Amey Wye Valley Ltd v Herefordshire District Council (TCC - 3.10.2016)

Amey Wye Valley Ltd v Herefordshire District Council (TCC - 3.10.2016)

The adjudicator’s error in the second adjudication in applying the contractual price adjustments mechanism based on the adjudicator’s decision in the first adjudication as to the meaning of that mechanism did not render his decision unenforceable
 
AMEY WYE VALLEY LTD V HEREFORDSHIRE DISTRICT COUNCIL
TECHNOLOGY AND CONSTRUCTION COURT
FRASER J
3RD OCTOBER 2016

A dispute arose as to the council’s use of the contractual mechanism known as VOP3 to calculate the effects of price inflation. This dispute was referred to a first adjudication in which the adjudicator was asked to and did decide the meaning of VOP3 but not the financial consequences of that meaning. A further dispute as to the financial consequences was referred to another adjudicator in a second adjudication. The second adjudicator ordered the contractor to repay a specified sum to the council. It was common ground that the second adjudicator in purporting to apply the meaning of VOP3 found by the first adjudicator in arriving at that sum made an error in his calculations. The council brought proceedings to enforce the second adjudicator’s decision.

 

The contractor submitted that: (i) The first adjudicator’s decision bound the parties in terms of the meaning of VOP3 and had become binding (ii) The second adjudicator therefore only had jurisdiction to act in accordance with that decision and had no jurisdiction to act otherwise than in accordance with it and (iii) The second adjudicator’s mistake of fact in applying the first adjudicator’s decision meant that he was acting outside his jurisdiction.

 

Fraser J, in rejecting the contractor’s submissions, stated that the first adjudicator was asked to decide the meaning of VOP3 but not the financial consequences of that meaning and decided that dispute. The adjudicator in the second adjudication was asked to and did decide the financial consequences of the decision in the first adjudication and did not purport or attempt to decide the dispute referred in the first adjudication again.

 

Even if the point of view of the adjudicator in the second adjudication was not taken as the starting point (i) The first adjudicator decided to what extent and how VOP3 was to be considered (including whether it was to be binding) and (ii) The second adjudicator decided the financial consequences of the first adjudicator’s decision where the dispute referred was how to calculate the VOP3 index to apply to the sums due under the agreement in accordance with that decision. The second adjudicator’s decision was consistent with that in the first adjudication in that the second adjudicator did not attempt to re-decide or consider again that which had been decided by the first adjudicator. Such errors of calculation as were made by the second adjudicator did not render his decision unenforceable.

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