Essential Living (Greenwich) Ltd v Elements (Europe) Ltd
Citation:  EWHC 1400 (TCC)
This was a Part 8 claim for declaratory relief concerning the extent to which an adjudication decision on an interim account, is binding on the parties for the purpose of an ongoing final account process under the contract, and any further adjudication, pending final resolution of the matters by litigation or settlement.
The dispute arose out of a project for a mixed-use development at Greenwich Creekside. By a contract dated 1 December 2016 and incorporating the JCT Construction Management Trade Contract 2011, the Claimant engaged the Defendant to design, supply, manufacture and install modular units for the project.
Delays occurred to the works and completion was not achieved within the original contract period. The works were certified as practically complete on 31 May 2019. Disputes arose between the parties as to the Defendant’s entitlement to adjustments to the Trade Contract Sum, its claims for variations, extensions of time and loss, and the Claimant’s claims for liquidated damages and financing costs. The Claimant commenced adjudication on 9 April 2019. In July 2019, the adjudicator determined (among other issues) the last interim valuation of the Defendant’s completed works.
Final account process
The Defendant submitted that the Adjudication Decision was not relevant to the next contractual steps which the Construction Manager had to fulfil, both in respect of the calculation of the provisional Final Trade Contract Sum, and in the fixing of the Completion Period after the issue of the practical completion certificate. The Claimant argued that the Defendant remained bound by the Adjudication Decision in respect of these issues.
O’ Farrell J held that:
- the parties were bound by the Adjudication Decision on any dispute or difference determined therein until it is finally determined by the court or by subsequent settlement;
- the parties could not seek a further decision by an adjudicator on a dispute or difference if that dispute or difference had been the subject of the Adjudication Decision;
- the Adjudication Decision was not binding on the parties for the purpose of the Construction Manager’s final determination of the Completion Period under clause 2.27.5 of the JCT contract, from which would flow any liability on the part of the Defendant for liquidated damages and finance charges (Mailbox (Birmingham) Ltd v Galliford Try Building Ltd  Bus LR 2103 distinguished);
- the Adjudication Decision was not binding on the parties for the purpose of determining the Final Trade Contract Sum;
- the Adjudication Decision was binding in respect of variations considered and assessed by the adjudicator, unless and until the decision is overturned, modified or altered by the court, or unless either party identifies a fresh basis of claim (i.e., amounting to a new cause of action) that permits such variation claim to be opened up and reviewed under the terms of the Contract;
- it was a matter of fact and degree, requiring careful analysis of the evidence and argument on each disputed item, as to whether the Adjudication Decision was binding on any other discrete issue referred to and determined by the adjudicator, unless and until the decision is overturned, modified or altered by the court;
- it was a matter of fact and degree as to whether any matters which the Defendant might seek to refer to a subsequent adjudication are the same, or substantially the same, as the matters determined by the Adjudication Decision; absent any notice of adjudication before the court, it was not possible for this issue to be determined.
Alexander Nissen QC (instructed by Pinsent Masons LLP) appeared for the Defendant.