Making mistakes in adjudication

In December of last year I reported the case of Bouygues -v- Dahl-Jensen. Although the case is soon to be heard on appeal, it has been cited by many as an illustration of the force and effectiveness of adjudication under the Housing Grants, Construction and Regeneration Act 1996.

The parties were approximately £11m apart when an adjudicator was appointed and given 28 days to resolve their disputes. Having assessed each party's entitlement on its respective claims and counterclaims, the adjudicator made a simple but fundamental error in his final statement of monies payable.

He calculated the monies due to the subcontractor Dahl-Jensen on the basis of gross amounts taking into account both claim and counterclaim, and then deducted previous payments, this latter figure being an amount net of retention. The effect was to release retention to the subcontractor in circumstances where the parties accepted that the works were not completed and retention not yet payable.

The adjudicator awarded a net amount of £207,000 in favour of Dahl-Jensen. Had the adjudicator spotted his error the overall effect would have been a net award of £140,000 in favour of Bouygues. On receipt of the adjudication decision, Bouygues' solicitors invited the adjudicator to correct the "slip". The adjudicator refused to do so contending in any event that he was now functus officio as regards the decision.

The court concluded that in so far as the adjudicator had made a mistake, it was a mistake in his calculations on the disputes put before him. It was not a mistaken decision to deal with a dispute that was outside his jurisdiction. Consequently Dahl-Jensen succeeded in enforcing the adjudicator's decision despite the existence of a very clear error.



Similar issues arose in the more recent case between Bloor Construction -v- Bowmer & Kirkland. Bowmer as main contractor entered into a contract with Bloor as subcontractor, under which Bloor was to provide labour and plant for ground works for a development at Whiteley Village, Fareham, in Hampshire.

Disputes arose under the contract and in early January of this year Bloor served notice on Bowmer of its intention to refer the disputes to adjudication. In the event the adjudicator delivered his decision with the effect that Bloor should be paid £122,000 including interest within 14 days of the date of the decision. The adjudicator sent a copy of his decision by fax to the parties. On receipt of the fax the managing surveyor employed by Bowmer realised that the adjudicator had failed to take into account previous payments made by them.

The error was pointed out to the adjudicator, and as a consequence later that same day the adjudicator sent a second decision to the parties taking into account the previous payments. The effect was that the £122,000 was no longer payable to Bloor, but instead the decision held that, subject to work in progress, Bloor was now in the position of a small over payment.

In court it was argued on behalf of Bloor that once the adjudicator had communicated his decision to the parties, his duty was at an end and he had no power to correct any errors, except perhaps clerical errors. It was argued that Parliament had laid down a quick and certain interim procedure for resolving disputes on the basis that any temporary injustice can be corrected at a later date. It was said that the adjudicator had a semi-judicial role which terminated at the delivery of his decision.

Bowmer argued that there must be an implied term in the contract between the adjudicator and the parties that the adjudicator had a power to correct manifest errors and clerical errors in similar fashion to arbitrators.



Judge Toulmin recognised that the Act and the Scheme do not address the question of whether, and if so in what circumstances, a decision once taken can be amended. It is therefore solely a matter of contract and thus, according to Judge Toulmin, the question was whether or not any terms could be implied into the agreement between the parties, under which the adjudicator could amend his award.

Judge Toulmin referred to the 1985 case of The Montan in which an arbitrator had accidentally transposed the names of the parties. In this case Sir John Donaldson, the then Master of the Rolls, had repeated his analysis of the "slip" rule. "It is a distinction between having second thoughts or intentions and correcting an award to give true effect to first thoughts or intentions which creates the problem."

Judge Toulmin was clear that the error in this case fell into the category of a "slip". The adjudicator was giving effect to his first thoughts and intentions in his amended ruling. In summary, Judge Toulmin recommended the contractor include a term that refers the dispute to adjudication. This additional term would allow the adjudicator or a third party application to correct an error arising from an accidental error or omission, to clarify or remove ambiguity in decisions reached.

He also stated that this would need to be executed within a reasonable time and without prejudicing the other party.