Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2011] CSOH 40
P478/10	OPINION OF LORD BANNATYNE in the Petition of MR and MRS JACK PATON Petitioners; for Judicial review of a decision dated 17 April 2010 by Ian Strathdee, acting in the capacity of an adjudicator ­­­­­­­­­­­­­­­­­________________

Petitioners: M. Hamilton; Maclay Murray & Spens LLP

First Respondent: S Smith; Wright Johnston & Mackenzie LLP

1 March 2011

Subject of the proceedings
[1] In this petition Mr and Mrs Paton ("the petitioners") seek judicial review of a decision of Ian Strathdee ("the adjudicator") dated 17 April 2010. The decision awarded an extension of time and prolongation costs totalling £27,414.83 with interest of £1,090.44 to Douglas Jamie ("the first respondent") who was the referring party in an adjudication which had taken place between the petitioners and first respondent.

The factual background to the adjudication
[2] The petitioners and the first respondent entered into a building contract on 10 September 2007 for the construction by the first respondent of a one and a half storey traditionally built private dwelling house ("the contract"). The contract is constituted by the conditions set out in the SBCC's Scottish Minor Works Contract 1986 Edition (January 2002 Revision) as amended by the parties.

[3] That the works were due to have been completed by 31 May 2008. They were not completed by that date.

[4] The works did not proceed according to programme and only achieved practical completion on 12 December 2008. Following a request by the first respondent on 8 September 2008 for an extension of time, the petitioners' architect granted an eight week extension of time by letter dated 27 August 2009. The extension of time awarded took the contractual completion date to 26 July 2008.

[5] That the first respondent was dissatisfied by the extension of time awarded. In addition, due to a number of difficulties experienced throughout the contract, the petitioners had withheld sums against an interim certificate and the final certificate. The first respondent was also dissatisfied that these sums had been withheld by the petitioners. By notice of adjudication dated 12 March 2010, the first respondent initiated an adjudication in accordance with Clause 10A of the Contract. In terms of the notice, the first respondent sought to challenge the extension of time awarded and the sums withheld by the petitioners. The adjudicator was nominated by the appropriate body. Before the adjudicator, the first respondent contended that he was entitled to an extension of time such that the contractual completion date coincided with the date of practical completion representing an extension of approximately 20 weeks. The first respondent also contended that the petitioners had wrongfully withheld sums due under the contract. In the decision, the adjudicator substantially agreed with the first respondent. He made awards as above set out.

The ground of challenge of the decision of the adjudicator
[6] The ground of challenge of the adjudicator's decision as developed in the petition was this: That in purporting to determine the dispute between the petitioners and the first respondent the adjudicator had acted in a manner which was in breach of the requirements of natural justice.

Evidence led in this judicial review
[7] The petitioners led evidence from two witnesses, namely: the adjudicator and Denis Shields. No evidence was led on behalf of the first respondent.

The adjudicator
[8] His evidence as regards what came to be the principal issues in the case was as follows: It was his position that based on the early site meeting minutes the first critical event was the supply of stonework by the petitioners to the site. When he spoke of an event or item as critical he was defining an event as being of such a nature that if it did not happen on the date in the contract programme when it was programmed to happen then other events in the programme would of necessity be delayed. It was in addition in his view the principal/dominant critical event in terms of this contract.

[9] As regards the first activity on the contract programme (6/26 of process) namely "site clear, drains, substructure" this was not broken up into its constituent parts in the programme. However, he gave evidence that he had come to the opinion that it would take one week to clear the site, drains would take two weeks and therefore the substructure could be commenced at the beginning of week four. That was his assessment and he came to his view by applying the experience that he had gained in the industry. In so far as when superstructure walling (event 2) could begin, he said that sufficient of the substructure had to be in place and that he had again used his knowledge and experience in coming to a view as to this. In reaching his view on what was sufficient, he had applied a rule of thumb. He described the contract programme as a simple one. It was no more than a bar chart.

[10] Turning to his approach to assessing the delay claim it was his position that he had not assessed this on the basis of a critical path analysis. He said that he had done no more than identify from the contract programme, and from the terms of the minutes of site meetings what events were critical, in this case principally supply of stonework. He stated that in a programme as simple as the one in this case that he was able to identify by eye the critical events. He said that he had only seen critical path analysis used in much more complex projects. He said that this type of bar chart programme did not lend itself to critical path analysis and that in particular there were no logic links.

[11] The adjudicator accepted when it was put to him that the second event on the contract programme, namely: "superstructure walling" was not divided in such a way as to identify what part of the period shown against that event related to breezeblock walling and what part related to stonework.

[12] When asked how he had reached his estimate that at the commencement of the third week of the second event namely 12 November 2007 stonework walling should have begun he advised that he had only been able to reach that figure with difficulty. He accepted that he had had to estimate when the stonework should have begun within the period allocated to that event. He said that he had come to his figure as a result of his own experience. It was what he described as an "informed guess". His opinion had been come to against a background that first, no delays were referred to in the site meeting minutes against the first event in the programme and secondly, the number of weeks given in the programme to that second event.

[13] In relation to the further relevant events he accepted that he had relied heavily on the architect's assessment.

Mr Denis Shields
[14] Mr Denis Shields, construction contract consultant, gave evidence as an expert on the petitioners' behalf. He spoke generally to his report 6/2 of process.

[15] In his evidence he accepted that for the purposes of assessing an extension of time claim it is possible to make an assessment without establishing a critical path and it would have been appropriate to make an assessment in this case without establishing a critical path by using minutes of meetings, photographs of work in progress and correspondence. However, it was his understanding from the documentation that the adjudicator was going to do a critical path analysis and use logic links. It was his position that a critical path could not be established without logic links.

[16] He had no difficulty with an adjudicator using his own knowledge and experience in arriving at an assessment.

[17] As regards the adjudicator's position that stonework was critical he advised under reference to 2.7.5 of his report that this was a critical matter. As to the adjudicators choice of date within the contract programme event 2 as to when stonework would have commenced he said that this was an estimate. It was his evidence that this was the critical date so far as the adjudicator was concerned in arriving at his figure for delay.

[18] He accepted that given that the superstructure bar was not divided between breezeblock and stonework the adjudicator would have had to make a judgment within the period shown against that event in the contract programme as to when the stonework could have been commenced.

[19] He accepted that when stonework would have commenced was a matter which on the basis of the submissions was before the adjudicator. He accepted that it was open to parties to make submissions on these issues. His position in cross-examination was that he had no difficulty with the adjudicator arriving at an assessment as to when stonework should have commenced and basing this on his own knowledge and experience. However, where he said the adjudicator had failed was in not giving parties an opportunity to comment on these matters.

Submissions for the petitioners
[20] Counsel's motion was that I should sustain the first and second pleas-in-law for the petitioners and repel the first respondent's pleas-in-law and thus reduce the adjudicator's decision and grant interdict as third and fourth sought.

[21] Counsel's broad position remained as set out in the petition that the adjudicator had breached natural justice in the manner in which he had reached his decision. The core of her position was as set out in paragraph 10 of the petition.

[22] She commenced her submissions by referring to Balfour Beatty Construction Limited v The Mayor & Burgesses of the London Borough of Lambeth 2002 BLR 288. The facts relevant to the issues before the court were:

"Balfour Beatty considered that they were entitled to extensions of time, and submitted certain information to the architect in respect of applications for this, relying upon 31 different relevant events .... Balfour Beatty did not submit a critical path, as Balfour Beatty maintained, this was not a practical proposition due to the many changes which had affected the critical path on a weekly basis.

In his decision ... the adjudicator had identified his own analysis of the critical path, awarded Balfour Beatty 35 weeks extension, and recalculated the appropriate amount of damages for delay.

Lambeth refused to pay and Balfour Beatty made an application for summary judgment under CPR Part 24. Lambeth claimed that the adjudicator ... had failed to comply with the principles of natural justice; and had failed to give Lambeth a chance to deal with arguments that neither party had raised, although those arguments were relied upon by the adjudicator in reaching his decision."

[23] It was held:

"Adjudications under the JCT conditions, ... require certain basic procedural principles to be applied in order that both parties were treated fairly. An adjudicator was not limited to material put to him by either party. In principle an adjudicator must inform the parties of the information he obtained from his own knowledge and experience, or from other sources, and of the conclusions that he may reach having relied upon those sources. However, in deciding whether a breach of this principle constitutes a sufficient breach of natural justice such that the decision of an adjudicator could be challenged, would depend upon whether the point or issue in question were decisive, or of considerable potential importance to the outcome, rather than peripheral or irrelevant. ...

2. The adjudicator took the initiative in ascertaining the facts and applied his own knowledge and experience to do Balfour Beatty's work for them, as the material submitted by Balfour Beatty did not satisfy the basic requirements such that it could be used to assess delay. However, he did not inform the parties of his proposed methodology and seek their observations on its suitability. He should have done this, and he should also have given Lambeth the opportunity to comment upon the use of his chosen analysis. Constructing a party's case for it, without giving the other party the opportunity to deal with it, is such a potentially serious breach of the requirement of impartiality or fairness as to render the decision invalid."

[24] Counsel derived the following principles from the judgment:

1. An adjudicator is entitled to take the initiative in ascertaining the facts and the law.

2. An adjudicator is not limited to the material presented to him by parties. He may obtain further information and may apply his own knowledge and experience thereto.

3. An adjudicator may have to inform parties of the information he obtains from his own knowledge and experience.

4. It was only matters which are either decisive or of considerable potential importance to the outcome which the adjudicator needs to inform parties.

It was counsel's submission that although the project in the instant case was considerably simpler than that in the Balfour Beatty case and although the delay assessment which was required to be made by the adjudicator was considerably simpler than that faced by the adjudicator in the Balfour Beatty case nevertheless the principles which she had just stated were applicable to the adjudicator.

[25] Counsel then turned to look at what the dispute was that was presented to the adjudicator and what he did in response thereto.

[26] She commenced by taking the court to referral notice number 6/7 of process. At paragraphs 3.10 to 3.12 of that document what was referred to the adjudicator was set out:

"3.10 The works were scheduled to have been completed by 31 May 2008. On 8 September 2008, the contractor (the first respondent) requested in accordance with Clause 3.2 of the contract, that the architect/contract administrator make an extension of the date for completion as the works had been delayed for reasons beyond his control (such delay also having been as a result of contractor's compliance with the architect/contract administrator's instructions), a copy of which letter of 8 September 2008 is produced with this referral notice as Annex 3.

3.11 In support of its application for extension of time, the contractor referred to the minutes of the prestart meeting and minutes of site meetings number 1 to 18 as demonstrating where work was delayed and material delivered late or outwith the control of the contractor. Copies of these minutes are produced with this referral notice as Annex 4.

3.12 On 27 August 2009, and in accordance with Clause 3.2 of the contract, the architect/contract administrator made an extension of time of eight weeks. The revised date for completion was therefore 26 July 2008. A copy of the letter making the extension of time is produced with this referral notice as Annex 5."

[27] The response by the petitioners to the referral notice is contained in 6/8 of process. At paragraph 3/13 the petitioners set out their detailed response:

"Admitted that the Referring Party issued a letter on 10 February 2009 in support of his application for an extension of time. Admitted that Architect's Instructions were issued after the revised completion date. The Referring Party's position appears to be that the extension of time awarded was insufficient because works were instructed by the Employer and delays were incurred by the Contractor after the new date for completion of 26 July 2008. However, the Referring Party was already in culpable delay when those instructions were issued (reference is made to the Architect's analysis of the extension of time of 8 weeks included as RESP 4). The Contractor has simply misunderstood how extensions of time are calculated where a Contractor is in culpable delay. Extensions of time are calculated net, not gross. This means that the Architect must calculate the total number of days of delay caused by the Employer during the period of culpable delay and add only that period of time on to the original (or, in this case, extended) date for completion. The purpose of the date for completion is to identify at the end of the period of time commencing with the date of possession within which the Contractor should have completed the works, including any variations, had he not delayed completion of the Works himself. Reference is made to the case of Balfour Beatty Building Limited v Chestermount Properties Limited 62 BLR 1 (RESP 2).

....

Denied that the extension of time which was made to 26 July 2008 was insufficient. In support of their position that a further 20 weeks extension of time should be granted, the Referring Party has produced their letter of 10 February 2009. That is the sole means by which he seeks to discharge the burden of proof upon them in this adjudication. He has produced no programme, no delay analysis and no assessment of the purported delays set against the critical path of the project. The Referring Party does not explain what other works were being carried out at the time when the purported delays occurred. He does not account at any point for concurrent delays. Nor is reference made in the letter made in the letter of 10 February 2009 or in the Referral Notice to any provisions of the Contract that would found the basis for an extension of time. The Referring Party relies in places upon events of purported delay that are in fact matters under the Contract for which they are responsible, such as delays caused by their own sub-suppliers. Crucially, there is no explanation of the effect that any of the purported delay events had on the date for completion. In short, the Referring Party has produced nothing to connect the collection of extracts from the minutes of site meetings reproduced in the letter of 10 February 2009 with a further 20 week delay to the project. Nor is the Adjudicator in a position to assist the Referring Party to discharge this burden of proof by constructing his own delay analysis based on the information available (Balfour Beatty Construction Limited v The Mayor and Burgesses of the London Borough of Lambeth [2002] EWHC 597 (TCC) (RESP 3))."

[28] In summary it was counsel's position that in the said part of 6/8 of process the petitioners were objecting to the sufficiency of information provided by the first respondent in order to support the claim for the extension of time.

[29] She then turned to 7/31 of process and adjudicator's communication number 10. The adjudicator at paragraphs 4 and 16 in response to the points made by the petitioners said this:

"4. That the referring party will try and refer to specific references in the minutes of meetings in their reply to the respondents' extension of time response.

16. Both parties were to comment on my suggestion that I had the right to assess extensions of time based on the views expressed by Lord Drummond Young in the recent judgment of City Inns v Shepherd."

[30] In response to those sections of communication 10 the petitioners' agents had replied in 7/27 of process paragraph 6 as follows:

"6. Views expressed by Lord Drummond Young on analysing delay
You asked us to confirm whether you have the right to assess extensions of time based on the views expressed by Lord Drummond Young in the case of City Inn Limited v Shepherd Construction Limited [2007] CSOH 190. We have no particular comment to make on the legal principles set out by Lord Drummond Young in that case. More to the point, in our view, is whether the Referring Party in this adjudication has produced sufficient material to allow you to make any assessment of extension of time.

We refer to the decision by Lord Drummond Young in Castle Inns (Stirling) Limited t/a Castle Leisure Group v Clark Contracts Limited [2009] CSOH 174. In that case, the Pursuer asked the court to apportion the loss they had suffered between delays caused by drainage works (which were the responsibility of the defender) and delays caused by other matters. Lord Drummond Young declined to do so. He took the view that the Pursuer had failed to establish that the drainage works were a material cause of the delay. An analysis of causation is essential. Normally that would be in the form of a critical path analysis. The Pursuer in Castle Inns had not produced any such analysis. For the same reason, the judge was also of the view that the Pursuer had failed to establish that the drainage delays were concurrent with other delays.

Following the case of John Doyle Construction Limited v Laing Management (Scotland) Limited [2004] BLR 295, it was argued by some commentators that apportionment could take place without any analysis of cause and effect. Clearly this is not the case. Castle Inns (Stirling) Limited t/a Castle Leisure Group v Clark Contracts Limited confirms that the onus will be on the pursuer (a) to establish that delay was caused by works for which the defender is responsible and (b) to provide a sufficient basis in evidence for apportioning delay (and loss) between the various cases.

Prior to receipt of the Response, it was clear that the Referring Party had failed to satisfy both these requirements and so, in our view, we would be unable to proceed to make any assessment of extension of time. We have now (just) received the Reply. We have not yet had time to read it or digest its contents. We should be grateful if you would permit us the opportunity to submit a Rejoinder in which we will address the question you have asked in relation to applicable case law against the background of what the Referring Party has actually produced."

[31] Thus counsel submitted the petitioners were again highlighting their concern to the adjudicator as to the sufficiency of information before him to enable him to assess the extension of time claim.

[32] The first respondent replied to the points made by the adjudicator in communication number 10 in 6/9 of process at paragraph 3.13.9. In this paragraph the first respondent comments on the issue of the approach the adjudicator should take to assessment of delay:

"3.13.9 The use of a critical path analysis programme is fraught with potential for error, especially if (as in this case) the analysis would be carried out retrospectively, using the actual date for completion - any error in the analysis can feed back into the entire process and invalidate the results. The correct approach for extension of time analysis should be:-

3.13.9.1 Examine the programme against which the works were being constructed, and consider whether it is reasonable and complete.

3.13.9.2 Examine the factual evidence to determine where time in the project was critically lost, and identify the cause or causes of that loss of time.

3.13.9.3 In looking at whether time was 'critically' lost, it is necessary to look for events in the construction process which logic, experience and common sense suggest will be critical to completion of the work (ie. that delay to any of these critical points would mean delay to completion of the works as a whole unless exceptional measures were taken to recover lost time)."

[33] Counsel submitted that the first respondent was clearly there suggesting a broad brush approach rather than a critical path analysis approach. At pages 9 and 10 of that document the first respondent set out the material he was relying on in support of his claim and this was largely minutes of site meetings. Counsel submitted that the first respondent was arguing that on this material there was sufficient information to calculate the extension of time claim.

[34] In 7/28 of process the first respondent's agents in the context of Lord Drummond Young's views on analysing delay and the issue of sufficiency of the information produced by the first respondent said this:

"It is submitted that you have been given plenty of information to give you an evidential basis for the apportionment of the various matters here. You have also been referred to the progress of the works as outlined in the Minutes of Site Meetings, where the progress of each of the delays, and their causes, can quite easily be tracked as flowing directly from failures of specification or information from either the Respondent Party and/or the Architect/Contract Administrator."

[35] The petitioners' replied to this in 6/10 of process at paragraph 3.13. It was counsel's position that the petitioners in summary in this section of the rejoinder maintained their position that the first respondent had not put enough information before the adjudicator to enable him to carry out his task.

[36] Thereafter the adjudicator in communications number 14 and 15 contained within 7/31 of process set out his position on the issue of sufficiency as follows:

First in communication number 14 he stated:

"I confirm that I will be considering the parties' submissions and supporting documents to decide whether I (a) have any question for the parties or (b) require any further submissions or (c) require a second adjudication meeting. I will make my decision no later than Friday morning, 9 April 2010."

Then in communication number 15 he stated:

"I confirm that I understand the parties' submissions with regard to extensions of time and direct loss and/or expense and that I have sufficient information to estimate such extension of time of the date of completion as may be reasonable. I note that the contract programme, revised contract programmes and as built programmes start with 18 bars and in the revised and as built bars were increased to 27 bars for the single house building contract. I consider that it is clear from the contract programme what the critical path was intended to be and also from the revised programmes and as built programme what the critical path became. Therefore, I do not require to construct my own delay analysis. I will be using these programmes along with the photographs, the minutes of meetings, the contract correspondence, and the submissions and evidence of the parties to consider each relevant delaying event and each contractor culpable delaying event at the time each of them occurred, to estimate the end of the period of time within which the contractor should have completed the works. If I find that during the period of a relevant event delay there is a truly concurrent period of contractors' culpable delay then I consider that the parties have provided me with sufficient information to determine the relative dominance of either delay and to estimate such extension of the date of completion as may be reasonable."

[37] Having analysed the documentation and set forth what she submitted was the relevant background counsel then turned to look at the decision of the adjudicator 6/1 of process to examine that in light of the said background and the evidence which had been led.

[38] Counsel turned first to paragraph 2.22 of the adjudicator's decision where he set out the part of communication number 15 which I have earlier set out in full. Her first criticism of the adjudicator was that from communication number 15 it was not clear what approach to the issue of extension of time the adjudicator was going to take. In that communication the adjudicator refers to the critical path. When asked in evidence what he meant by that sentence he stated: "You can tell from the programme when each item starts and finishes."

[39] When asked how he identified the critical path he responded by referring to the agreement of the parties that the first critical item was the date of delivery of the stonework. Counsel submitted that parties could not know that he was going to look at the criticality of this single item and stop there.

[40] Secondly, when asked where the critical path went from event 1 on the contract programme his response was that the substructure must be built sufficiently for bar two to be commenced (events 1 and 2 overlapped). He said that nothing before him told him how long site clearance was to take, however, he knew how long it took to clear a site. Counsel submitted that it was clear he had applied his knowledge and experience to these matters ie. how long it would take to clear the site and what was sufficient substructure to allow event 2 to commence, however, he had not come back and asked for parties' views on this.

[41] Thirdly, the adjudicator was asked how he had come to the view at 4.1b) of his determination that stonework should have commenced at the beginning of week 3, namely: 12 November 2007. The adjudicator accepted that there was no specific information before him that this work should have started on 12 November and that he had had to make an informed guess when he gave that start date. He again had relied on his own experience and had not asked parties for their comments on this critical issue.

[42] Fourthly the adjudicator had been asked in evidence about his conclusion at 4.1c)iii):

"Since the referring party only requires a further extension of time of two weeks and two days and since the respondents' architect has agreed to further extensions of time for some of these relevant events, I confirm that I do not require to view them in detail."

[43] It was counsel's position that this approach to other relevant events was not one he was invited to take on the basis of any of the submissions that were before him.

[44] Thus it was counsel's position that in the course of reaching his conclusions the adjudicator had applied his own knowledge and experience to reach material conclusions in the course of his determination. In particular he had applied his own knowledge and experience in relation to the stonework issue and other issues as above referred to. He did not obtain parties' submissions in relation to these issues.

[45] It was her position that the conclusions reached on the basis of his own knowledge and experience could not be described as peripheral but rather were essential to the extension of time award which he made.

[46] It was her submission that in the context of the sum sought in this adjudication his decisions without reference to the parties were clearly of material importance.

[47] It was her position that by not putting his initial conclusions to parties for their comment before issuing his decision he had breached the rules of natural justice and given that these matters were material to his final decision his decision ought to be reduced.

[48] Moreover it was her position that his entire approach to the assessment of the delay claim was not one which parties knew he was going to take - therefore they were unable to comment on the suitability of this approach. In failing to obtain their comments on this, there had also been a breach of natural justice.

Submissions on behalf of the first respondent
[49] Counsel submitted that he did not dispute the principles derived by counsel for the petitioners from the Balfour Beatty case. However, he stressed that the context in which the said principles had been expressed required to be borne in mind. The Balfour Beatty case he described as being a considerably more extreme case than that which was before this Court. The circumstances in the Balfour Beatty case were that the adjudicator had adopted an approach that no party had asked him to adopt. He submitted that the circumstances in Balfour Beatty were wholly different from those in the present petition. He described the circumstances in the Balfour Beatty case as wholly exceptional.

[50] He submitted generally that the situation in the present petition was that the petitioners were seeking to challenge the type of decision which adjudicators made routinely. He submitted that if decisions of adjudicators were to be reviewed successfully on the grounds advanced in the instant case then adjudications would simply ground to a halt and would no longer be used. Adjudications would become so lengthy as to render them unworkable.

[51] Counsel submitted that the Balfour Beatty case had been recognised by the Courts as very much an exceptional case. He referred first to Carillion Construction Limited v Devonport Royal Dockyard Limited 2005 EWCA Civ 1358 and in particular paragraph 53 of the judgment of Lord Justice Chadwick where he says as follows:

"3. It is often not practicable for an adjudicator to put to the parties his provisional conclusions for comment. Very often those provisional conclusions will represent some intermediate position, for which neither party was contending. It will only be in an exceptional case such as Balfour Beatty v London Borough of Lambeth that an adjudicator's failure to put his provisional conclusions to the parties will constitute such a serious breach of the rules of natural justice that the Court will decline to enforce his decision."

[52] It was his submission that the adjudicator here had dealt with the issue remitted to him and set forth what his conclusions were on that issue. Thus his reasons were sufficient. The petitioners were not entitled to more than that from the adjudicator.

[53] Said submission was made under reference to further observations by Lord Justice Chadwick in the Carillion case at sub-paragraph 5 of paragraph 53 where he says as follows:

"If an adjudicator is requested to give reasons pursuant to paragraph 22 of the scheme, in my view a brief statement of those reasons will suffice. The reasons should be sufficient to show that the adjudicator has dealt with the issues remitted to him and what his conclusions are on those issues. It will only be in extreme circumstances ... that the Court will decline to enforce an otherwise valid adjudicator's decision because of the inadequacy of the reasons given. The complainant would need to show that the reasons were absent or unintelligible and that, as a result, he had suffered substantial prejudice."

[54] Counsel additionally referred to paragraphs 85 and 86 of the said decision:

"85. The objective which underlies the Act and the statutory scheme requires the Court to respect and enforce the adjudicator's decision unless it is plain that the question which he has decided was not the question referred to or the manner in which he has gone about his task is obviously unfair. It should be only in rare circumstances that the Court will interfere with the decision of an adjudicator. ...

86. It is only too easy in a complex case for a party who is dissatisfied with the decision of an adjudicator to comb through the adjudicator's reasons and identify points upon which to present a challenge under the labels 'excess of jurisdiction' or 'breach of natural justice'. It must be kept in mind that the majority of adjudicators are not chosen for their expertise as lawyers. Their skills are as likely ... to lie in other disciplines. The task of the adjudicator is not to act as arbitrator or judge. The time constraints within which he is expected to operate are proof of that. The task of the adjudicator is to find an interim solution which meets the needs of the case. Parliament may be taken to have recognised that, in the absence of an interim solution, the contractor ... will be driven into insolvency through a wrongful withholding of payments properly due. The statutory scheme provides a means of meeting the legitimate cash flow requirements of contractors .... The need to have the 'right' answer has been subordinated to the need to have an answer."

[55] Counsel submitted on the basis of these observations that it was clear where an adjudicator's decision was challenged on the basis of a breach of natural justice it must be shown that the adjudicator had approached the decision in an obviously unfair manner. It was only in the plainest of cases and in the most rare circumstances that the Court should interfere with the decision of an adjudicator on the basis of a breach of natural justice. He submitted that no such basis of challenge had been put before the Court in the instant case.

[56] Counsel sought to reinforce that point by reference to two further cases:

[57] First, Cantillon Limited v Urvasco Limited 2008 EWHC 282. Under reference to paragraph 68 of that decision it was counsel's submission that only where it could be argued that the adjudicator had gone off on a forensic frolic of his own without the defending party having an opportunity to address the frolic that it could be said that the adjudicator had breached the rules of natural justice.

[58] Secondly: Costain Limited v Strathclyde Builders Limited 2004 SLT 102. In that case the issue was this: The adjudicator had taken advice before reaching his decision and had not given parties the opportunity to comment on that advice. Counsel referred to the Opinion of Lord Drummond Young at page 110 paragraph (20).6 where he says as follows:

"If the adjudicator merely applies his own knowledge and experience in assessing the contentions, factual and legal, made by the parties, I do not think that there is any requirement to obtain further comments. If, however, the adjudicator uses his own knowledge and experience in such a way as to advance and apply propositions of fact or law that have not been canvassed by the parties, it will normally be appropriate to make those propositions known to the parties and call for their comments."

[59] Counsel submitted that applying what Lord Drummond Young had said to the instant case it was clear that the matters which had been taken into account by the adjudicator were not matters upon which he had to return to parties for their comments.

[60] Turning from the law to the facts of the case counsel commenced his submissions by turning to the referral notice 6/7 of process. He submitted that it was clear from sections of this document and in particular paragraphs 3.11 and 3.13 which referred to Annex 6 to the referral notice which was produced at 6/14 of process that the first respondent intended to rely on minutes of site meetings. In particular within the documentation there were references to stonework and in particular to site meetings where the criticality of the delivery of stonework to the site is referred to. Thus this issue of the criticality of the delivery of stonework to the site was clearly a point that was being made at the outset of the referral.

[61] 6/8 of process was the substantive response on behalf of the petitioners to the referral notice. In terms of paragraph 3.13 of that document the substantive position of the petitioners in reply to the referral notice was that the first respondent was in culpable delay. They also make the point about the insufficiency of evidence supporting the first respondents' extension of time claim.

[62] In 7/31 of process in communication 10 the adjudicator at Point 4 requires greater specification in relation to the site meetings upon which reliance has been placed by the first respondent. At 6/9 of process, page 9, the required specification is then given.

[63] In the rejoinder to 6/9, 6/10 of process at pages 4 to 6 a substantive response is produced on behalf of the petitioners and in particular the issue of the criticality of the delivery date for stonework to the site is dealt with.

[64] Against that background counsel submitted that there were four broad criticisms of the adjudicator's position made on behalf of the petitioners.

[65] The first criticism as regards his decision was to this effect: The petitioners could not know that the adjudicator was in his decision going to hold that stonework and its delivery to site was a critical event. Counsel's reply to that point was this: There was no basis for that criticism. The first respondent had made it clear that it was relying on the minutes of the site meetings which referred in detail to this issue. In addition everyone knew that the stonework was critical. In those circumstances how could it be said that the adjudicator was breaching natural justice by holding that the delivery of the stonework was critical.

[66] The second point which was developed by counsel for the petitioners was based on the passage of evidence where the adjudicator was taken to the programme overlap between activities 1 and 2 and asked how he had determined the amount of substructure which it was necessary to build before walling could be begun. The adjudicator's answer was that there had to be sufficient substructure. This answer was criticised. There was nothing in this criticism. It was submitted that it was unfair to single out this passage where the adjudicator was looking at the programme on its own. It was clear that the adjudicator was also relying on the site meeting minutes and in particular that he had relied on the fact that there was no question of any delay in relation to the building of the substructure in the minutes looked at by him. He submitted that the petitioners might think that this was a wrong conclusion on the part of the adjudicator but they had had an opportunity to respond.

[67] The third area of criticism related to the interface between the breezeblock and the stonework which were both shown within the undivided superstructure activity in the contract programme. The adjudicator had made an assessment as to where within that event stonework should have begun. The criticism was that he had failed to revert to parties before reaching a final conclusion in relation to that matter. It was his position that there was nothing in this criticism. It was clear from the minutes of the site meetings that both parties understood there was a question about when within the superstructure activity stonewalling should have commenced. It was his position that if the petitioners had wished to advance some particular argument in relation to the date at which stonewalling should have begun then they had the opportunity to advance this.

[68] Counsel pointed out that the petitioners had taken the opportunity in their response document to take a position on this issue and had stated that approximately three weeks would be required to carry out the stonewalling.

[69] It was counsel's position that the point which the adjudicator was being asked to decide upon was the sort of point which was normally put to an adjudicator by parties and upon which adjudicators had to make assessments. It was an issue that everyone was alive to and upon which parties had sought to make submissions and adduce evidence. That having been done the adjudicator thereafter made a decision and there was no basis for saying he required to revert to parties with some provisional conclusion.

[70] The fourth feature which had been the subject of criticism related to the further relevant events. The criticism that was being made was that having indicated in his evidence and in his decision that looking at the architect's previous assessment and in considering the matter briefly he had adopted an approach to the matter which he had not been invited to take. Counsel submitted that the adjudicator was entitled, having regard to the factors which were set out in this section of his decision to consider the matter briefly and entitled to take into account the architect's position. He submitted that there was no substantial criticism being made of the adjudicator here. It may be that he had made an error of fact and law in relation to this matter however there was no basis for it being argued that this was in some sense a breach of natural justice.

[71] It was counsel's position in summary that he accepted that the adjudicator had used his own knowledge and experience in relation to certain material matters. However, he had done so on the basis of what material had been put before him. What he had not done was use his own knowledge and experience on the basis of what was not put before him. It would only have been in the latter circumstance that he would have breached natural justice. It was his position that the decision was perfectly valid.

Discussion
[72] From the cases to which I was referred by parties the following principles could be identified:

First, as a starting point when considering whether the adjudicator has breached natural justice the broad objective of the 1996 Act must be borne in mind: namely, that the adjudicator is to provide a quick answer and that in order to do so a need to have the right answer has been subordinated to that.

Second, unless the manner in which the adjudicator has gone about his task is obviously unfair then his decision should not be interfered with by the Court.

Third, that the task of an adjudicator is not to act as an arbitrator or a judge.

Fourth, that an adjudicator may use his own knowledge and experience in deciding disputed matters before him.

Fifth, that if the adjudicator uses such knowledge and experience to decide a contention placed before him by the parties he does not require to obtain their further comments thereon.

Sixth, the mere fact that the adjudicator arrives at an intermediate position for which neither party was contending does not of itself mean that said conclusion must be referred to parties for their comments.

Seventh, however, if he uses his own knowledge and experience to decide matters not advanced by parties then if these matters are of materiality in reaching his decision it would be his duty in order to comply with the rules of natural justice to revert to parties for their comments.

[73] Turning to the first criticism of the adjudicators decision advanced by counsel for the petitioners it is my judgement that in adopting the approach to assessment of delay which he used in arriving at his decision, he did not act unfairly and breach the rules of mutual justice. In 6/9 of process at paragraphs 3.13.9.1 to 3.13.9.3 an approach to the analysis of the extension of time claim is proposed by the first respondent. The petitioners were given an opportunity to make submissions in relation to this suggested approach. In 6/10 of process the petitioners' reply to the submission made on behalf of the first respondent within those paragraphs. In the adjudicator's communication number 15 at 7/31 of process it is clear that the approach the adjudicator intends to take is broadly that put forward by the first respondent in said section of 6/9 of process. He states in that communication first that he will look at the construction programmes as suggested he should in 3.13.9.1. He then goes on to say that he will look at photographs, the minutes of meetings, contract correspondence, submissions and evidence of parties in order to consider the relevant delaying events. Thus he is having regard to the factual evidence in considering where time was critically lost as suggested at paragraph 3.13.9.2. He then goes on to say that he will look at relevant delay events and is thus seeking to identify time critical events as suggested at 3.13.9.3.

[74] The approach as set out in the foregoing communication is the approach which he takes in his decision 6/1 of process. Thus the approach which he adopted in assessing the delay was an approach which was properly before him. The issue of the approach to assessment which should be adopted by the adjudicator and the sufficiency of information before him to enable him to carry out an assessment was one upon which both parties made detailed comments. Both parties were able to put forward detailed comments upon the particular form of approach to assessment which he adopted. The parties from the documentation should have been well aware of the approach to assessment he intended to take and which he in fact did adopt in his decision. In adopting this approach it cannot be said that he was embarking on a frolic of his own. I am unable to identify any breach of natural justice in light of the form of approach adopted by the adjudicator. The position of the adjudicator in the instant case is entirely different from that adopted by the adjudicator in the Balfour Beatty case. In that case no critical path was submitted by Balfour Beatty. However the adjudicator identified his own analysis of the critical path. Thus the adjudicator had taken an approach which the presenting party, Balfour Beatty was not relying upon and one which Lambeth Council had never been given an opportunity to comment upon. Thus he was clearly on a forensic frolic of his own. That cannot be suggested in the instant case. The approach taken by the adjudicator was one which was presented to him by the first respondent and upon which the petitioners were able to comment. It cannot be said as is stated at paragraph 10 of the petition that the adjudicator has undertaken a delay analysis without affording the parties an opportunity to address him on the proposed analysis so that any factual or other errors might be identified. In my view there is simply no basis for that argument. Nor has he undertaken a delay analysis without advising parties as to his proposed analysis of the critical path. As he made clear in his evidence he did not undertake in reaching his decision a critical path analysis. Rather he followed the approach set out in communication 15 which was clearly an entirely different approach to assessing the delay claim. In my judgment in the form of analysis he has adopted he has acted fairly and in accordance with the principles of natural justice.

[75] Turning to counsel for the petitioners' second ground of criticism it was clear from the decision of the adjudicator that he had considered the delay of the stonework's delivery to the site as a critical event. The petitioners' criticism of this finding appeared to come to this: The parties could not have known that the adjudicator was going to consider that this was a critical event. I am clear that this submission is without merit.

[76] In the referral document at paragraph 3.11 the first respondent in support of his claim for an extension of time relies on minutes of site meetings. The first respondent is then asked by the adjudicator to detail the parts of the minutes upon which he is placing reliance. In 6/9 the first respondent states that he is relying on delays arising from the failure of the petitioners to supply to them the stonework. He does this under reference to certain detailed sections of the site minutes. In 6/14, Appendix 6 at pages 4 and 5 the site meetings which are relied upon are further detailed. I observe that from the minute of the first site meeting supply of stone is said to be critical (see paragraph 4.04).

[77] The adjudicator in his evidence stated that from these minutes he was able to identify the failure to supply the stonework by the petitioners as being a critical event in that it would lead to delays in other events. The petitioners were aware (a) that the minutes were being relied upon by the first respondent in support of his claim; (b) of the detailed sections of the minutes which referred to stonework which were being relied upon by the first respondent in support of his claim; and (c) of the approach set forth on behalf of the respondent in 6/9 of process regarding the assessment of the delay claim which inevitably would require the adjudicator to consider whether the delay in delivery of stonework was a critical event. In their rejoinder 6/10 of process the petitioners had an opportunity to comment on the matters raised in 6/9 and were able in so far as they wished to make submissions on these and in particular were able to comment on the issue of the criticality of the date for delivery of the stonework. These submissions were before the adjudicator. Their own expert witness accepted that the issue of the criticality of the delivery of stonework to the site was a matter which was clearly before the adjudicator.

[78] Against that background in my judgment the issue of the criticality of the delivery date of the stonework was clearly a matter which was before the adjudicator and a matter upon which parties had been able to lead evidence and make submissions. It cannot be said that the adjudicator in considering the criticality of this particular factor was embarking on a frolic of his own. It cannot be said that in order to comply with the principles of natural justice this was a matter which he had to refer back to the parties with his preliminary conclusions. In considering the criticality of this matter he was dealing with points which had been clearly placed before him. Counsel for the petitioners appeared to suggest that if the adjudicator held that this was critical it was not clear to parties that he would stop there. As I have said the adjudicator made his approach to assessment clear in communication 15. He considered the delay in the delivery of the stonework to be the dominant critical event. In my view in so holding against the background of what was before him, he was not required to return to parties and ask for their comments on this. Parties had already made submissions on this issue.

[79] As regards the criticism of the adjudicator's evidence that sufficient of the substructure required to be built before walling could be erected I accept that in deciding at what point in time sufficient of the substructure would have been built to allow event 2 to commence the adjudicator had required to use his knowledge and experience. However, what he was applying his knowledge and experience to was the submitted contract programme, the minutes and the various other documents and submissions which had been made to him. He was not in any sense going off on a frolic of his own and applying in some way his knowledge and experience to matters which were not before him. I do not believe that in acting as he did in relation to this issue, he acted unfairly.

[80] The next point raised by counsel for the petitioners was in relation to the adjudicator making an assessment of when breezeblock work would have been completed to such an extent that the stonework could commence. The criticism again was that he had applied his own knowledge and experience to this matter without reverting to parties.

[81] The issue of the delay in the date of the delivery of the stonework was one which was referred to throughout the minutes, this issue of necessity raised the issue of when in the programme stonework could be commenced. Given that event 2 in the programme was not divided, an assessment of where within that event it should have started must therefore have had to be made by the adjudicator. This was a matter which must have been obvious to parties. It was a matter on which if they so wished they could make a submission. In 6/8 of process the petitioners' response to the referral notice at paragraph 3.13 reference is made to the architect's analysis of the extension of time which is included at "RESP 4". This document is 6/18 of process. At paragraph 2.1 it is stated:

"On this project the major stonework requirement was towards the front of the house and therefore would be commenced approximately three weeks into the superstructure start date."

[82] Accordingly a specific submission was made in relation to this issue on behalf of the petitioners.

[83] In my view no unfairness has arisen in the way that the adjudicator has dealt with this issue. The matter was one which should have been clear to parties was an issue the adjudicator would require to deal with. It was clearly an issue put before the adjudicator by parties upon which each made submissions. It cannot be said that this was a matter upon which the adjudicator on reaching a view had to return to parties for their comments. They had already put forward their positions and impliedly asked him to make his assessment in light of these and using his knowledge and experience.

[84] The last criticism was in relation to how he had approached further submitted relevant events at 4.1.C. The criticism was that in his decision he had followed a course which he was not entitled to take in that it was not an approach he was invited by either party to take.

[85] The specific approach which the adjudicator has taken was not one which was specifically before him. However his decision to take this particular approach has to be seen in the light of the fact that he had on the basis of the stonework delay granted an extension of 20 weeks i.e. to practical completion. This was the period sought by the first respondent. Secondly, the further extension of time sought was two weeks and two days and the petitioners' architect had granted further extensions of time for certain of these relevant events. In his decision the adjudicator first considered parties submissions on the relevant events: see (i), (ii) and (iii). He decided that these were relevant delaying factors. He then holds against the above background that he did not require to consider the extensions of time in detail arising from these further relevant events and could place reliance on the architect's views. He thus appears to have considered parties submissions and had regard to the petitioners' own architect's views. Although the precise approach he takes was not one he was asked to take, it is one based on evidence submitted by the parties and one which he was entitled to take in the whole circumstances. It cannot be said to be a frolic of his own. Even if he has erred in his approach he cannot be said to have acted unfairly. This approach in the context of the above background in any event, cannot be said to be on a material issue and can properly be described as peripheral.

Decision
[86] For the foregoing reasons I dismiss the petition.