Landmark Supreme Court Decision On Adjudication: Aspect Contracts v Higgins Construction

On 17 June 2015, the Supreme Court handed down judgment in Aspect Contracts (Asbestos) Limited v Higgins Construction Plc [2015] UKSC 38, and in doing so, it considered for the first time the interaction between the statutory adjudication provisions contained in the Scheme for Construction Contracts (England and Wales) Regulations 1998 ("the Scheme") and the statutory law of limitation, and laid down an important new law.

The facts

Aspect Contracts (Asbestos) Limited ("Aspect") contracted with Higgins Construction PLC ("Higgins") to carry out an asbestos survey and report on blocks of maisonettes in Hounslow which Higgins was considering redeveloping. The contact contained implied terms under the Scheme which enabled disputes under it to be referred to adjudication, and required the parties to comply with the decision of any adjudicator until the dispute was finally determined by legal proceedings, arbitration or agreement.

A dispute subsequently arose when Higgins discovered asbestos containing materials which had not been identified in Aspect's original report of 27 April 2004 and the dispute was referred to adjudication. The adjudicator's decision went in Higgins' favour and Higgins was awarded the sum of £490,627 plus interest and the adjudicator's costs in respect of Aspect's breach of contractual and / or tortious duty to exercise reasonable care and skill. On 6 August 2009, Aspect made a part payment of the adjudicator's award, leaving an unpaid balance of £331,855 plus interest which Higgins made no attempt to recover, whether by proceedings or otherwise

The limitation periods for any claim in contract and tort by Higgins expired on 28 April 2010 and in early 2011 respectively. In an unusual move, Aspect issued proceedings seeking to recover the part payment it made on 8 August 2009 after the expiry of both limitation periods as it wished to revisit Higgins' original claim in contract and / or tort which it alleged was without merit. Aspect contended that it had a cause of action against Higgins (in addition to its causes of action in the underlying dispute) which was based on an implied term in the Scheme and / or restitution1. The alleged implied term provided that, in the event that a dispute between the parties was referred to adjudication pursuant to the Scheme, parties remained entitled to have the decision finally determined by legal proceedings and, to the extent that the dispute was finally determined in one party's favour, to have that money repaid to it.

Higgins defended Aspect's claim...