Aspect Contracts (Asbestos) Ltd v Higgins Construction plc (SC - 17.6.2015)

Aspect Contracts (Asbestos) Ltd v Higgins Construction plc (SC - 17.6.2015)

The surveyor’s right to have the dispute referred successfully to adjudication by the contractor finally determined in court proceedings arose and accrued for limitation purposes from when it paid the contractor the sum awarded by the adjudicator.
 

ASPECT CONTRACTS (ASBESTOS) LTD v HIGGINS CONSTRUCTION PLC

SUPREME COURT

LORDS MANCE, WILSON, SUMPTION, REED AND TOLSON

17th June 2015

 

The contract of engagement between the contractor and the surveyor incorporated the Scheme for Construction Contracts. The contractor referred a claim against the surveyor to adjudication based on the surveyor’s allegedly negligent report. The adjudicator awarded the contractor a sum which was some £200,000 less than the sum it claimed of about £820,000. The adjudication took place about four years into the limitation period for the contractor to bring the claim. The surveyor chose not to commence the court proceedings in which it claimed the repayment of the sum awarded until some two and a half years after the adjudication when the contractor’s cause of action for its claim was otherwise time-barred by limitation. 

The Supreme Court held that the surveyor’s right to have the dispute referred successfully to adjudication by the contractor finally determined in court proceedings arose and accrued for limitation purposes from when it paid the contractor the sum awarded by the adjudicator (i) on an implied contractual basis in consequence of the implied contractual term that it had a directly enforceable right to recover its payment if the merits of the dispute were finally determined in its favour and (ii) on a restitutionary basis (and was therefore not time-barred). However, the contractor’s cause of action to claim the balance of its original claim, which the adjudicator refused to award, in the court proceedings began by the surveyor accrued at the same time as its original claim (and was therefore time-barred). 

Lord Mance stated that it is a necessary legal consequence of the Scheme for Construction Contracts that the surveyor 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. The obvious basis for recognition of this right is by way of implication arising from the Scheme provisions which are themselves implied into the construction contract. Whatever basis the right to repayment arises upon, the same restitutionary considerations underlie it, namely (i) If and to the extent that the basis on which the payment was made falls away as a result of the court's determination, an overpayment is retrospectively established and (ii) Repayment must to that extent be required by contractual implication or, if not, by virtue of an independent restitutionary obligation. The surveyor’s cause of action, whether analysed in implied contractual or restitutionary terms arose from payment, was only for repayment and could therefore be brought at any time within six years after the date of payment to the contractor.

Download