PP Construction Limited v Geoffrey Osborne Limited [2015] EWHC 325 (TCC)

PP Construction Limited v Geoffrey Osborne Limited
[2015] EWHC 325 (TCC)

Judgment date: 6 February 2015

A construction contract must include a written provision giving an adjudicator the right to correct a typographical or clerical error (the slip rule). Here the parties' contract provided that they had 14 days to request a correction under the slip rule, with the amended decision being issued within seven days of that request. For a request to be operative and to engage these time periods, the error must be identified with sufficient clarity that a reasonable adjudicator would understand that he had made an error, what the error was, why it was an error and what alteration was necessary.

Background

PP Construction Limited (“PP”) and Geoffrey Osborne Limited (“GOL”) entered into a contract on 17 January 2013 where GOL engaged PP to act as its subcontractor and to carry out ground works and works on the concrete frame at the Chichester Festival Theatre.

Within the contract, Clause 70(9) made express provision for the correction of errors in an award. The Clause provided that any correction of an error in an award must be made within 7 days from when the adjudicator either takes the initiative or a request is made by either party. The Clause also provided that “the adjudicator may on his own initiative or at the request of either party correct his decision so as to remove any clerical mistake, error or ambiguity provided that such initiative is taken or such request is made within 14 days of the notification of his decision to the parties”.

A dispute arose between PP and GOL regarding payment due to PP. The adjudicator, issued an award on 26 November 2014 directing GOL to pay PP £229,005 plus VAT and applicable interest. The adjudicator used PP’s valuation figure as a base, applying a 5% discount, and deducting a 2.5% retention as well as sums already paid by GOL.

PP emailed the adjudicator at 13:53 on 26 November 2014 stating that the calculation was incorrect and that the 5% discount should not have been made as PP’s valuation was already net of a 5% discount. PP stated that the adjudicator had therefore discounted the amount twice by 5%.

The adjudicator responded to PP on 28 November 2014 clarifying that there was no intention to discount by 5% twice and suggesting that PP identify the particular erroneous items in the award. PP emailed the adjudicator on 28 November 2014 providing an explanation of their calculations.

The adjudicator replied to PP on 30 November 2014 accepting that PP was correct to point out the clerical error and confirmed that 5% had been taken twice. The adjudicator concluded his email with “the correction will be issued as above once you cast an eye”.

PP then replied to the adjudicator on 4 December 2014 confirming the difference in calculation and requesting the adjudicator to issue his revised decision. On 5 December 2014, PP’s solicitors emailed the adjudicator again asking him to issue his revised decision. The adjudicator issued the revised award that day.

If the operative request for correction of the clerical error was the email on 26 November 2014 from PP to the adjudicator, then the revised award was issued more than the 7 days after the request provided for by Clause 70(9). If, however, the operative request was made on 28 November 2014, 4 December 2014 or 5 December 2014 the revised award was issued within the 7 days allowed by Clause 70(9).

GOL resists the application for summary judgement on the basis that the adjudicator’s correction was made out of time and was of no effect.

Issues

The Court was asked to decide:

1. Whether the email and attachment on 26 November 2014 were a “request” within the meaning of Clause 70(9)?
2. If the email and attachment on 26 November 2014 were not a “request” within the meaning of Clause 70(9), did PP issue a “request” within the meaning of the Clause at a later date?
3. If the email and attachment on 26 November 2014 were a “request” within the meaning of Clause 70(9):
   • was it open to PP to issue another request within the meaning of the Clause and, if it was,
   • did PP issue another request within the meaning of the Clause?
4. If the answers to issues (1), (2) and (3)(b) are “No”, did Mr Bingham correct his decision on his own initiative?

Decision

The Court granted summary judgment in favour of PP and held that:

• The court found the attachment as presented to the adjudicator was unclear so that he could not read it. The court concluded that the attachment was intended to be part of the request, “an integral part of the whole but the whole could not be understood”. The court disagreed with GOL’s submission that the adjudicator’s response on 28 November 2014 showed the email and attachment were suitably clear and that the adjudicator understood the essential terms that would constitute an operative request. The court held that the adjudicator’s response illustrated his acceptance that he had taken a second 5% discount and that it was not his intention to do so. The adjudicator had additionally asked for clarification for where the error was to be found. Consequently, the email and attachment sent by PP on 26 November 2014 did not constitute a “request” within the meaning of Clause 70(9).
• The court found that that the email and attachment on 28 November 2014 enabled any reasonably competent adjudicator to understand precisely where in his adjudication he had made a clerical error, what that error was, why it was an error and what alteration was required. On this basis the court found that the email and attachment on 28 November 2014 satisfied all the requirements of an operative request.
• If the email and attachment of 28 November 2014 had not been sufficient to be an operative request, the court found that each of the emails of 4 and 5 December 2014 were capable of satisfying the formalities of an operative request. However, the court held it was not necessary to make this decision as the email of 28 November 2014 was the operative request.
• As the court found that the email and attachment of 28 November 2014 was the operative request, issue number 3 above did not arise. However, the court held that Clause 70(9) did not expressly prohibit the making of more than one operative request.
• The court stated that if it had found that the email of 26 November 2014 was the operative request, PP were allowed to issue another request within the meaning of Clause 70(9), and PP had issued another request within the meaning of Clause 70(9) on 4 and/or 5 December 2014.

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