Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc
| Jurisdiction | England & Wales |
| Judge | Lord Reed,Lord Sumption,Lord Mance,Lord Toulson,Lord Wilson |
| Judgment Date | 17 June 2015 |
| Neutral Citation | [2015] UKSC 38 |
| Date | 17 June 2015 |
| Court | Supreme Court |
[2015] UKSC 38
Lord Mance
Lord Wilson
Lord Sumption
Lord Reed
Lord Toulson
Appellant
Andrew Bartlett QC
Isabel Hitching (Instructed by Silver Shemmings LLP)
Respondent
Fiona Sinclair QC
Richard Liddell (Instructed by Mills & Reeve LLP)
(with whom Lord Wilson, Lord Sumption, Lord Reed and Lord Toulson agree)
This appeal raises difficult and important issues about the effect of adjudication pursuant to provisions implied into a construction contract under section 108(5) of the Housing Grants, Construction and Regeneration Act 1996, read with the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998 No 649). The construction contract (within the broad meaning assigned by section 104(2) of the 1996 Act) was a contract by the respondent, Aspect Contracts (Asbestos) Ltd ("Aspect"), to carry out an asbestos survey and report on blocks of maisonettes in Hounslow which the appellant building contractor, Higgins Construction Plc ("Higgins"), was considering redeveloping.
The survey was conducted in March 2004 and the report was dated 27 April 2004. During the redevelopment in early 2005, Higgins allegedly found and had to have removed asbestos containing materials which had not been identified in the report. A dispute consequently arose with Aspect.
Negotiation and mediation having failed, Higgins referred the dispute to adjudication, claiming £822,482 damages plus interest. The claim was for breach of contractual and/or conterminous tortious duties to exercise reasonable skill and care. By a decision dated 28 July 2009, the adjudicator, Ms Rosemary Jackson QC, concluded that Aspect had been in breach of such duties causing Higgins loss in various, though not all, respects alleged by Higgins, and ordered that Aspect pay Higgins £490,627, plus interest which amounted, at the date of the decision, to £166,421.05. She also ordered Aspect to pay her own fees of £8,750 plus VAT. On 6 August 2009 Aspect duly paid Higgins £658,017, a sum which included further interest from the date of the decision.
Higgins did not commence any proceedings, whether to recover the balance of its claim, £331,855 plus interest, or otherwise. The limitation period expired on the face of it on or about 27 April 2010 for any action by Higgins founded on breach of the construction contract and at the very latest by early 2011 for any action founded on tort: Limitation Act 1980, sections 2 and 5. Higgins was evidently content to let matters rest. It did not, so far as appears, ask Aspect to agree, and Aspect did not agree, to treat the adjudicator's decision as final.
Only after the expiry of both the above-mentioned limitation periods did Aspect on 3 February 2012 itself commence the present proceedings seeking to recover the sum it paid on 6 August 2009. It did so without giving prior notice that it was dissatisfied with Ms Jackson's decision or going through any pre-action protocol procedure.
Aspect confines itself expressly to a contention that no sum was due to Higgins on an examination of the merits of the original dispute, regarding the alleged failure to identify and report the existence of asbestos containing materials beyond those mentioned in its report. It claims that the sum of £658,017 is repayable accordingly. Higgins however seeks to counterclaim for the £331,855 balance of its claim and interest. Only in relation to this balance does Aspect raise a limitation plea, under sections 2 and 5 of the Limitation Act. These sections provide that any action founded on, respectively, tort or simple contract "shall not be brought after the expiration of six years from the date on which the cause of action accrued".
Aspect rests its claim on an implied term, alternatively in restitution. The implied term is that:
"in the event that a dispute between the parties was referred to adjudication pursuant to the Scheme and one party paid money to the other in compliance with the adjudicator's decision made pursuant to the Scheme, that party remained entitled to have the decision finally determined by legal proceedings and, if or to the extent that the dispute was finally determined in its favour, to have that money repaid to it."
By consent on 31 January 2013 Akenhead J ordered the trial of a preliminary issue as to (a) the existence of the implied term, (b) the limitation period applicable to any such implied term, (c) the limitation period applicable to the counterclaim, and (d) the existence or otherwise of a claim for restitution. By a clear and comprehensive judgment dated 23 May 2013, he held that there was no such implied term as alleged, that Aspect could have claimed a declaration of non-liability at any time within six years after performance of the contract, upon the grant of which declaration the court would then have had ancillary and consequential power to order repayment, but that any such claim was now time-barred. He also held that there was, in these circumstances and in the absence of any recognised basis like mistake or duress and of any right to have the adjudicator's decision set aside, no claim in restitution.
The Court of Appeal (Longmore, Rimer and Tomlinson LJJ) [2014] 1 WLR 1220, in a concise judgment given by Longmore LJ, reached an opposite conclusion. It held that the Scheme implied that any overpayment could be recovered. It noted that Higgins's contrary case faced a number of difficult questions, such as, first, the fairness of a conclusion that required any claim for repayment to be made within six years of the original contractual performance, second, the juridical basis for a conclusion that a declaration of non-liability would carry with it a right to order repayment and, third, the correctness of the judge's conclusion that a declaration of non-liability was liable to be time-barred. Aspect did not pursue its pleaded restitutionary claim before the Court of Appeal.
The present appeal follows by this court's permission. In giving permission, the court informed the parties that:
"without prejudging whether it would be open to [Aspect] to raise any positive point on restitution, the Supreme Court may wish as part of the context to have explained the legal position regarding restitution."
The parties accordingly exchanged cases which addressed the position regarding restitution, and, during the course of the hearing, Miss Fiona Sinclair QC for Aspect sought permission to raise a case in restitution based on the payment made. Mr Andrew Bartlett QC for Higgins resisted this, and the court heard submissions on it de bene esse. In the event, since the issue was raised at first instance and is one of pure law, I consider that permission should be granted to Aspect to rely upon restitution as an alternative to its primary claim based on an implied term.
Section 108 of the Housing Grants, Construction and Regeneration Act 1996 (in its original form, as in force before its presently immaterial amendment by the Local Democracy, Economic Development and Construction Act 2009) provides:
"108.—Right to refer disputes to adjudication.
(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 —
(a) enable a party to give notice at any time of his intention to refer a dispute to adjudication;
(b) provide a timetable with the object of securing the appointment of the adjudicator and referral of the dispute to him within 7 days of such notice;
(c) require the adjudicator to reach a decision within 28 days of referral or such longer period as is agreed by the parties after the dispute has been referred;
(d) allow the adjudicator to extend the period of 28 days by up to 14 days, with the consent of the party by whom the dispute was referred;
(e) impose a duty on the adjudicator to act impartially; and
(f) enable the adjudicator to take the initiative in ascertaining the facts and the law.
(3) The contract shall provide 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"
Section 114 provides that:
"(1) The Minister shall by regulations make a scheme ('the Scheme for Construction Contracts') containing provision about the matters referred to in the preceding provisions of this Part.
….
(4) Where any provisions of the Scheme for Construction Contracts apply by virtue of this Part in default of contractual provision agreed by the parties, they have effect as implied terms of the contract concerned."
The Scheme contained in the Schedule to the Regulations is in parallel terms to those indicated in section 108(1) to (4), with slight differences which no-one suggests are significant. It provides:
"1(1) Any party to a construction contract (the 'referring party') may give written notice (the 'notice of adjudication') at any time of his intention to refer any dispute arising under the contract, to adjudication. …
(3) The notice of adjudication shall set out briefly —
(a) the nature and a brief description of the dispute and of the parties involved,
(b) details of where and when the dispute has arisen, …
19(1) The...
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