In March 2004, Higgins Construction Plc (“Higgins”) engaged Aspect Contracts (Asbestos) Ltd (“Aspect”) to carry out an asbestos survey and report which was completed by Aspect shortly after. In February 2005 additional asbestos containing materials (“ACMs”) were discovered which had not been identified in Aspect’s report. Higgins only then commenced adjudication proceedings against Aspect in June 2009, some four years later. The adjudicator found that Aspect was liable for £658,017 and Aspect paid Higgins the sum in full.

In February 2012, Aspect commenced proceedings seeking “a final and binding resolution of a dispute which was referred to adjudication” and a declaration that they were not liable to pay damages to Higgins in the amount decided by the adjudicator or at all. Aspect alleged, most likely due to the statute of limitations, that there was an implied term in the contract that an unsuccessful party in adjudication is entitled to have the dispute determined by litigation and if successful to recover any monies paid out following that adjudication. Aspect also pleaded in the alternative that it had paid Higgins the sum under compulsion of law and therefore was entitled to restitution of the sum paid.

Higgins claimed that Aspect’s claim was statute barred because the alleged cause of action in contract accrued at the latest in April 2004 when Aspect delivered its asbestos report to Higgins, or in tort in June 2005 when the additional ACMs had been removed and Higgins continued with their work on site.

The Judge reviewed the authorities in respect of implied terms, interpretation of statutes, restitution and actions for negative declarations. In particular the Judge considered the case of Jim Ennis Construction Ltd v Premier Asphalt Ltd (2009) which dealt with this issue and the Judge in that case found that there was an implied term of the contract whereby the obligation to comply with the adjudicator’s decision gives rise to a new cause of action in favour of the successful party to compel the losing party to comply with that decision.

Although the Judge in the present case agreed that a new cause of action arose as determined in the Jim Ennis Construction case, he disagreed that Paragraph 23(2) of the Scheme for Construction Contracts in some way provides a “platform” for the implication of a term. The Judge considered that there was nothing in the Parliamentary debates to suggest that Parliament intended to create in every construction contract incorporating the Scheme an implied term along these lines. The fact that there had been an adjudication did not mean that the limitation period started to run again. He held that there was no implied term in the contract that the paying party (Aspect) remained entitled to have the dispute finally determined by legal proceedings. He found that Aspect’s claim was therefore barred by limitation. Accordingly, the claim was dismissed.