YCMS Limited (trading as Young Construction Management Services) v (1) Stephen Grabiner (2) Mariam Grabiner

Case reference: 
[2009] EWHC 127 (TCC)
Saturday, 31 January 2009

Key terms: 
Slip Rule - Adjudicator's Errors - Jurisdiction - Set-off

YCMS applied for summary judgment to enforce the decision of an adjudicator against the employer, Mr and Mrs Grabiner. Mr and Mrs Grabiner employed YCMS to carry out extensive works at their property under a building contract in writing, which incorporated the JCT Intermediate Form. Substantial variations were issued under the contract, which increased the contract sum to over £1 million.

Interim certificates were issued by the architect on a regular basis. Two versions of Certificate 13 were issued. One was entitled "draft" and certified as due, exclusive of VAT, for the sum of £50,984.14. The other version certified as due, exclusive of VAT for the sum of £50,013.14. Certificate 13 was not paid. A dispute arose as to whether or not either sum was payable to YCMS pursuant to Certificate 13 and also as to whether or not there was any justification for withholding earlier sums certified as due and VAT sums.

YCMS referred the dispute to adjudication. Mr and Mrs Grabiner claimed that Certificate 13 was a draft certificate and was not itself valid and enforceable. Their defence included the assertion that Certificate 14 (issued subsequently) was enforceable and represented in effect the sum due to YCMS. Certificate 14 had been paid and therefore no monies were due.

The adjudicator found in favour of YCMS. On receipt of the decision, YCMS informed the adjudicator that he had made an arithmetical error and that in fact a greater sum was due. The adjudicator decided that both his and YCMS' calculations were wrong and amended his decision by inserting an even greater sum due, which he calculated by a different method.

The sum said to be due under the first or revised first decision was not paid. YCMS commenced a second adjudication, in relation to additional preliminaries and under valued works. The adjudicator made a second award in YCMS' favour, which Mr and Mrs Grabiner paid.

A further dispute arose between the parties in relation to the final certificate, which was referred to adjudication. The adjudicator made a third award, this time in favour of Mr and Mrs Grabiner.

YCMS issued court proceedings seeking the recovery of sums in relation to the first decision (as revised). Mr and Mrs Grabiner opposed enforcement on four grounds:
1 The first award was outside the adjudicator's jurisdiction because it purported to include Certificate 14 which had not been included in the referral;
2 The purported revision of the first award was not valid;
3 The second award had duplicated the first award; and
4 They should be permitted to set off sums awarded to them under the third award against any sums to be paid to YCMS under the first award.

Certificate 14 had not been included in the referral to the adjudicator but because of Mr and Mrs Grabiner's defence, the adjudicator had been bound to have regard to the certificate. The mention of Certificate 14 in his decision was no more than a factual observation that was material to determining how much had been paid by Mr and Mrs Grabiner at the time he made his decision.

The Judge made the following observations regarding when an adjudicator may revise his decision, and considered the case of Bloor Construction (UK) Ltd -v- Bowmer and Kirkland (London) Ltd:

(a) "An adjudicator can only revise a decision if it is an implied term of the contract by which adjudication is permitted to take place that permits it. It does not follow that, if it is purely a statutory arbitration under the HGCRA (if there is no contractual adjudication clause), such implication can be said to arise statutorily.
(b) If there is such an implied term, it can and will only relate to "patent errors". A patent error can certainly include the wrong transposition of names or the failing to give credit for sums found to have been paid or simple arithmetical errors.
(c) The slip rule cannot be used to enable an adjudicator who has had second thoughts and intentions to correct an award. Thus for example if an adjudicator decides that the law is that there is no equitable right of set off but then changes his mind having read some cases feeling that he has got that wrong, such a change would not be permitted because that would be having second thoughts.
(d) The time for revising a decision by way of the slip rule will be what is reasonable in all the circumstances. In the Bloor case, the Adjudicator revised his decision within several hours and before the time for issuing a decision had been given. It will be an exceptional and rare case in which the revision can be made more than a few days after the decision. The reason for this is that, unlike a court judgment or an arbitration award, a principle purpose of the 1996 Act is to facilitate cash flow. If an adjudicator was able to revise his decision, say, 21 or 28 days later that would necessarily slow down and interfere with the speedy enforcement of adjudicators' decisions. That would in broad terms be contrary to the policy of the Act."

In the instant case, the adjudicator had gone further than just correcting his error and had decided to make a recalculation using different figures. Mr and Mrs Grabiner were therefore materially prejudiced by the amendment. Therefore the revised first award was not valid.

It was held that Mr and Mrs Grabiner had not begun to establish an arguable case on the facts to support their argument that the second award duplicated the first.

With regard to the possibility of setting off one adjudicator's decision against another, the Judge referred to Interserve Industrial Services Ltd -v- Cleveland Bridge UK Ltd where it was held that absent special circumstances, the losing party must comply with the adjudicator's decision. The losing party cannot withhold payment whilst anticipating recovery of the monies through future adjudications.

In relation to the third award, the decision was only recently issued and it was possible that YCMS might take a jurisdictional objection in any enforcement proceedings by Mr and Mrs Grabiner. The Judge granted summary judgment for YCMS in the sum of £28,675.44 inclusive of VAT.

Key contact

Tel: +44 (0)20 7421 1986
Tel: +44 (0)20 7421 1986