Essential Living (Greenwich) Ltd v Elements (Europe) Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell DBE,Mrs Justice O'Farrell |
| Judgment Date | 08 June 2022 |
| Neutral Citation | [2022] EWHC 1400 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2021-000388 |
[2022] EWHC 1400 (TCC)
Mrs Justice O'Farrell DBE
Case No: HT-2021-000388
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice
Rolls Building
London, EC4A 1NL
Mathias Cheung (instructed by Taylor Wessing LLP) for the Claimant
Alexander Nissen QC (instructed by Pinsent Masons LLP) for the Defendant
Hearing date: 8 th December 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
“ 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 8 th June 2022 at 10:30am”
This is a Part 8 Claim by the claimant (“Essential Living”) for declaratory relief arising out of the adjudication decision of Dr Franco Mastrandrea dated 22 July 2019 (“the Adjudication Decision”).
The issue for determination by the court is whether, and if so, to what extent, the Adjudication Decision is binding on the parties for the purpose of the ongoing final account process under the contract and any further adjudication, pending final resolution of the matters determined in the adjudication by legal proceedings or settlement.
Essential Living's position is that, in respect of any matters assessed and decided by the adjudicator, the Adjudication Decision is binding for the purposes of calculating the final contract sum, fixing the completion period under the contract and any subsequent adjudication.
The defendant (“Elements”) opposes the relief sought on the ground that the adjudication related to an interim application for payment, shortly before the occurrence of practical completion; the Adjudication Decision does not impact on the final account process or the contractual review of the period for completion following practical completion. Further, the claim requires a detailed examination of disputed facts and is unsuitable for resolution as a Part 8 claim.
The Contract
The underlying dispute arises out of a project for a mixed-use development at Greenwich Creekside, East Creek Road, Greenwich, London SE8, comprising residential apartments, amenity floors and ground floor retail units in two multi-storey buildings with a shared basement.
By a contract dated 1 December 2016, Elements was engaged by Essential Living for the design, supply, manufacture and installation of modular units for the project (“the Contract”).
The Contract incorporates the JCT Construction Management Trade Contract 2011, subject to further amendments agreed by the parties.
Article 2A specifies that the Trade Contract Sum is £25,751,956 and states:
“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.”
Part 3 of the Trade Contract Particulars provides that the agreed period for completion the works is 38 weeks after the expiry of the period of notice to commence works. The notice to commence works on site required Elements to commence works on 20 March 2017, giving an initial period for completion of the works that expired on 11 December 2017.
The Construction Manager appointed by Essential Living was InnC UK Ltd (“InnC”). In about September 2019, InnC became insolvent and Essential Living took over the role of Construction Manager under the Contract until after completion of the works.
The Contract contains provisions for periodic interim payments to be made as set out in clauses 4.10 and 4.17:
“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 gross Valuation 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 Gross Valuation 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 total values 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] …”
Clause 4.1 provides that, where the Adjustment Basis applies (as in this case), the Final Trade Contract Sum shall be calculated in accordance with clause 4.3.1:
“On the Adjustment Basis the Final Trade Contract Sum shall be the Trade Contract Sum adjusted by the amount stated in any Variation 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.”
Clause 4.3.2 identifies the deductions to be made to the Trade Contract Sum, for items such as omissions of work, and clause 4.3.3 identifies the additions to be made, including the Valuation of Variations as provided for in clauses 5.3 to 5.12 of the Contract.
The Contract sets out the timetable and procedure for calculation and payment of the Final Trade Contract Sum:
“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.”
Clauses 2.25 to 2.28 of the Contract provide for Elements to give notice of delay to progress, identifying any Relevant Event specified in the Contract causing delay to completion of the works, and for the Construction Manager to make such adjustment to the Completion Period in respect of any delay caused by those Relevant Events as he estimates to be fair and reasonable.
Clause 2.27.5 provides for a fresh assessment of the Completion Period to be carried out following expiry of the same or completion of the works:
“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.”
Clauses 2.32 and 8.7A of the Contract (as amended) provide that if Elements fails to complete the works within the Completion Period, it shall pay or allow to Essential Living liquidated damages, at the rates set out, subject to an overall cap, and payment of £300,000 in respect of financing costs.
Article 7 of the Contract provides that either party may refer any dispute or difference arising under the Contract to adjudication in accordance with clause 9.2. Clause 9.2 states:
“If a dispute or difference arises under this Trade...
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