Cases - Balfour Beatty Construction Ltd v The Mayor & Burgesses of the London Borough of Lambeth
Record details
- Name
- Balfour Beatty Construction Ltd v The Mayor & Burgesses of the London Borough of Lambeth
- Date
- [2002]
- Citation
- EWHC 597 (TCC)
- Legislation
- Keywords
- Construction contracts - adjudication - jurisdiction - breach of natural justice - bias - fairness - procedural errors - extension of time - damages for delay - enforcement - summary judgment - JCT Standard Form Contract - whether adjudicator exceeded jurisdiction - Housing Grants, Construction and Regeneration Act 1996, section 108
- Summary
-
Balfour Beatty were seeking to enforce the decision of the adjudicator and applied for summary judgment. Lambeth had deducted approximately £356,000 in liquidated damages and Balfour Beatty disputed their entitlement to do so. This dispute was referred to an adjudicator, who decided that Balfour Beatty were entitled to an extension of time and that therefore Lambeth should pay to Balfour Beatty the sum of approximately £284,000 plus interest. He also decided that Lambeth would be liable for his fees.
Lambeth challenged the adjudicator's decision and resisted enforcement on two principal grounds:
- Lambeth alleged that the adjudicator did not act impartially as he did not give Lambeth an opportunity to deal with arguments that had not been advanced by either party even though he relied on them to reach his decision.
- It was submitted that the decisions reached were in breach of contract and without jurisdiction in that the adjudicator employed assistants to do work beyond that which the parties had agreed he would employ assistants to do.
The judge found that the adjudicator not only took the initiative in ascertaining the facts but also applied his own knowledge and experience to an appreciation of them and that, in effect, did Balfour Beatty's work for it.
The judge reasoned that the adjudicator is entitled to use the powers available to him, but that he may not of his own volition use them to make good fundamental deficiencies in the material presented by one party without first giving the other party a proper opportunity of dealing both with that intention and with the results. The judge concluded that the principles of natural justice as applied to an adjudication may not require a party to be aware of the case that it has to meet in the fullest sense, since adjudication may be inquisitorial or investigative rather than adversarial. However, that does not mean that each party need not be confronted with the main points relevant to the dispute and to the decision.
Further, the judge went on to say that an adjudicator does not act impartially or fairly if he arrives at a decision without having given a party a reasonable opportunity of commenting on the case that it has to meet (whether presented by the other party or thought to be important by the adjudicator) simply because there is not enough time available. An adjudicator, acting impartially and in accordance with the principles of natural justice, ought in such circumstances to inform the parties that a decision could not properly, reasonably and fairly be arrived at within the time and invite the parties to agree further time. If the parties were not able to agree more time, then an adjudicator ought not to make a decision at all and should resign.
The judge concluded that constructing or reconstructing a party's case for that party without confronting the other party with it is such a potentially serious breach of the requirement of either impartiality or fairness that the decision is invalid as it is a not a decision that the adjudicator was authorised to make.
With regard to the use of additional assistants, the judge concluded that Lambeth may have established a breach of contract but they did not establish what the consequences were. The judge said that it was true that what the adjudicator did was not authorised technically, but the judge could not draw the conclusion that the breaches had any material consequence on the decision or that there was any material prejudice to Lambeth or substantial injustice. Had this been the only ground upon which enforcement was resisted, the judge would have considered that it had no realistic prospect of success and that Balfour Beatty's application would have succeeded.