Herbosh-Kiere Marine Contractors Ltd V Dover Harbour Board

The adjudicator's adoption of his own methodology to assess the contractor's financial entitlement which formed no part of the dispute referred to him without giving the parties the opportunity to comment on it was in excess of his jurisdiction and in breech of the rules of natural justice
 

 

 
Herbosh-Kiere Marine Contractors Ltd V Dover Harbour Board
Technology and Construction Court
Akenhead J
26 January 2012
 
Akenhead J held that the adjudicator’s adoption (albeit unwittingly) of his own methodology to assess the contractor’s financial entitlement relating to its delay claim and to pain/gain which had not been argued for by the parties and which formed no part of the dispute referred to him without giving the parties the opportunity to comment on meant that he went off “on a frolic of his own”, acted in excess of jurisdiction and was also materially in breach of the rules of natural justice.
 
The basis expressed by the judge for his decision was that the dispute referred was clearly and relatively simply defined and was based purely on the application of the contract resource rates (with an extrapolated rate for the tug) to the delay caused to each individual resource by the delay events, such as asbestos. Whilst one could understand that the adjudicator was not alerted to there being any jurisdictional issues raised by either party, what should and indeed must have been clear was that (i) Both parties were proceeding in the referral and the response (and beforehand) on the basis of the individual contract resource rates being applied to the delay attributable to each resource as a result of the events relied upon and (ii) Neither party had either suggested or even hinted at the need or desirability for the application of a composite overall rate to the total delay. The breach was material in that the way in which the adjudicator decided of his own initiative to assess the quantum relating to delay and to pain/gain assessment arithmetically (apparently) made a very real difference in financial terms to the contractor’s advantage because (i) Overall the adjudicator appeared to have allowed in effect over £350,000 more than was being claimed once one fed into the calculation the delays actually found by him as having been caused by the various events and (ii) If the pain/gain assessment was done on the same basis as adumbrated by both parties as opposed to on a composite rate basis, a different pain figure would no doubt have resulted.
 
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