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Published 14 February 2017
This case reiterates the well-known principle that the TCC will not go behind an adjudicator's decision to correct a mistake as to fact or law. An arithmetic error, even with material impact, will not render an adjudicator's decision unenforceable.
As Fraser J stated adjudication is where "…The 'right' answer is secondary to the parties having a rapid answer…".
The dispute arose out of an adjudicator's decision in relation to the relevant price adjustment for inflation purposes, for payments made by HDC to Amey for works to the highways and roads of Herefordshire over a ten year period.
HDC entered into a Service Delivery Agreement ("SDA") with Amey for the repair and maintenance works to the highways and roads of Herefordshire. The SDA incorporated Option A of the Engineering and Construction Contract (2nd edition 1995) together with Contract Data in Parts One and Two and together with and adjusted by the items listed in Schedule 5 (the "NEC Conditions"). The SDA provided a method to calculate the adjustment, however, the parties fell into a dispute concerning how to apply the contractual calculation.
The parties initially resolved the dispute in a letter dated 21 July 2005 (the 2005 Agreement) which included a price increase mechanism ("VOP3") however, they subsequently could not agree on the adjustment required in VOP3 and what the words in it actually meant. This led to two adjudications. The first adjudication was to decide what VOP3 actually meant, without applying those findings to the financial consequences (the "First Decision").
Neither party served a Notice of Dissatisfaction within the requisite period provided in the SDA to challenge the first decision and so it became binding on the parties, however the parties subsequently could not agree upon its financial consequences. The second adjudication was therefore to determine the financial consequences of the First Decision (the "Second Decision"). The Second Decision determined that the financial consequence of the First Decision was that Amey was ordered to pay HDC the sizeable sum of £9,500,632.43.
HDC commenced enforcement proceedings in relation to the Second Decision and HDC issued cross CPR Part 8 proceedings seeking certain declarations, which had the effect that HDC would be unable to rely upon the Second Decision. Amey argued that the Second Decision was inconsistent with the First Decision and therefore in making a mistake of fact, the adjudicator had acted outside of his jurisdiction or in the alternative, that the decision should be severed so that an error in the calculations by the adjudicator could be corrected (rendering it unenforceable to the extent of that error). The two sets of proceedings were consolidated for determination by the TCC.
Fraser J held that the adjudicator was acting within his jurisdiction. The adjudicator did not attempt to decide again the issues which had been resolved in the First Decision, rather he was determining the financial consequences of it, and he was entitled to make errors in arithmetic in making that decision.
The alternative argument advanced by Amey was also rejected on the basis that it would amount to a correction of fact, which was contrary to the law of enforcement of adjudicator's decisions. The TCC held that "…a single dispute is either valid and enforceable or invalid and unenforceable…". This dispute related to the financial effect of the inflation adjustment necessary as a result of VOP3 and the findings as to its effect in the First Decision. An error in one part of the calculation in that dispute could not be severed.
This case reinforces the well-known principle that a court concerned with enforcement proceedings, will not embark upon a detailed factual analysis of how an adjudicator arrived at his ultimate decision.
There are only two matters for the court to consider when enforcement of an adjudicator's decision is challenged; whether the adjudicator is acting within his jurisdiction and whether the decision was reached in accordance with the rules of natural justice. The court has made it clear that adjudicators are not expected to be perfect given the timescales involved, and so errors of fact or law will not be corrected by the TCC.
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