Many JCT standard form building contracts, from the Minor Works Building Contract 2011 to the Standard Building Contract 2011 appoint a Contract Administrator to fulfil a specific role under the building contract. Once you have appointed a Contract Administrator, is it as simple as filling in the blanks in Article 3 and then forgetting about it?

Professionals such as architects, quantity surveyors and project managers are nervous about undertaking this role due to the potential for conflict with their other roles or their relationship with the Employer.  Remember, the Contract Administrator is appointed by the Employer. If the Contract Administrator fails in his duties, it is the Employer who would have a claim under their appointment. 

THE CONTRACT ADMINISTRATOR’S POWERS ARE GOVERNED BY THE JCT CONTRACT

It is axiomatic but the Contract Administrator can only exercise the powers given under the JCT contract conditions.  Exceeding these powers would be fertile ground for challenge by the Contractor who could ignore any instruction not authorised by the building contract.  

THE CONTRACT ADMINISTRATOR MUST PROCEED ‘WITHOUT FAVOUR’

The court’s view is that the Contract Administrator has a duty to act fairly and impartially between the Employer and the Contractor in accordance with the contract conditions. These conditions can take some time to master especially if you are reading them for the first time.

CAN THE CONTRACT ADMINISTRATOR PROCEED ‘WITHOUT FEAR’?

A 1974 case held [1] (with reference to an architect fulfilling the role of Contract Administrator):

“The employer and the contractor make their contract on the understanding that in all matters where the architect has to apply his professional skill he will act in a fair and unbiased manner in applying the terms of the contract”.

This case involved a claim by an employer against a contract administrator (an architect) and did not deal with the Contract Administrator’s liability to a Contractor. However it is arguable that if the Contractor could show the Contract Administrator acted unfairly, the Contractor may have a claim against the Employer. The basis of such a claim may exceed the Contract Administrator’s actual duties in his terms of appointment with the Employer (to which the Contractor is not privy )

Where the Employer is insolvent, a Contractor may consider recovering its losses from the Contract Administrator directly, even though the Contract Administrator is not a party to the building contract, and so  is unlikely to succeed (absent fraud). In 1990, the Court of Appeal held [2] that an engineer did not owe a contractor a duty of care in negligence when certifying payment. The Contractor’s redress was against the Employer, not the engineer in this case.

Therefore, if the Contractor claimed against the Employer based on the Contract Administrator’s failures, the Employer could claim against the Contract Administrator to recover his losses. However the Employer’s claim would be governed by his  appointment with the Contract Administrator. Whilst the decision in this case is controversial, it could be distinguishable on its facts in future cases. 

In a challenging economy, having a potential claim against a Contract Administrator (especially if he is insured) may be attractive  to either party to the building contract, to recoup their losses.

ARE CONTRACT ADMINISTRATOR’S DECISIONS FINAL?

If a Contractor wishes to challenge a Contract Administrator’s decision under the building contract, then he need not prove any breach of contract or lack of impartiality. Fortunately the Scheme [3] applies to JCT contracts. Paragraph 20 of the Scheme permits an adjudicator to re-open , revise and review any decision under the building contract, and such determination will replace the Contract Administrator’s decision, except where stated to be final and conclusive in the building contract..

BAD FAITH, FRAUD OR COLLUSION CLAIMS BETWEEN THE EMPLOYER AND THE CONTRACT ADMINISTRATOR

A claim based on these grounds would be very difficult to prove due to the evidential burden imposed on the Contractor as the claimant. The Contractor would be alleging a conspiracy by the Employer and/or the Contract Administrator to defraud the Contractor of his financial or other entitlements under the building contract.

The point to note is that the role is not purely administrative and carries a lot of responsibility.