The Supreme Court clarifies that claims arising from payments
made pursuant to adjudicator's decisions are fresh causes of
Aspect Contracts (Asbestos) Limited v Higgins
Construction Plc (2015)
The Supreme Court has clarified that any claim arising from a
payment made pursuant to a provisional adjudicator's decision,
is a fresh cause of action generated by the payment itself and is
independent of any contractual limitation period affecting the
underlying claim. It therefore remains an option for paying parties
who are on the wrong end of such an adjudicator's decision, to
subsequently challenge it in court proceedings, even if the
limitation period applying to the underlying claim has expired.
Aspect Contracts (Asbestos) Limited was originally retained by
Higgins Construction Plc in 2004 to carry out an asbestos survey on
a block of maisonettes which Higgins hoped to redevelop. The survey
report was delivered in April 2004, however during the
redevelopment in early 2005, Higgins found unexpected asbestos
containing materials which required removal. After failed attempts
at negotiation and mediation with Aspect and after a considerable
period of time, Higgins referred the dispute to adjudication,
claiming breach of contract and/or tortious duty of care, and
damages of over GBP 800,000. The adjudicator issued her decision
and ordered Aspect to pay Higgins GBP 490,000 in damages, interest
amounting to just over GBP 166,000 and her fees of GBP 8,750 plus
VAT. Aspect paid Higgins GBP 658,017 on 6 August 2009. Although
Higgins had not recovered the entirety of its claim, it did not
commence proceedings for the balance. The limitation period expired
in April 2010 for any contractual claim and at the latest by the
beginning of 2011 for claims in tort. However, Aspect subsequently
issued proceedings in February 2012 to recover the sum it paid
pursuant to the adjudicator's decision on the ground that no
sum was in fact due to Higgins and thus the GBP 658,017 was
repayable. Higgins counterclaimed for the balance of GBP 331,855
owing under its original claim.
In the Technology and Construction Court (TCC), Aspect argued
that there was an implied term that a party which had paid money
pursuant to an adjudicator's decision, remains entitled to have
the decision finally determined by legal proceedings and to have
the money repaid if the dispute was finally determined in its
favour. The TCC found that there was no such implied term and that
Higgins' counterclaim was time-barred. Further, in the absence
of mistake or duress or a right to have the adjudicator's
decision set aside, there could be no claim in restitution.
Disagreeing, the Court of Appeal found there was an implied term
that any overpayment relating to an adjudicator's decision
could be recovered.
The Supreme Court agreed with the Court of Appeal and,
additionally, gave Aspect permission to rely on restitution as an
alternative claim to its primary claim for an implied term. It
commented that adjudication is perceived as a speedy provisional
measure and as such, an inability to recover a payment made
pursuant to an adjudicator's decision would not make sense.
Lord Mance stated: "it is a necessary legal consequence of the
Scheme implied by the 1996 Act into the parties' contractual
relationship that Aspect must have a directly enforceable right to
recover any overpayment to which the adjudicator's decision can
be shown to have led, once there has been a final determination of
the dispute." He went on to find that Aspect's cause of
action arose from the date of payment to Higgins and as such, a
claim could be brought at any time within six years from then.
Higgins however, was time-barred from pursuing its counterclaim.
This was a consequence of Higgins' own decision not to commence
legal proceedings within the relevant limitation periods.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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