The contractor under a construction contract submitted an application for final payment to the developer on 31 October 2014 and re-submitted it more than seven years later in July 2022. Following the developer’s failure either to make payment or respond with a payless notice, the contractor referred a dispute under the re-submitted application to adjudication pursuant to the provisions of the Scheme for Construction Contracts. The developer asserted that (1) the date on which the contractor’s right to payment accrued was 28 November 2014, namely 28 days after the application was first submitted, (2) more than six years having elapsed since the accrual date, under section 5 of the Limitation Act 1980, an “action”, as defined by section 38, could not be founded on the construction contract, and therefore (3) the contractor’s claim for payment made in July 2022 was statute-barred by the time it had been referred to adjudication. The adjudicator held that the contract did not provide an adequate mechanism for determining when payments became due, therefore the provisions of the Scheme for Construction Contracts applied, which did not impose any time limit for making a claim for payment under a construction contract. The adjudicator held that the contractor’s cause of action accrued on 28 August 2022, the date identified in the contractor’s notice of referral as the final date for payment, and then went on to award a sum in the contractor’s favour.
On the contractor’s claim to enforce the adjudicator’s decision and the developer’s claim for a declaration that the adjudicator’s decision was void and unenforceable on the ground that the sum awarded was statute-barred by section 5 of the 1980 Act—
Held, enforcement claim dismissed, declaration claim allowed. The definition of “action” in section 38 of the Limitation Act 1980 had to be read as including adjudication proceedings. Therefore, a limitation defence under section 5 was a defence which could be raised on a dispute referred to adjudication in response to a late application for payment. Contrary to the adjudicator’s decision, the contractor’s payment terms adequately covered its right to submit an invoice, payable within 28 days, for the difference between the contract price and total of previous instalments of the price paid by the developer. The exclusive reliance on the Scheme for Construction Contracts to establish a payment accrual date of 28 August 2022 had, therefore, not been justified. The contractor’s right to payment of the unpaid balance having accrued on 28 November 2014, the re-submitted application was statute-barred and the adjudicator’s decision requiring payment of the sum sought by it was unenforceable (paras 68–69, 85–86, 113–115).
Phil Mosson (surveyor) for the contractor.
Harry East (instructed by Hill Dickinson LLP) for the developer.