Balfour Beatty v Mayor & Burgess of L.B. of Lambeth [2002] BLR 288 : [2002] EWHC 597

This summary was provided by CMS Cameron McKenna LLP.

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A critical path analysis is necessary for an adjudication concerning extensions of time and the deduction of liquidated damages to be carried out methodically and fairly. However, an adjudicator who constructs the referring party's case for it and does not give the responding party reasonable opportunity to comment upon the case it has to meet is not acting fairly and impartially and his decision will not be enforced

H Lloyd QC

12th April 2002

The parties entered into a contract for the refurbishment of a building that incorporated JCT standard terms. B was granted three extensions of time. However, two certificates of non-completion were issued, which entitled L to claim damages for delay. B claimed it was entitled to further extensions of time and sought payment of the damages for delay that L had withheld.

B referred the case to an adjudicator, providing an "as-built" programme and analysis. The adjudicator was unable to make use of this and requested further information. B claimed that it was not necessary to determine a critical path. The adjudicator relied on his own assessment of the critical path and gave a decision in favour of B two days before the deadline imposed by the parties. Neither party was given the opportunity to look at the assessment upon which the adjudicator based his judgment.

L refused to pay the amount awarded by the adjudicator and B brought proceedings under CPR Pt 24 for summary judgment to enforce the adjudicator's award. L resisted the application on the grounds that, in reaching his decision, the adjudicator had not acted impartially, contrary to clause 41A.5.5 of the JCT terms. Further, the adjudicator had not complied with the principles of natural justice, in that he had not given the parties the opportunity to consider the arguments upon which his decision was based. In response B submitted that the adjudicator had merely "set his own procedure" and taken the initiative in ascertaining the facts and law as he considered necessary, which was expressly permitted by clause 41A.5.5 of the JCT contract.

The court ruled that it was essential that a critical path be used if a case concerning extensions of time was to be decided methodically and fairly. However because the adjudicator had constructed B's case for them without confronting either party, nor allowing time or the opportunity for this to be considered, this amounted to a potentially serious breach of the requirement for impartiality and the rules of natural justice. The application for summary judgment was therefore dismissed.

A critical path analysis is necessary for an adjudication concerning extensions of time and the deduction of liquidated damages to be carried out methodically and fairly. However, an adjudicator who constructs the referring party's case for it and does not give the responding party reasonable opportunity to comment upon the case it has to meet is not acting fairly and impartially and his decision will not be enforced.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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