Judgment in Aspect v Higgins – Andrew Bartlett QC & Isabel Hitching in the Supreme Court
Aspect Contracts v Higgins Construction Plc
FIRST SUPREME COURT DECISION ON CONSTRUCTION ADJUDICATION
If a construction adjudicators decision has gone against you, and you have had to pay out money in compliance with it, what is the time limit for you to bring legal or arbitral proceedings to have the dispute finally determined in your favour? Is it the time limit applying to the original claim, or do you get the benefit of a new period of 6 years from the date you made the payment? In cases where the statutory Scheme applies, this question has given rise to differing views, both in the High Court and in the Court of Appeal.
In Aspect Contracts v Higgins Construction Plc the Supreme Court has today (17.6.15) resolved this question in favour of the longer period. The Court held that it is a necessary legal consequence of the Scheme that the paying party has a substantive right to recover any overpayment to which the adjudicators decision can be shown to have led, once there has been a final determination of the dispute. This right is also the appropriate route for a paying party to obtain a final determination of the dispute. This is an implied term arising from the provisions of the Scheme. The right is to be treated as arising at the date of the payment, so that it is subject to the contractual limitation period of 6 years from that date. Interest on the payment will also be recoverable.
This decision has important implications for the claiming party who receives the benefit of a payment ordered in an adjudication. He cannot safely assume that he can simply hold on to the payment and allow the limitation period for his claim to expire. He may still be faced by proceedings for recovery, brought after that time, until 6 years from the date of payment. At this time it may be too late for him to start proceedings of his own to confirm the adjudicators award or to commence a counterclaim to seek any shortfall in the amount ordered by the adjudicator. In the appeal the Court held that by not commencing legal proceedings within the original time limit the receiving party (Higgins) had taken the risk of not confirming the adjudication award it had received, and had foregone the possibility of improving upon it. This decision is a warning to those who receive adjudication awards to consider what they need to do to ensure that this situation does not arise.
Andrew Bartlett QC and Isabel Hitching are due to deliver the joint TECBAR / SCL lecture on 1 December 2015 speaking on The implications of Aspect v Higgins.