High Court considers whether an adjudicator’s decision is binding on a Final Trade Contract Sum

Essential Living (Greenwich) Limited v Elements (Europe) Limited [08.06.22]

In Essential Living (Greenwich) Limited v Elements (Europe) Limited [08.06.22], the High Court considered the effect of adjudication decisions and how they operate in conjunction with construction contracts, in particular with regards to liquidated damages, extensions of time and damages for delays, and how this may impact any final trade contract sums.


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:

  1. A declaration that Essential Living were entitled to the liquidated damages and costs as per the Adjudicator’s Decision.
  2. A declaration that nothing within the contract allowed the construction manager to review, alter or modify the Adjudicator’s Decision as regards to the liquidated damages and costs.

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:

  1. The Adjudicator’s Decision could not override the contractual provision within the contract requiring the construction manager to assess the final trade contract sum and post-completion contract period following practical completion.
  2. The Adjudicator’s Decision did not assess the final trade contract sum, rather, it determined the sums due to Essential Living for liquidated damages and financing costs up to March 2019. Accordingly, any liability owed by Elements to Essential Living in respect of liquidated damages and financing costs was to be determined by the construction manager’s final determination of the completion period.
  3. The Adjudicator’s Decision was however binding in respect of the variations assessed by the adjudicator, until and unless that is overturned by a subsequent court decision or a fresh basis of claim is identified by the parties in respect of the variations under the contract.


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.

Read other items in Construction Brief - October 2022

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