Out-Law Analysis 4 min. read
20 Jun 2019, 9:57 am
A decision issued earlier this year confirmed that adjudicators can make consequential changes to decisions they have already issued in cases where they are obliged to correct typographical or arithmetical errors they have made in their rulings.
Clarification on how the so-called 'slip rule' applies in practice will be of interest to businesses entered into construction contracts.
Given the short timeframe within which adjudications are conducted and adjudicators are required to issue their decisions, having considered what can be large volumes of material, it is unsurprising that occasionally an accidental error or omission occurs in the adjudicator's decision that requires correcting.
This has been recognised by the courts and is now part of the statutory regime governing adjudication in relation to construction contracts.
UK construction law requires construction contracts to "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 is known as the 'slip rule'.
Under the Scheme for Construction Contracts (as amended), which applies where a construction contract does not comply with the requirements of the Construction Act, the following provisions are implied:
Case law has clarified what a "clerical or typographical error" is considered to be.
The High Court in England and Wales in 2009 confirmed that the slip rule does not allow an adjudicator to issue a correction which in effect amounts to a second consideration of the issues.
In a 2017 case, the Outer House of the Court of Session in Edinburgh said that 'clerical and typographical error' could be defined as "an error in expression or calculation of something contained within the decision, not an error going to the reason or intention forming the basis of that decision. Such slips might include an arithmetical error in adding or subtracting sums, mis-transposing parties’ names, a slip in carrying over a calculation from one part of the decision to another or, as here, the mistaken insertion of a rogue number."
In a decision issued in February, the High Court in London confirmed that consequential amendments to a decision required as a result of correction of a typographical or arithmetical error by an adjudicator can be made under the slip rule.
The court held that the correction of a decision to amend calculations in the decision, which resulted in a positive balance being due to the claimant as opposed to a negative amount as was found in the original decision, fell within the statutory slip rule. The court also held that the adjudicator was entitled to make consequential changes, such as adding an award of interest and reversing liability for payment of his fees and expenses, under the slip rule.
In his original decision, the adjudicator stated that a negative balance was owed to Axis M&E UK Ltd because he had erroneously deducted both the contra-charges he accepted (£246,886.37) as well as those which Multiplex Construction Europe Ltd had included in its payment notice (£783,924.60) with the effect that the calculations in the original decision included a total deduction of £1,030,810.97 for contra charges instead of just £246,886.37. This resulted in a negative balance and no sum being due to Axis.
The adjudicator subsequently issued a corrected decision relying on the slip rule which removed this error and made consequential changes to the decision by adding interest in respect of the amount now awarded to Axis, and making Multiplex liable for the adjudicator’s fees. In his corrected decision, the adjudicator determined that Axis was owed £654,119.65.
Axis applied for summary judgment for the sum that the adjudicator determined in his corrected decision. Multiplex resisted enforcement, contending that the corrected decision was not binding because the amendments went beyond those permitted by the slip rule, and so the original decision was the only one capable of enforcement.
The court concluded, having reviewed the dispute referred to the adjudicator, that the error made in over deducting for contra charges was the sort of error falling within the statutory slip rule as construed in case law as being "an arithmetical error by adding or subtracting sums [or]…a slip in carrying over a calculation from one part of the decision to another".
The novel question was whether the adjudicator was right to go further by making ‘consequential changes’, namely adding an award of interest and reversing the order as to payment of his fees.
Acknowledging that this issue had not previously been considered in the context of an adjudicator's decision, the court looked to case law developed in the context of correcting an arbitration decision.
The court subsequently held that once it had been established that it was legitimate to correct the initial error, the effect of that decision permitted and in fact required that any corrections consequent upon correction of the initial error be made. In short, the court held that once one element of a decision has been corrected, any other changes consequential upon that correction should be made, since otherwise the decision is likely to be internally inconsistent.
This decision has therefore clarified that not only does the slip rule extend to correcting simple arithmetical errors but that changes required to the decision as a result of correcting the original error also fall within the scope of the adjudicator's power to correct their decision under the statutory slip rule.
If a party wishes to challenge a decision, whether on jurisdictional or natural justice grounds, but requests an amendment to an error or omission in a decision, there is a risk that that party is found to have waived its right to challenge the decision. However, provided that a party's position in respect of its challenge is reserved expressly, clearly and unequivocally as part of the application then it may be possible to apply for a correction under the slip rule whilst maintaining the right subsequently to challenge the decision.
Lawrence Davies and Danielle Griffiths are experts in construction law at Pinsent Masons, the law firm behind Out-Law.