The slip rule – did the adjudicator make a genuine arithmetical error or was he deviating from his first thoughts?

Axis M&E UK Ltd and Axis Plumbing NSW PTY Ltd (Axis) v Multiplex Construction Europe Ltd (Multiplex) [2019] EWHC 169 (TCC)

In early February 2019 the Technology and Construction Court handed down a judgment and provided some useful guidance regarding the entitlement of an adjudicator to correct an error made when calculating a sum payable under a construction contract and what implications such correction would have regarding a subsequent award of interest on the sum payable.

Facts

Axis were appointed by Multiplex as mechanical and electrical sub-contractors for a residential project in London.

Axis, having made an application for payment, referred a dispute to adjudication regarding the value of the works and the sum due to them. This also included Multiplex’s alleged entitlement to deduct contra charges.

The adjudicator’s decision found a negative sum against Axis. However, this decision was based on the adjudicator erroneously over-deducting the contra charges. Four days later the adjudicator issued a corrected decision (Amended Decision). In the Amended Decision the adjudicator found that Axis should be paid the sum of £654,199.65 (including £11,046.76 in respect of interest) and that Multiplex should also pay the adjudicator’s fees.

Axis sought summary judgment to enforce the Amended Decision on the basis that the adjudicator was entitled to issue the Amended Decision as he incorrectly calculated the sums due and which he was entitled to correct under paragraph 22A(1) of the Scheme for Construction Contracts (Scheme) because it fell within the slip rule. Multiplex argued that such a correction fell outside the scope of the slip rule as they believed it was not removing an error arising by accident or omission.

Judgment

Mr ter Haar QC in his judgment started by considering the nature of the dispute that was referred to adjudication between Axis and Multiplex (applying Rok Building Ltd v Celtic Composting Systems Ltd [2009] EWHC 2664 (TCC)). In this instance, the dispute required the adjudicator to resolve what the appropriate variations between the parties under the contract were and what contra charges should be deducted. In terms of the contra charges aspect of the adjudicator’s decision an arithmetic exercise had to be carried out by him to give effect to what he decided.

The judge was satisfied that the adjudicator made “an arithmetical error in adding or subtracting sums [or] … a slip in carrying over a calculation from part of the decision to another” by mistake which therefore fell within the statutory slip rule, applying NKT Cables A/S v SP Power Systems Ltd [2017] CSOH 38. He did not consider the adjudicator’s error to fall outside the statutory slip rule because he did not consider the error to be one that, for example, was a mistake of fact, law or a whole omission. The correction would also reflect the adjudicator’s first thoughts.

As to the award of interest and payment of the adjudicator’s fees, the court had not previously considered this in the context of adjudications and so the judge was steered by Gannet Shipping Ltd v Eastrade Commodities Ltd [2001] All ER (D) 74 (Dec) which concerned the correction of an arbitration award. The judge found that, once one element of a decision was corrected, it follows that any other changes consequential upon that correction should also be made to avoid an internally inconsistent outcome.

Axis were therefore successful in their summary judgment application and were awarded the sums set out in the Amended Decision.

Comment

This case provides useful guidance on what might fall within the scope of the slip rule under the Scheme, in that it is confined to correcting a typographical or clerical error of something expressed within the four corners of the decision and which is apparent on the face of the decision.

The scope of the slip rule does not, however, extend to more substantive errors such as the adjudicator misinterpreting the facts, the law, making an omission or simply wanting to enforce their second thoughts.

While this gives useful guidance in relation to what might constitute an arithmetic error falling under the slip rule, each case will ultimately be heard on their individual facts and circumstances.

Glovers acted for Axis in this matter and the full judgment can be found here.

Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.

For further information, please contact Philip Eyre.