Aspect Contracts (Asbestos) Limited v Higgins Construction PLC [2015] UKSC 38: Adjudication challenge

KEYWORDS: LIMITATION PERIODS AND APPEAL FROM ADJUDICATIONS

KEY TAKEAWAY

This is the first decision of the Supreme Court of the United Kingdom on a construction adjudication.

An unsuccessful party in an adjudication under the Housing Grants, Construction and Regeneration Act 1996 (UK) (the Act) can bring a claim to have the adjudication decision challenged within six years of the unsuccessful party making payment. This limitation period begins to run from the date the unsuccessful party makes a payment to the successful party pursuant to the adjudication.

The facts

In March 2004, Higgins Construction Plc (Higgins) contracted with Aspect Contracts (Asbestos) Limited (Aspect) for Aspect to conduct an asbestos survey on blocks of maisonettes that Higgins was considering for development (the Contract). It was undisputed that the Contract was a "construction contract" under the Act. Aspect conducted the survey and provided a report on 27 April 2004.

The development went forward and in early 2005 Higgins alleged that it had found asbestos material not previously identified in the Aspect report. As a result, a dispute arose between Higgins and Aspect regarding the unidentified asbestos material.

Ultimately, Higgins referred the dispute to adjudication, claiming over £800,000 in damages, plus interest. Higgins could refer the dispute to adjudication because of sections 108 and 114 of the Act, which implied a term into the Contract providing for a process of adjudication.

Higgins succeeded during the adjudication and was awarded £490,627 plus interest.

Importantly, the implied adjudication clause provided that:

"the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration ... or by agreement". The parties did not agree to consider the adjudication final and Higgins did not commence any action to recover the £331,855 balance of its claim or otherwise finally determine the dispute.

The limitation period for any claim Higgins had regarding the dispute had expired in early 2011. However, on 3 April 2012, Aspect commenced proceedings for recovery of the amount paid to Higgins on the basis that no payment was due on the merits of the original dispute. Higgins counterclaimed for the £331,855 balance of its original claim.

Aspect's claim

Aspect rested its claim either on the presence of an implied term or on the doctrine of restitution. The relevant term that Aspect submitted was implied was one...