In the first case* it has heard on construction adjudication, the Supreme Court has had to decide how long parties have to apply for determination of the decision following an adjudication.
Higgins(a property developer) engaged Aspect (an asbestos risk management specialist) to carry out an asbestos survey on some properties that Higgins was considering re-developing. The survey was completed in April 2004 and the re-development took place in early 2005. A dispute arose between the parties, as Higgins claimed that Aspect had failed to identify all asbestos on the site. This dispute was referred to adjudication.
In July 2009, the adjudicator decided that Aspect was liable and it was ordered to pay damages to Higgins in August 2009.
The amount the adjudicator decided was less than Higgins had claimed, but Higgins did not start proceedings to recover the balance within the 6 year limitation period.
In February 2012, Aspect began its own proceedings to overturn the adjudicator’s decision and recover the payment it had made. Higgins counterclaimed for the additional balance of its claim. As mentioned above, this was more than 6 years after Aspect’s alleged breach, but less than 6 years after the adjudication and Aspect’s payment.
The Court held that there is an implied term entitling an unsuccessful party to seek repayment of sums paid following an adjudication award against it within 6 years from the date of payment. As such, Aspect’s claim was not out of time. Higgins’s counterclaim, however, was.
In the words of Lord Mance delivering the judgment, adjudication is intended to be a speedy method of dispute resolution, only binding “until the dispute is finally determined”. So, just as one party has the right to enforce a payment in line with the adjudicator’s decision so does the other have the right to recover such a payment, if on determination in later court or arbitral proceedings it is established that such sum was not payable in respect of the original dispute.
Higgins argued that the date from which the claim should be brought was the date of the original breach but the judge dismissed this as artificial: following the adjudication, it is the date of payment from which the 6 year period in which to re-claim the sum paid begins.
- If you are the unsuccessful party in adjudication and have to make a payment, you can claim for repayment within 6 years from the date the payment was made.
- If you are the successful party in adjudication, any claim for determination must be made within 6 years of the original breach.
- To avoid the uncertainty of further claims arising out of adjudicator’s decisions, you might consider including a term in your contracts that the adjudicator’s decision is binding.
For more information, email firstname.lastname@example.org.
*Aspect Contract (Asbestos) Ltd v Higgins Construction Plc