Adjudication
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KEYWORDS: |
Causes of Delay, Adjudication, Role of Adjudicator, Extensions of Time, Judge Humphrey Lloyd QC, |
Establishing the causes of delay to completion of a construction project usually requires careful analysis of the method of construction. The entitlement to extension of time will depend on the proper interpretation of the contract and this will dictate the method of analysis to be adopted. Disagreements about the method of analysis, the method of construction and the facts can make extension of time disputes complicated and difficult to resolve.
An adjudicator faced with such a dispute will have a difficult task. Often the analysis submitted to him is not sufficiently detailed. In that case, how far should the adjudicator go to establish the facts? Should he determine himself the critical path to completion and if he does how much involvement should the parties have in deciding the appropriate method of analysis. Should he instead simply decide on the information presented to him on the basis that adjudication was not intended for such complicated disputes? These are difficult questions that have been answered by His Honour Judge Humphrey Lloyd QC in Balfour Beatty Construction Ltd v The London Borough of Lambeth (2002) TCC in an application by BB to enforce an adjudicator’s decision.
The contract between BB and Lambeth was for the refurbishment and remodelling of Falmouth House in London under the JCT standard form of building contract 1998 Edition with contractor’s designed portion supplement 1998.
Although extensions of time had been granted, this did not account for all the delay and Lambeth were entitled to, and did, deducted damages for delay totalling some £350,000.
BB gave notice of adjudication on the issue of entitlement to extension of time. BB submitted its referral notice but the adjudicator was unable to make use of submitted "as-built" programme and analysis. He requested BB to produce a schedule of relevant facts. In a subsequent meeting BB was unable to identify the critical path on its programmes as they were not a critical path analysis but were a simple bar charts without any links.
Judge Lloyd observed that if adjudication was to be utilised effectively it was essential that the referring party gave the adjudicator all that was needed in a highly manageable form. In this case it was clear that BB did little or nothing to present its case in a logical or methodical way. There was no attempt to provide a critical path analysis. This situation is not uncommon. What approach should the adjudicator take?
It appears to have been accepted that it was reasonable for the adjudicator to verify BB’s as–built programmes and to try to divine a critical path. It was accepted that the adjudicator could take the initiative in ascertaining the facts and in addition to apply his own knowledge and experience and, in effect, do BB’s work for it. The issue was how far should the adjudicator use his own judgment without the involvement of the parties. In this case the adjudicator adopted the "collapsed as-built" method of analysis but did not present his conclusion to the parties for their comment.
It was held that the adjudicator should have invited comments on whether the "as-built program" he had drawn was a suitable basis from which to derive a retrospective "critical path". He should have informed the parties of the methodology that he intended to adopt, or seek observations from them as to the manner in which it or any other methodology might reasonably and properly be used in the circumstances to establish or to test BB’s case. The adjudicator should not of his own volition have used his powers to make good fundamental deficiencies in the material present by one party without first giving the other party a proper opportunity of dealing both with that intention and with the results.
Lambeth was entitled to have the dispute decided on the material provided by BB either originally or in answer to the adjudicator’s requests and not on a basis devised by the adjudicator and which had not been made known to it.
It was held that if an adjudicator uses his powers to find out more about the facts or to form the opinion that a different principle should be applied for their evaluation he would have to tell both parties of what he had found, and of the potential implications (if that needed to be pointed out). It was held that the adjudicator exceeded his jurisdiction by making good fundamental deficiencies in BB’s material, namely the lack of a critical path and the method of analysis adopted for demonstrating the criticality of events.
It was held that constructing (or reconstructing) a party’s case for it without confronting the other party with it is such a potentially serious breach of the requirement of either impartiality or fairness that the decision was invalid. It was not a decision that the adjudicator was authorized to make. Accordingly, the application by BB was dismissed.
The conclusion to be drawn from the decision is that whilst an adjudicator can take an inquisitorial approach to ascertaining the facts, including preparation of an analysis, ultimately the process of adjudication is adversarial. The parties must be given the opportunity to make submissions on developments in the case that affect the final decision. The Adjudicator must decide on the submissions by the parties and not on evidence that he gives only to himself. These developments in adjudication reinforce the view held by many that the training of adjudicators needs to be more exacting than hitherto has been the case.