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On appeal from: [2013] EWCA Civ 1541

The Supreme Court unanimously dismissed the appeal concerning an implied term in the parties’ contract that could allow the respondents to recover the payment they made as a result of an adjudicator ruling, if they were successful in seeking a final determination by litigation.

The respondent contracted with the appellants to survey and report on a block of maisonettes that the appellant’s were redeveloping. A dispute arose when asbestos was discovered on site that had not been identified in the respondent’s report. In their contract they agreed to enable disputes to be referred to adjudication, in which the appellant’s were awarded £490,627 plus interest for the appellant’s breach of its duties to exercise reasonable skill and care in carrying out the survey. The parties now dispute an implied term in their contract under the Housing Act 1996, s 108(3), that “the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration… or by agreement”. The respondent’s seek to recover the sum it paid as the adjudicator’s decision was not treated as final and the appellant’s had not issued a claim to recover the remaining balance of £331,855 during the limitation period. The High Court rejected the appeal stating that there was no implied term for restitution after the limitation period but the Court of Appeal allowed their appeal on the basis that there was an implied term in which they could recover the costs if they could show that it had not been due on the merits, and that this attracted a six-year limitation period running from the date of Aspect’s payment. This decision was appealed to the Supreme Court.

In delivering the judgment Lord Mance stated that adjudication is intended to be a speedy provisional measure, pending final determination. The respondent’s had an independent basis for having the original dispute finally determined arising on an implied contractual or restitutionary basis after they made payment to the appellants. He recognised that it was an implied contractual term that the respondent would have a directly enforceable right to recover such payment if, on a final determination on the merits of the original dispute, those sums were shown not to have been due. The limitation periods for the respondent’s claims in contract and restitution are six years from the date of payment. However the appellant’s on the other hand is time-barred from pursuing its counterclaim for the balance of its original claim because they failed to bring legal proceedings before the end of the original limitation period.

 

For judgment, please download: [2015] UKSC 38
For Court’s press summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII