Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc – Isabel Hitching successfully appears in the TCC for Higgins
Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc  EWHC 1322 (TCC) – Isabel Hitching successfully appears in the TCC for Higgins Construction.
This case, in which judgment was handed down on 23rd May 2013, in the view of Akenhead J ‘raises an interesting and important issue as to when in terms of limitation of action a party which is dissatisfied with the substance of an adjudicator’s decision needs to issue its proceedings or to raise any counterclaim in those proceedings to challenge and seek to overturn that decision’.
In most cases a dispute is referred to adjudication well within the limitation period. Adjudication is designed to aid cash-flow and a party seeking payment does not often wait until the end of the limitation period to commence an adjudication. Whatever the outcome of the adjudication either party is usually able to obtain a final determination without questions of limitation arising. In this case Aspect contended that, in addition, the contract contained an implied term that it had a right to seek repayment which would arise on payment and that it therefore had six years from payment to seek a negative declaration as to its liability and repayment. It could therefore commence proceedings long after limitation in respect of the underlying cause of action had expired. Higgins argued that no such implied term existed and that the court therefore had no jurisdiction to order repayment.
The court held in favour of Higgins.
Analysis of decision
Aspect relied on the only prior decision on the issue, Jim Ennis Construction Ltd v Premier Asphalt Ltd  EWHC 1906. In that case the court held that there was such an implied term. However it proceeded on the basis of crucial concessions and without oral argument. Aspect v Higgins is the first occasion when the court has heard full argument.
Higgins argued that such a term should not be implied into the contract. It contended that the parties’ rights to have a dispute finally determined by the court are preserved by but do not stem from the Housing Grants Construction and Regeneration Act 1996 (and The Local Democracy, Economic Development and Construction Act 2009) and that the Acts and the Scheme do not alter or extend the limitation periods for bringing a dispute before the Court. Further, it argued that there is no basis for implying such a term as both parties are adequately protected by existing rights. It argued that there was therefore no gap in the contract to be filled and that in any event such a term did not satisfy the requirements set out by Lord Hoffmann in Attorney General of Belize v Belize Telecom Ltd  UKPC 10.
The court held in favour of Higgins. Akenhead J held that there was no gap. Aspect could have sought a negative declaration at any stage after purported performance of the contract It could therefore have brought the dispute to court for final determination within the limitation period. It was not necessary to imply a term to ensure that it could do so. Further such a term did not satisfy the criteria for implying a term into a contract.
The court rejected Aspect’s argument that such a term was necessary to protect Aspect’s Human Rights.
Aspect in the alternative sought repayment on the basis of restitution. The court rejected this claim, accepting Higgins’ argument that any right to repayment could only arise if and when the court had determined the dispute in Aspect’s favour. To do so the court needed to be seised of the claim. If there was no implied term it could not make this determination. The restitutionary claim simply fell away.
Significance of the decision
Aspect did not argue that the term should be implied due to any facts specific to this case. The term would therefore be implied not just into the contract between Aspect and Higgins but into every ‘construction’ contract to which the HGCRA applied. This decision is therefore of significance for every construction contract. The court has confirmed that both parties can bring the dispute to court for determination (without limitation defences being raised) only within the currency of the limitation periods. A losing party does not by paying obtain a further six years in which to commence proceedings.
The court has granted leave to appeal.
Click here for the judgment.