As I said previously, when I read Edwards-Stuart J’s judgment in Hyder v Carillion, two things struck me:
- The court confirming that it is the decision of the adjudicator that is binding, not his reasoning.
- The question an adjudicator should ask himself as to whether he should share or put his approach or interpretation to the parties?
This post considers the second point.
What happened in Hyder v Carillion?
The responding party, Carillion, argued that the adjudicator adopted a methodology that the parties were not asked to comment on, and they should have been. If they had, Carillion could have pointed out the error in his calculation (it wasn’t a true comparison), and that would have meant a lower Target Cost and a reduced sum of money due to the referring party, Hyder. It may even have meant money passing the other way under the parties’ pain/gain share arrangement.
Naturally Hyder did not agree. It did not think the adjudicator had used anything other than the material provided to him by the parties. He did not use his own knowledge and experience. Because he rejected both parties’ primary position, it was inevitable that he would carry out his own calculations. There was no reason to assume, as Carillion did, that the adjudicator would adopt one party’s methodology – he was entitled to make his own assessment.
What did the adjudicator do?
The court considered that part of what the adjudicator did was simply setting out his reasoning. As it did not form part of his decision, it did not bind the parties. So, even though the value of the Target Cost does not bind the parties in a future adjudication, his calculations on the costs incurred by Hyder and the agreed uplifts do. It all comes down to his interpretation of a particular clause in the contract (clause 9.5).
Not using own knowledge
The court said this wasn’t a case of the adjudicator using his own knowledge, or using material the parties had not put before him. It was simply a case of using a different methodology to the ones advanced by the parties.
The court looked at the decision in Balfour Beatty v Lambeth, and I can see why it wasn’t followed. That case has often been described as an exceptional one because the adjudicator came up with his own critical path analysis. Here the adjudicator just used the parties’ figures in a slightly different way.
Not off on a frolic either
The idea that the adjudicator went on a frolic of his own was also rejected. He wasn’t doing something that required him to give notice to the parties and obtain their submissions on it.
Adjudicator could reject parties’ submissions
The court said the adjudicator could adopt his own approach if he decided to reject the submissions of both parties. He was not obliged to choose one over the other (Carillion v Devonport).
Walking a tightrope
This all appears to mean that provided the adjudicator bases his decision on the parties’ submissions and evidence, even if his approach is wrong, there will not be a breach of the rules of natural justice.
However, it is a difficult line to tread between an adjudicator using his own expertise to assess the parties’ submissions and the evidence, and the adjudicator simply using his own expertise or evidence. In this instance, it sounds like the adjudicator got it right, but that isn’t always the case.
