Trowers & Hamlins’ Theresa Mohammed on a case where an adjudicator’s arithmetic went wrong, but the Technology & Construction Court said the correction was made in good time.
The ability for adjudicators to correct clerical mistakes, errors or ambiguities is set out in the Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (England) Regulations 2011. Under the Scheme, the adjudicator is required to make such amendment within five days of the delivery of the decision.
In the adjudication enforcement case PP Construction Ltd v Geoffrey Osborne Ltd, main contractor Geoffrey Osborne resisted the enforcement of the adjudicator’s decision that said an additional £112,997.95 was owed to PP above the sum it had already paid – on the grounds that the adjudicator had made corrections to his decision (which had the effect of increasing the sum owed by £112,997.95) out of time, which meant they were of no effect.
Geoffrey Osborne had engaged PP Construction to act as its ground works subcontractor at the Chichester Festival Theatre. A payment dispute arose between the parties and this was referred to adjudication. The appointed adjudicator, in his decision dated 26 November 2014, directed that Geoffrey Osborne pay PP £229,005 plus VAT and interest.
Upon delivery of the decision, PP’s solicitors identified on the same day that the adjudicator had made errors in the calculation that significantly underestimated the amount due to PP: a 5% deduction against the full contract sum had already taken place before the adjudicator deducted a further 5%. So when the adjudicator subtracted a 2.5% retention and the sums already paid by Geoffrey Osborne, the final figure was lower than it should have been – the email from PP’s solicitors argued that this had introduced an error of £92,530 excluding interest.
In this case the parties had amended their construction contract to deal with such incidences in the following manner at clause 70(9):
“… the adjudicator may on his own initiative or at the request of either party correct his decision so as to remove any clerical mistake, error or ambiguity provided that such initiative is taken or such request is made within 14 days of the notification of his decision to the parties. Any such correction shall be made and notified to the parties within 7 days from when such initiative is taken or such request is made as the case may be and for the avoidance of any doubt, the parties shall be deemed to have agreed that any such correction forms part of the decision of the adjudicator.”
However, what was evident before the court was that PP’s email identifying the error to the adjudicator on 26 November referred to slips in the singular and plural sense in different paragraphs, failed to identify precisely where the error had been made, made a reference to an attachment that set out the calculation that was indecipherable and did not make clear how PP’s solicitors had calculated that the error amounted to £92,530 excluding interest.
"The court has again shown that it will reject technical arguments that seek to undermine otherwise enforceable decisions."
The adjudicator clearly had not understood PP’s position and this attachment had to be re-sent and a further explanation was offered by PP two days later. This prompted the adjudicator to send a draft correction for comment and stated that “The correction will be issued once you cast an eye”.
On 4 December PP’s solicitors wrote to the adjudicator, making reference to an email of 1 December which was never sent or received, and confirmed that the correction was agreed and that the revised decision should be issued. On 5 December PP’s solicitors chased again for the revised decision which was then delivered.
Geoffrey Osborne paid PP the sums awarded by the first decision and not the £321,536 plus interest which was ordered in the second decision, as it argued that was made out of time.
An alternative argument was that PP had issued more than one operative request for a correction on 26 and 28 November and 4 and 5 December that was not permitted under the contract as this could function to continue to delay the timetable undermining the important time efficiency of adjudication.
Mr Justice Stuart-Smith held that the email from PP’s solicitors did not satisfy the requirements of a request pursuant to clause 70(9) of the contract as it was not suitably clear as the adjudicator did not understand the essential terms of that request. It was not until 28 November that all the requirements of an operative request were made that would have enabled any reasonably competent adjudicator to understand precisely where in his decision he had made a clerical error, what the error was, why it was an error and what alteration was needed.
It was also held that even if Geoffrey Osborne’ position was accepted and there was one operative request made on 26 November, there was nothing in the clause that prohibited further requests and that the overall longstop of the 14 days plus 7 days being 21 days set out in clause 70(9) did in fact ensure there was still speed and certainty to the process.
As such, the court has again shown that it will reject technical arguments that seek to undermine otherwise enforceable decisions. However, what has been emphasised is that due care needs to be taken with the clarity of submissions made in respect of clerical errors in adjudicators’ decisions so that similar disputes can be avoided.
Theresa Mohammed is a senior associate at law firm Trowers & Hamlins
