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Contractor wins right to challenge £658,000 award

A contractor has won the right to challenge a £658,000 award made against it by an adjudicator more than six years ago.

The court heard that the contractor had been engaged by a developer to carry out an asbestos survey on a block of maisonettes. The developer later claimed that the contractor had failed to identify all the asbestos on the site, which led to delays and added costs. It referred the dispute to adjudication, claiming £822,482.

The contract between the two sides was subject to the adjudication provisions implied by the Scheme for Construction Contracts (England and Wales) Regulations 1998 Sch.1.

In July 2009, the adjudicator ordered the contractor to pay £658,017, which it did in August 2009.

In February 2012, more than six years after the allegedly negligent survey, but less than six years after making the payment, the contractor issued proceedings to overturn the adjudicator's decision and recover the payment.

It claimed that the contract contained an implied term entitling it to have the adjudicator's decision finally determined by legal proceedings in court and, if successful, to have the money repaid.

The case went all the way to the Supreme Court which ruled in favour of the contractor.

It held that the Scheme for Construction Contracts contained an implied term permitting the contractor to take legal action to challenge the payment. It also held that the limitation period was six years from payment, and that the contractor's claim was not time-barred.

It was a necessary legal consequence of the Scheme that the contractor had to have a directly enforceable right to recover any overpayment identified following a final determination of the dispute. Since the contractor's causes of action in contract and restitution arose from the payment, they could be brought at any time within six years of the date of payment.

Please contact us if you would like more information about the issues raised in this article or any aspect of contractual disputes.