NW Communiqué v2.10: THE DISCRETION OF THE CERTIFIER

THE DISCRETION OF THE CERTIFIER: A DRAFTING TOOL BEST LEFT IN THE TOOLSHED?
By: Anders Axelson

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One of the multiple duties of a contract administrator² under conventional construction contracts is to act as a “certifier”: that is, to make validating decisions, from an independent perspective, about various aspects of the contractor’s performance in order to determine the payment and other entitlements due to it under the contract.³ A fundamental question arises in this context: how much “decision-making freedom” or “discretion” should contracts ascribe to contract administrators? This paper will attempt to identify and consider some of the issues surrounding this concept.

The Concept of Discretion
What is discretion? In a legal context, it has been defined as “the power to choose between two or more courses of action, each of which is thought of as permissible.”⁴ Professor Ronald Dworkin identified three different senses in which the term is commonly used in relation to any decision-making process: two he labelled “weak” and one he labelled “strong.”⁵ The first weak sense refers to instances where the decision-maker has to exercise “judgement.”⁶ The second weak sense is when the decision-making freedom arises from finality; that is, the absence of the possibility of subsequent revision by a superior decision-maker.⁷ According to Dworkin, when a decision-maker exercises “weak discretion” in either sense, although the outcome can be regarded as less predictable than if it were to be reached “mechanically,” it can nevertheless be considered that he is bound by external “standards” or criteria which purport to lead him to a definite decision, independently of his internal idiosyncrasies.⁸ “Strong discretion,”⁹ on the other hand, refers to circumstances where a decision-maker is not fully bound by external standards and thus has complete freedom (albeit perhaps, within defined parameters) to reach any one of a number of choices, arbitrarily or from personal idiosyncrasy.¹⁰

Much of the scholarly analysis that has been directed to this concept has occurred in relation to the discretion that judges have to decide cases.¹¹ Judges, furthermore, can be considered a potentially useful analogy to certifiers: both are, after all, required to exercise independent judgement in applying an external set of standards¹² to the facts in a case in order to reach a determination of the rights and entitlements of the parties. Like judges, furthermore, certifiers will also have to deal with situations that Dworkin termed “hard cases”¹³ for which normal or textbook rules may not provide a straightforward or mechanically ascertainable solution.¹⁴ With that analogy in mind,¹⁵ the main thrust of academic debate in this area can now be considered. In particular, two opposing schools of thought have emerged about whether and how judges should and do use discretion, especially when it comes to deciding difficult cases. These are, respectively, what might be termed the “positivist” or “open-textured” view, and what might be termed the “neo-formalist” or “closed-textured” view.

The “Open-Textured” or “Positivist” Approach to Hard Cases
The legal positivist movement subscribes to the philosophy that the law consists solely of a collection of morally neutral rules, and that the law itself should therefore be regarded as independent of any moral dimension.¹⁶ Because it consists of rules and nothing more, positivists theorise, the law is “open-textured” and contains “gaps” for which it does not necessarily lead to a single “right” solution in every case.¹⁷ It was Professor H. L. A. Hart, perhaps the best-known advocate of this viewpoint, who first distinguished between what he termed the “easy cases” and the “hard cases” that courts have to decide.¹⁸ For “easy cases,” he argued, judges mechanically apply textbook rules of law to the facts in order to reach a verdict. In the “hard cases,” conversely, that sometimes arise, the law does not lead to a single determinate solution. In these instances, Hart argued, judges have no alternative but to resort to the use of discretion (in Dworkin’s strong sense, that is) to provide a verdict.¹⁹

The “Closed-Textured” or “Neo-Formalist” Approach to Hard Cases
Echoing the traditionally formalist tenet that judges should merely apply pre-existing laws to cases and should not be considered to make new law themselves,²⁰ Dworkin rejected Hart’s thesis that judges ever needed to resort to strong discretion, and theorised as follows:²¹

Whilst accepting the uncontroversial proposition that judges exercise discretion in the two “weaker” senses that he identified, Dworkin argued that there was never any need for judges, in Anglo-American legal systems at least, to exercise “strong” discretion.²² In this manner, the law is conceived as a determinate framework in which rules are supplemented by principle and policy, and steer judges, if they are able to exercise their judgment correctly, towards a single correct solution in all cases.²³ Judicial decision-making then, simply becomes a question of getting the law right.²⁴

Categorising Decision-Making Freedom
What does this all mean for certifiers under construction contracts? To borrow somewhat from Dworkin’s theories and apply them to this context, it seems possible to identify three separate degrees of power by reference to the freedom with which the decision-maker is vested. Respectively corresponding with Dworkin’s “mechanical” decision-making, “weak” discretion and “strong” discretion, the following categories can arguably be discerned:

When a decision can be scrutinised and its effects changed or reversed by a third party, furthermore, the freedom that the decision-maker possesses can be regarded as of a weaker type than that which he possesses if there is no possibility of review. There is arguably, therefore, a relationship between the degree of discretion that a decision-maker can be said to have been given and “reviewability;”²⁸ that is, the extent to which the exercise of that discretion can be challenged, reviewed and revised by another, superior decision-maker.²⁹ If the untested proposition is adopted that a review of any of the three above-mentioned categories is possible, reviewability can be considered to represent a separate dimension of this classification; accordingly, these three potential categories can be expanded into six.³⁰ In any case, the conclusion can be drawn from Dworkin’s analysis that the theoretical underpinnings of a seeming simple concept of discretion are more contentious or ambiguous than might first be thought to be the case.

Examples from Standard Forms
Standard forms of contract,³¹ whilst often allowing the certifier some latitude, are frequently unclear as to precisely which of the abovementioned categories these decision-making powers come under. JCT98, for instance, invokes the Architect’s “opinion” and “estimation” in the certification of extension of time entitlement, as follows:³²

This kind latitude is “almost always,”³³ however, tempered by a duty to act to a standard of fairness or reasonableness, or some equivalent formulation of words. Another typical example, AS4000, for instance, states:³⁴

Even when read together, these clauses do not determine conclusively the category of decision-making freedom that the “opinion of the architect” falls under. Without judicial assistance, this question,as submitted, is left open to be interpreted in two ways which mirror the neo-formalist and positivist dichotomy. The first interpretation is that the duty to act fairly and reasonably imposes on the certifier a closed-textured set of principles that leads him to a single correct decision. The second is that it constrains incompletely the range of potential decisions, and that an element of true discretion is therefore needed to narrow down the field. As will be discussed below, the uncertainty surrounding the precise degree of freedom that the certifier actually has, as well as corresponding implications for the reviewability of that decision, serve to compound the unpredictability about how a decision-making power will be used that already exists when a contract administrator is given a degree of decision-making freedom.

The Potential for Different Interpretations of Discretion and Reviewability
A Neo-Formalist Interpretation
The relationship between reviewability and discretion is one area in particular on which judicial minds have differed, and which has caused divergences of understanding about discretion. Logically, if a neo-formalist philosophy is to be adopted and the notion that there is any place for true discretion within the ambit of a certifier’s decision-making processes rejected, the conclusion can readily be reached that, as closed-textured standards will guide the certifier to a single correct decision, decision-making will simply be a matter of getting it right and there is no place for any input unique or personal to the certifier. From this platform it can be argued that it is in the interests of justice that a party disputing a decision has the opportunity to appeal to an arbitrator or court, so that a correct decision, where applicable, can be substituted for an incorrect one.³⁵

Reflecting the desirability of third party review from such a perspective, standard forms often have widely drawn arbitration clauses that allow parties to appeal against a certifier’s decision and grant the arbitrator the power to “open up, revise and review” it.³⁶ Courts charged with construing construction contracts, moreover, have further facilitated third party review by adopting what might be described as a pro-interventionist stance, establishing that such provisions are typically to be interpreted as meaning the arbitrator can “step into the shoes” of the certifier and render the decision again afresh on its merits, and that, to the extent that the certifier exercised any discretion previously, it will then be exercisable again by the arbitrator.³⁷ As is well established, judges³⁸ and adjudicators,³⁹ furthermore, when they have appropriate jurisdiction and when it does actually fall to them to assess a certifier’s decisions, are in a similar position.⁴⁰

A particularly illuminating case in this regard is the Western Australian Supreme Court’s judgment in WMC Resources.⁴¹ In that case, Leighton, a contractor, wished to challenge the method that WMC, a mine developer, used to value the quantum of its variation entitlement, pursuant to a clause that stated that its entitlement would be as determined by WMC “in its sole discretion.”⁴² In the face of a broadly worded arbitration clause, the trial division of that court had to consider the nature of that phrase and, in particular, determine whether it implied conclusivity and finality: was WMC stuck with Leighton’s variation valuation or could it be reviewed and revised by an arbitrator or judge? Anderson J adopted the latter interpretation, despite acknowledging that the phrase did seem to convey at least “some degree of conclusivity”.⁴³ Echoing Dworkin’s classification of decision-making powers, His Honour initially sought to differentiate “true discretion” from the weaker sense of a judgemental decision-making power in which he considered the term had been used in the contract:⁴⁴

His Honour, in keeping with this neo-formalist approach, then went on to describe the valuation process as “objective” and downplayed the role of discretionary judgement in certification:⁴⁵

A Positivist Interpretation
In line with this viewpoint, His Honour found in favour of Leighton and held that WMC’s valuation decisions could be reviewed by an arbitrator. WMC then appealed and so the same matter came before the Full Court, which then adopted a completely different tack. Ipp J⁴⁶ considered that: ⁴⁷

In other words, decision-making processes that did not fit the “mechanical” criterion, His Honour considered, could be regarded as “discretionary”. As examples of discretionary decision-making processes, furthermore, His Honour cited not only the contractual variation valuations in question but also estimates of the market value of business operations based on “gut feel” and opined:⁴⁸

These sentiments can be considered consistent with the positivist viewpoint that discretion should play an integral part in certification decisions. From this perspective, as was mentioned above, it can readily be concluded that when parties have agreed to subject the determination of their legal rights to the discretionary input of a certifier, such input will be unique to that individual, and so cannot ever properly be replicated by an arbitrator or judge. And so, the Full Court reversed the first instance decision.

Irrespective of what philosophical camp the Full Court fell into in its approach to the certifier’s discretion, however, Ipp J’s understanding, with its merely twofold classification of decision-making powers, and in failing to recognise that there exists an intermediate judgemental decision-making power between proper discretion and mechanical decision-making, does seem unduly simplistic.⁴⁹ In any case, however, the contract in WMC illustrates a practical problem that contracts which purport to invoke the discretion of the certifier carry: the uncertainty that a court or tribunal will adopt one or another of conflicting and irreconcilable approaches to its interpretation.⁵⁰ The reasoning behind Ipp J’s judgment, furthermore, suggests the tendentious implication that there is no such thing as a “reviewable true discretion” - a true discretion, perhaps, by its very nature, will be inherently unreviewable.⁵¹

Discretion as a Drafting Tool to Mitigate Against “Hard Cases”
Procedural and Substantive Certainty
By controlling, in general, the level of decision-making freedom that a certifier has, and in particular, whether a certifier is vested with true discretion on the one hand or merely a judgemental decision-making power on the other, drafters of contracts have a device that, where applicable, can be manipulated to further drafting objectives. In this respect, it is submitted, when decision-making freedom is increased, that freedom will serve to lend controversial decisions a greater legitimacy than would otherwise be the case, and so, the likelihood that a decision, once made, will stand and not be overturned on appeal, will increase. On the other hand, this will also mean, however, that the likelihood that a particular decision will be reached on any particular set of facts will probably be reduced; when freedom is granted, it may not always be predictable how that freedom will be exercised. In other words, discretionary freedom seemingly enhances procedural certainty but detracts from substantive certainty. As will be discussed further below, when a certifier is required to make a decision in a context where the applicable underlying standards and laws, furthermore, are intricate, uncertain, unpredictable or incoherent, (i.e. they are already substantively uncertain) drafters, in endeavouring to promote the certainty with which parties know their rights and obligations, can focus their attention instead on delivering that certainty via the procedure by which a decision is reached. It is in this context that drafters may wish to resort to invoking discretion to maintain control over how the contract operates and guard against the possibility that an unexpected interpretation will arise from so-called “hard cases” in the underlying common law. This is particularly strikingly illustrated by the framework of precedent, principle and policy surrounding extension of time clauses and the invocation of the prevention principle, an area of law in which, it is submitted, there is unquestionably a great deal of complexity that is coupled with uncertainty over how that complexity might be resolved.

Discretion, Extensions of Time and the Prevention Principle⁵²
It is a corollary of the prevention principle that when there is no contractual clause providing for an extension of time to neutralise the effect of an “act of prevention” on the contractor’s ability to meet its completion date, then the contractor can escape that completion date obligation, time will be set “at large”⁵³ and the employer will thus lose its usual right to deduct (liquidated) damages for late completion when an act of prevention occurs.

So that this does not happen, it is thus in employers’ interests that contracts be balanced so that, on the one hand, the contractor’s obligation to complete by a specified date is preserved, but on the other hand, the extent of what is otherwise the contractor’s liability for delays to completion is not diminished unduly. As will be discussed, uncertainty and complexity in the underlying law that surrounds the prevention principle, however, has made such a balance difficult to achieve in practice, and so, to address this, some contract drafters have sought to confer upon the certifier a degree of discretion in the manner described above. Such uncertainty and complexity is encapsulated in the following two questions, which are further addressed below.

Will a Failure of the Certifier to Give a Decision in a Reasonable Time Activate the Prevention Principle?
This area of difficulty arises from the question of, with respect to a contractor’s extension of time application under given contract, whether a requirement that the certifier must provide a response “within a reasonable time” will be construed and if so, whether failure to comply will activate the prevention principle. In the 1934 case of Miller v London County Council,⁵⁴ for instance, upon the occurrence of an extension event a contract provided that the certifier was required “to assign such other time or times for completion as...may appear reasonable.” The King’s Bench Division of the English High Court held that this obliged the certifier to grant an extension of time within a “reasonable time” of the cause of delay ceasing to subsist, failing which, the prevention principle was enlivened and time set at large.⁵⁵ Such an interpretation was justified on the basis that, if the contractor is to be held to complete by a certain date, it ought to know what that date is in sufficient time for it to be able to mobilise its resources and plan the works accordingly. In Australia, the Miller approach was endorsed in 1969 by the New South Wales Supreme Court in Perini, where Macfarlan J, again referring to the desirability of a contractor knowing the completion date it had to meet promptly, stated:⁵⁶

In Western Australia, furthermore, Miller was also relied upon in the 1971 case of MacMahon Construction Pty Ltd v Crestwood Estates, where that jurisdiction’s Supreme Court reached the conclusion that:⁵⁷

In other words, if the certifier does not give the contractor an extension of time within a reasonable time, the prevention principle is activated and time is set at large.

Whilst that appears for the time being to be the general position under Australian case law, in England, the law took a different turn when Miller was distinguished on what Hudson describes as “somewhat slender grounds” in the case of Amalgamated Building Contractors Ltd v Waltham Holy Cross UDC⁵⁸ (a case which, surprisingly, was not referred to in either Perini or MacMahon). In that case, Denning LJ (as he then was) held that a certifier could validly grant an extension of time despite the fact that completion had passed, and in any event, long after the circumstance giving rise to it had passed, and in so doing would still not set time at large.⁵⁹ Lending support to this interpretation is Hudson, which has doubted the correctness of Miller and MacMahon as follows:⁶⁰

Hudson then goes on to cite policy justifications in support of its contention that the English approach is to be preferred:⁶¹

The differences between the English and Australian approaches to this issue, it is submitted, are consistent with opposing views of decision-making powers that the neo-formalist and positivist theories suggest. If one takes the closed-textured viewpoint that there is no place for discretion in the certification process, it follows that the date for completion will be independently ascertainable, without the need for any unique input by the certifier. The role of the certifier will then simply be to calculate the right date, however difficult that calculation may be. From that perspective, arguments that the contractor ought to be able to escape from its completion date obligations if a decision is not rendered promptly fade away somewhat: absent a certifier’s response, the contractor can, in theory at least, determine for itself what its date for completion is to be. This is, in essence, the approach exemplified by Amalgamated Building Contractors.⁶²

On the other hand, if one adopts the Australian and open-textured position and considers that there is a place for discretion in the certification process, the opposite conclusion is reached: the contractor cannot in theory determine for itself its completion date obligation because the unique discretionary input of the certifier is required. From this, it might be concluded, as indeed, as it was in MacMahon, that it is important for the certifier give his decision within a reasonable time so as not to leave the contractor having to resort to guesses when it comes to deciding about how rapidly it needs to marshal its resources.⁶³ Australian standard form contracts, unlike their English counterparts,⁴ are accordingly vulnerable, by virtue of the MacMahon interpretation, to time being set at large if a significant amount of time is allowed to elapse between the submission of an extension of time claim and the certifier’s subsequent response. How this problem has been addressed will be demonstrated below.

Will a Time Barred But Otherwise Valid Extension of Time Claim Enliven the Prevention Principle?
Many standard forms require that the contractor provide notification to the employer of an event for which it wishes to claim an extension of time, within a stipulated period after the occurrence of the event, with the contractor prima facie losing what would otherwise be its extension of time entitlement if it does not comply.⁶⁵ The Northern Territory Supreme Court considered how this kind of notice requirement interacted with the prevention principle in the case of Gaymark.⁶⁶ In particular, that Court affirmed an arbitrator’s interpretation that an act of prevention for which the contractor became time barred from claiming an extension of time, notwithstanding its own inaction in failing to give notice within the required time limit, nevertheless enlivened the prevention principle and so, paradoxically, allowed the contractor to escape from its completion date obligation.⁶⁷ Gaymark has been, however, subjected to sustained criticism and had its correctness doubted.⁶⁸ The New South Wales Court of Appeal in Peninsula Balmain, for instance, expressed obiter its disapproval as follows:⁶⁹

Whether or not the Gaymark interpretation is to be regarded as correct, the easy escape from completion date obligations that this implies for contractors whose contracts contain notification time bars suggests that unless there is some express provision in contracts to counteract it, employers may find themselves in a vulnerable position in respect of their right to deduct liquidated damages.⁷⁰

Using Discretion to Overcome the Difficulties
Australian contract drafters have attempted to overcome the interpretative difficulties that these problems pose by expanding the discretion of the certifier. This has been achieved by the device, now common in Australian standard forms, of assigning to the certifier the power to make an ad hoc intervention and extend the contractor’s extension of time entitlement (known as the “unilateral power to extend time”). In this manner, the certifier is given the ability to override the extension of time and notification machinery in the contract. AS4000, for instance, following a traditionally styled extension of time clause, provides as follows:⁷¹

Recent case law history suggests, however, that the decision-making freedom that this clause purports to give to the certifier, whilst creating a façade of certainty, nevertheless renders itself liable to a multitude of possible interpretations. As much was illustrated in Peninsula Balmain where, the mere fact that the parties required the New South Wales Court of Appeal to decide how the clause in question should be interpreted lends support to this proposition. ⁷² In this case, the question arose as to whether or not this power was an “unfettered discretion.”⁷³ Counsel for the employer argued in essence that the clause should be construed purposively - the purpose of the clause being to preserve the employer’s right to liquidated damages. Accordingly, it was argued, a requirement ought to be implied that the power be exercised only in the employer’s favour. The Court rejected these arguments.⁷⁴ Hodgson JA, referring to the contractual duty that AS2124⁷⁵ imposed upon the contract administrator to act honestly and impartially, and stated as follows:⁷⁶

The suggestion that the certifier’s decision-making possibilities remain open in this way, it is submitted, can readily be equated with an open-textured interpretation of this power. If accepted, it can thereby be concluded that the power does give the contract administrator an element of true discretion. On the other hand, interestingly, and unlike its Western Australian counterpart in WMC Resources,⁷⁷ the New South Wales Court, whilst seeming to accept this notion, rejected the proposition that the presence of this discretion meant that decisions reached from its exercise could not be reviewed in appellate proceedings.⁷⁸ These interpretations have since been approved by the Victorian Supreme Court in the case of 620 Collins Street.⁷⁹ In any case, if the New South Wales Court of Appeal’s views are correct, although the problematic Gaymark interpretation is successfully circumvented by the unilateral power to extend,⁸⁰ it is achieved at a relatively heavy cost: that of both substantive certainty and, given the abovementioned interpretation that the certifier’s exercise of his discretion will be reviewable, procedural certainty.

Conclusion
In conclusion, by controlling the level of discretionary freedom that a certifier is given under construction contracts, drafters are able to manipulate the relative amounts of substantive and procedural certainty that are associated with a decision-making process. When a certifier is given what might be described as “true discretion,” for instance, it is logical that, vis-à-vis a mere “judgemental decision-making power,” procedural certainty (i.e. the likelihood that a decision, once made, will stand) is enhanced. On the other hand, however, substantive certainty (i.e. the likelihood that a particular decision will be reached on any particular set of facts) will correspondingly be reduced. In any case, this scope for manipulation means that in “discretion,” drafters of contracts have a tool that can seemingly be used to attempt to overcome, for instance, uncertainties and intricacies in how contract terms would otherwise be interpreted, as indeed, the attempts that standard forms have made to deal with the “hard cases” arising out of the prevention principle, show. There are, on the other hand, compelling reasons why “discretion”, as a contractual mechanism, should not be drafted liberally into contracts. Although it might be considered a simple device, the theoretical underpinnings of the concept - in relation to not only the decision-making processes that are permissible but also to the inherent reviewability of decisions - are contentious. When a high degree of discretion is granted to a certifier in construction contracts, moreover, this practice has the potential to lead to unforeseen difficulties and ambiguities in interpretation, thus undermining one of the key reasons for its use in the first place. More specifically, the different answers that different philosophical approaches suggest to issues such as the level of decision-making freedom that attaches to a particular form of contractual words and the extent to which a decision will be reviewable by third parties means that judicial interpretations may well vary dramatically from jurisdiction to jurisdiction, from court to court and possibly, as the first instance and appellate decisions in WMC Resources show, between different divisions of the same court. In other words, when discretion in invoked, the increase in substantive uncertainty or unpredictability that that might imply is further compounded by uncertainty surrounding how third parties will choose to interpret it. For this reason, the discretion of the certifier, notwithstanding both the English tradition of respectfully deferring determination of the rights and obligations of parties to the “opinion” of a professional person and more recent Australian drafting trends alike, should be seen as a device best used sparingly, if, as might ordinarily be expected to be the case,⁸¹ there is a form of contractual words that can unambiguously achieve the relevant drafting aim without reference to any personal input from the certifier.

Anders Axelson BE (Civil) LLB (Hons) MCIArb MIEAust is a Senior Consultant with the Nielsen-Wurster Asia-Pacific, a subsidiary of the international management consulting group The Nielsen-Wurster Group, Inc., and is based in Melbourne, Australia.

1. Edward L. Rubin, “Discretion and Its Discontents” (1997) 72 Chicago-Kent L. Rev. 1299 at 1300.

2. This term is used in place of “engineer,” “architect,” “project manager” or “superintendent,” as referred to by various forms of contract.

3. The certifying role of a contract administrator in relation to the time, money and quality aspects of a contractor’s performance is to be distinguished from his other role as an agent of employer where he must act in the employer’s interests. See e.g. John Uff (2002) Construction Law (8th edition) Sweet and Maxwell, London, pp. 261-275.

4. Professor H. L. A. Hart, as quoted in Rubin, op. cit., pp. 1300-1301. The Oxford Dictionary also defines discretion as the “freedom to decide on a course of action.” See Oxford Concise English Dictionary (2004) Oxford University Press, Oxford, p. 410.

5. Ronald Dworkin, quoted in Wilfrid J. Waluchow, “Strong Discretion,” (1983) 33 Philosophical Quarterly 321 at 321-323.

6. or what is sometimes metaphorically described as “value judgement.”

7. Rubin, op. cit., pp. 1301-1302.

8. Dworkin considered that standards, furthermore, embraced not only formal “rules” but also informal norms. Thus the range of options available to an individual from the exercise of “discretion” is considerably smaller than the range of options available to an individual from the exercise of free will. See e.g. Waluchow, op. cit., pp. 322-323.

9. Which might also be defined as “true discretion.”

10. Rubin, op. cit., p. 1301.

11. Discretion has also been subjected to a great deal of scholarly analysis in the context of the discretion that officers of the executive branch of the government enjoy under administrative law. As such discretion occurs in light of considerations unique to public law such as the separation of powers and royal prerogative doctrines, however, the usefulness of drawing comparisons between this form of discretion and that which exists under construction contracts is limited. See e.g. Rubin, op. cit.

12. Such as, for instance, the rules of contractual interpretation, applied in making a decision about whether the contract provides a particular entitlement or, for instance, the principles of valuation to ascertain an amount due to the contractor.

13. See below for discussion of “hard cases.”

14. For example, in relation to a re-measurement contract, where a certifier has to decide whether or not to value a variation in accordance with a schedule of rates or to, in the alternative, arrive at a “fair valuation”, in a borderline situation. See e.g. the issues discussed in Henry Boot Construction v. Alstom Combined Cycles [2000] BLR 247.

15. Indeed, Hudson mentions that “a contract administrator’s certification duties are commonly described as “quasi-judicial.” See Ian Duncan Wallace QC (ed.) (1995) Hudson on Building and Engineering Contracts (11th edn) Sweet and Maxwell, London, p. 870.

16. See e.g. George P. Fletcher (1995) Basic Concepts of Legal Thought, Oxford, pp. 21-27.

17. Ronald Dworkin, “Judicial Discretion” (1963) 60 Journal of Philosophy 624 at 625-626 referring to H. L. A. Hart (1961) The Concept of Law, Oxford, pp. 124-132.

18. Ibid.

19. Ibid.

20. That being properly the domain of elected legislatures. See e.g. Fletcher, loc. cit. The notion that judges exercise discretion is synonymous with the notion that judges make new laws themselves. Ibid., p. 32.

21. Ronald Dworkin (1977) Taking Rights Seriously, Duckworth Publishing, London, p. 75.

22. Id., quoted in Waluchow, loc. cit.

23. Waluchow, op. cit., pp. 321-322.

24. Ibid.

25. For example, in a contract, a schedule of rates provides for a contractor to be remunerated at the rate of £150 per cubic metre of concrete foundations. It has cast 100m3 of concrete. It will therefore be proper, under conventional contracts, for the certifier to certify that the contractor is entitled to an interim payment of £15,000 for this element of work.

26. For example, a specification stipulates that bricks in a building are to be laid to a “world-class” standard of workmanship. A certifier is accordingly required to decide whether the bricks that have been laid have met this standard before issuing a final certificate. This is where the decision-maker possesses what Dworkin describes as a “weak” discretion.

27. For example, a contract provides that interim certificates can be issued at any time prior to completion, on the “absolute personal discretion” of the certifier. This is what Dworkin refers to as “strong discretion.”

28. As Dworkin recognised. See note 9 supra.

29. Rubin, op. cit., p. 1301, referring to the theories of Dworkin.

30. i.e. reviewable and unreviewable mechanical decision-making power, reviewable and unreviewable judgemental decision-making power, and reviewable and unreviewable true discretion.

31. This latitude, as displayed in standard forms with lengthy heritages such as the ICE and JCT forms reflects, it has been theorised, social class structures in nineteenth century England, whereby it was expected that the party performing the physical work would be deferential to a member of the professional classes such as an engineer or architect. See e.g. Sir Patrick Garland, “Contract Policy for Time,” in John Uff and Phillip Capper (eds.) (1989) Construction Contract Policy 191 at 193-194.

32. JCT98 Standard Form of Building Contract (With Quantities Edition) clauses 25.3.1.1 and 25.3.1.2. Emphasis added. Subsequent clauses in JCT98 also go on to invoke the “opinion” and “satisfaction” of the Architect. See clauses 25.3.1, 25.3.3.1, 25.3.3.2 and 25.3.4.2.

33. To borrow the words of Hudson. See Wallace, op. cit., p. 869.

34. AS4000 – 1997, Australian Standard Conditions of Contract, clause 20. “Principal” means employer and “Superintendent” means contract administrator under this form

35. Exemplifying this viewpoint is Professor Ian Duncan Wallace QC, who refers to “personal discretion” in a way that might readily be equated to Dworkin’s “strong discretion,” and adopts what might be regarded as a profoundly Dworkinian view of the certifier’s duties, as follows: “a duty to act impartially when called upon by the contract to do so...does not mean (as some architects, whether acting as arbitrators or certifiers, seem to think,) that they are free to give way to their own ideas of what is fair in defiance of the strict letter of the contract. The contract confers no personal discretion whatever on the certifier, unless it expressly so states. ...The duty of the certifier is to apply the contract as strictly and impartially as a judge would do, it is submitted, though no doubt the application of the “de minimis” rule might allow him to pass over purely trivial defects in the same way that a judge would do.” (emphasis added). See Wallace, op. cit., p. 872.

36. Or a similar form of words. See e.g. Professor Ian Duncan Wallace QC, “‘In its Sole Discretion’: An Unpersuasive Interpretation?” (2000) 16 BCL 243 at 248.

37. See e.g. Beaufort Developments (NI) v. Gilbert-Ash (NI) Ltd [1996] AC 266 at 271; see generally also Professor Ian Duncan Wallace QC, “RIP Crouch: An Unmourned Demise” (1998) BCL 441.

38. Ibid.

39. For a judgment confirming that UK adjudications were to be treated in a like manner to arbitrations in this regard see Bouygues (UK) Limited v. Dahl-Jensen (UK) Limited [2001] All ER 1041.

40. Ibid.

41. WMC Resources Limited v. Leighton Contractors Pty Ltd (Unreported, Case No ARB15 of 1998, SC WA); WMC Resources Limited v. Leighton Contractors Pty Ltd [1999] WASCA 10.

42. Ibid. at [5].

43. WMC Resources Limited v. Leighton Contractors Pty Ltd (Unreported, Case No ARB15 of 1998, SC WA) at 19.

44. Ibid. at 16 (emphasis added).

45. WMC Resources Limited v. Leighton Contractors Pty Ltd, (Unreported, Case No ARB15 of 1998, SC WA) at 17 (emphasis added).

46. With whom Kennedy and White JJ agreed.

47. WMC Resources Limited v. Leighton Contractors Pty Ltd [1999] WASCA 10 at [32].

48. Ibid. at [33].

49. For detailed criticism of Ipp J’s reasoning, see Professor Ian Duncan Wallace QC, “‘In its Sole Discretion’: An Unpersuasive Interpretation?” (2000) 16 BCL 243 at 250.

50. But see also the arguments of Adrian Baron, “WMC Resources: A Persuasive Interpretation Based on What Courts are Asked to Do” (2001) 17 BCL 103.

51. That is, by suggesting not only that the developer possessed true discretion, but also that the exercise of such discretion could not be reviewed by the arbitrator.

52. The “prevention principle” was enunciated in Roberts v. The Bury Improvement Commissioners (1870) LR 5 CP 310 at 326 per Blackburn and Mellor JJ: “...It is a principle very well established at common law, that no person can take advantage of the non-fulfillment of a condition the performance of which has been hindered by himself...” An “act of prevention” can correspondingly be defined as an instance of the employer hindering the contractor’s ability to carry out its contractual duties. See also Keith Pickavance (2005) Delay and Disruption in Construction Contracts (3rd edition), Informa LLP, pp. 186-189.

53. Keith Pickavance, op. cit., pp. 186-189.

54. [1934] All ER 657.

55. Ibid. at 657.

56. Perini Corporation v. Commonwealth of Australia [1969] 2 NSWR 530 at 539.

57. MacMahon Construction Pty Ltd v. Crestwood Estates [1971] WAR 162 at 162. Emphasis added.

58. Amalgamated Building Contractors Ltd v. Waltham Holy Cross Urban District Council [1952] 2 All ER 452.

59. Ibid. at 452.

60. Ian Duncan Wallace QC, op. cit., p. 1188.

61. Ibid, pp. 1188-1189.

62. Amalgamated Building Contractors Ltd v. Waltham Holy Cross Urban District Council [1952] 2 All ER 452.

63. Note also that there has been, since cases such as Perini, the emergence of a consensus that, as a matter of fact, a delaying event will only affect the contractor’s completion date (and thereby give rise to an extension of time) if it is on the critical path of the contractor’s programme. This, it might be considered, has led to a greater focus on objective fact-finding and a lesser focus on subjective judgement or the exercise of discretion when it comes to making decisions about extension of time entitlement. See e.g. Keith Pickavance, op. cit., pp. 259-261.

64. For this reason, it seems, the English standard forms of contract have no need to give to the contract administrator the unilateral power to extend the time for completion and, in view of this, do not.

65. See for instance, Australian Standard Conditions of Contract AS4000-1997.

66. Gaymark Investments Pty Ltd v. Walter Construction Group Ltd (1999) NTSC 143.

67. Ibid. For criticism of this case see also Professor Ian Duncan Wallace QC, “Prevention and Liquidated Damages: A Theory Too Far?” (1999) 16 BCL 449.

68. Pickavance, op. cit., p. 145.

69. Peninsula Balmain Pty Limited v. Abigroup Contractors Pty Limited [2002] NSWCA 211 at [78].

70. See e.g. Pickavance, op. cit., p. 148.

71. AS4000, clause 34.5. Indeed, note that the removal of the unilateral power to extend in the standard form NPWC3-1981 was, in fact, how the employer managed to jeopardise its entitlement to liquidated damages in the first place in Gaymark. See (1999) NTSC 143 at [57]-[58].

72. Peninsula Balmain Pty Limited v. Abigroup Contractors Pty Limited [2002] NSWCA 211 at [69]-[82].

73. Or, to use the terminology of this paper, the question of whether it was a true discretion or merely a judgemental decision-making power.

74. Peninsula Balmain Pty Limited v. Abigroup Contractors Pty Limited [2002] NSWCA 211.

75. This form was the forerunner to AS4000, and was the basis for the main contract in that case.

76. Ibid. at [79]. Emphasis added.

77. Note also that in WMC Resources, Ipp J stated that his interpretation of the term “sole discretion” would have been the same had that phrase not included the word “sole”; accordingly WMC Resources, cannot, it would seem, be distinguished from Peninsula Balmain on this ground. See WMC Resources Limited v. Leighton Contractors Pty Ltd [1999] WASCA 10 at [54].

78. Peninsula Balmain Pty Limited v. Abigroup Contractors Pty Limited [2002] NSWCA 211 at [69]-[82].

79. 620 Collins Street Pty Ltd & Ors v Abigroup Contractors Pty Ltd [2006] VSC 491.

80. This argument is also affected, however, by other reasons that exist for maintaining the unilateral power to extend, an examination of which is beyond the scope of this paper.

81. Although the law surrounding the ability of parties to regulate or oust the extent to which courts can review the operation of ongoing agreements between them contains complexities, the general position remains that as expressed by Sir George Jessel in Printing and Numerical Registering Co v. Sampson (1875) LR 19 Eq 462: “If there is one thing more than any other which public policy requires, it is that men of full age and competent understanding shall have the utmost liberty in contracting, and that their contracts, when entered into voluntarily, shall be held as sacred and enforced by the Courts of Justice”. Accordingly, as a general proposition, parties are vested with the freedom to reach agreement on whatever terms they choose.