Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc

A party required to pay under an adjudicator’s temporarily binding decision does not automatically acquire a new cause of action, running from payment, to recover the money. The underlying contractual or tortious dispute remains subject to its original limitation period. A party may seek a negative declaration, but the court retains discretion whether to grant it. An implied term permitting repayment after final determination will arise only where the contract, read against its relevant background, reasonably requires that implication. The adjudication provisions of the Housing Grants, Construction and Regeneration Act 1996 and the Scheme did not create such a term. Nor was there a separate restitutionary cause of action on the facts. Both the claim and counterclaim were therefore statute-barred.

Aspect carried out an asbestos survey for Higgins in 2004. Higgins later alleged that the survey failed to identify asbestos-containing materials and obtained an adjudicator’s award of £658,017 in 2009. Aspect paid the award and commenced proceedings in 2012, seeking a declaration that it was not liable and repayment of the money. It relied on an alleged implied contractual term permitting final determination of the dispute by litigation and repayment if successful, alternatively on restitution.

Higgins denied the implied term and counterclaimed for the balance between the damages claimed in the adjudication and the amount awarded. Preliminary issues concerned implication of the term, limitation, restitution and the limitation of the counterclaim.

1. The claim and counterclaim were dismissed. Aspect’s essential claim was for a negative declaration that it had not breached its contractual or tortious duties and that Higgins had suffered no recoverable loss. That cause of action accrued no later than the relevant contractual performance and was barred by the six-year period under section 5 of the Limitation Act 1980. Higgins’ counterclaim was likewise statute-barred.
2. The adjudication provisions incorporated into the contract required the adjudicator’s decision to bind the parties until the dispute was finally determined by legal proceedings, arbitration or agreement. They did not make the underlying cause of action disappear, nor did they create a new cause of action for the paying party from the date of payment.
3. The court declined to follow Jim Ennis Construction Ltd v Premier Asphalt Ltd [2009] EWHC 1906 (TCC) insofar as it treated the Scheme as supporting an implied term entitling the unsuccessful party to repayment after final determination. Applying the approach in Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, the question was whether the proposed term spelled out what the contract, read as a whole against its background, reasonably meant. The term was not necessary, obvious or required for business efficacy.
4. A negative declaration was available in principle, subject to the court’s discretion. The availability of that remedy did not postpone limitation. The risk that a party might delay proceedings until after adjudication was insufficient to justify implying the proposed term.
5. There was no independent restitutionary cause of action. Payment followed from the contractual and statutory obligation to comply with the adjudicator’s decision. Repayment would be consequential upon, and available only to the extent of, a successful final determination of the underlying dispute. The analogy with restitution following a successful appeal or setting aside of a judgment was therefore inapplicable.
6. The Article 6(1) argument did not alter the result. Aspect had access to a court with jurisdiction to determine the underlying dispute, and the existence of a possible limitation defence did not remove that access.

First-instance decision. No earlier appellate decision is stated in the judgment.