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The ‘right’ answer

November 2016 - Issue 87

Secondary to the parties having a rapid answer!

The case of Amey Wye Valley (‘Amey’) v The County of Herefordshire District Council (‘HDC’) [2016] EWHC 2368 (TCC) concerned two adjudications for works to the highways and roads in Herefordshire over a ten year period between 2003 and 2013. A Service Delivery Agreement (‘SDA’) was entered into by the parties which incorporated Option A of the ECC 2nd Edition 1995 together with Contract Data in Parts One and Two, as adjusted by the items listed in Schedule 5 (the ‘NEC Conditions’).

In 2005, there was a dispute between the parties concerning how to calculate the price adjustment for inflation under the SDA which was later resolved in a letter dated 21 July 2005. This agreement also related to the way in which the price increase mechanism was to apply over the duration of the contract (‘VOP3’).

The two adjudications took place in 2013 and 2015. The first adjudication involved deciding what VOP3 actually meant and, the second adjudication was to put money figures to the first decision, which resulted in Amey being order to repay to HDC £9.5 million which HDC claimed they had overpaid Amey for works during the contract period.

Under the NEC form, if a party does not serve a notice of dissatisfaction within a set time period, then the adjudication decision is final and binding. Neither party challenged the first decision. However, both parties accepted that the second adjudicator had made an error in the calculation of the final figure for repayment contained in his decision, although the parties did not agree about the effect of that error. Amey claimed it was £2.5 million, whilst HDC claimed it was £1.9 million.

Mr Justice Fraser in considering the adjudicator’s error stated:

“Errors of fine detail are part of the process effectively accepted by Parliament as a consequence of the process of adjudication. The ‘right’ answer is secondary to the parties having a rapid answer.”

The adjudicator was required to consider the parties’ respective calculations and positions in the context that those findings were binding. Both parties had made admitted errors themselves in the material and calculations that they submitted.

Amey argued that the second adjudicator acted without jurisdiction and should not be enforced in the full amount as part of the amount of repayment calculated involved an error in one part of the spreadsheet.

However, Mr Justice Fraser held that such an approach would be contrary to the law regarding enforcement of decisions by adjudicators as it would amount to a correction of an error of fact to arrive at a different outcome. The Judge held that to sever from the decision would amount to a correction of a single mistake of fact, concluding “An error in the arithmetic does not render the decision unenforceable”. Providing that the adjudicator was resolving the dispute referred to him, and not re-deciding something that was not before him, then he had jurisdiction to determine that dispute, despite making a mistake in doing so.

Rebecca Palmer

Senior Associate

e rpalmer@prettys.co.uk

t 01473 298274

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