JIM ENNIS CONSTRUCTION LIMITED V PREMIER ASPHALT LIMITED

The sub-contractors cause of action in the court proceedings it brought to recover the amount of the deduction it made from the sub-sub-contractors final account for allegedly defective work was not statute barred by limitation
 
 

Technology and Construction Court
His Honour Judge Stephen Davies
24 July 2009

 
The sub-contractor’s cause of action in the court proceedings it brought to recover the amount of the deduction it made from the sub-sub-contractor’s final account for allegedly defective work was not statute barred by limitation
 
The sub-sub-contractor disputed a deduction made by the sub-contractor from its final account on the ground of alleged defects in its work but did not take any steps to challenge the deduction at the time, referred the dispute to adjudication almost six years after the deduction was made, was awarded a specified sum by the adjudicator and was paid the sum awarded by the sub-contractor. The sub-contractor commenced court proceedings against the sub-sub-contractor for its alleged breach of contract in producing defective work so as to recover the sum deducted. The date when the sub-sub-contractor referred the dispute to adjudication was within the six year limitation period for a claim in contract founded on the non-payment of the sub-sub-contractor’s final application for payment but outside the six year limitation period for the sub-contractor to advance a claim for damages for breach of contract. The date when the sub-contractor commenced court proceedings against the sub-sub-contractor was more than six years after its contractual cause of action for the alleged defective work arose. The sub-sub-contractor contended that the only legal basis for relief was a claim brought on the underlying cause of action, namely the dispute referred to the adjudicator, so that if a claim founded on the underlying cause of action was statute-barred, any action finally to determine the dispute in order to obtain a repayment was also statute-barred.
 
Judge Davies rejected the sub-sub-contractor’s contention. The contractual obligation to comply with an adjudicator's decision gave rise to a new and independent cause of action in favour of the successful party to compel the losing party to comply with that decision. There was an implied term in a contract to which the adjudication provisions of the Scheme for Construction Contracts applied, as in the instant case, that where one party paid monies to the other party in compliance with an adjudicator’s decision, that party was entitled to have that dispute finally determined by legal proceedings and to have those monies repaid to him if or to the extent that the dispute was finally determined in his favour. The cause of action under the implied term only arose when the losing party paid monies to the winning party in compliance with the adjudicator's decision.
 
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