In Essential Living (Greenwich) Ltd v Elements (Europe) Ltd [2022] EWHC 1400 (TCC), Mathias Cheung recently appeared for the Claimant (Essential Living) in the TCC in a Part 8 claim for declarations relating to the effect of a previous adjudication decision on the parties’ ongoing final account dispute.
This is an important case which provides helpful clarification on the binding effect of adjudication decisions on interim accounts for the purpose of subsequent final account assessments.
The dispute arises from a mixed-use development in Southwest London known as Greenwich Creekside, and Essential Living engaged the Defendant (Elements) in December 2016 to carry out the design and construction of the modular units for the project under an amended JCT Construction Management Trade Contract 2011.
Prior to practical completion in May 2019, the parties went through a lengthy adjudication before Dr Franco Mastrandrea from April to July 2019 on the last interim valuation account. In his Decision, the Adjudicator determined (among other things) Elements’ variation and extension of time claims and also awarded liquidated damages for delay.
In the final accounting process conducted by the Construction Manager, Elements sought to reopen and reargue the various variations and delay matters which were determined by the Adjudication Decision. In anticipation of a potential further adjudication on such matters, Essential Living sought Part 8 declarations from the Court to the effect that Elements remained bound by the prior Adjudication Decision.
O’Farrell J held, in summary, that:
- Where the Adjudication Decision determined discrete issues of entitlement or valuation (such as on variations), those determinations are binding on Elements for the purpose of ascertaining the Final Trade Contract Sum, unless and until those matters are finally resolved by litigation or settlement, or unless Elements advances claims on a fresh basis such that they amount to new causes of action. It is not right for Elements to say that those determinations are irrelevant simply because they were made in the context of an interim valuation.
- However, the Construction Manager (and any subsequent adjudicator) is entitled to review previous decisions / assessments on extensions of time post-completion and reach a different assessment, by virtue of the express power of review in clause 2.27.5 of the JCT Contract. The decision in Mailbox (Birmingham) Ltd v Galliford Try Building Ltd [2017] Bus LR 2103 is therefore distinguishable.
Mathias was instructed for the Claimant by Taylor Wessing LLP.
