Balfour Beatty Construction Limited -v- The Mayor & Burgesses of the London Borough of Lambeth
Case reference:
[2002] EWHC 597 (TCC)
Friday, 12 April 2002
Key terms: Part 24 Summary Judgment - natural justice
Balfour Beatty made an application under Part 24 (Summary Judgment) to enforce the decision of an adjudicator. The contract between Balfour Beatty and Lambeth was for the refurbishment of the Falmouth House, Penwith Manor Estate, Kennington Park Road, London. The contract was made pursuant to an order, and at the time of the adjudication the contract had, apparently, not been executed, but the order incorporated the JCT Standard Form of Building Contract 1998 Edition Local Authorities Without Quantities incorporating amendments and the Contractor's Designed Portion Supplement 1998.
During the course of the works delays occurred, and on three occasions the architect awarded Balfour Beatty an extension of time. However, the architect also issued a Certificate of Non-Completion, with the result that Lambeth deducted liquidated damages totalling £355,831.71. A dispute arose in connection with the amount of damages for delay, and 5 months after practical completion the dispute was referred to adjudication. The basis of the referral was an as built programme and analysis, but the adjudicator did not consider that it was adequate in that it did not identify each relevant event, the date of the event, the activity directly effected by the event, and the nature of that effect on the completion date.
The adjudicator attempted to obtain this information from the parties, but was only partly successful and decided to prepare his own critical path analysis. He then made his decision based upon that critical path analysis. The complaint in this case was that the adjudicator had not given the parties an opportunity to review and comment upon the critical path analysis.
HHJ Lloyd QC referred to the decision of HHJ Bowsher QC in Discain Project Services Limited (No 1) which recognised that some breaches of natural justice might be allowed in order to deal with the dispute in a restricted time scale, and that each case would turn upon its facts, but that nonetheless adjudicators must comply with the rules of natural justice. HHJ Lloyd QC confirmed this approach recognising the importance of adjudication in the industry, not just in terms of settling minor disputes, but more recently in settling large disputes post completion. He considered that in these circumstances natural justice was all the more important. He went on to hold that the adjudicator had not just taken the initiative in ascertaining the facts, but had gone further in that he had made out Balfour Beatty's case for them. Further, though he had not given the parties an opportunity to review and comment upon the critical path analysis produced by him.
As a result HHJ Lloyd QC held that the adjudicator had exceeded his jurisdiction by making good the material deficiencies in Balfour Beatty's claim and by not giving a party a reasonable opportunity of commenting upon the critical path analysis produced by him. The application for summary judgment was therefore dismissed.
During the course of the works delays occurred, and on three occasions the architect awarded Balfour Beatty an extension of time. However, the architect also issued a Certificate of Non-Completion, with the result that Lambeth deducted liquidated damages totalling £355,831.71. A dispute arose in connection with the amount of damages for delay, and 5 months after practical completion the dispute was referred to adjudication. The basis of the referral was an as built programme and analysis, but the adjudicator did not consider that it was adequate in that it did not identify each relevant event, the date of the event, the activity directly effected by the event, and the nature of that effect on the completion date.
The adjudicator attempted to obtain this information from the parties, but was only partly successful and decided to prepare his own critical path analysis. He then made his decision based upon that critical path analysis. The complaint in this case was that the adjudicator had not given the parties an opportunity to review and comment upon the critical path analysis.
HHJ Lloyd QC referred to the decision of HHJ Bowsher QC in Discain Project Services Limited (No 1) which recognised that some breaches of natural justice might be allowed in order to deal with the dispute in a restricted time scale, and that each case would turn upon its facts, but that nonetheless adjudicators must comply with the rules of natural justice. HHJ Lloyd QC confirmed this approach recognising the importance of adjudication in the industry, not just in terms of settling minor disputes, but more recently in settling large disputes post completion. He considered that in these circumstances natural justice was all the more important. He went on to hold that the adjudicator had not just taken the initiative in ascertaining the facts, but had gone further in that he had made out Balfour Beatty's case for them. Further, though he had not given the parties an opportunity to review and comment upon the critical path analysis produced by him.
As a result HHJ Lloyd QC held that the adjudicator had exceeded his jurisdiction by making good the material deficiencies in Balfour Beatty's claim and by not giving a party a reasonable opportunity of commenting upon the critical path analysis produced by him. The application for summary judgment was therefore dismissed.