Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc

The Supreme Court has determined the effect of an adjudicator’s decision on the cause of action and limitation period where an unsuccessful party to a statutory adjudication seeks a final determination of matters decided by the adjudicator.    

In Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc [2015] UKSC 38, an adjudicator ordered Aspect Contracts (Asbestos) Ltd (“Aspect”) to pay Higgins Construction Plc (“Higgins”) damages for breach of contract.  Neither party sought a final determination of the dispute within the relevant limitation period for commencing court proceedings.  It was not until after the expiry of the limitation period for Higgins to bring a claim that Aspect commenced recovery proceedings.  In this case, the Supreme Court unanimously decided that in an adjudication under the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998 No 649), the unsuccessful party has the benefit of an implied term to recover any overpayment to which the adjudicator’s decision has led, once the dispute has been finally determined.  Further, the unsuccessful party has a right to seek a final determination of the dispute through litigation, which arises on the date of payment of sums awarded by the adjudicator and is subject to a limitation period of six years from the date of payment.

For a successful party in an adjudication, the decision in Aspect means that they may be faced with recovery proceedings at any time within six years from the date payment is made.  As a result, by the time recovery proceedings are brought, the successful party may be prevented from bringing proceedings to confirm the adjudicator’s decision, or from lodging a counterclaim, as the limitation period to bring their own claim may have expired. 

A successful party to an adjudication should therefore consider either obtaining the unsuccessful party’s agreement to the fact that the adjudicator’s decision is binding, or ensures that it commences final determination proceedings within the original limitation period.

http://www.bailii.org/uk/cases/UKSC/2015/38.html