A recent Court of Appeal decision has clarified an important issue regarding the situation where a party makes a payment pursuant to an adjudication decision and subsequently seeks to recover that payment through court proceedings.  

Under the relevant statute of limitations, any such court proceedings must be brought within a specified time (generally 6 years) from the date the relevant cause of action arose. However, there has been conflicting authority on whether the cause of action in such cases arises (and time therefore starts to run) at the time the payment was made or at the earlier time of the original breach or event that gave rise to the adjudicated claim.   The Court of Appeal has now confirmed that it is the former –  meaning that a paying party has up to 6 years from the date of payment to issue its own proceedings for repayment and does not need to take precautionary steps (such as seeking a negative declaration from the court) within the first 6 years of the original events giving rise to the dispute, as the lower court in this case had suggested.

Aspect Contracts (Asbestos) Ltd v Higgins Construction plc .  Read our Construction and Engineering team’s briefing on the decision here.