Partner - London. United Kingdom
Essential Living (Greenwich) Limited v Elements (Europe) Limited [08.06.22]
Essential Living (Greenwich) Limited (Essential Living), engaged Elements (Europe) Limited (Elements) to design, supply, manufacture and install a number of modular units for a mixed-use development project in Greenwich, London in December 2016. The parties signed an amended JCT Construction Management Trade Contract 2011, (the Contract) providing, amongst other things, that if Elements failed to complete the works within the completion period given under the contract, Elements were required to pay Essential Living liquidated damages as per the terms under the contract plus £300,000 in financing costs.
Due to delays, the completion date under the contract was not met and Essential Living brought an adjudication against Elements in April 2019. Essential Living later sought to enforce the adjudication decision regarding sums due to Elements by Essential Living for variations, and requiring Elements to pay Essential Living various sums for the delays, including sums in respect of liquidated damages and financing costs (the Adjudicator’s Decision).
In October 2021, Essential Living issued a Part 8 Claim for declaratory relief in respect of various declarations arising out of the Adjudicator’s Decision, including:
Elements argued that the Adjudicator’s Decision only applied to the interim payment application and did not affect the construction manager’s determination of the final trade contract sum and post-completion contract period, which were the next steps required to be considered under the contract.
The court held:
The court made it clear that in deciding whether an adjudicator’s decision is binding, the outcome will largely turn on the facts and evidence provided in respect of each disputed issue. As a result, those that partake in adjudications should carefully evaluate the decisions in establishing, with reference to terms in the contract, which issues have been dealt with and which issues may form a new basis of claim. Thus, allowing parties to issue fresh proceedings.