LRJ Interiors Limited (“LRJ”), the Claimant in the proceedings, sought enforcement of an adjudicator’s decision against the Defendant, Cooper Construction Limited (“Cooper”) for the payment of £3,256.58 which remained unpaid by the Defendant in respect of a payment application which it had ignored (“Application No. 4”). The Defendant responded by commencing its own Part 8 proceedings seeking a declaration that the adjudicator’s decision was in fact void and unenforceable because the adjudicator had failed to recognise that LRJ’s claim was time-barred under the Limitation Act 1980. 

The parties entered into a construction contract comprising a letter, quotation and purchase order for dry lining, plastering and screed works at a development in Oxfordshire (the “Contract”). The works were completed in October 2014. Approximately eight years later, LRJ submitted Application No. 4, to which it received no response from Cooper. Shortly after, LRJ launched an adjudication claiming the unpaid sum. In response, with reference to section 5 of the Limitation Act 1980, Cooper raised a limitation defence given that more than six years had passed since completion of the works. The adjudicator decided that the alleged breach was the failure to settle Application No. 4 by the final date for payment of 28 August 2022. On the basis that LRJ’s cause of action had accrued on this date, its claim was not time-barred.

In the subsequent proceedings, the Defendant maintained its position by arguing that LRJ’s right to claim for payment of Application No. 4 accrued at the date of completion of the works and therefore the statutory six-year limitation period had expired. 

Finding in favour of the Defendant, the Judge ruled that the adjudicator had failed to consider the terms of the Contract when deciding that the accrual date was the final date for payment. The adjudicator had also been wrong to assume that the lack of a pay less notice negated the need to assess whether or not the payment application itself was timely. The Judge concluded that on the facts, the right to be paid Application No. 4 had accrued shortly after completion of the works in November 2022. The outstanding sum did not simply become due again by being demanded some eight years later and thus usurping the statutory rules on limitation. Critically, the Judge confirmed that the Limitation Act 1980 applies equally to adjudication as it does to litigation. The court gave the declaration sought by the Defendant and held that the adjudicator’s decision was void and enforceable, and no monies were payable to LRJ.

Practical Implications

This judgment provides helpful guidance on the applicability of the statutory rules on limitation to adjudication proceedings and the need for adjudicators to carefully consider any limitation defence put forward. A limitation period is not automatically refreshed by an application for payment. Before commencing an adjudication, the referring party should assess whether its claim may be time-barred to avoid wasted time and costs.