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A Slip-Up when using the Slip Rule

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02/06/2017

Dawnus Construction Holdings Ltd v Marsh Life Ltd [2017] EWHC 1066 (TCC) (11 May 2017)

The TCC has confirmed that in the absence of an express reservation of rights, a party is not entitled to argue that an Adjudicator’s decision is a breach of the rules of natural justice, where that party has previously treated the decision as being valid.

The Housing Grants Construction and Regeneration Act 1996 provides that a construction contract must include a written provision giving the Adjudicator the power to correct clerical and typographical errors in his decision. This is known as the slip rule.

Marsh Life Ltd (“Marsh Life”) had previously invited the Adjudicator, under the slip rule, to make corrections to its award that Marsh Life had to pay sums to Dawnus Construction Holdings Ltd (“Dawnus”). The Adjudicator declined to make such corrections.

Dawnus sought summary judgment against Marsh Life after it refused to pay the sums awarded. The TCC found that Marsh Life was not entitled to resist enforcement of the Adjudicator decision on the grounds that the Adjudicator’s decision was invalid, when Marsh Life had previously accepted the decision as binding by requesting the corrections under the slip rule.

The Judge held that there was little distinction between a claim of breach of the rules of natural justice and a claim that an Adjudicator had acted in excess of his jurisdiction. As such, claiming the Adjudicator’s decision is a breach of natural justice is effectively claiming that the decision is invalid.

As Marsh Life had previously invited the Adjudicator to amend his decision under the slip rule, it had recognised and accepted the decision as being valid.

Unless Marsh Life had expressly reserved its rights to the contrary, it had waived its right to bring a challenge on the ground that the decision was invalid.

Comment

The case highlights the importance of careful consideration of all the options available to a party upon an Adjudicator making its decision. Whenever there is the potential that enforcement of the decision will be challenged on the grounds of validity, a party should make expressly clear in its correspondence with the Adjudicator and the other party that such rights are being reserved.

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