The slip rule – how far does it go?

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The slip rule – how far does it go?

Published 22 May 2019

The recent decision in Axis M&E UK Ltd & Anor v Multiplex Construction Europe Ltd [2019] EWHC 169 (TCC) has provided a useful review of the case law in this area and what might fall within the scope of the slip rule under the Scheme for Construction Contracts (“the Scheme”).

The Facts

Axis was engaged by Multiplex as the M&E contractor for a large residential development in Kensington, London. Axis referred a dispute concerning Multiplex’s valuation of its interim payment application no. 23 (dated May 2018) to adjudication under the Scheme.

The dispute referred specifically concerned: (i) the value of certain variations; (ii) Multiplex’s entitlement to deduct contra charges; and (iii) the consequential payment due to Axis following the Adjudicator’s decisions on these two issues.

In his Original Decision, the Adjudicator determined the value of the variations at £980k more than Multiplex’s valuation, and the value of the contra charges at £247k which was £537k less than the Multiplex’s valuation. On that basis, the amount certified as due to Axis should have increased by £1,517,209.

However, in calculating the sum due the Adjudicator used as a starting point the total sum certified as due to Axis under the relevant payment notice. That certified sum already included a deduction of £780k for contra charges, meaning that when the Adjudicator deducted a further £247k for the value of the contra charges he had determined, he actually deducted £1.03m on account of contra charges. This led the Adjudicator to find that a negative sum was due to Axis, meaning that Axis had lost the adjudication.

The error was addressed with the Adjudicator and an Amended Decision was issued revising the amount due to Axis and making consequential changes to the decision. Following the correction, the Adjudicator found that (i) £643k was due to Axis, (ii) plus £11k on account of interest; and (iii) Multiplex was liable for the Adjudicator’s fees (reversing his previous decision on fees).

The law

Section 108(3A) of the Housing Grants, Construction and Regeneration Act 1998 (“the Act” as amended) provides that:

“The [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.”

This requirement is reflected in the Scheme at paragraph 22A:

“(1)       The adjudicator may on his own initiative or on the application of a party correct his decision so as to remove a clerical or typographical error arising by accident or omission.”

The Court’s decision

Axis issued an application for summary judgment to enforce the Adjudicator’s Amended Decision on the basis that the Adjudicator was entitled to correct his decision to remove a clerical or typographical error arising by accident or omission by virtue of paragraph 22A(1) of the Scheme.

Multiplex resisted the application claiming that whilst an adjudicator is permitted to correct a decision to ensure that it accurately records what he in fact decided, he cannot go back and decide something new or change a decision he consciously made. The crux of Multiplex’s argument being that as the adjudicator did not consider the need to add back into in the payment calculation the amounts previously deducted for contra charges, it did not form part of his original intention so it could not be amended under the slip rule.

Mr Roger ter Haar QC, sitting as deputy high court judge, reviewed the relevant case law finding that:

  1. The starting point is to consider the dispute which had been referred to the adjudicator and the dispute that had to be decided (as per Rok Building Ltd v Celtic Composting Systems Ltd [2009] EWHC 2664 (TCC)). In this case the adjudicator had to decide the value of (a) the variations; and (b) the contra charges. These were the key issues and there was no suggestion that he made an error in reaching his decision on those issues.

  2. Once the values had been determined, arithmetic had to be carried out to give effect to the adjudicator’s decision on the value of the variations and contra charges. The judge was satisfied that the error made in this case was “…an arithmetical error in adding or subtracting sums [or] …. a slip in carrying over a calculation from one part of the decision to another” as per NKT Cables A/S v SP Power Systems Ltd [2017] CSOH 38.

  3. Having corrected the calculation, the Adjudicator was permitted to make consequential amendments to his decision on the award of interest and his costs (as per Gannet Shipping Ltd v Eastrade Commodities Ltd [2001] All ER (D) 74 (Dec)).

Comment

This case provides a useful reminder of the case law in this area and confirms the scope for an adjudicator to correct a mistake in his decision. The mistake must be a true clerical or mathematical error, which extends to erroneously carrying over a calculation from one part of the decision to another. It must be apparent on the face of the decision and fall within the adjudicator’s first decision making process.

In terms of new law, the Court also approved the Adjudicator’s consequential amendments to his decision allowing an award of interest and reversing his decision on payment of his costs. The Court agreed this was necessary so as to prevent an outcome which was “internally inconsistent”. This issue had not previously been considered by the courts in the context of adjudication (only for arbitral awards) and provides clarity going forward.

Authors

Mark Roach

Mark Roach

London - Walbrook

+44 (0)20 7894 6314

Harriet Hawkins

Harriet Hawkins

London - Walbrook

020 7894 6106

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