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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Essential Living (Greenwich) Ltd v Elements (Europe) Ltd [2022] EWHC 1400 (TCC) (08 June 2022) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2022/1400.html Cite as: [2022] EWHC 1400 (TCC), 203 Con LR 267 |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Rolls Building London, EC4A 1NL |
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B e f o r e :
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Claimant |
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- and - |
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Defendant |
____________________
Alexander Nissen QC (instructed by Pinsent Masons LLP) for the Defendant
Hearing date: 8th December 2021
____________________
VERSION
OF APPROVED JUDGMENT
Crown Copyright ©
"This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Wednesday 8th June 2022 at 10:30am"
Mrs Justice O'Farrell:
The Contract
"The Employer shall pay the Trade Contractor that sum or such other sum as on the Adjustment Basis becomes payable in accordance with this Trade Contract ("the Final Trade Contract Sum") at the times and in the manner stated."
"4.10.2 Where periodic payments apply, the due dates in respect of the period up to practical completion of the Works shall be the monthly dates specified in the Trade Contract Particulars up to either the date of practical completion or the specified date within one month thereafter…
…
4.10.4 The sum due as an interim payment shall be the grossValuation
under clause 4.17 less the aggregate of:
.1 any amount which may be deducted and retained by the Employer as provided in clauses 4.19 to 4.21 ("the Retention");
.2 the cumulative total of the amounts of any advance payment that have then become due for reimbursement to the Employer in accordance with the terms stated in the Trade Contract Particulars for clause 4.9;
.3 the sums stated as due in previous Interim Certificates;
.4 any sums paid in respect of an Interim Payment Notice given after the issue of the latest Interim Certificate, whether as adjusted by a Pay Less Notice or otherwise. …
…
4.17 The GrossValuation
shall be the total of the amounts referred to in clauses 4.17.1 and 4.17.2 less the total of the amounts referred to in clause 4.17.3, applied up to and including a date not more than 7 days before the due date of an interim payment.
4.17.1 The totalvalues
of the following which are subject to Retention shall be included:
.1 the work properly executed by the Trade Contractor …
4.17.2 The following which are not subject to Retention shall be included:
…
.6 any other amount which is required by this Trade Contract to be added in the calculation of the Final Trade Contract Sum.
4.17.3 The following shall be deducted:
.1 any amounts deductible under clause … 2.36 [defects] …"
"On the Adjustment Basis the Final Trade Contract Sum shall be the Trade Contract Sum adjusted by the amount stated in anyVariation
Quotations for which the Construction Manager has issued a Confirmed Acceptance and by the amount of any
Variations
thereto as
valued
under clause 5.3.3 and are set out in clauses 4.3.2 and 4.3.3."
"4.6.1 Not later than 3 months after the issue by the Construction Manager of the certificate of practical completion of the Works, the Trade Contractor shall provide the Construction Manager with all documents necessary for calculating the Final Trade Contract Sum.
4.6.2 Not later than 3 months after receipt by the Construction Manager of the documents referred to in clause 4.6.1 the Construction Manager shall prepare and send to the Trade Contractor a provisional calculation in accordance with clause 4.3 or 4.4, as applicable…
…
4.16.1 The Construction Manager shall issue the Final Statement to the Trade Contractor and not later than 2 months after whichever of the following occurs last:
.1 the Final Release Date …
.2 the date of issue of the Certificate of Making Good under clause 2.38…
.3 the date on which the Construction Manager sends to the Trade Contractor a copy of the statement to be prepared under clause 4.6.2.
4.16.2 The Final Statement shall set out:
.1 the Final Trade Contract Sum; and
.2 the sum of amounts already stated as due in Interim Certificates …
and … the final payment shall be the difference (if any) between the two sums, which shall be shown in the Final Statement as a balance due to the Trade Contractor from the Employer or to the Employer from the Trade Contractor, as the case may be. The Final Statement shall state the basis on which that amount has been calculated."
"After the expiry of the Completion Period for the Works … if this occurs before the date of practical completion, the Construction Manager may, and not later than the expiry of 12 weeks after the date of practical completion shall, by notice to the Trade Contractor …
.1 fix a Completion Period for the works … later than that previously fixed if in his opinion that is fair and reasonable having regard to any Relevant Events, whether on reviewing a previous decision or otherwise and whether or not the Relevant Event has been specifically notified by the Trade Contractor under clause 2.26.1; or
.2 … fix a Completion Period shorter than that previously fixed if in his opinion that is fair and reasonable having regard to any instructions for Relevant Omissions issued after the last occasion on which a new Completion Period was fixed for the Works …; or
.3 confirm the Completion Period previously fixed."
"If a dispute or difference arises under this Trade Contract which either party wishes to refer to adjudication, the Scheme shall apply … "
"An adjudicator must resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication, and a decision has been taken in that adjudication."
"The decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement between the parties."
The adjudication
"(1) A declaration that the sum due toElements
for the original scope of works performed (less omitted works) to date is £24,395,338 or such other sum as the adjudicator shall determine;
(2) A declaration that the sum due toElements
for
variations
is £1,842,044 or such other sum as the adjudicator shall determine;
(3) A declaration that the sum due toEssential
for the extra-over cost of completing the works omitted from
Elements'
original scope of works, and for remedying defects in
Elements'
works is £10,461,024.00 or such other sum as the adjudicator shall determine;
(4) A declaration that the sum due toEssential
for liquidated damages is the capped sum of £1,287,598 (incorrectly identified as £1,587,598 in the Notice) or such other sum as the adjudicator shall determine;
(5) A declaration that the sum due toEssential
under clause 8.7A is £300,000 or such other sum as the adjudicator shall determine;
(6) An order thatElements
must pay the sum of £11,368,610.76 within 14 days of the date of the decision, or such other sum as the adjudicator shall see fit;
(7) An order thatElements
shall pay interest on the sum due under (6) above accruing daily at the rate of 4% per annum over the Bank of England Base Rate (the Contract Rate) or at such other rate as the adjudicator may determine."
"33. … this Adjudication concerns the sum due in respect of:
33.1Elements'
application for payment issued on 11 March 2019; and
33.2 InnC'svaluation/payless
notice dated 20 March 2019.
34. In other words, the Adjudicator is required tovalue
![]()
Elements'
interim payment application…"
"The dispute before me is over the "latest interim"valuation
of completed
Elements
works, and liability for contra charges and liquidated damages."
i) the sum due to Elements
for the original scope of works performed to date is £24,673,360.34;
ii) the sum due to Elements
for
variations
is £2,346,650.46;
iii) the amount to which Essential
Living is entitled for remedying defects in
Elements'
works was £1,423,096;
iv) the amount to which Essential
is entitled for liquidated damages is the capped sum of £1,287,598;
v)
the amount to which
Essential
is entitled under clause 8.7A is £300,000;
vi)
an order that
Elements
pay to
Essential
Living the sum of £1,842,360.64 within 14 days of the date of the decision, together with interest; and
vii)
the parties each pay 50% of the adjudicator's fees and expenses.
Final Account submissions
Proceedings
i) a declaration that Essential
Living is entitled to the sums awarded by the adjudicator by way of liquidated damages and clause 8.7A damages and can retain those sums, unless and until the Adjudication Decision is overturned, modified or altered by the Court;
ii) a declaration that Elements
is not entitled to any extensions of time beyond those already assessed and awarded by the Adjudication Decision, unless and until those are overturned, modified or altered by the Court;
iii) a declaration that nothing in clause 2.27.5.1, clause 4.6 or any other provision of the Trade Contract allows the Construction Manager to review, reopen, modify or alter the extensions of time, liquidated damages, clause 8.7A damages and valuations
assessed and decided by the Adjudication Decision;
iv) a declaration that Elements
is not entitled to claim any loss and/or expense for extended on-site preliminaries, unless and until the Adjudication Decision is overturned, modified or altered by the Court;
v)
a declaration that
Elements
is not entitled to claim any loss and/or expense for factory production disruption costs, unless and until the Adjudication Decision is overturned, modified or altered by the Court;
vi)
a declaration that
Elements
is not entitled to claim any loss and/or expense for preliminaries thickening based on alleged delay events which were considered and rejected by the adjudicator, unless and until the Adjudication Decision is overturned, modified or altered by the Court;
vii)
a declaration that
Elements
is not entitled to claim or pursue any deductions to the Trade Contract Sum for the cantilevered balcony works and/or preliminaries which differ from the
values
and/or basis already decided by the adjudicator, unless and until the Adjudication Decision is overturned, modified or altered by the Court;
viii)
a declaration that
Elements
is not entitled to claim or pursue any sums which differ from the
values
and/or basis already decided in respect of the
variations
considered and assessed by the adjudicator (including but not limited to those set out in the witness statement appended hereto), unless and until the Adjudication Decision is overturned, modified or altered by the Court;
ix) a declaration that Elements
is not entitled to claim any balconies testing costs and/or any associated overheads and profit, unless and until the Adjudication Decision is overturned, modified or altered by the Court;
x) [this declaration is no longer pursued]; and
xi) a declaration that Elements
is not entitled to re-adjudicate on any of the matters and claims decided by the adjudicator, and that at all events, any subsequent adjudicator is bound by the Adjudication Decision on such matters and claims and/or lacks the requisite jurisdiction to reopen or determine such matters and claims.
i) Jonathan Hutt of Taylor Wessing LLP, solicitors acting for Essential
Living – first statement dated 7 October 2021 and second statement dated 18 November 2021;
ii) Colin Fraser of Pinsent Masons, solicitors acting for Elements
– statement dated 4 November 2021; and
iii) Simon Underwood, Chief Executive Officer of Elements
– statement dated 4 November 2021.
The issues
i) the impact of the Adjudication Decision on claims for extensions of time, liquidated damages and delay damages;
ii) the impact of the Adjudication Decision on evaluation of the Final Trade Contract Sum, including variations
and loss and/or expense; and
iii) the impact of the Adjudication Decision on any subsequent adjudication.
Parties' submissions
Applicable legal principles
"[14] By providing that the decision of an adjudicator is binding and that the parties shall "comply with it", paragraph 23(2) of the Scheme makes the decision enforceable for the time being. It is enforceable by action founded on the contractual obligation to comply with the decision combined, in a normal case, with an application for summary judgment… But the decision is only binding and the obligation to comply with it only lasts "until the dispute is finally determined" in one of the ways identified. By use of the word "until" paragraph 23(2) appears to contemplate that there will necessarily be such a determination. The short time limits provided by paragraph 19(1) also indicate that adjudication was envisaged as a speedy provisional measure, pending such a determination. But there is nothing to prevent adjudication being requested long after a dispute has arisen and without the commencement of any proceedings. Further, it seems improbable that the Scheme imposes on either party any sort of obligation to start court or arbitration proceedings in order to confirm its entitlement. Either or both of the parties might understandably be content to let matters rest.
[15] ... it seems clear that neither party is obliged ever to commence legal proceedings, and that if neither does the adjudicator's decision continues to bind…"
"[17] Adjudication is conceived as a provisional measure. At a cashflow level, [the successful party] remains entitled to the payment unless and until the outcome of legal proceedings, arbitration or negotiations, leads to a contrary conclusion. But at the deeper level of the substantive dispute between the parties, the parties have rights and liabilities, which may differ from those identified by the adjudication decision, and on which the party making a payment under an adjudication decision must be entitled to rely in legal proceedings, arbitration or negotiations, in order to make good a claim to repayment on some basis."
"(a) The parties are bound by the decision of an adjudicator on a dispute or difference until it is finally determined by court or arbitration proceedings or by an agreement made subsequently by the parties.
(b) The parties cannot seek a further decision by an adjudicator on a dispute or difference if that dispute or difference has already been the subject of a decision by an adjudicator.
(c) The extent to which a decision or a dispute is binding will depend on an analysis of the terms, scope and extent of the dispute or difference referred to adjudication and the terms, scope and extent of the decision made by the adjudicator. In order to do this the approach has to be to ask whether the dispute or difference is the same or substantially the same as the relevant dispute or difference and whether the adjudicator has decided a dispute or difference which is the same or fundamentally the same as the relevant dispute or difference.
(d) The approach must involve not only the same but also substantially the same dispute or difference. This is because disputes or differences encompass a wide range of factual and legal issues. If there had to be complete identity of factual and legal issues then the ability to re-adjudicate what was in substance the same dispute or difference would deprive Clause 39A.7.1 of its intended purpose.
(e) Whether one dispute is substantially the same as another dispute is a question of fact and degree."
"In my judgement, the following factors, amongst others, can be deployed in considering whether the same or substantially the same dispute has been referred to or resolved in an earlier adjudication:
(a) One needs to consider what is and was the ambit and scope of the disputed claims which is being and was referred to adjudication. That of course willvary
from dispute to dispute. One has however to take a reasonably broad brush approach in determining what the referred claims were. The reason for this is to avoid repeat references to adjudication of what is
essentially
the same dispute.
(b) The fact that different or additional evidence, be it witness, expert or documentary, over and above what was relied upon in the earlier adjudication, is deployed in the later claim to be referred to a second or later adjudication, will not usually alter what theessential
dispute is or has been. The reason is that evidence alone does not generally alter what is the
essential
dispute between the parties. One needs to differentiate between the
essential
dispute and the evidence required to support or undermine one party's or the other's case or defence.
(c) The fact that different or additional arguments to support or enhance a claiming party's position are deployed in the later adjudication will not usually of itself mean that it is a different dispute to that which was referred earlier. Again, the reason is that different or even better arguments that are deployed in a later adjudication do not usually create anessentially
different dispute.
(4) The fact that the quantum is different or is claimed on a different quantification basis in the later reference to adjudication from that claimed in the earlier adjudication is not necessarily a pointer to the referred disputes being in substance different. If for example in Adjudication A the referring party claims for thevalue
of 100 m³ of supplying and installing concrete, £20,000, at a rate of £200 per cubic metre, a claim for the same concrete work on a time plus materials basis in Adjudication B is
essentially
the same claim, albeit put on a different basis. There is nothing to stop the referring party in the subsequent arbitration or litigation claiming on each alternate basis but the claim is a claim for payment for the supply and installation of concrete.
(5) One should be particularly cautious about being over-awed in the exercise of comparison of two sets of documents purporting to set out the disputed claims for two adjudications by the amount or bulk of the detail, evidence, analysis, submissions or annexures attached to either.
(6) It is legitimate to look at the expressed motivation by the party in the later adjudication for bringing it and the given reasons for the basis of formulation of the later adjudication claim.
(7) One must bear in mind that Notices of Adjudication and Referral Notices are not required to be in any specific form; they may be more or less detailed and they may or may not be drafted by people with legal expertise. They do not need to be interpreted as if they were contracts, pleadings or statutes.
(8) One strong pointer as to whether disputes are substantially the same is whetheressentially
the same causes of action are relied upon in the earlier and later Notices of Adjudication and Referral Notices. One must bear in mind that one dispute (like one Claim in Court proceedings) may encompass more than one cause of action."
Impact of the Adjudication Decision on extensions of time, liquidated damages and delay damages
"[47] Whether dispute A is substantially the same as dispute B is a question of fact and degree. If the contractor identifies the same Relevant Event in successive applications for extensions of time, but gives different particulars of its expected effects, the differences may or may not be sufficient to lead to the conclusion that the two disputes are not substantially the same. All the more so if the particulars of expected effects are the same, but the evidence by which the contractor seeks to prove them is different.
[48] Where the only difference between disputes arising from the rejection of two successive applications for an extension of time is that the later application makes good shortcomings of the earlier application, an adjudicator will usually have little difficulty in deciding that the two disputes are substantially the same."
"In myview,
it is beyond argument that Mailbox are entitled to retain the entirety of the liquidated damages awarded by the adjudicator (and the subject of the enforcement judgment of O'Farrell J), unless and until the liquidated damages claim is challenged in court and the court reaches a contrary
view
on the detailed claims. That is the effect of the decision in the first adjudication. That entitlement cannot be reduced or modified either under the contract or in a subsequent adjudication."
Impact of the Adjudication Decision on the Final Trade Contract Sum
Impact of the Adjudication Decision on any further adjudication
Summary of conclusions
i) the parties are bound by the Adjudication Decision on any dispute or difference determined therein until it is finally determined by the court or by subsequent settlement;
ii) the parties cannot seek a further decision by an adjudicator on a dispute or difference if that dispute or difference has already been the subject of the Adjudication Decision;
iii) the Adjudication Decision is not binding on the parties for the purpose of the Construction Manager's final determination of the Completion Period under clause 2.27.5, from which would flow any liability on the part of Elements
for liquidated damages and finance charges;
iv) the Adjudication Decision is not binding on the parties for the purpose of determining the Final Trade Contract Sum;
v)
the Adjudication Decision is binding in respect of
variations
considered and assessed by the adjudicator, unless and until the Adjudication Decision is overturned, modified or altered by the court, or unless either party identifies a fresh basis of claim that permits such
variation
claim to be opened up and reviewed under the terms of the Contract;
vi)
it is a matter of fact and degree, requiring careful analysis of the evidence and argument on each disputed item, as to whether the Adjudication Decision is binding on any other discrete issue referred to and determined by the adjudicator, unless and until the Adjudication Decision is overturned, modified or altered by the court;
vii)
it is a matter of fact and degree as to whether any matters which
Elements 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 is not possible for this issue to be determined.