Aspect Contracts (Asbestos) Ltd v Higgins Construction Ltd
The surveyor's cause of action to recover the sum awarded by the adjudicator and paid by it to the contractor in consequence of its (alleged) breach of duty in providing a negligent report to the contractor arose when it made the payment.
29 November, 2013
ASPECT CONTRACTS (ASBESTOS) LTD v HIGGINS CONSTRUCTION LTD
Court of Appeal
Longmore, Rimer and Tomlinson LJJ
29th November 2013
The contract of engagement between the contractor and the asbestos surveyor incorporated the Scheme for Construction Contracts. The contractor referred a claim against the surveyor to adjudication based on the surveyor’s allegedly negligent report. The adjudicator awarded the contractor a sum which was some £200,000 less than the sum it claimed. The adjudication took place about four years into the limitation period for the contractor to bring the claim. The surveyor or its insurer chose not to commence court proceedings until some two and a half years after the adjudication when the contractor’s cause of action for its claim was otherwise statute barred by limitation.
The surveyor contended that there was an implied contractual term that if any dispute was referred to adjudication pursuant to the Scheme for Construction Contracts and if one party paid money to the other in compliance with the adjudicator's decision, that party remained entitled to have the dispute finally determined by legal proceedings and to have that money repaid to it if or to the extent that the dispute was finally determined in its favour. The Court of Appeal, in overturning the decision of Akenhead J at first instance, held that there was such an implied term, that the surveyor’s cause of action arose when it made the payment to the contractor and that the surveyor’s claim was therefore not time barred by limitation.
Longmore LJ stated that the implied term contended for by the surveyor in saying that the party ordered to pay money is entitled (i) to have the dispute finally determined by legal proceedings is saying no more and no less than paragraph 23(2) of the Scheme for Construction Contracts and (ii) to have that money repaid to it if or to the extent that the dispute was finally determined in its favour is setting out true intent of paragraph 23(2) and is saying in actual words what is already inherent in the words used. Whilst the negative declaratory relief sought by the surveyor had potential difficulties, none of these difficulties arose if (i) The contract is construed in accordance with what it appears to say, namely that any overpayment can be recovered and (ii) The accrual of that cause of action is the date of overpayment since the losing party is (on this hypothesis) "entitled" to have the overpayment returned to him.