nuttall. Carter then responded formally on 23 August 2001, contending that Nuttall had not demonstrated an entitlement to any additional extension of time.

Subsequent applications for payment were made by Nuttall and, while further valuations were made by Carter, the valuation remained negative.

In accordance with the terms of the DOM/1 subcontract, Nuttall issued a Notice of Intention to Refer the Dispute to Adjudication on 14 December 2001. An adjudicator was appointed and the Referral Notice was served on 4 January 2002, accompanied by an expert report dated 27 December 2001 prepared on behalf of Nuttall.

The report supported the claim for an extension of time to subcontract works. Although the 235 days sought was the same as that previously stated by Nuttall in its claim submitted in May 2001, the alleged justification for the extension of time sought was different and some new matters were relied upon. Also, the sums claimed in the adjudication as loss and expense to which Nuttall was allegedly entitled were different from those in the May claim and the Notice of Intention to Refer to Adjudication.

Carter objected to the adjudicator's jurisdiction to consider the expert report, maintaining that it was a new claim. The adjudicator disagreed and decided that the report could be considered and a decision reached based upon it as it related to the same dispute, delay and works.

Subsequently, the adjudicator awarded Nuttall £830 000 plus vat, to be paid within 14 days. Carter, however, refused to pay so Nuttall applied to the court for Summary Judgement.

At the court hearing, Nuttall argued that the nature of the dispute was not affected by the fact that it had sought to advance arguments and rely on facts different from those in the May 2001 claim.

Carter stated that the matters detailed within the Notice of Adjudication and the Referral Notice had not been previously brought to its attention and it had accordingly neither admitted, rejected or sought clarification of those claims, and as such there was no dispute as at the date of the Referral Notice.

For there to be a dispute, there must have been an opportunity for each party to consider the position adopted by the other and to form reasoned arguments

The judge decided that the real question at issue was not whether there was a dispute between Nuttall and Carter at 14 December 2001, but whether the dispute considered by the adjudicator was that which was the subject of the 14 December 2001 letter or had changed.

The judge concluded that a dispute is something different from a claim. While a dispute can be about a claim, there is more to a dispute than simply a claim that has not been accepted. For there to be a dispute, the judge felt that there must have been an opportunity for each party to consider the position adopted by the other and to form reasoned arguments.

The judge confirmed that a party to an adjudication can refine its argument and abandon non-meritorious points without altering fundamentally the nature of the dispute. However, a party cannot abandon facts previously relied upon or arguments previously advanced and then argue that because the claim remains substantially the same the dispute must be also.

The judge commented that the Notice of Adjudication represented a "mallard transformed into a swan" by the expert report. The facts and matters relied on and the new arguments submitted in the expert report were not part of the dispute that existed as at 14 December 2001. Therefore, the adjudicator's decision was made without jurisdiction, and accordingly the application to enforce that decision failed.

Leave to Appeal was refused by the trial judge but it is understood that Nuttall is applying to the Court of Appeal.

What does this case mean for the adjudication process? Well, it could have a very significant and wide-ranging impact.

For all cases other than simple disputes, parties should ensure that the full package of arguments and facts is assembled, disclosed and either disputed or not responded to prior to issue of a Notice of Adjudication. If new or additional facts or arguments are to be relied upon, ensure that they are submitted and the other party given chance to respond before adjudication.

New facts and arguments introduced after a Notice of Intention to Refer has been served cannot be relied upon in that adjudication. As a result, there may have to be a subsequent adjudication on the same dispute, but with different facts and arguments.