Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc has been in the legal and construction news since it first went to court in February 2012. The Supreme Court has now given judgment in this long running dispute.
In 2004, Aspect contracted with Higgins to provide an asbestos survey and report on some maisonettes that Higgins was redeveloping. The dispute arose when Higgins found asbestos in the maisonettes that Aspect had not identified in its report. The Scheme applied to the adjudication that followed.
Higgins argued that Aspect had breached its duty of reasonable skill and care in carrying out the asbestos survey. The adjudicator agreed and awarded Higgins £490,627 plus interest of its original claim for £822,482 plus interest. In August 2009, Aspect paid Higgins £659,017.
So far, so normal. But that wasn’t the end of it: the Act and the Scheme say that an adjudication decision will be binding until finally determined by legal proceedings, arbitration or by agreement. Higgins took no steps to recover the balance of its claim; neither did it agree with Aspect that the adjudicator’s decision would be final.
Time ticked on and the limitation period for Higgins to recover the balance ran out under the usual rules on limitation, at the latest, in early 2011. But in April 2012, Aspect started proceedings to recover the money it had paid to Higgins in the adjudication. It argued that payment hadn’t been due on the merits of the original dispute. Higgins counterclaimed the balance of its original claim. Aspect argued that the counterclaim was time-barred and had been since early 2011 at the latest.
At first instance, HHJ Akenhead decided that there was no implied term for repayment of the money paid by Aspect which it could show had not been due on its merits. The Court of Appeal thought otherwise and said that the implied term would be subject to the usual six year limitation period running from the date of Aspect’s payment in August 2009. Higgins’ counterclaim for the balance of its claim was however time-barred because time started to run for that back in 2004.
On 17 June, the Supreme Court gave its judgment. It is an important decision for the construction industry because it provides that a party that pays money following an adjudication decision has six years from the date of the payment to have the dispute finally determined and claim its money back. This means that any potential counterclaim may have become time-barred much earlier.
The decision opens up a new avenue of strategic concern: a successful party in an adjudication will now have to have a clear understanding of the different limitation timetables in play for finally determining a dispute. It is inevitable that this will catch out some of those who, having been successful at adjudication, find themselves liable to repay the sums awarded years after the original event.