Jim Ennis Construction Ltd v Premier Asphalt Ltd

Where an adjudication decision is binding only until final determination, the losing party who complies with it has a right to seek final determination and repayment. That right arises under an implied contractual term where necessary to make the adjudication scheme workable. The cause of action accrues when payment is made, not when the underlying contractual breach occurred or when the adjudicator decided that payment was due. A restitutionary claim may also arise where money was paid under compulsion pursuant to the adjudication decision. A six-year limitation period under the Limitation Act 1980 applies to the contractual claim.

The claimant had engaged the defendant to carry out surfacing works. After alleged defects and replacement works, the claimant deducted sums from the defendant’s final account. Almost six years later, the defendant referred the payment dispute to adjudication and obtained an award requiring payment. The claimant paid the award in compliance with the adjudicator’s decision, then issued proceedings seeking final determination of the dispute and repayment.

The defendant contended that the claimant’s claim was founded on the original defective works and was therefore barred under section 5 of the Limitation Act 1980. The claimant contended that its cause of action arose only upon payment of the adjudicator’s award, or alternatively arose in restitution. The preliminary issue was whether the claim was statute-barred.

1. The claim was not statute-barred. The preliminary issue was answered in favour of the claimant.
2. The adjudication provisions created a separate contractual obligation to comply with the adjudicator’s decision. That obligation gave the successful party a cause of action to enforce the decision. The underlying cause of action survived and was not merged in or superseded by the adjudicator’s decision. The reasoning in Glencot Development v Ben Barrett [2001] EWHC 15 (TCC) was consistent with that analysis.
3. Although the Housing Grants, Construction and Regeneration Act 1996 and the Scheme for Construction Contracts did not expressly confer a right on the losing party to recover money paid under an adjudicator’s decision, such a term was implied. It was reasonable and equitable, necessary to give business efficacy, obvious, capable of clear expression, and consistent with the contractual adjudication provisions. The term entitled the paying party to final determination and repayment to the extent that the final result was favourable to it.
4. The contractual cause of action arose on payment in compliance with the adjudicator’s decision. Section 5 of the Limitation Act 1980 therefore gave the claimant six years from payment to sue. The limitation period did not run from the original alleged breach or from the adjudicator’s decision.
5. Alternatively, a restitutionary cause of action arose. Payment pursuant to an adjudicator’s decision was not voluntary, because the statutory and contractual scheme required compliance. If the decision was subsequently displaced by final determination, repayment could be sought in restitution. It was unnecessary to decide conclusively whether every restitutionary claim was subject to limitation, since even on the assumption that section 5 applied, time ran from payment.
6. The proposed estoppel argument was left undecided because it was unnecessary to the result.