Slipping Up: Adjudicator's Power Limits Clarified in MHL v. LJJ

The Court rejected the Revised Decision, deeming it outside the adjudicator’s jurisdiction. The adjudicator had requested identification of clerical or typographical errors under the 'slip rule'.  In the decision the Court provided important guidance on use of the slip rule and clarified that clerical errors can include inaccuracies in the written decision, but these cannot affect the decision's reasoning or intention. The Court held that the adjudicator, influenced by the further submissions, mistakenly revised the decision on substantive grounds, which was beyond his authority.

Background

MCLH was engaged by Shiying Property London Limited for the fit-out and refurbishment of Christchurch Court, Paternoster Square, London. MCLH subcontracted the mechanical and electrical installations to LJJ under a JCT 2016 Design and Build contract worth approximately £17 million. The current dispute emerged during the fifth adjudication between the parties.

In September 2023, MCLH initiated Adjudication 5, seeking £1,160,000 in damages for LJJ’s failure to meet key dates. The adjudicator's decision on 31 October 2023 awarded MCLH £808,000 (due to LLJ's failure to meet a number of key dates under the contract), payable by LJJ within seven days.

On 4 November 2023, the adjudicator issued a Revised Decision under the slip rule, clarifying his intention to avoid double recovery. The revision amended the final sentence of paragraph 138 to ensure clarity in the decision's wording, specifying that 'if not already allowed', the sum must be paid by LJJ to MCHL within seven days.

When payment was not received with those seven days, MCHL sought summary judgment to enforce the Decision on the grounds that it was not superseded by the Revised Decision, as the Adjudicator had exceeded his jurisdiction under the 'slip rule' in revising the Decision, with LJJ resisting enforcement on four main grounds ([2]):

• The Decision was superseded by a Revised Decision, meaning it was unenforceable and could be enforced;
• If the adjudicator erred in law in issuing the Revised Decision, this was within his jurisdiction and the Court should not interfere;
• MCHL could not approbate and reprobate the Decision; and
• MCHL could not enforce the Revised Decision.

Slip Rule

As outlined at paragraph [17] of the judgment, the Scheme for Construction Contracts 1998 (as amended) permits adjudicators to correct decisions under paragraph 22A(1), which states that:

“The Adjudicator may on his own initiative or on the application of a party correct his decision so as to remove a clerical or typographical error arising by accident or omission”

This has been clarified subsequently through English and Scottish case law, emphasising:

• Scope of Slip Rule: It does not address pure omissions (things the adjudicator intended but forgot to include);
• Definition of Errors: Clerical or typographical errors include expression or calculation mistakes, such as arithmetic errors, mis-transposing names, calculation slips, or incorrect numbers. These errors do not affect the decision's reasoning or intention; and
• Nature of Errors: Errors must be accidental or due to omission, aimed at correcting slips in expression, not changes in the decision's rationale.

Within the judgment, the TCC also referenced Lady Wolffe’s comments in NKT Cables A/S v SP Power Systems Limited [2017] CSOH 38, reinforcing that:

• The slip rule is narrow, allowing corrections of accidental clerical or typographical errors, not omissions or substantive mistakes; and
• Corrections are limited to the adjudicator's original thoughts and intentions. Broadening this scope would undermine the interim finality of adjudicators' decisions, a key feature of the Scheme.

Court Decision

The Court examined LJJ's primary arguments against enforcing the Decision and determined:

• The Revised Decision was not a correction of a clerical error but a substantive change based on further submissions, making the original decision enforceable;
• The adjudicator exceeded the scope of his powers, with reference made to Lesotho Highlands Development Authority v Impregilo SpA [2006] 1 AC 221 and O'Donnell Developments Ltd v Build Ability Ltd [2009] EWHC 3388 to demonstrate the limits of the Adjudicator's power;
• The argument that MCLH could not both approve and disapprove the decision lacked merit; and
• The claim that MCLH could not enforce the Revised Decision became moot once the Revised Decision was deemed invalid.

The TCC concluded that the adjudicator’s actions surpassed the allowable scope under the slip rule.

Specifically, the addition of “if not already allowed” within the Revised Decision transformed a clear determination of payment into a conditional declaration subject to further investigation of transactions between the parties. The adjudicator's mandate was to correct clerical or typographical errors arising from accidents or omissions, not to clarify or qualify decisions.

Consequently, MCLH was granted summary judgment to enforce the original Decision requiring LJJ to pay £808,000.

Practical Takeaways

There are a number of key practical takeaways from the case as follows:

• Scope of Adjudicator's Powers: Adjudicators can correct clerical errors where true clerical or typographical errors occur, but not substantive matters. Parties should carefully consider the scope of the adjudicator's powers before seeking corrections;
• Coverage of slip rule: this covers mistakes of expression, rather than the reasons and intentions behind the decision itself; and
• Enforcement of Adjudication Decisions: the courts generally will uphold adjudication decisions unless exceptional circumstances exist, and, as such, parties should be prepared to enforce or challenge decisions promptly.