Adjudication of a construction dispute seems like a great idea – until you get an adjudicator’s report which is not to your liking. In such circumstances, it may be possible to litigate or arbitrate the dispute and, hopefully, settle it on better terms.
In a recent case, an asbestos management company and a building firm fell into dispute over a contract to remove asbestos from a property which was being demolished as part of a development. There was more asbestos to be removed than was originally thought and that led to a considerable delay in completing the project.
The developer alleged that the asbestos management company had breached its contract in that it failed to carry out a proper survey and that breach resulted in the failure to identify the extent of the asbestos problem. The dispute went to adjudication in 2009. The adjudicator awarded the developer more than £650,000, which was considerably less than the original claim. The payment was made shortly thereafter.
The asbestos management company wished to challenge the adjudication award and recover the payment it had made. It began a legal action in 2012, more than two years after it had paid the money and (crucially) more than six years after the original breach. This led to the court having to decide when the time limit for the commencement of any legal proceedings brought by the asbestos management company started. Was it when it paid the money to the builder or when the original (alleged) breach of its contractual duties occurred?
The arguments were complex, but central to the decision was the consideration of whether the payment of the arbitrator’s award created a new ‘cause of action’. In the circumstances, the judge ruled that it did not – with the result that the asbestos management firm’s claim was ‘out of time’ and could not be brought.
For most purposes, proceedings must be commenced within six years of the event which causes the claim or the time when you first become aware of the damage which is the basis of your claim. If a decision is made against you with which you disagree, it is wise to take advice as soon as possible so that any legal challenge you make is not time barred.
Dean Parnell, Sydney Mitchell.
For further information on this article and related matters, please contact Dean Parnell on 0121 698 2200, email d.parnell@sydneymitchell.co.uk or fill in our online enquiry form.
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