Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc

Construction adjudication is a temporary stage. An adjudicator’s decision is binding until final determination by court, arbitration or agreement, but the final determination governs the parties’ ultimate rights.

The statutory scheme therefore implicitly provides for recovery of money paid under an adjudication which is later shown not to have been due, although the repayment mechanism is not stated expressly. The cause of action to recover the overpayment accrues when payment is made, so the limitation period is six years from payment. By contrast, a claim based on the underlying breach accrues on that breach. A negative declaration is an ungainly alternative and raises difficult questions about repayment and limitation.

Aspect Contracts (Asbestos) Ltd appealed preliminary rulings made by Akenhead J in the Technology and Construction Court, reported at [2013] B.L.R. 417. Higgins Construction Plc had obtained an adjudication award and Aspect had paid the adjudicated sum. Aspect later sought repayment after more than six years had passed from the alleged breach but less than six years from payment.

The judge held that there was no implied contractual term entitling repayment, that a declaration of non-liability was time-barred, and that there was no restitutionary claim. Higgins cross-appealed on the limitation period applicable to its counterclaim. The central issue was whether the repayment cause of action accrued on the original breach or on payment following the adjudication.

1. Disposition. Lord Justice Longmore delivered the judgment, with Lord Justices Rimer and Tomlinson agreeing. The appeal was allowed. The first preliminary issue was answered affirmatively; the limitation period for Aspect’s repayment claim was six years from payment; Higgins’ counterclaim remained subject to six years from the alleged breach; and the restitution issue was not argued. Higgins’ cross-appeal therefore failed.
2. The court treated the adjudication regime under the Housing Grants Construction and Regeneration Act 1996 and the Scheme for Construction Contracts as provisional. The adjudicator’s decision was binding until the dispute was finally determined by legal proceedings, arbitration or agreement. That necessarily contemplated that the final determination might differ from the adjudication.
3. Paragraph 23(2) of the Scheme did not expressly state that an overpayment could be recovered. Nevertheless, its true intent and the meaning inherent in its language required a mechanism for repayment where final determination showed that money paid under the adjudication was not due. The proposed contractual term therefore spelled out the effect of the Scheme rather than improving it. The distinction between construction and implication was immaterial. The court applied the objective approach to construction described in Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10; [2009] 1 WLR 1988.
4. The repayment cause of action accrued on the date of payment, when the unsuccessful party became entitled to have the overpayment returned. The successful party’s underlying claim, including a claim for more than the adjudicated sum, remained governed by the ordinary limitation rules running from the alleged breach.
5. The court expressed reservations about relying on negative declaratory relief. Such relief was procedurally ungainly, its juridical basis for automatic repayment was unclear, and the limitation position was controversial. Those observations were unnecessary to the result once the repayment entitlement under the Scheme had been identified.

• Court of Appeal (Civil Division). Allowed Aspect’s appeal and rejected Higgins’ cross-appeal on 29 November 2013.
• High Court of Justice, Queen’s Bench Division, Technology and Construction Court. Akenhead J held that there was no implied repayment term, treated Aspect’s declaration claim as time-barred, held there was no restitutionary claim, and dismissed the claim: [2013] B.L.R. 417.