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 adjudicators 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 contractors 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 BBs asbuilt 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 BBs 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 BBs 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 adjudicators
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 BBs 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 partys
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.
| 