Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Rimer:,Lord Justice Tomlinson: |
| Judgment Date | 29 November 2013 |
| Neutral Citation | [2013] EWCA Civ 1541 |
| Date | 29 November 2013 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2013/1588 & A1/2013/1579 |
[2013] EWCA Civ 1541
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT
THE HONOURABLE MR JUSTICE AKENHEAD
Royal Courts of Justice
Strand, London, WC2A 2LL
The Right Honourable Lord Justice Longmore
The Right Honourable Lord Justice Rimer
and
The Right Honourable Lord Justice Tomlinson
Case No: A1/2013/1588 & A1/2013/1579
Ms Fiona Sinclair QC & Mr Richard Liddell (instructed by Mills & Reeve LLP) for the Appellant
Ms Isabel Hitching (instructed by Silver Shemmings LLP) for the Respondent
Introduction
Before 1996 it was a common complaint of contractors (and sub-contractors) in building contract cases that employers or developers would attempt to set off debatable cross-claims (e.g. in relation to the quality of work) against legitimate claims for interim payment during the progress of the work. This tactic was given considerable impetus by the decision of the House of Lords in Gilbert-Ash v Modern Engineering [1974] A.C. 689 which overruled a series of decisions of the Court of Appeal which had assimilated architect's interim certificates to bills of exchange and required immediate payment regardless of set-off. Contractors continued to complain that there was serious interference with their cash-flow. Parliament intervened in the Housing Grants Construction and Regeneration Act 1996 ("the 1996 Act") by creating the concept of "adjudication" which was intended to be a temporary procedure by which an "adjudicator" made a speedy "adjudication", often without disclosure and while the contract was still on foot, which all parties accepted was not intended to be final but gave a contractor interim cash in appropriate cases. In Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] B.L.R. 93, 97 (approved by this court in Levolux v Ferson [2003] 1All ER (Comm) 385) Dyson J described adjudication as "an intervening provisional stage in the dispute resolution process". The final rights of the parties can still be determined by arbitration, legal proceedings or agreement after the dust has settled. The parties can make their own adjudication provisions in the contract but otherwise the Scheme for Construction Contracts is to apply.
Section 108 of the 1996 Act (as amended) provides:-
"(1) A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section.
For this purpose "dispute" includes any difference.
(2) The contract shall include provision in writing so as to-
(a) enable a party to give notice at any time of his intention to refer a dispute to adjudication…
(3) The contract shall provide in writing that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement.
The parties may agree to accept the decision of the adjudicator as finally determining the dispute….
(5) If the contract does not comply with the requirements of subsections (1) to (4), the adjudication provisions of the Scheme for Construction Contracts apply."
The Scheme is scheduled to Regulations made pursuant to the 1996 Act and paragraph 23 of the Schedule provides:-
"23. (1) …
(2) The decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement between the parties."
The question that has arisen in this case is whether a claim by the losing party to the adjudication for repayment of sums paid over to the successful party is subject to a time bar accruing at the time of the (supposed) original breach of contract or duty or only from the date of the (supposedly) unnecessary payment made as a result of the adjudication. It may be noted at once that this is a somewhat one-sided question. If the successful party in the adjudication wishes to sue for the amount adjudicated in his favour he sues on the adjudication and his cause of action accrues at that time; if he wishes to sue for more than the amount adjudicated, he will be subject to the ordinary rules relating to the accrual of his original cause of action (namely 6 years from the breach of contract or duty, as the case maybe). The unsuccessful party is in a different position. He has no readily discernible cause of action at the time of his supposed breach of contract or duty, unless it be for a declaration that he is not liable. But his main wish is to sue for the return of money which he contends was never due in the first place. To the extent that he has a cause of action for the return of the money, a natural reaction might be that the cause of action accrued at the time he made the (assumedly unnecessary) payment.
In Jim Ennis Construction Ltd v Premier Asphalt Ltd [2009] EWHC 1906 (TCC) HHJ Stephen Davies held that there was an implied term of the construction contract that an unsuccessful party to an adjudication was entitled to be repaid all sums paid by it in compliance with an adjudication if they were subsequently decided or agreed not to be due and that the cause of action for such sums accrued at the date of the original payment. In the present case Akenhead J has held [2013] B.L.R. 417 that the cause of action accrued "whenever it otherwise did before the decision was issued" (last sentence of para 1 of the judgment). The judge declined to follow the Jim Ennis case and we must decide if he was right so to do.
The Facts
These are comparatively straightforward. The claimants Aspect Contracts (Asbestos) Ltd ("Aspect") are specialists in providing asbestos surveys. The defendants, Higgins Construction Plc ("Higgins") specialise in the construction and refurbishment of community housing, education and healthcare properties. In March 2004 Higgins asked Aspect to conduct an asbestos survey of the Ivybridge Estate in Hounslow. On 27 th April 2004 Aspect sent their survey report to Higgins who paid Aspect's invoice on 24 th June 2004. Higgins then made a contract with the Notting Hill Housing Trust for the demolition and redevelopment of the Ivybridge Estate and made a sub-contract with Falcon Refurbishment and Demolition Ltd for asbestos removal and demolition. It is said by Higgins that there was more asbestos containing material ("ACMs") than discovered by Aspect and Falcon had to be paid more than originally agreed to remove those ACMs. According to Higgins that caused 17 weeks of critical delay by 27 th September 2005. Rather surprisingly Higgins (to whom cash-flow does not seem to have been critical) took no steps to recover their loss until 26 th June 2009 when they served notice referring the dispute to an adjudicator. With commendable speed Ms Rosemary Jackson QC decided on 28 th July 2009 that Aspect should pay to Higgins the sum of £658,017, which Aspect paid on 6 th August 2009. Aspect (to whom cash-flow does not seem to have been critical either) only began proceedings to recover this sum on 3 rd February 2012 (much more than 6 years after their supposed breach of contract or duty in 2004 but less than 6 years after making the payment). Aspect's claim was met by a defence and counterclaim, claiming the amount claimed in the adjudication. If therefore one reproduces the critical dates in a tabular form the result would be:-
Ironically, it was only when a limitation defence was pleaded by Aspect in their Reply and Defence to Counterclaim that Higgins sought and obtained permission to plead that Aspect's claim was itself barred by lapse of time.
The Issues
| March 2004 | Aspect carried out their survey |
| 27 April 2004 | Aspect sent survey report to Higgins |
| 24 June 2004 | Higgins paid Aspect's invoice |
| February 2005 | Alleged discovery of additional ACMs |
| July 2005 |
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