In April 2010, Dover Harbour Board employed HKM to remove the remains of a ship from the Dover Harbour. Disputes arose about the final account and causes of delay and HKM sought to enforce an Adjudicator’s award made in its favour. Dover Harbour argued that the Adjudicator exceeded his jurisdiction or acted materially unfairly as he never suggested to the parties prior to the issue of his decision that a composite rate should be applied to the overall delay.

The Adjudicator’s decision was not enforced. The Judge’s first step was to analyse the dispute that was referred to adjudication, primarily by looking at the Notice of Adjudication. After reviewing the correspondence between the parties prior to the Notice, the Judge thought it was clear that the dispute did not encompass any assertion by either side that the appropriate method of assessment was simply a determination of the overall delay multiplied by a composite rate comprising or relating to the three resource rates. The Judge thought it was not an over-analytical approach to establish that the scope of the dispute was defined by reference to the specific letters relied upon by both parties as defining the dispute. The dispute was not a very general amorphous final account dispute but a specific final account claim calculated on the certain basis in relation to delay related matters, to which there was no dispute broadly about the method of assessment, namely on a resource by resource basis, calculated at the contract rate.

The case involved a basic breach of the rules of natural justice. There was a clearly and relatively simply defined dispute in the context of the delay issues which was based purely on the application of the contract resource rates to the delay caused by each individual resource by the delay events. Whilst the Adjudicator was not alerted to there being any jurisdictional issues raised by either parties what should and indeed must have been clear was that 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 Defence replied upon. Neither party had either suggested or even hinted that the need or desirability of the application of a composite overall rate to the total delay.

The way in which the Adjudicator decided of his own initiative to assess the quantum relating to delay and to pain/gain mechanism did arithmetically make a variable difference. Although it could be said that the Adjudicator had arguable gone wrong in fact and law and assessing the financial entitlement as he did that was not the subject of legitimate criticism. Instead the Adjudicator could be criticised for deciding something not only on a basis which was not argued in the adjudication proceedings but also without giving either party the opportunity to address the point. Therefore, in essence, the Adjudicator had gone off “on a frolic of his own” in using a method of assessment which neither party argued and which he did not put to the parties. The breach of natural justice was material and had or has apparently led to a very substantial financial difference in favour of HKM unnecessarily against the interests of Dover Harbour. Therefore the Adjudicator’s decision could not be enforced for both excess of jurisdiction and breach of the rules of natural justice.