[2024] EWHC 1032 (TCC)

On 12^th September 2023, MHL issued an Adjudication Notice in Adjudication 5. This sought, inter alia, “a decision and direction that LJJ are to pay or allow Key Date Damages arising from LJJ’s failure to meet the Sub-Contract Key Dates in the sum of £1,160,000 or such other sum as the Adjudicator might determine, such sum to be paid forthwith.”

Following numerous exchanges, the Adjudicator issued the Decision on 31^st October 2023. He decided that LJJ were to pay Key Date Damages arising from LJJ’s failure to meet the Sub-Contract Key Dates in the sum of £808,000, this sum to be paid within 7 days.

In a covering email of the same date, the Adjudicator asked the parties to notify him of any “clerical or typographical errors”. This innocent enough request was to produce a considerable volume of correspondence.

On 2nd November 2023 LJJ’s then solicitors wrote to the Adjudicator in the following terms, with emphasis added:

“We acknowledge receipt of your decision dated 31 October and your request for correction of clerical errors.

LJJ’s submissions in this regard are set out below, entirely without prejudice to LJJ’s submissions as to jurisdiction and subject to a reservation of rights to raise additional points as to jurisdiction and/or natural justice and/or the validity of the decision.

…

2... The final sentence of paragraph 84 is also factually incorrect. MHL’s valuation of AfP 18 was issued on 8 November 2022, well before the decision in Adjudication 2 (5 March 2023). MHL’s valuation of AfP 19 dated 8 December 2022 (copy attached) contained a deduction of Key Date damages of £954,285.71. It is therefore wrong to say that the PLN issued the month after AFP18 did not deduct Key Date damages. It is also wrong to say that Valuation 17 was superseded – MHL clearly carried forward their claim for Key Date damages and LJJ maintains that the Decision should reflect the benefit that MHL have already extracted from Decision 2 and exercised their right to make deductions from LJJ’s valuations.

It is understood that paragraph 84 is based on MHL’s submission from paragraph 41 of the Reply. The Adjudicator’s LOI did not request submissions from LJJ on this specific point in response, which is why LJJ are replying to this point now. In the interests of natural justice, it is submitted that the Adjudicator should take this into account for the purposes of his amended decision. Clarity on this point is essential, particularly given that LJJ may refer a dispute regarding Valuation 19 to adjudication…”

It is immediately apparent that this communication went well beyond the correction of clerical or typographical errors. These comments were properly characterised as “submissions” on matters of fact.

The Adjudicator responded on the same day asking for MHL’s comments by 11am on 3rd November 2023. At 10:04 on 3 November 2023, MHL’s solicitors wrote to the Adjudicator objecting to LJJ’s submissions on the basis that they did not advise of clerical or typographical errors and were not in any event agreed. They invited the Adjudicator to disregard them.

At 11:19 on 3rd November 2023, LJJ’s solicitors wrote again to the Adjudicator in the following terms, which are also properly to becharacterised as “submissions” on matters of fact (or, possibly, law):

“MHL’s position should be considered particularly in the context of paragraph 2 of our submissions below. Clause 2.3B.2 provides that the “Sub-Contractor agrees to pay or allow to the Contractor such…amount” [of Key Date damages]. We understand that you are alive to this distinction because of your reference to MHL’s valuation of AfP 18. You now have evidence confirming that MHL deducted Key Date damages in their valuation of AfP 19 and that, critically, the sum deducted (or allowed) in that valuation was greater than the sum considered to be due in Adjudication 5.

If the Decision was not corrected, LJJ would be required to both pay and allow Key Date damages, which is clearly wrong. As a matter of arithmetic, the sum allowed (£954,285.71) should be deducted from the sum decided as due.”

On 4th November 2023 at 12:31, the Adjudicator responded to LJJ’s comments as follows, emphasis as original:

“Paragraph 3 (third and four paragraphs) [sic: in context this must be a reference to numbered paragraph 2, third and fourth internal paragraphs] These are observations/ submissions concerned with reasoning, not an application for a correction. I concluded that Interim Application 17 and its Payless Notice were superseded by Interim Application 18, merely noting, correctly, that “MHL says” that no Key Date damages were deduced in respect of Interim Application….

However, to recognise the possibly that MHL’s submission may not be correct, a matter which my Decision did consider, it not being the intention to award double recovery, an intention not clearly reflected in the wording of the Decision, I consider that the last sentence of paragraph 138 should be amended to read: “I have so stated ordering that, if not already allowed, as envisaged in paragraph 69 of the LoI on which neither party commented, that the said sum be paid by LJJ to MHL within seven days of the date of this Decision together with such VAT, if any, as is applicable thereon in law. Paragraph 2 of the Operative part to be corrected to read; “If not already allowed, the said sum of £808,000.00 to be paid by LJJ to MHL within seven days of the date of this Decision together with such VAT, if any, as is applicable thereon in law.”

The Adjudicator asked for the parties to provide any comments on the drafting of the amendments/corrections he proposed to make by 5pm that day. This provoked further correspondence, in which MHL’s solicitors contended that the proposed amendments fell outside the scope of the correction of clerical or typographical errors. LJJ’s solicitors argued to the contrary.

However, the Adjudicator incorporated his proposed changes and issued the Revised Decision later on 4th November 2023. The covering letter stated:

“Whilst I note McLH’s concern that the corrections I have made to paragraph 138 of the Reasons and paragraph 2 of the Operative Part fall outside of the scope of paragraph 22A of the 2011 Scheme, I remain of the view that those corrections are within that power for the reasons stated in my email of earlier today. Indeed, as LJJ submits, these corrections have similarities to those that the court in Bloor Construction (UK) Ltd v Bowmer & Kirkland (London) Ltd [2000] BLR 314 considered were within an Adjudicator’s power; albeit in that case under an implied slip rule.

The question of whether Key Date damages of at least the amount referred to those two corrected paragraphs has been allowed is not addressed in the corrected Decision.

That is for the parties to consider given that, as noted in my email of earlier today, the Decision does not determine whether such damages were deducted by the Payless Notice responding to LJJ’s Application which I concluded in my Decision superseded those which Decision No.2 concerned.”