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England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc  EWHC 1322 (TCC) (23 May 2013)
Cite as:  WLR(D) 211,  EWHC 1322 (TCC)
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| ASPECT CONTRACTS (ASBESTOS) LIMITED
|- and -
|HIGGINS CONSTRUCTION PLC
Isabel Hitching (instructed by Silver Shemmings LLP) for the Defendant
Hearing date: 19 April 2013
Crown Copyright ©
Mr Justice Akenhead:
|March 2004||The Contract between Aspect and Higgins for Aspect to carry out an asbestos survey and provide a survey report. The scope of the survey is in dispute.|
|23/24 March 2004||Survey carried out by Aspect|
|27 April 2004||Survey report sent to Higgins|
|30 April 2004||Invoice rendered by Aspect to Higgins|
|24 June 2004||Higgins paid invoice|
|October 2004||Higgins as main contractor enters into design and build contract with Notting Hill Housing Trust for demolition and redevelopment of the Ivybridge Estate|
|9 December 2004||Higgins enters sub-contract with Falcon Refurbishment and Demolition for asbestos removal, demolition and site clearance.|
|February 2005||Alleged discovery of additional asbestos containing material ("ACMs") in the apartment blocks at the Estate|
|24 March 2005||Letter from Falcon to Higgins confirming agreement between Higgins and Falcon as to amount of additional payment to be made by Higgins to Falcon for additional asbestos removal|
|19 July - 15 August 2005||Falcon removed additional ACMs upon instructions from Higgins|
|27 September 2005||Piling rig arrives on site: end of period of 21 weeks' alleged critical delay, of which Higgins alleged that 17 weeks was attributable to discovery of additional asbestos|
|26 June 2009||Higgins served Referral Notice referring dispute with Aspect to adjudication|
|28 July 2009||Adjudicator's decision issued|
|6 August 2009||Aspect paid Higgins £658,017 in compliance with the Adjudicator's decision|
|3 February 2012||Aspect commences current proceedings (with no pre-action protocol procedures or any prior notice of issue of proceedings). Particulars of Claim served alleging implied term that unsuccessful party in adjudication entitled to have dispute determined by litigation and to repayment if successful|
|4 May 2012||Defence and Counterclaim served. Implied term admitted and no limitation defence pleaded. Counterclaim seeks difference between the sum claimed as damages in the adjudication and the lower sum decided on by the Adjudicator|
|19 June 2012||Reply to Defence and Counterclaim served contending that the Counterclaim is barred by limitation|
|31 January 2013||Hearing before TCC. Leave granted to amend the Defence and Counterclaim to withdraw admission about implied term and to plead limitation defence or alternatively that both claim and counterclaim are not statute barred. Preliminary issues ordered.|
"…that in the event that any dispute between the parties was referred to adjudication pursuant to the Scheme and one party paid money to the other in compliance with the adjudicator's decision made pursuant to the Scheme, that party remained entitled to have the dispute finally determined by legal proceedings and if or to the extent that the dispute was finally determined in its favour, to have that money repaid to it."
Paragraphs 13 to 15 address the performance by Aspect of its obligations with an assertion that the survey was carried out with reasonable care. Paragraphs 16 to 35 assert broadly that Higgins' allegations in the adjudication about Aspect's performance and on damages were wrong for a variety of reasons. So far as damages are concerned a number of the averments are that Aspect do not admit or put Higgins to proof on the issue of damages. There is then reference to the award of interest being for more than Higgins was entitled and to the adjudicator's decision. At Paragraphs 40 and 41, it seeks a declaration as referred to above, repayment of the sum of £658,017 awarded against it by the adjudicator and the costs of the adjudication together with interest on any sums recovered by it. At Paragraph 42 it pleads:
"Further or alternatively, Aspect paid the said sum to Higgins under compulsion of law. That compulsion will be released upon judgement hearin Aspect's favour. Aspect will be entitled to restitution of the sum paid."
The HGCRA and the Scheme
"(1) A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section.
For this purpose "dispute" includes any difference.
(2) The contract shall—
(a) enable a party to give notice at any time of his intention to refer a dispute to adjudication…
(3)The contract shall provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement.
The parties may agree to accept the decision of the adjudicator as finally "determining the dispute…".
(5) If the contract does not comply with the requirements of subsections (1) to (4), the adjudication provisions of the Scheme for Construction Contracts apply."
"2. Where a construction contract does not comply with the requirements of section 108(1) to (4) of the Act, the adjudication provisions in Part I of the Schedule to these Regulations shall apply."
The Schedule materially provided as follows:
"23.—(1) In his decision, the adjudicator may, if he thinks fit, order any of the parties to comply peremptorily with his decision or any part of it.
(2) The decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement between the parties."
"16. Before discussing in greater detail the reasoning of the Court of Appeal, the Board will make some general observations about the process of implication. The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It is the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed: see Investors Compensation Scheme Ltd v West Bromwich Building Society  1 WLR 896, 912-913. It is this objective meaning which is conventionally called the intention of the parties, or the intention of Parliament, or the intention of whatever person or body was or is deemed to have been the author of the instrument.
17. The question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so. Otherwise, the express provisions of the instrument are to continue to operate undisturbed. If the event has caused loss to one or other of the parties, the loss lies where it falls.
18. In some cases, however, the reasonable addressee would understand the instrument to mean something else. He would consider that the only meaning consistent with the other provisions of the instrument, read against the relevant background, is that something is to happen. The event in question is to affect the rights of the parties. The instrument may not have expressly said so, but this is what it must mean. In such a case, it is said that the court implies a term as to what will happen if the event in question occurs. But the implication of the term is not an addition to the instrument. It only spells out what the instrument means.
19. The proposition that the implication of a term is an exercise in the construction of the instrument as a whole is not only a matter of logic (since a court has no power to alter what the instrument means) but also well supported by authority. In Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board  1 WLR 601, 609 Lord Pearson, with whom Lord Guest and Lord Diplock agreed, said:
"[T]he court does not make a contract for the parties. The court will not even improve the contract which the parties have made for themselves, however desirable the improvement might be. The court's function is to interpret and apply the contract which the parties have made for themselves. If the express terms are perfectly clear and free from ambiguity, there is no choice to be made between different possible meanings: the clear terms must be applied even if the court thinks some other terms would have been more suitable. An unexpressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract: it is not enough for the court to find that such a term would have been adopted by the parties as reasonable men if it had been suggested to them: it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, though tacit, formed part of the contract which the parties made for themselves."
20. More recently, in Equitable Life Assurance Society v Hyman  1 AC 408, 459, Lord Steyn said:
"If a term is to be implied, it could only be a term implied from the language of [the instrument] read in its commercial setting."
21. It follows that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean. It will be noticed from Lord Pearson's speech that this question can be reformulated in various ways which a court may find helpful in providing an answer – the implied term must "go without saying", it must be "necessary to give business efficacy to the contract" and so on – but these are not in the Board's opinion to be treated as different or additional tests. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?
22. There are dangers in treating these alternative formulations of the question as if they had a life of their own. Take, for example, the question of whether the implied term is "necessary to give business efficacy" to the contract. That formulation serves to underline two important points. The first, conveyed by the use of the word "business", is that in considering what the instrument would have meant to a reasonable person who had knowledge of the relevant background, one assumes the notional reader will take into account the practical consequences of deciding that it means one thing or the other. In the case of an instrument such as a commercial contract, he will consider whether a different construction would frustrate the apparent business purpose of the parties. That was the basis upon which Equitable Life Assurance Society v Hyman  1 AC 408 was decided. The second, conveyed by the use of the word "necessary", is that it is not enough for a court to consider that the implied term expresses what it would have been reasonable for the parties to agree to. It must be satisfied that it is what the contract actually means.
23. The danger lies, however, in detaching the phrase "necessary to give business efficacy" from the basic process of construction of the instrument. It is frequently the case that a contract may work perfectly well in the sense that both parties can perform their express obligations, but the consequences would contradict what a reasonable person would understand the contract to mean. Lord Steyn made this point in the Equitable Life case (at p. 459) when he said that in that case an implication was necessary "to give effect to the reasonable expectations of the parties."
24. The same point had been made many years earlier by Bowen LJ in his well known formulation in The Moorcock (1889) 14 PD 64, 68:
"In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men"
25. Likewise, the requirement that the implied term must "go without saying" is no more than another way of saying that, although the instrument does not expressly say so, that is what a reasonable person would understand it to mean. Any attempt to make more of this requirement runs the risk of diverting attention from the objectivity which informs the whole process of construction into speculation about what the actual parties to the contract or authors (or supposed authors) of the instrument would have thought about the proposed implication. The imaginary conversation with an officious bystander in Shirlaw v Southern Foundries (1926) Ltd  2 KB 206, 227 is celebrated throughout the common law world. Like the phrase "necessary to give business efficacy", it vividly emphasises the need for the court to be satisfied that the proposed implication spells out what the contact would reasonably be understood to mean. But it carries the danger of barren argument over how the actual parties would have reacted to the proposed amendment. That, in the Board's opinion, is irrelevant. Likewise, it is not necessary that the need for the implied term should be obvious in the sense of being immediately apparent, even upon a superficial consideration of the terms of the contract and the relevant background. The need for an implied term not infrequently arises when the draftsman of a complicated instrument has omitted to make express provision for some event because he has not fully thought through the contingencies which might arise, even though it is obvious after a careful consideration of the express terms and the background that only one answer would be consistent with the rest of the instrument. In such circumstances, the fact that the actual parties might have said to the officious bystander "Could you please explain that again?" does not matter.
26. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 282-283 Lord Simon of Glaisdale, giving the advice of the majority of the Board, said that it was "not…necessary to review exhaustively the authorities on the implication of a term in a contract" but that the following conditions ("which may overlap") must be satisfied:
"(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying' (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract".
27. The Board considers that this list is best regarded, not as series of independent tests which must each be surmounted, but rather as a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means, or in which they have explained why they did not think that it did so. The Board has already discussed the significance of "necessary to give business efficacy" and "goes without saying". As for the other formulations, the fact that the proposed implied term would be inequitable or unreasonable, or contradict what the parties have expressly said, or is incapable of clear expression, are all good reasons for saying that a reasonable man would not have understood that to be what the instrument meant."
"A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person."
"An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued."
Most cases based in contract involve either debt, breach, termination or the accrual of other contractual rights. Authorities over many years have established that the cause of action arises in debt, when the sum first becomes due for payment, for breach of contract when the breach occurs, for or in connection with termination often when the termination is triggered and for other contractual rights when those rights have actually accrued.
"unravelling the practical consequences of orders made by the courts below and duly carried out by the unsuccessful party. The result of [a successful appeal] is… that, to the extent indicated, orders made in the courts below should not have been made. This result could, in some cases, be an idle exercise unless the [appellate court] were able to make consequential orders which achieve, as nearly as is reasonably practicable, the restitution which this result requires."
(a) The decisions of adjudicators can be enforced by the Courts, essentially on the basis that there is a contractual undertaking in effect that the parties shall treat the decision as binding, albeit for the time being (see e.g. VHE Construction plc v RBSTB Trust Co  BLR 187).
(b) Those decisions are to be enforced by the Courts even if the adjudicators have answered the questions or disputes referred to them incorrectly as a matter of fact or of law (see e.g. Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd  EWCA Civ 507).
(c) Those decisions are to bind the parties to the construction contract until and unless the parties agree otherwise or the tribunal of final resolution (be it arbitration or a Court) decides otherwise.
(d) It is open to parties to a construction contract or a contract which incorporates comparable adjudication provisions to those allowed for in the Scheme or by the HGCRA to initiate adjudication proceedings at any time.
So far as this latter point is concerned, the Latham Report which ultimately led to the Act highlighted difficulties for parties to construction contracts securing payment and thus in connection with cash flow as did the Parliamentary debates on the bill. Some commentators have argued that adjudication can or should only be initiated broadly during the course of the construction contract in question. However that is not a view accepted by the courts and indeed Section 108(1) of the HGCRA does not on its face impose any temporal limits on when adjudications can be started. There have been some authorities that suggest that, even if the tribunal charged with final resolution has embarked on its final exercise of resolving particular disputes, such disputes can simultaneously be referred to adjudication which will, almost invariably, proceed to a decision somewhat more quickly than the final tribunal can produce its award or judgment as the case may be. It follows from this that an adjudication can be started even after the limitation period in question has expired, albeit that the referred claim may be doomed to failure.
"Of course that conclusion is not in itself sufficient for the Claimant in this case, because the Claimant is seeking to have the court finally determine the dispute decided by the adjudicator, as opposed to seeking to enforce the adjudicator's decision. It does however provide the platform for the Claimant's second submission that there is additionally an implied term that an unsuccessful party is entitled to bring court proceedings to have the dispute referred to the adjudicator finally determined and, if successful in persuading the court to reach a conclusion different to that reached by the adjudicator, to be repaid all sums paid by him in compliance with the decision."
19. If it is the referring party who is dissatisfied with the adjudicator's decision, so long as he is within the limitation period applicable to the underlying cause of action he can simply bring legal proceedings in respect of that cause of action. It is difficult to see how he can suggest that his right to have the dispute finally determined by legal proceedings entitles him to commence those proceedings outside the limitation period applicable to the underlying cause of action. Where, however it is the responding party who is dissatisfied with the adjudicator's decision, then the question arises as to the source of his right, which has never been disputed, to challenge the decision by legal proceedings and recover sums paid in compliance with it. Although there are of course some cases where the dispute referred to adjudication is not about money that is relatively unusual; typically the dispute referred to adjudication is a money claim. In such cases, the responding party may simply assert a pure defence, it may (subject to compliance with the withholding requirements of the HGCRA) assert a defence by way of set-off or cross-claim, or it may (as in this case) assert both a pure defence (to the claim for payment for the replacement works) and a cross-claim (setting off its cross-claim for losses flowing from the defective original works against money otherwise admitted due to the Claimant). In all such cases, however, the responding party has not suffered any actual loss as at the date of referral precisely because he has refused to pay the responding party and thus is not out of pocket. It follows that he would not on a conventional analysis have a cause of action against the referring party at that stage, other than perhaps one for nominal damages for breach of contract.
20. Although not conceded in terms, it is I think implicit from the footnote to paragraph 20 of Ms Sims' submissions that she accepts that in principle it would be open to the Claimant to bring legal proceedings seeking a negative declaration, i.e. that it had no liability to the Defendant. These legal proceedings could be brought either before the adjudication, in response to a threatened claim by the Defendant, or after an adjudication, if resulting in a decision adverse to the Claimant. It is clear from the decision of the Court of Appeal in Messier-Dowty v Sabena  1 WLR 2040, referred to in the current White Book Service 2009 at paragraph 40.20.2, that the court has a discretion, which should be approached pragmatically, whether or not to grant a negative declaration, that it should not be reluctant to do so where to do so would help to achieve the aims of justice, but that since to do so would reverse the usual role of claimant and defendant and thus might result in procedural complications and lead to potential injustice, caution should be exercised in deciding whether or not to exercise the discretion. It may well be, therefore, that the court would be more inclined to make a negative declaration on an application by the losing party to the adjudication than it would before an adjudication had even been commenced, unless some good reason could be shown for seeking a declaration at that stage. Ms Sims' point is, I think, that one undesirable result of a finding by this court that this case was statute-barred would be to lead parties in the position of this Claimant to issue proceedings for a negative declaration out of an abundance of caution in every case where a claim which had been made but neither referred to adjudication nor agreed was approaching the expiry of the relevant limitation period.
21. There is, it appears to me, a real difference between issuing legal proceedings seeking only a negative declaration (i.e. that the claimant is not liable to the defendant), and issuing legal proceedings seeking the return of sums paid in compliance with an adjudicator's decision on the footing that on a final determination of the dispute the claimant has no liability to the defendant. In the latter case the claimant is asserting a state of affairs which entitles him to a substantive remedy, viz the repayment of money, which therefore seems to me to be in substance the assertion of a cause of action for the repayment of that money. However, what is the cause of action on which the claimant in such a case can rely?
23. Although the Defendant contests the Claimant's case, its case consists merely of a bare denial; it does not advance a positive case as to why the requirements for implication are not met. Insofar as the Defendant appears to be saying that there is no need for the implication of such a term because the Claimant has his cause of action in relation to the underlying dispute, that does not seem to me to answer the objection that the only claim which a losing party in the position of the Claimant here could assert in relation to the underlying dispute would be either a claim for nominal damages for breach of contract or a claim for a negative declaration. It does not seem to me that any claim on the underlying cause of action could include a claim for the substantive relief of an order for repayment of the monies which he has paid in compliance with the adjudicator's decision. The other possible counter-argument, which the Defendant does not make because it appears not to accept that there is any claim in restitution, is that the availability of a claim in restitution means that there is no need for any implied term. However it does not seem to me that the availability of an alternative claim in restitution is fatal to the implication of an implied term; indeed if anything it supports it, because it shows that on an objective basis the parties must be taken to have understood that there was a right to repayment of monies paid in compliance with the adjudicator's decision if the final determination of the dispute by legal proceedings produces a different result.
24. In my judgment the implied term contended for by the Claimant satisfies the 5 requirements identified in the BP Refinery case, for the reasons set out by Ms Sims in her submissions. It is a reasonable and equitable term which applies equally to both parties to the contract; it is essential to give effect to the reasonable expectation of the parties (that a losing party to an adjudication who has to 'pay now challenge later' will have the right to recover such payment by legal proceedings finally determining the dispute); it is obvious that such a term is required to give effect to the reasonable expectations of the parties; it can clearly be expressed; it supports rather than contradicts the terms of the Scheme which form part of the contract between the parties. I am satisfied therefore that in a contract such as this to which the adjudication provisions of the Scheme apply there is to be implied a term that where one party has paid monies to the other party in compliance with the decision of an adjudicator then that party is entitled to have that dispute finally determined by legal proceedings and, if or to the extent that the dispute is finally determined in his favour, to have those monies repaid to him.
25. It seems to me that the implied term is necessary to make fully workable the concept of the temporary finality of the adjudicator's decision which lies at the heart of the policy behind the adjudication provisions of the HGCRA. It is in substance no different to the state of affairs which exists in many construction contracts where there is provision for interim payments under interim certificates based on interim valuations, with the final valuation, certificate and payment to be made at the end of the contract. If it transpires at that stage that the contractor has been overpaid under the interim certificates, then it cannot be doubted that the employer has a cause of action to recover the overpayment. Although standard form contracts will typically make express provision for that eventuality, in my judgment if they did not such a right would undoubtedly be implied…
26. It could I suppose be objected that this could result in unacceptable delay, where for example a party launches an adjudication shortly before the expiry of the 6 year limitation period for his claim, succeeds and receives money, only to be met by a claim for repayment just before the expiry of the 6 year limitation period for that claim to be made, with the result that the court would have to adjudicate on a stale claim 12 years old. However the first counter-argument is that the initial delay cannot be the fault of the losing party, and the second is that this still appears to me to produce a fairer result than the one for which the Defendant is contending in this case. In any event, given that adjudication is employed in the vast majority of cases precisely because it is a quick remedy, I doubt very much that cases such as the present case are likely to occur frequently, still less the extreme example which I have just given.
28. Although strictly unnecessary given my previous conclusion, I should also address the Claimant's alternative argument that it has a cause of action for the repayment of money in restitution. Ms Sims relied upon the principle, summarised in Goff & Jones' The Law of Restitution (7th edition, 2007) at paragraph 16-001, that where a party to legal proceedings has paid money or transferred property to another party in compliance with a court order, then if that order is subsequently reversed or set aside the paying party is entitled by way of restitution to recover the money or property paid or transferred. The Defendant does not challenge that principle, but disputes that it has any application to monies paid in compliance with the decision of an adjudicator. Whilst I can see that there is a difference between adjudication, which is the creature of contract (albeit one which statute requires be written in to the contract whether the parties like it or not), and legal proceedings, it nonetheless seems to me that the end result is still the same, namely that the claimant has been required to pay the defendant money under compulsion as a result of the decision of a decision-maker with jurisdiction to rule on the relevant dispute, so that if the decision is subsequently set aside a restitutionary claim ought in both cases to lie to recover the payment. If the only point of difference is that an adjudication is contractual in origin, then presumably the same objection would apply to an arbitration award subsequently set aside on an appeal to the court on a point of law, which would at first blush produce a surprising and unjust result. The Defendant's suggestion that the payment by the Claimant was voluntary is completely at odds with the express obligation imposed by the HGCRA and the Scheme to comply with the decision; it can scarcely be supposed that a claimant would have to require the defendant to issue enforcement proceedings in the TCC to obtain a judgment to enforce the decision before a subsequent claim in restitution would be available to him.
29. I therefore conclude that the Claimant has a cause of action to recover the monies paid over in restitution in addition to the cause of action founded on the implied term.
Limitation period applicable to the claim in restitution
30. Ms Sims contended that the Limitation Act does not apply to restitutionary claims. She relied upon the fact that restitutionary claims are not specifically dealt with in the Limitation Act, and she refers to a discussion by Professor McGee in his publication Limitation Periods (5th edition, 2006) at paragraphs 4.006 – 4.007 to support her argument to this effect. Although it is true that Professor McGee does suggest that the view, expressed by Hobhouse J. (as he then was) in Kleinwort Benson v S Tyneside MBC  4 All ER 972, to the effect that a claim for money had and received fell within s.5 Limitation Act, should be treated with caution, it is clear that this view is not shared by Goff and Jones, who in chapter 43 of their book, devoted to the defence of limitation in restitution claims, accept that the assumption (that s.5 applies to money had and received cases) 'must be made, though the words used cannot be regarded as felicitous' (paragraph 43-001). Although Goff & Jones do not specifically consider the case of claims for the recovery of money paid over under a court order, the general approach appears to be that in personal restitutionary claims at law a 6 year limitation period will apply by virtue of s.5 Limitation Act.
31. In any event, since it is clear in my judgment that even if the usual 6 year limitation period applies it will run from the date of payment (see Goff & Jones, paragraph 43-002), so that the Claimant's claim in restitution is not statute-barred even on that basis, there is nothing to be gained from my expressing any concluded opinion as to whether the claim in restitution is subject to any limitation period at all, which is far better left for a case in which the point does directly arise for decision. I am wholly unable to accept the Defendant's argument that the limitation period in restitution runs from the date when the adjudicator decided that the Claimant should have paid the Defendant, viz January 2003. There is no logical basis for this argument, and it is inconsistent with the cases cited in paragraph 43-002 of Goff & Jones."
"approach was pragmatic. It is not a matter of jurisdiction. It is a matter of discretion. The deployment of negative declarations should be scrutinised and their use rejected where it would serve no useful purpose. However where a negative declaration would help to ensure that the aims of justice are achieved the courts should not be reluctant to grant such declarations. They can and do assist in achieving justice…So in my judgement the development of the use of declaratory relief in relation to commercial disputes should not be constrained by artificial limits wrongly related to jurisdiction. It should instead be kept within proper bounds by the exercise of the courts' discretion."
He went on at Paragraph 42 to say:
"While negative declarations can perform a positive role, they are an unusual remedy in so far as they reverse the more usual roles of the parties. The natural defendant becomes the claimant and vice versa. This can result in procedural complications and possible injustice to an unwilling 'defendant'. This in itself justifies caution in extending the circumstances were negative declarations are granted, but, subject to the exercise of appropriate circumspection, there should be no reluctance to their being granted when it is useful to do so."
"The decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement between the parties." (Emphasis added)
One needs to bear in mind what it is that the adjudicator is deciding: it is the dispute which has been referred to him or her. That dispute may be a contested claim for a debt, for damages or for a declaration (positive or negative). That claim will usually involve some sort of (at least alleged) cause of action which is said to have accrued before it has been disputed. Thus, in the current case, it was Higgins' contested claim for damages for contractual negligence which was referred to adjudication. Such cause of action did not and does not disappear by reason of the adjudication process or decision; it existed and is as good before as it is after the decision.
"that in the event that any dispute between the parties was referred to adjudication pursuant to the Scheme and one party paid money to the other in compliance with the adjudicator's decision made pursuant to the Scheme, that party remained entitled to have the dispute finally determined by legal proceedings and if or to the extent that the dispute was finally determined in its favour, to have that money repaid to it."
I attach little importance to the fact that this implied term runs to 73 words because I have no doubt that it could be reduced verbally, although it is sometimes said that the longer the implied term the less likely it is that the term "goes without saying". The five factors on the BP Refinery list are:
"(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying' (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract".
(a) There is no doubt that each party here and any party to a construction contract had and has a right to sue on a cause of action for a positive or negative declaration that Aspect was or was not in breach of its contract or duty of care. That right was not circumscribed in any way by the simple contract into which they entered.
(b) Each party had a legally enforceable right at any time after a dispute arose to refer it to adjudication.
(c) The decision of any given adjudicator on any given dispute by operation of law was or would be binding on the parties unless and until it was finally resolved by the Court.
(d) Both in Court and in adjudication, all defences, including limitation, would be open to the defending party.
(e) The creation in effect by way of implication of a term along the lines pleaded creates a new cause of action as from the date of payment ordered to be made by an adjudicator's decision which would have the effect of extending the period in which the underlying dispute can be litigated or arbitrated (but only by the party required to pay) for an additional six years from the date of payment, without the risk of a limitation defence being raised.
(f) There is a possible undesirability for the party which might be criticised for instance for breach of contract or as owing money having to pursue a claim for a negative declaration within six years of performance under the contract to avoid the possibility of a limitation defence being raised against it.
(g) There is a theoretically possible risk to the party which does not yet wish to seek such a negative declaration that, if it decides to wait to see what the outcome is of an adjudication brought against it within a few weeks of the potential expiry of the limitation period, it might not have time within the limitation period to seek a negative declaration after the decision has been issued let alone honoured by it; it might then be faced with a limitation defence and not be able to recover payment pursuant to a decision which as properly analysed by a judge or arbitrator might turn out to be wrong.
(h) Against that, the responding party in adjudication in the theoretical scenario could, as soon as the belated adjudication is threatened or started, issue its proceedings for a negative declaration which would protect it against an unfavourable outcome in the adjudication decision.
(i) There is of course a risk, albeit a very small one, that, if the belated adjudication is started by a party whose claim is in truth already barred by limitation, the adjudicator might get it all wrong and (legally or factually unjustifiably) reject the limitation defence in the adjudication; there would then be no comeback for the losing party, unless it had instituted its claim for a negative declaration within the limitation period for seeking such a declaration.