YCMS Ltd (t/a Young Construction Management Services) v Grabiner & Anor [2009] EWHC 127 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-lawnow.com/adjudication

SUMMARY

In this case the Court held that a revision that an Adjudicator had purported to make to his award under the “slip rule” was invalid as the Adjudicator had not merely corrected a “patent error” but had in fact had second thoughts as to the basis for calculating the award.  The Court also decided that the defendants should not be permitted to set-off against the award the amount of a subsequent award in their favour that had not yet fallen due for payment.  

Technology and Construction Court, Mr Justice Akenhead

BACKGROUND

The Grabiners employed YCMS to carry out extensive works to their London home.  Interim Certificates were issued regularly by the Architect.  In June 2007, the Architect signed and issued 2 versions of Certificate No. 13: the first was headed “draft” and was for £50,984.14 plus VAT; the second was not headed “draft” and was for £50,013.14 plus VAT.  The Grabiners did not pay Certificate No. 13 and YCMS commenced Adjudication 1 to recover sums due. 

Shortly after the adjudication was commenced, YCMS submitted Valuation No. 14 and suggested that the parties extend the Adjudicator’s jurisdiction to deal with the whole final account.  The Grabiners refused.    The Architect then issued Certificate No 14.  This identified a sum due of £15,615.45 plus VAT and contained the following statement: “The Certificate preceding this one is Certificate No 12”.  The Grabiners paid the amount certified in Certificate No. 14.  They argued, in defence of YCMS’ claims in the adjudication, that Interim Certificate No. 14 represented the total owing to YCMS and, that amount having now been paid, the matter of payment was now resolved.    

The Adjudicator issued his decision on 29 October 2008, holding that you could not have a “draft” Interim Certificate (thus Certificate No. 13 was valid and the qualification on Certificate No. 14 was irrelevant) and YCMS was entitled to £25,942.74 plus any VAT due on Certificate No. 14.  YCMS responded on the same day pointing out that this figure should have been £41,558.19 and requesting correction of the arithmetical slip in the Adjudicator’s decision.  2 days later, the Adjudicator purported to correct the slip, but in fact recalculated the sum on a slightly different basis, changing the award to £59,906.36.  The Grabiners did not pay either sum.

Subsequently YCMS commenced Adjudication 2 with the same adjudicator, claiming additional preliminaries and sums in respect of allegedly undervalued works.  The Adjudicator made further awards to YCMS.  The Grabiners claimed the two adjudications duplicated one another and offered to pay the sums awarded in Adjudication 2 in full and final settlement of both proceedings.  YCMS rejected the offer but the Grabiners paid the Adjudication 2 award anyway.

The Grabiners subsequently commenced Adjudication 3 with a different adjudicator in respect of the value to be included in the Final Certificate (essentially claiming they had overpaid YCMS).  The Adjudicator awarded the Grabiners £17,890.74 plus VAT and apportioned all his fees to YCMS. 

YCMS commenced proceedings seeking enforcement of the revised sum awarded in Adjudication 1 (or alternatively, if the Adjudicator was found not to be entitled to “rectify” his decision, the original £25k sum).  The award under Adjudication 3 was not yet due and payable at the time of the Court’s decision.    

ISSUES

The Grabiners opposed enforcement of the decision in Adjudication 1 on the grounds that:

1. The decision was outside the Adjudicator’s jurisdiction because the Adjudicator purported to include the sum due under Interim Certificate No. 14 and the parties had declined to extend the Adjudicator’s jurisdiction to include that certificate;

2. The Adjudicator’s revision of the award was not valid;

3. The award in Adjudication 2 (which the Grabiners had paid) duplicated the award in Adjudication 1; and

4. The Grabiners should be permitted to set off the sums awarded to them in Adjudication 3.

DECISION

The Court granted summary judgment for the original figure awarded in Adjudication 1 (i.e., £25,942.74).  The revision of the award was not valid, as the Adjudicator had not merely corrected a “patent error” but had in fact had second thoughts as to the basis for calculating the award.  If the Adjudicator had simply corrected the arithmetical error as YCMS requested, the revision would have been valid as it had been effected within a reasonable time of the decision.  The Court noted that in cases of correction of a genuine “slip” it will not normally be necessary for the parties to be heard first.

 The Court held that the Adjudicator was entitled to include the sum due under Certificate No. 14 in his award, as the Grabiners had themselves brought it within the Adjudicator’s jurisdiction by raising it as a defence to YCMS’ claim (which the Adjudicator was accordingly bound to consider). 

 The Court refused to find that the awards in Adjudications 1 and 2 were duplications, as the Grabiners had led no evidence to that effect.  Nor were the Grabiners entitled to set off the sums awarded in Adjudication 3, as the fact that there had been a subsequent award was not a “special circumstance” justifying departure from the general rule that adjudicator’s decisions should be enforced promptly.  Things might be different if there were effectively simultaneous adjudications and awards.  Further, as there was no suggestion that either party was in financial difficulty there would be no prejudice to the Grabiners in having to honour the decision in Adjudication 1. 

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-lawnow.com/adjudication

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