Once bitten, fight shy

Edmund Nuttall was the contractor for sprucing up the town centre at Swanley for Sevenoaks district council. Presumably it involved oodles of block paving, trees and those confounded traffic-calming bumps that seem to fascinate town planners and infuriate car drivers. Anyway, Nuttall said it was messed about in its endeavour and was entitled to an extension of time, a claim for consequent expense, plus a claim for disruption as well as changes of mind. Maybe the council increased the traffic bumps to the size of Everest. Some money was paid in respect of all this, but not enough, said Nuttall.

So the company called for an adjudicator. Chris Dancaster was appointed. The sum claimed was £70 000. Seemingly, though, the various heads of claim were gross sums that did not give credit for sums already paid on account. In due course Dancaster decided that Nuttall was entitled to an extension of time of 18 weeks together with £403 119 + VAT with the rider "subject only to such retention and liquidated damages as may be properly deductible under the contract". Missing from the calculations was a deduction of £48 800 already certified for loss and expense tucked away in the referral notice.

Sevenoaks spotted this oversight and drew it to the adjudicator's attention. Quite properly, he entirely agreed that the amount awarded was too high but said, "I do not believe that I have jurisdiction to amend my decision, but consider that it would be improper not to acquaint you with the situation." And in due course that is what came to be a question for the courts. Meanwhile Nuttall admitted that its demand that Sevenoaks stump up the lump of cash in the adjudicator's award was based on a wrong calculation, but it wanted that money anyway. No, no, said Sevenoaks, we will deduct the £48 800 error plus another £43 230 for liquidated damages for delays beyond the 18 weeks' extension of time. Sevenoaks sent Nuttall a cheque for a whole lot less than the adjudicator's figure. Having drawn the battle lines across the speed bumps, the disputants went to court.

Nuttall told the court that Sevenoaks had no reasonable argument to its application for instant judgment. So could it have its money now without having to await a tiresome trial? Strictly speaking Nuttall held a good hand of cards because the decision of an adjudicator is binding until finally decided in litigation or arbitration. The court had the power to give summary judgment if it considered that Sevenoaks had no real prospect of succeeding with its defence if it went to trial. The deciding factor was recently explained as being whether a brief look at the defence would show that the defendant would probably lose and that "it could end in tears". It was only necessary to be satisfied that Sevenoaks would probably fail.

Mr Justice Dyson told Sevenoaks that if it were up to him, he would say it would probably fail. But in a previous case, Bouygues Ltd vs Dahl-Jensen Ltd – in which he decided a so-called wrong figure nevertheless was binding – the Court of Appeal gave permission to examine his decision. So, he could no longer say a trial on the same type of point would probably lead to Sevenoaks' defence failing. He therefore would not give summary judgment. As a matter of fact, the Court of Appeal took the view that the decision of an adjudicator in the Bouygues case, even if wrong, was binding. But wait a moment. The adjudicator in this Nuttall case entirely accepted that there was an error. This is different. Now what?

Nuttall admitted its demand for the cash in the award was based on a wrong calculation, but it wanted it anyway

In another "numbers" error case, Bloor vs Bowmer & Kirkland, the judge thought that an admitted error could be corrected "provided it was done within a reasonable time and without prejudicing the other party". In which case Dancaster could have corrected the error.

That, for now at least, is the clearest guidance. But let me admit that I have made similar numbers errors in my adjudications. These days I send out a draft of my decisions in advance, and invite the parties to point up errors. It works. No tears.

One other point in the Nuttall matter was the right of Sevenoaks to deduct the £43 230 liquidated damages from the amount ordered by the adjudicator. Not on, said the judge: "These damages were not properly deductible under the contract at the time of the adjudicator's decision, nor are they properly deductible now." The reason appears to be that in neither case was proper written notice of withholding money sent in time, nor did the other contractual notices under the contract served concern non-completion.