The slip rule and consequential corrections

The slip rule in adjudications is well established. Indeed, it has been enshrined in statute through section 108(3A) of the Construction Act 1996 (as amended) and paragraph 22A of the Scheme for Construction Contracts 1998 (as amended) (“the Scheme”). Prior to that reliance was placed on case law that held a term could be implied into a construction contract giving an adjudicator the ability to correct slips (see Bloor Construction v Bowmer & Kirkland [2000] BLR 314). In short, the slip rule allows an adjudicator to correct his decision so as to remove a clerical or typographical error and a recent analysis of the rule was carried out by Roger ter Haar QC in Axis M&E UK Limited and another v Multiplex Construction Europe Limited [2019] EWHC 169 (TCC).

Background

Axis referred a valuation dispute to adjudication and, as a result of a mathematical error, the adjudicator concluded in his original decision that no monies were due to Axis. Some four days later the adjudicator issued a corrected decision in which he held that Axis was due circa £654,000. In short, the adjudicator had double counted contra charges in his original decision. As a result of his correction, the adjudicator also held that Axis was entitled to interest on the £654,000 and that Multiplex was responsible for payment of the adjudicator’s fees (whereas in his original decision Axis were responsible for fees).

Enforcement proceedings followed in which Multiplex argued that the adjudicator was not permitted to make the changes he had in his corrected decision because they went beyond those permitted by paragraph 22A of the Scheme.

Decision

Roger ter Haar QC considered the relevant authorities and paragraph 22A of the Scheme. The judge’s view was that when correcting a slip the adjudicator should give effect to his first thoughts and intentions and should not be changing his decision on a matter of fact or law because he is having second thoughts. He also referred to Lady Wolff’s decision in NKT Cables A/S v SP Power Systems Ltd [2017] CSOH 38 where she considered that paragraph 22A was to apply to errors in expression or calculation. Applying these principles, the judge held that the adjudicator had made an error in arithmetic and that, as such, the double counting of the contra charges was a mistake that fell within the ambit of the statutory slip rule.

The more interesting aspect of this case was that the judge held that the adjudicator also had jurisdiction to make consequential corrections to his decision in respect of interest and fees. In reaching his decision the judge considered section 57 of the Arbitration Act 1996 (which allows an arbitrator to correct a clerical error) and the judgment in Gannet Shipping Ltd v Eastrade Commodities Ltd [2001] ALL ER (D) 74 (Dec). In that case the arbitrator had been faced with a similar situation to the one that presented itself in the Axis adjudication and made consequential corrections in respect of liability for costs. In this case the arbitrator held that he had jurisdiction to review his decision in respect of liability for costs and so did so and this decision was upheld by Langley J. Applying the same logic to the Axis adjudication, Roger ter Haar QC held that the “gateway error” of double counting the contra charges allowed for consequential corrections to be made in respect of interest and fees.

Conclusion

The decision is one which confirms the common sense position, but it is no doubt reassuring for adjudicator’s to know that such an approach has been endorsed by the courts.