Consideration
53 The submissions that the Contractor put on appeal included those put at first instance (as to which, see [46] above). In addition, the Contractor contended that, contrary to the primary judge's findings, the Expert had, in his Expert Determination, extended the time for Completion and that this had occurred by the Expert "stepping into the shoes" of the Principal in order to exercise the power conferred upon the Principal by Condition 54.6 (see above at [23]), as distinct from an extension of time being granted in favour of the Contractor under Clause 54.1. The Contractor submitted that, however an extension might have come about, it operated for all purposes and was one of which the Contractor was entitled to take advantage.
54 The first point to note about these submissions is that the ability of the Expert to "step into the shoes" of the Principal for the purpose of granting an extension of time under Clause 54.6 was not put in issue in the proceedings. It is accordingly appropriate to assume, without deciding, that such power existed.
55 Secondly, I do not agree with the primary judge's view that the Expert did not exercise the power granted to the Principal under Clause 54.6 to extend time but, instead, was calculating appropriate reductions to the Principal's cross-claim for damages (see above [50]). Assuming (as I have said is appropriate) that the Expert was entitled to exercise the power to extend time on the Principal's behalf, he clearly purported to do so. This can be seen from a number of parts of the Expert Determination ([498], [509], [527] and [533]). It is sufficient to refer in terms to [498] (quoted in [38] above) where, in relation to the possibility of stepping into the Principal's shoes to exercise that power, the Expert said "[t]hat is what I now propose to do", and [509] (quoted in [40] above) where he said, in connection with variation claim 10(a), "I determine an EOT, for the benefit of the Principal, pursuant to Clause 54.6, of 9 days …". I appreciate that, as the primary judge pointed out, the Expert took this course for the purpose of enabling him properly to assess the Principal's damages claim. The fact that he may have done it for this reason does not, however, in my view require the conclusion that he did not make an extension of time. Having (so it should be assumed) the power to do it and having purported to do it, he should in my view be taken to have done it.
56 Thirdly, the grant of an extension of time under the Contract (whether the extension is granted under Clause 54.1 or Clause 54.6) does not of itself entitle the Contractor to delay costs under Clause 55. In so far as the Contractor's submissions suggested that there was an automatic inconsistency between the Expert's grant of an extension of time and his non-award of delay costs in respect of variation claim 10(a), that submission should not be accepted. Clause 55.1, upon which the Contractor relied to claim delay costs, required not only an extension of time but also that such extension came about as a result of a delay caused by a variation order by the Principal or a breach of contract of the nature described in that clause. Clause 54.6 confers a broad discretionary power on the Principal enabling it to extend time "for any reason", that is, not simply for the reasons referred to in Clause 55.1.
57 In these circumstances it is apparent that, if the Contractor's appeal is to succeed, consideration must focus upon the reason or reasons why the Expert exercised the Clause 54.6 power on the Principal's behalf. When this occurs, it can be seen that the reason that the Expert gave is of a type referred to in Clause 55.1, that is, either a variation or a relevant breach of contract (see ED at [508] quoted in [40] above and ED at [517]). This raises the question of why the Expert did not then award the Contractor delay costs under Clause 55.1.
58 As I have pointed out above (see [41]), there is an inconsistency between the Expert's reasoning in extending time under Clause 55.6 and his reasoning in rejecting the Contractor's claim to an extension of time (see [140] - [144] of the Expert Determination quoted in [32] above). It is apparent that the Expert regarded his rejection of the Contractor's claim to an extension of time as having the corollary that the Contractor was not entitled to delay costs (see [33] above; see also [35] above).
59 What one is left with is, on the one hand, a finding made in the context of considering the Principal's claim for damages, that nine days' delay to completion was caused by the Principal issuing variation instructions or breaching the contract. On the other hand is the inconsistent finding, made in the context of considering the Contractor's variation claim 10(a), for, inter alia, an extension of time and consequential delay costs, that no such delay had been established.
60 In these circumstances, I consider that the Contractor can fairly say, as it does, that it has not been told by the Expert why it is not entitled to delay costs. One is left in a state of ignorance as to why the delay costs claim in respect of variation claim 10(a) was rejected. It follows from this that the Expert has in this respect failed to give proper reasons for his decision.
61 The Expert's reasoning is not clarified by reference to [501] of the Expert Determination (quoted in [38] above) which suggests that the Contractor's claim failed because it did not satisfy "contractual conditions precedent". This is presumably a reference to the topic dealt with in [34] above but, as that paragraph points out, the Expert did not suggest that there was any failure to give any relevant notice in respect of the Principal's variation instructions or misleading and deceptive conduct. Both of these provided a proper basis for an extension of time in relation to the elements of variation claim 10(a) with which they were concerned. The variation instructions would also have founded a consequential award of delay costs, although the misleading and deceptive conduct would not, because Clause 55.1, concerning delay costs, is only triggered by variations and breaches of Contract, not by misleading and deceptive conduct in contravention of the Trade Practices Act.
62 In any event, attributing failure of the Contractor's claim for delay costs under variation claim 10(a) to a failure to fulfil conditions precedent appears inconsistent with the reasons given for that failure in [140] to [144] of the Expert Determination (see [32] above and in particular ED [141] and [142]).
63 The Expert Determination Procedure quoted in [26] above imposed an obligation upon the Expert to give reasons for his Determination (see paragraph 4.1.3). An expert's determination that does not contain reasons for the determination is not a determination of the contractual description. Accordingly, consistent with the reasons given by McHugh JA in Legal & General Life v A Hudson (see [47] above) the Expert Determination is not binding upon the parties. As pointed out in Holt v Cox [1997] NSWSC 144; (1997) 23 ACSR 590, the reasoning of McHugh JA had, to that time, been followed in New South Wales and elsewhere on a number of occasions (see at 595). More recently, the reasoning was applied by this Court in Kanivah Holdings Pty Ltd v Holdsworth Properties Pty Ltd [2002] NSWCA 180; (2002) 11 BPR 20,201.
64 It is unnecessary in this case to consider whether the contractual requirement for the Expert to give reasons requires reasons to be given to the standard with which those exercising judicial functions must comply. Even assuming that the standard was a lesser one, the Expert's reasons nevertheless did not comply with it. At a minimum, experts who are required to give reasons "should explain succinctly why, in light of what happened, they have reached their decision and what that decision is" (Bremer Handelsgesellshcaft mbH v Westzucker GmbH (No 2) [1981] 2 Lloyd's Rep 130 at 132-3 referring to the obligations of arbitrators; compare Oil Basins Ltd v BHP Billiton Ltd [2007] VSCA 255; (2007) 18 VR 346 and Gordian Runoff Limited v Westport Insurance Corporation [2010] NSWCA 57). This standard is not complied with if the ultimate basis for a decision cannot be discerned because of inconsistency of reasoning or findings.
65 In Kanivah, at first instance ([2001] NSWSC 405; (2001) 10 BPR 18,825), Palmer J said in relation to a contractual requirement that a valuer give "sufficient written reasons" for his determination of the current market rental of leased premises:
"[118] I cannot accept Kanivah's submission. In my view, the requirement of cl 1(f) for 'sufficient reasons' obliged Mr Norris to disclose what he did and why only to the extent necessary to enable the parties, with the assistance of their experts, to see whether he had complied with the requirements of cl 1(d) by having regard to the matters to which he was obliged to have regard, and by disregarding the matters which he was obliged to disregard. If it was apparent from the face of the determination that Mr Norris had addressed himself to the right questions, as the contract required, the parties would know that the process and calculations by which he produced his answers could not in law found a claim of vitiating error. On the other hand, if it was apparent from the face of Mr Norris' determination that he had not addressed himself to the right questions, as the contract required, then the parties would know that the determination would be of no effect regardless of what process and calculations had been used. This was all the contractual requirement to give sufficient reasons was intended to achieve.