On second thoughts… the slip rule in adjudication

The formal decision of the adjudicator was that M&E contractor LJJ Ltd pay main contractor McLaughlin & Harvey Ltd £808,000 within seven days. It was for a failure by LJJ Ltd to meet a key date obligation. Theirs was a £17m subcontract on a prestigious £56m office refurb at Paternoster Square, adjacent to St Paul’s Cathedral. “Whoa!” said LJJ. Since the interim account sum due already included a £954,000 deduction by McLaughlin & Harvey on account of this alleged key date failure, LJJ politely pointed out to the adjudicator that his decision gave double recovery.

It was an obvious slip, said LJJ, so please issue an amended decision. The JCT subcontract had the familiar rule: “The adjudicator may on his own initiative or on the application of a party correct his decision so as to remove a clerical error or typographical error arising by accident or omission.” A slip or slip-up is ordinary. It happens when the adjudicator at breakneck speed types figures the wrong way round, adds up or deducts wrongly, types the wrong party’s name. All easily spotted and easily put right. But there is more to it than that.

McLaughlin & Harvey baulked at the idea of a corrected decision, since that would deprive it of the £808,000 awarded by the adjudicator.

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The adjudicator’s reply said that LJJ was not asking for a correction and acknowledged that the decision, as it stood, may well provide an unintentional double recovery of the £808,000. To avoid that disaster, the adjudicator said he would issue an amended decision.

Ah, he meant well.

The amendment brought in some additional words about paying the £808,000 “if not already allowed”. Can you immediately see the snag and the big difference by hurling that boulder into the award? You can bet on a dispute, a new dispute, popping up about whether or not the £808,000 had already been allowed. It is a completely different outcome from the adjudication.

So, the two parties now had a revised, amended award which removed the order for payment by LJJ to McLaughlin & Harvey in the first award a few days earlier.

Now the parties went legal. McLaughlin & Harvey said to the High Court that the first award was effective and it wanted its money. LJJ, for its part, said that the first award contained a “slip” that was now corrected, so nothing was payable in this adjudication.

Go back to the slip rule. There was no typographical error, so now ask: was there a clerical error? What, pray, is a clerical error? It includes something that an adjudicator meant to do but by some oversight forgot to do. It also includes typographical errors, meaning an error of calculation of something within the decision, but not an error going to reason or intention forming the basis of the decision. Lastly, it can mean an error of expression.

The slip rule is confined to corrections of pure omissions or to give effect to an adjudicator’s first thoughts and intentions, rather than second thoughts. Has the written award not conveyed what they intended?

I rather prefer a shorthand test: the slip rule is confined to corrections of pure omissions or to give effect to an adjudicator’s first thoughts and intentions, rather than second thoughts. Or, put yet another way: has the adjudicator’s written award not conveyed what they intended?

That’s not what happened in this adjudication, said the High Court. There was no clerical error or slip. Instead, LJJ had read the award and immediately made a submission in good faith, pointing to a matter of substance that had not been adequately addressed in the decision. But that’s not a slip. It was a second thought prompted by a submission, after the award.

You can see the well-meaning adjudicator’s light being switched on, such that he awarded the £808,000 but only “if not already allowed”.

But the adjudicator had no power to amend his award. He was attempting to exercise a power which he did not have, rather than an erroneous exercise of power available to adjudicators.

If the slip rule had applied to this set of circumstances in this adjudication, then the adjudicator could have amended. It would have been within his powers. And if the amendment had been incorrect, then his amended decision would still have been binding. The High Court was alive to that principle – it is at the heart of the Construction Act. It has been thus since the outset. In the words of Mr Justice Dyson: “In deciding whether the adjudicator has decided the wrong question, rather than given a wrong answer to the right question, the court should bear in mind that the speedy nature of the adjudication process means that mistakes will inevitably occur. In my view, it should guard against characterising a mistaken answer to an issue that lies within the scope of the reference as excess of jurisdiction.”

The argument that the amendment corrected a slip failed. So this second decision could not apply. The first decision, whether right or wrong, whether it gave double recovery or not, ordered £808,000 to be stumped up and was enforced.

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple