O'Donnell Developments Ltd v Build Ability Ltd
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr. Justice Ramsey |
| Judgment Date | 18 December 2009 |
| Neutral Citation | [2009] EWHC 3388 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 18 December 2009 |
| Docket Number | Case No: HT-09–450 |
[2009] EWHC 3388 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Before: The Hon. Mr. Justice Ramsey
Case No: HT-09–450
Ms Finola O'Farrell QC(instructed by Trowers & Hamlins) for the Claimant
Mr Simon Lofthouse QC (instructed by HBJ Gateley Wareing) for the Defendant
Hearing dates: 4 th December 2009
The Hon. Mr. Justice Ramsey :
Introduction
In these proceedings the claimant (ODD) brings a claim against the defendant (BAL) to enforce two adjudication decisions. ODD applied for summary judgment in the sum of £1,229,393.40 inclusive of VAT and interest. BAL originally challenged the appointment of the Adjudicator in the adjudications, contended that the he did not have jurisdiction to make corrections to the decision in one adjudication (Adjudication 8A) and sought a stay of execution of any summary judgment in relation to the adjudication decisions.
By the time of the hearing BAL had withdrawn its application to stay execution and had accepted that ODD was entitled to £920,670.35 plus VAT. That left two issues to be determined:
(1) Whether ODD was entitled to £148,468.67 pursuant to the correction to the decision in Adjudication 8A in respect of sums paid.
(2) What Order should be made as to costs.
Background
ODD was engaged as a concrete framework sub-contractor by BAL, the main contractor in respect of a mixed retail and leisure development known as The Cube at the Mailbox, Commercial Street, Birmingham.
The parties entered into the sub-contract on 28 September 2007 using the DOM/2 Form of Sub-Contract (1981 Edition), as amended (“the Sub- Contract”).
A number of disputes arose under the Sub-Contract as to interim valuations, extensions of time and loss and expense and these were referred to adjudication in Adjudications 1 to 7.
Adjudication 8A concerned the value of the sub-contract works for the purpose of Interim Valuation 25 (up to 3 August 2009) and the validity of deductions made by BAL against that valuation.
On 3 November 2009 the Adjudicator issued his Decision in Adjudication 8A in which he determined that ODD was entitled to payment in respect of the gross cumulative total value of the sub-contract works up to Valuation 25 of £14,328,131.88 less retention, valid BAL deductions and payments to date.
On 4 November 2009 ODD notified the Adjudicator of what were considered to be two errors in the Decision, as follows:
(1) In respect of the calculation of sums paid against Valuation 25: At Item N of the table in the Decision where the Adjudicator calculated the sum due, the Adjudicator had set out the total of the payments to be deducted from the value of the works. In doing so the Adjudicator had included payments made against the value of the sub-contract works up to Valuation 25 but had also included a sum paid for loss and expense awarded in the decision in Adjudication 7 dated 28 August 2009, which was after the date of Valuation.
(2) In respect of the calculation of retention: At Item K in the table in the Decision the retention figure was calculated as 3% of the gross value of the works, including loss and expense (at Item F) and not 3% of the gross value excluding loss and expense.
On 5 November 2009 BAL wrote and objected to the correction of those errors on the ground that they did not fall within the definition of slips which it was permissible for the Adjudicator to correct.
Later on 5 November 2009 the Adjudicator wrote to the parties. He said that he had power to correct both errors and issued a corrected version of his Decision entitling ODD to the sum of £778,267.25 plus applicable VAT and interest.
Adjudication 9 concerned the validity of BAL's withholding notices against Valuation 26. On 6 November 2009 the Adjudicator issued his Decision in Adjudication 9 in which he determined that ODD was entitled to the sum of £285,306.56 plus applicable VAT and interest. There was a minor error in paragraph 36 of that decision but it was corrected on 9 November 2009 and is not disputed.
BAL failed to pay the sums awarded in Adjudication 8A and Adjudication 9.
By letter dated 10 November 2009, BAL's solicitors indicated that they would challenge any enforcement proceedings on the basis that the Adjudicator was not properly appointed in the two adjudications and did not have jurisdiction to make the corrections made in Adjudication 8A. BAL also said they would seek a stay of execution in respect of any summary judgment on the grounds of ODD's alleged insolvency.
Proceedings
On 11 November 2009 ODD issued proceedings, claiming the sums awarded in Adjudications 8A and 9. On 25 November 2009 BAL issued an application for a stay of execution in respect of any judgment against it pursuant to RSC Order 47.
BAL's evidence served on 25 November 2009 set out the grounds on which it opposed ODD's application. In that evidence BAL did not pursue its objection to the Adjudicator's appointment in the two adjudications. BAL also accepted that the Adjudicator was entitled to correct the mistake in the calculation of retention in his Decision in Adjudication 8A. However BAL maintained its objection to the correction of sums paid against Valuation 25 and sought a stay of execution on the ground that ODD would be unable to repay any sums paid by BAL to ODD pursuant to any judgment.
Subsequently on 1 December 2009, BAL's solicitors notified ODD that it withdrew its application for a stay of execution and that it would arrange for payment to be made to ODD in respect of the Adjudication Decisions in the sum of £920,670.35 plus applicable VAT.
I now deal with the two outstanding issues: the disputed correction in respect of sums paid against valuation 25 and costs.
Correction of sums paid
BAL submits that, on the facts, the Adjudicator should not have made the corrections. BAL says that the Adjudicator asked ODD for information about sums paid and the error which it accepts was made by the Adjudicator was induced by that information. BAL says that the information was incorrect and was mistakenly provided by ODD. In the circumstances, BAL submits that the correction to Decision 8A which awarded ODD an additional £148,468.67 was not within the slip rule and it was not open to the Adjudicator to amend the Decision to increase the sum payable by that amount. BAL says that the sum of £148,468.67 should be found to constitute no part of Decision 8A.
ODD submits that the Adjudicator's correction to Decision 8A fell within the slip rule because the uncorrected Decision 8A did not accurately reflect his intentions. As a result ODD says that the adjudicator had jurisdiction to make the correction and his corrected Decision 8A was valid and enforceable in its entirety.
The Slip Rule
In general, an adjudicator's decision will be enforced even if it contains an error of fact or law. In Bouygues v Dahl-Jensen [2000] BLR 49 and 522 the adjudicator made an error in the calculation of the sum due because he did not properly take account to the fact that the sums due were based on the gross contract price whilst the sums paid were net of 5% retention. The existence of that error was not challenged in the Court of Appeal.
The adjudicator in that case was asked to amend his decision to correct the error which, if corrected, would have made the sum payable £141,254 and not £207,741. He had expressly reserved the right to rectify any “slip” in his decision as if it were an award published pursuant to the Arbitration Act 1950. He declined to do so on the basis that he said the decision reflected his intention and did not contain a clerical mistake or error arising from an accidental slip or omission.
The Court of Appeal upheld the decision of Dyson J at first instance. He held that the error did not give rise to a right to challenge the adjudicator's decision on an application for summary judgment. He found that the adjudicator had done what he was being asked to do and was answering the correct question. On that basis there was no challenge if he answered the correct question in the wrong way.
This approach found support in the decision of Knox J in Nikko Hotels (UK) Ltd v MEPC Plc [1991] 2 EGLR 103 where he said: “If he has answered the right question in the wrong way, his decision will be binding. If he has answered the wrong question, his decision will be a nullity.”
For present purposes Simon Lofthouse QC, who appears for BAL, accepts that the slip rule is an implied term of the Sub-Contract in similar terms to the implied term held to exist by His Honour Judge Toulmin CMG QC in Bloor Construction (UK) Ltd v Bowmer & Kirkland (London) Limited [2000] BLR 314 and recently considered by Akenhead J in YCMS Ltd v Grabiner [2009] BLR 211 at [50].
In summary the implied term provides for a slip rule which permits an adjudicator to correct an accidental error or omission in a decision, providing that the correction is made within a reasonable time: see Bloor at 319.
In Bloor the adjudicator sent the parties his decision, one of the parties pointed out an error and the adjudicator corrected his decision, all within the time period within which the adjudicator could reach his decision. In YCMS the adjudicator had published his decision within time and the slip was pointed out within time but the adjudicator corrected his decision two days later. Akenhead J held that this would come within the slip rule, so far as timing in concerned.
The slip rule has therefore been interpreted to apply even where the time for making the original decision has expired. This is on the basis that the adjudicator retains power...
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