ESSENTIAL LIVING (GREENWICH) LIMITED v ELEMENTS (EUROPE) LIMITED

An adjudication decision binds the parties temporarily until final determination, but it does not displace the underlying contract or its later decision-making procedures.

The effect of an adjudication depends on the scope of the dispute referred and the decision made. A later adjudication cannot determine the same or substantially the same dispute. Whether disputes are substantially the same is a question of fact and degree.

A post-completion contractual review may produce a different completion period from an earlier interim assessment. Conversely, matters such as agreed or adjudicated variations remain binding for the final account unless the contract permits a fresh basis of assessment. Broad declarations are inappropriate where each disputed item requires detailed analysis.

The claimant sought declarations concerning the effect of an adjudicator’s decision dated 22 July 2019 on the parties’ continuing contractual processes.

The underlying contract concerned the design, supply, manufacture and installation of modular units. The adjudication determined an interim valuation, including variations, defects, liquidated damages and finance costs. Practical completion had occurred on 31 May 2019, but the contractual post-completion review of the completion period and the final account process remained outstanding.

The central issues were whether the adjudication decision bound the parties in the post-completion assessment of time and damages, in calculating the final trade contract sum, and in any later adjudication. The court also considered whether those issues were suitable for determination under Part 8.

1. Temporary binding effect. The parties were bound by the adjudication decision on any dispute or difference determined by the adjudicator until final determination by the court or settlement. The decision had to be given effect to, but it did not alter the parties’ underlying contractual rights or displace contractual procedures for determining them.
2. Subsequent adjudication. The parties could not refer the same or substantially the same dispute to a further adjudication. The comparison required analysis of the scope and substance of the disputes. Different evidence, arguments or quantification would not necessarily create a new dispute. Whether disputes were substantially the same was a question of fact and degree.
3. Completion period and damages. The adjudication concerned the latest interim valuation as at March 2019. It did not determine the separate exercise required by clause 2.27.5 after practical completion. That clause expressly permitted review of an earlier decision and could produce a different completion period. The adjudication therefore did not bind the parties for that exercise or for resulting liquidated damages and finance charges. Mailbox (Birmingham) Ltd v Galliford Try Building Ltd was distinguishable because termination had removed the post-completion review and the first adjudicator had finally determined the relevant issue.
4. Final account. The adjudication did not determine the Final Trade Contract Sum. Nevertheless, agreed variations and variations disputed and determined in the adjudication were binding for that account, unless the contract permitted a fresh basis of claim. The Construction Manager had to analyse each disputed item and decide whether it was agreed, already determined and binding, or open to fresh assessment. That factual inquiry was unsuitable for a general Part 8 declaration.
5. Disposition. The court declined to give the broad declarations sought. It was not possible to determine hypothetically whether future disputes would be the same or substantially the same without a notice, referral and response identifying them. Consequential matters, including the form of order, costs and any permission to appeal, were adjourned.