Adjudication Matters – June 2019

17th June 2019

The Slip Rule – the “gateway” for consequential corrections to an adjudicator’s decision?

Introduction

In the recent judgment of Axis M&E UK Ltd v Multiplex Construction Europe Ltd [2019] EWHC 169 (TCC), the Technology & Construction Court considered for the first time whether consequential corrections are permitted under the statutory slip rule in the context of adjudication.

The Judge, Roger ter Haar QC, evaluated whether the adjudicator’s correction of an arithmetical error fell within the scope of the slip rule under the Scheme for Construction Contracts (England and Wales) Regulations 1998 (the “Scheme“) and provided some helpful guidance on the common law application of this principle.

The “Slip Rule”

The “slip rule” is a well-established rule that allows for the court, an arbitrator or an adjudicator to correct any accidental errors, mistakes or omissions (i.e. “slips” in judgments or orders.

For adjudication, section 108(3A) of the Housing Grants Regeneration and Construction Act 1996 (the “Construction Act“) provides that a construction contract “shall include provision in writing permitting the adjudicator to correct his decision so as to remove a clerical or typographical error arising by accident or omission”

If a construction contract does not contain a written provision which permits the adjudicator to correct his decision in accordance with section 108(3A) of the Construction Act, then paragraph 22A of the Scheme will be implied into the contract. Paragraph 22A confirms that the adjudicator may correct the decision to remove a clerical or typographical error arising by accident or omission on his own initiative or at the request of one of the parties.

The Facts

Axis M&E UK Ltd (“Axis“) were engaged by Multiplex Construction Europe Ltd (“Multiplex“) as mechanical and electrical sub-contractors for a residential development in Kensington. In August 2018, Axis referred to adjudication a dispute regarding the valuation of their works, in particular the value of certain variations and Multiplex’s entitlement to deduct contra-charges.

Original Decision: The adjudicator decided that Axis had been overpaid, therefore no money (and no interest) was due and the claim failed. Consequently, Axis were ordered to pay the adjudicator’s fees within 7 days of the decision.

However, in calculating the sums due, the adjudicator had made a mathematical error and double-deducted for certain contra-charges. When the mistake was pointed out, the adjudicator issued an amended decision correcting his over-deduction as a slip.

Corrected Decision: The adjudicator removed the error and as a consequence, the adjudicator concluded that Axis was actually due the sum of £654,119.65. Further, it was decided that Axis was entitled to interest on this amount and Multiplex should pay the adjudicator’s fees instead of Axis.

Axis sought summary judgment via adjudication enforcement proceedings to enforce the sum due to it under the Corrected Decision. Multiplex opposed enforcement on the ground that the amendments had not been made “so as to remove a clerical or typographical error arising by accident or omission” and so (Multiplex argued), were beyond the scope of the statutory slip rule under paragraph 22A of the Scheme.

Summary Judgment

Roger ter Haar QC held that the adjudicator had been entitled to correct an arithmetic error in calculating sums due to the sub-contractor. He decided that the adjudicator had acted within his jurisdiction when awarding interest on the sum payable and reversing his decision on payment of his fees, as consequential corrections flowing from the “gateway error” (i.e. the double deduction of contra charges) were required in the interests of justice.

In reaching his judgment, Roger ter Haar QC applied the Scottish case NKT Cables A/S v SP Power Systems Ltd 2017 SLT 494 which confirmed that a clerical or typographical error slip includes “an arithmetical error in adding or subtracting sums [and/or]… a slip in carrying over a calculation from one part of the decision to another or…the mistaken insertion of rogue numbers” Essentially, the slip rule is confined to corrections of the adjudicator’s “first thoughts and intention”.

In addition, whilst the award of interest and decision that Multiplex should pay the adjudicator’s fees were not part of the adjudicator’s Original Decision, it was held that these consequential corrections reflected the adjudicator’s first thoughts. In the context of the dispute, the adjudicator meant to decide whether any sums were due to the sub-contractor based on his calculation and the award of interest and payment of his fees were part of this intention.

Roger ter Haar QC concluded that once one element of a decision had been corrected, then any other changes consequential to that correction should be made, since otherwise the decision is likely to be “internally inconsistent”.

Practical Implications

This is the first judgment that has been handed down by an English court on the application of the statutory slip rule under the Scheme and provides useful guidance for what might constitute a clerical or typographical error which is capable of being corrected.

Whilst it will be a question of fact (on a case by case basis) whether the adjudicator’s correction falls within the scope of the statutory slip rule under the Scheme, this case demonstrates that consequential corrections following a “gateway error” can be implemented and should be considered by parties when deciding whether to seek to enforce or resist an adjudicator’s corrected decision.

It is advisable to include within a construction contract a provision which specifies the extent of matters which may be corrected by the adjudicator as a slip so as to avoid the provisions of the Scheme being implied.

Upon receipt of an adjudicator’s decision, the adjudicator’s calculations should be checked as soon as possible to enable any errors to be notified to the adjudicator and corrected. Any consequential corrections which are required as result of such error should also be notified to the adjudicator together with an explanation of why they are required.