A recent TCC decision has considered the scope of the statutory slip rule applicable to adjudication proceedings. This is the first decision of an English court to consider the statutory rule, which is drafted more narrowly than the equivalent rule for arbitration. The court also considered the ability of an adjudicator to make consequential amendments following the correction of an initial error under the slip rule.

The “slip rule”

The “slip rule” applies in court, arbitration and adjudication proceedings and allows for the correction of accidental mistakes or errors in the outcome of such proceedings. Prior to 2011, the Housing Grants Regeneration and Construction Act 1996 (“Construction Act”) did not contain any provision which expressly empowered adjudicators to correct such mistakes. Adjudicators had to rely instead on an implied term. In Bloor Construction (UK) Ltd v Bowmer & Kirkland (London) Ltd, the implied term was described as providing the adjudicator with a power to “correct an error arising from an accidental error or omission or to clarify or remove any ambiguity in the decision which he has reached.”

The implied term set out in Bloor mirrors Section 57 of the Arbitration Act 1996 which provides that a tribunal may: “remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award.” This also reflects the rule in High Court proceedings that the “court may at any time correct an accidental slip or omission in a judgment or order” (CPR 40.12).

This position changed when the amendments to the Construction Act came into force on 1 October 2011. The new section 108(3A) of the Construction Act 1996 formally introduced the following slip rule for adjudication: “The contract shall 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.” Consequential amendments were also made to paragraph 22A(1) of the Scheme for Construction Contracts (England and Wales) Regulations 1998 mirroring this drafting.

These amendments narrowed the scope of the slip rule for adjudication proceedings to “clerical or typographical errors”. The High Court and arbitration slip rules extend to any accidental slips or omissions, regardless of whether they are clerical or typographical.

Axis M&E UK Ltd v Multiplex Construction Europe Ltd

In 2015 Axis were appointed by Multiplex as M&E sub-contractors for a residential development in Kensington. In 2018, Axis referred a dispute to adjudication to determine the sum payable in respect of its works under an interim application. The dispute included the valuation of a number of variations, Multiplex’s entitlement to deduct contra charges, and Axis’ resulting entitlement to payment. In total Axis was claiming more than £5m.

In making his decision, the adjudicator made a mathematical error by double-deducting certain contra-charges. This led him to conclude that: Axis’ claim failed; no money (and no interest) was due; and Axis were liable for his fees and expenses. Four days later, the adjudicator corrected his decision and concluded that Axis was in fact due £654,119.65 plus interest and Multiplex was liable for his fees and expenses.

Axis applied to the TCC for summary judgment to enforce the sum due under the amended decision. Multiplex opposed the proceedings on the basis that the scope of the amendments made went beyond those permitted by statutory slip rule.

A narrower rule?

In considering the scope of the slip rule under the Construction Act, the court followed an earlier Scottish decision (NKT Cables A/S v SP Power Systems Ltd) which had confirmed that the rule did not extend to pure omissions, but only to clerical or typographical errors. That in turn meant “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.”

The adjudicator's double-deduction of contra-charges was found to fall within the rule, being essentially an error in calculation. The consequential corrections made in relation to interest and costs were less straight-forward. These corrections were not in themselves errors of calculation or expression, but required correction because the initial error of calculation had changed the whole result of the decision.

The court upheld these consequential corrections, referring to the adjudicator’s initial error in calculation as a “gateway error”. This error opened the door to making other consequential corrections required in the interests of justice, otherwise the decision would be internally inconsistent. In reaching this decision, the court relied on a previous case decided under the Arbitration Act slip rule (Gannet Shipping Ltd v Eastrade Commodities Ltd).

Conclusions and implications

This is the first English court decision on the Construction Act slip rule. The decision appears to confirm that the rule is more limited than that which applies in court and arbitration proceedings. The court’s conclusions as to the consequential corrections are, however, difficult to square with those limitations. Whilst the ability to make such corrections is necessary to avoid internal inconsistency, it is difficult to see how such corrections result from clerical or typographical errors, given that the parts of the decision being corrected will have initially expressed the adjudicator’s intention accurately (i.e. in relation to interest and costs).

The correction of such errors appears to be more in keeping with the implied term formulated in Bloor and the slip rule applicable to arbitration proceedings. The present decision may therefore reflect the difficulties which arise when limiting the rule to clerical and typographical errors. Moreover, the explanatory notes which accompanied the amendments to the Construction Act in 2011 suggest that the intention of the statutory rule was, in fact, to mirror the implied term from Bloor. The purpose behind the limitations introduced to the rule, and whether those limitations were intended by Parliament, is therefore unclear.

It remains to be seen how the peculiar narrowness of the Construction Act slip rule will be applied in future cases. In the meantime, the present decision provides helpful guidance that consequential corrections following a “gateway error” are possible under the Construction Act rule.

References:

Bloor Construction v Bowmer & Kirkland [2000] BLR 314.

Gannet Shipping Ltd v Eastrade Commodities Ltd [2001] All ER (D) 74 (Dec).

NKT Cables A/S v SP Power Systems Ltd [2017] CSOH 38.

Axis M&E UK Ltd & Anor v Multiplex Construction Europe Ltd [2019] EWHC 169 (TCC).