Balfour Beatty Engineering Services (HY) Ltd v Shepherd Construction Ltd

An adjudicator’s jurisdiction is defined by the disputed claim referred, not by every argument or item of evidence advanced. A broad claim may encompass matters raised in the defence and reply, provided the adjudicator does not re-decide a dispute already resolved by an earlier adjudication. A later decision is unenforceable only to the extent that it materially overrides the earlier binding decision.

Challenges based on natural justice require a material procedural breach concerning a decisive or potentially important issue. Adjudication decisions need intelligible reasons showing what was decided and why, but courts should allow for the expedited and non-final nature of adjudication. Errors of fact, law, emphasis or grammar do not ordinarily prevent enforcement.

The claimant, formerly Haden Young Ltd, was a mechanical and electrical subcontractor employed by the defendant on a hospital project. The claimant sought enforcement of an adjudicator’s decision awarding approximately £1.44 million, including an extension of time to the actual completion date and repayment of liquidated damages and prolongation costs.

A first adjudicator had rejected a prospective extension-of-time claim based on delayed access to Block Z. In the second adjudication, the claimant relied principally on retrospective delay analysis concerning air balancing, cause-and-effect testing and pharmacy works, while also relying on earlier access and watertightness delays as background and causative matters. The defendant challenged the second decision for excess of jurisdiction, inconsistency with the first adjudication, breach of natural justice, bias and inadequate reasoning.

1. Enforcement. Judgment was given for the claimant. The adjudicator’s decision was enforceable. Interest of £3,126.89 was awarded under section 35A of the Supreme Court Act 1981. Costs were summarily assessed at £45,000, payable within 14 days. Permission to appeal was refused.
2. Jurisdiction. The dispute referred was the claimant’s challenged claim for an extension of time based on the air-balancing, cause-and-effect testing and pharmacy delays. The earlier access and watertightness delays were expressly relied on as explaining and contributing to those later delays. The scope of the dispute was also widened, or at least clarified, by the defendant’s case that the delays were caused by the claimant’s own defaults. The adjudicator therefore had jurisdiction to find that the earlier delays caused the relevant delay.
3. The second adjudicator did not impermissibly re-decide the first adjudication. The first decision concerned a prospective claim based on delayed access to Block Z as assessed in October 2007. The second decision dealt with retrospective delay and could consider Block Z access as one factor in the actual delay, provided it did not override the earlier decision.
4. Natural justice. The adjudicator was entitled to draw conclusions from the evidence and was not bound by ordinary court rules of evidence. He had given advance notice of the possibility of an adverse inference from non-production of documents. In any event, his decision did not depend on such an inference: the defendant’s cross-claim failed because the claimant had obtained a full extension of time and because the defendant had not proved its case.
5. Bias. Criticism of the defendant’s expert and the inference that his reports had not addressed earlier access delays did not establish actual or apparent bias. The adjudicator was entitled to reject the expert’s account and draw an inference from the scope of his reports.
6. Reasons. The decision was poorly expressed, repetitive and grammatically defective, but its reasoning was intelligible. It identified the late or denied access as the operative cause of delay, explained why reprogramming did not defeat the extension-of-time claim, and concluded that the claimant was entitled to an extension to 10 June 2008. The court need not agree with the reasoning, and an adjudicator need not address every argument, provided the essential route to the decision is apparent.