A contract had been concluded around August 1995, before the effective date of Part II of the Act. In August 1998 (after the Act had come into force) a novation agreement was concluded, transferring the sub-contract from Cleveland to Yarm Road Limited. Yarm Road Limited argued that it could refer any dispute to adjudication by virtue of the novation agreement. Costain Limited argued that if the novation agreement amounted to a construction contract within the definition of the Act, then the Act would have a retrospective effect on the building contract. Costain maintained that the Act should not be applied retrospectively.

His Honour Judge Avery QC held that the novation agreement fell within Section 104 of the Act, and that Yarm Road Limited could therefore proceed to adjudicate at any time in respect of any dispute which had arisen in respect of the contract, even if the subject matter of the dispute related to work carried out in 1995.