Court reviews Operation of Adjudication slip rule

O’Donnell (ODD) applied for summary judgement to enforce to adjudication decision. The defendant, BAL, challenged the adjudicator’s jurisdiction to make corrections in one adjudication, plus a stay. BAL later withdrew its application for a stay, so that the remaining issues were whether ODD was entitled to be paid £148,468.67 in accordance with the correction made to the adjudication, and what order for costs should be made.

ODD was engaged by BAL as a concrete frame subcontractor under a DOM/2 subcontract. BAL was the main contractor on the Cube in Birmingham. There were a number of disputes about interim valuations, extensions of time, and loss and expense, with a number of adjudications. Adjudication 8A was concerned with the value of contract works in Interim Valuation no. 25, and the validity of deductions made by BAL.

The adjudicator found that ODD was entitled to payment of £14,328,131.88 less retention, valid BAL deductions and payments to date. The next day, ODD notified the adjudicator that they thought there were two errors in his decision because he had included a sum paid for loss and expense awarded in Adjudication no. 7 which was after the date of Valuation no. 25. ODD also pointed out that at Item K in the table in the adjudicator’s decision, he had calculated the retention as 3% of the gross value of the works, including loss and expense (at Item F) and not 3% of the gross value excluding loss and expense.

BAL objected to these items being corrected, arguing that they did not come within the definition of slips which the adjudicator was entitled to correct. The adjudicator wrote to both parties, stating that he did have the power to correct both mistakes, and issued a corrected version , which awarded ODD £778,267.25 plus applicable VAT and interest.

Adjudication no. 9 dealt with the validity of BAL’s withholding notices against Valuation no. 26. In that adjudication, ODD was awarded £285,306.56. BAL did not pay the awards made in Adjudications 8A and 9, and it made it clear that it would challenge any enforcement proceedings on the basis that the adjudicator had not had the jurisdiction to make the corrections in Decision 8A. In addition, BAL said that it would seek a stay because of ODD’s alleged insolvency. This application for a stay was later withdrawn, and it paid ODD £920,670.35 in respect of both decisions.

The issue of whether the adjudicator had the jurisdiction to make the corrections remained to be resolved. BAL said that the adjudicator should not have made the corrections because he had asked ODD for information about the sums paid and the error he had made had been caused by ODD mistakenly giving incorrect information. That being so, BAL said that the correction to Decision 8A did not come within the slip rule, and it had not been open to the adjudicator to make the correction and increase the sum payable to ODD. ODD argued that the decision to amend the decision did fall within the slip rule provisions because the original decision had not reflected his intentions.

Generally, an adjudicator’s decision will be enforced even if it contains an error, or if he answers the right question in the wrong way. The slip rule enables an adjudicator to correct his decision providing that the correction is made within a reasonable time, even if the time for making his decision has expired. The present application for summary judgement raised a question of to what extent a court can interfere with an adjudicator’s exercise of his power under the slip rule.

Having reviewed a number of authorities, and listened to counsels’ arguments, the judge distilled the following propositions. If an adjudicator were to exercise a slip rule when there was no express or implied slip rule, that would clearly be a decision which was outside his jurisdiction. If a party asked the adjudicator to correct a slip and the adjudicator accepts that an error has been made within the slip rule then if the adjudicator makes an error of fact or law in making the correction, the judge considered that such an error did not take the exercise of the slip rule outside his jurisdiction. Finally, if a party asks an adjudicator to correct a slip which the other party agrees is a slip within the slip rule but in operating the slip rule he makes and error of fact or law, then Ramsey, J. was of the opinion that the court could not interfere in that decision.

Each case would have to be considered on the facts. In the present case, BAL had accepted that the slip rule was an implied term of the DOM/2 subcontract. The adjudicator had been asked to correct a slip, and accepted that he had made a mistake within the slip rule. Under those circumstances, the judge was of the opinion that the court could not and should not interfere because if it did, it would be comparable to interfering in a case where the adjudicator had answered the right question whether he was right or wrong in the answer given.

The present case was similar to that of YCMS Ltd. v Grabiner, [2009] EWHC 127 (TCC), where the adjudicator had made a patent error. He had been right to recognise the mistake as “inadvertent slip” because he made a deduction which he had not intended to make. This often happened, and was could be caused because the adjudicator relied upon information given by one of the parties. It was not that the adjudicator was trying to have second thoughts about his decision. Because the adjudicator had used the slip rule to correct an accidental error, BAL had no real prospect of successfully defending ODD’s claim.

ODD was awarded summary judgement, and awarded the costs of its summary judgement application on an indemnity basis, plus the costs of BAL’s withdrawn application to stay.

Date: December 2009

Author: Ann Glacki

Commentary

Once again the court distinguished between a slip, being an error within a decision (ie typographical, mathematical etc) as opposed to the Decision itself being wrong. Providing an Adjudicator had an expressed or implied right to correct a slip then that was not outside of his jurisdiction even if the time for the Decision has past.

Further, as with the Decision itself, the Courts would not correct a mistake of the Adjudicator even where manifest, within a correction to a slip. Providing an adjudicator had jurisdiction to give a Decision or correct a slip, then the Courts would not set it aside for an error.

For more information please contact Lorne Alway by telephone 01295 275975 or by email on lorne.alway@alway-associates.co.uk

Author: Lorne Alway

Date: February 2010

Ann Glacki

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