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27/06/2015

Higgins lose Supreme Court appeal in asbestos case

Subject: Building and construction work

Source: Supreme Court

Aspect Contracts (Asbestos) Limited (Respondent) v Higgins Construction Plc (Appellant) [2015] UKSC 38

This case raised 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).

In 2004, the building contractors Higgins Construction Plc (Higgins) engaged Aspect Contracts (Asbestos) Limited (Aspect) to conduct an asbestos survey for a property in London. In 2005, Higgins made a claim against Aspect saying that more asbestos had been discovered than Aspect had reported which meant it had to pay the subcontractor more than originally planned and it had also caused a critical delay to the works.

In 2009, Higgins commenced adjudication against Aspect on these issues. The Scheme for Construction Contracts applied. The adjudicator decided that Aspect should pay to Higgins the sum of £658,017, which Aspect paid in August 2009.

In February 2012 Aspect commenced legal proceedings in the High Court against Higgins to recover the monies paid. The proceedings had been commenced more than six years after Aspect’s supposed breach of contract or duty in 2004 but less than six years after making the payment following the adjudicator’s decision.

The court was asked to determine the following preliminary issues:

(i) Was it an implied term of the parties’ contract that an unsuccessful party to adjudication would be entitled to seek a final determination by litigation and, if successful, recover payment made?

(ii) If there was such an implied term, what was the applicable limitation period for a claim seeking to enforce it?

(iii) What was the limitation period applying to Higgins’ claim?

The High Court judge ruled that on issue (i) there was not an implied term; on issue (ii) if there had been such an implied term, the applicable limitation period would have been six years from the date of the payment made; on issue (iii), the judge held that Higgins’ claim for negligence was time barred.

Aspect appealed to the Court of Appeal on issue (i) and Higgins appealed on issue (iii). The Court of Appeal overturned the High Court’s decision; see ; see [2013] EWCA Civ 1541.  The Court of Appeal ruled that there was an implied term that a successful party to an adjudication would be entitled to seek a final determination by litigation and if successful, recover payment made. It agreed with the High Court judge that the applicable limitation period for such implied terms would be six years from the date of the payment made.

On appeal by Higgins, the Supreme Court upheld the decision of the Court of Appeal.

[Crown copyright: contains public sector information licensed under the Open Government Licence v3.0
Legaleze is solely responsible for the above text which is a summary only and the full report should be read.]

 

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