An adjudicator’s decision is binding until the dispute is finally determined but here’s a case that opens up the question of limitation and how late that determination can take place
In the asbestos quarrel, eight judges went one way, one judge went the other. I am still not convinced. All the effort is in still trying to fathom 17 years on, how our world-beating construction adjudication is intended to work. Now then, bear with me; it’s a tricky point about the contract you sign up to or even verbally agree every day. It’s called the limitation period. Some call it “time bar”. My bricklayer friends talk about it all the time. Lawyers do too.
Higgins Construction PLC called on Aspect Contracts (Asbestos) Limited to survey a housing trust site in Notting Hill. The asbestos report was then used by Higgins to bid for the demolition and redevelopment. They won the job and engaged an asbestos removal firm to do their stuff. They found, they said, a lot more work and Higgins paid the asbestos removal contractor. Then, four years later, they asked an adjudicator to order Aspect to stump up the £822,482 losses and interest said to arise out of Aspect’s wrongful survey. The adjudicator ordered Aspect to pay Higgins instead £490,627. That’s where it all stood then. It seemed to be done and dusted.
We all know that adjudication is binding unless and until a court or arbitrator hears that dispute afresh. And if that happens, the light, fast scrape of adjudication and the break-neck speed of decision-making give way to the deep-dig, and thorough inquiry of the court or arbitration process. In this every day contract the limitation period or time bar was six years which meant that any action for breach of contract had to begin by, at the latest, early 2011. It was not until 2012 that Aspect decided that the adjudicator had awarded too much and come to litigation to get the £490,627 back.
Aspect argued in reply to Higgins that Higgins was out of time on that claim for more money, but Aspect was in time to be repaid. Dear me no, said the judge, You are both out of time
Well, then, said Higgins, what’s sauce for the goose is sauce for the gander. Higgins also said the adjudicator got it wrong and counter-sued for the shortfall of £331,855+ interest.
And this is where the bricklayers and lawyers start falling about laughing. Aspect argued in reply to Higgins that Higgins was out of time on that claim for more money, but Aspect was in time to be repaid. Dear me no, said judge No.1. You are both out of time. Let’s face it these two companies had let oodles of time slip by sitting on their hands. The six-year limitation clause defeated both of them, he said. But Aspect now had the bit between its teeth. It asked three more judges to reverse judge No.1. It argued that the losing party (Aspect) in adjudication had six years from when the “wrongful overpayment” was made to seek a declaration that the order to pay was wrong and get its money back. Put another way, the time bar didn’t apply to “negative declarations” meaning, said Aspect, “we paid too much in the adjudication”. As for Higgins, its claim for the total amount, they said, remained a claim under the contract for negligent services provided. So time ran out under the contract but not under the adjudication.
Higgins was coming under the litigation to argue for its rights under the contract. But Aspect was coming for its right to be re-paid what was ordered in the adjudication. Subtle, isn’t it? And the three more judges agreed. That was the Court of Appeal. Ouch, said Higgins. If Aspect can argue the adjudicator was wrong, then Higgins can argue the adjudicator was wrong. Right? Wrong, said five more judges, this time in the Supreme Court. Aspect won again.
Look, most adjudications are conducted under “the Scheme”. So too was this one. So it is important to understand this judgment. The parties argued their rights under their contract in front of the adjudicator. That had to be done within the six-year limitation period. (Sometimes you sign your contracts as a deed. The limitation period then is 12 years). No problem thus far. By now four years of the six was used up. Both had two years left to begin the dispute process all over again in court. But neither did. In year seven, Aspect began a High Court action for repayment. Higgins countered for more money. The five later judges agreed with the previous three. An overpayment can be recovered. The Scheme says the adjudicator’s decision is binding for the time being. All Aspect has to show is that the money ordered by the adjudicator is subsequently shown not to have been due. There is said to be an implied term or principle of return or restoration (the lawyers call it restitution). That’s different seemingly from Higgins arguing for damages under the contract.
All these nine judges were deployed to decide whether both Aspect and Higgins could now re-argue the dispute about the alleged negligence. And when it goes back into court for the substantive dispute, you can bet on it that a whole range of arguments will be advanced that were not put to the adjudicator. But if it is found that Higgins was entitled to more than they got in the adjudication, they won’t be able to enforce that decision because they’ll be out of time.
I wonder if the eight judges are any good at bricklaying?
Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple