Key Contacts: | Clare Cashin – Partner | Finola Igoe – Senior Associate
The High Court has yet again granted leave to enforce the decision of an adjudicator (and entered judgment in the sum of €1.25 million in favour of McGill Construction Limited), reinforcing the Court’s track-record of endorsing adjudication and the jurisdiction of adjudicators in Ireland.
These proceedings were brought by McGill Construction Ltd (the “Applicant”) who sought leave to enforce a decision of an adjudicator pursuant to Section 6(11) of the Construction Contracts Act 2013. The following grounds of opposition were raised by Blue Whisp Ltd (the “Respondent”) against the application to enforce the adjudicator’s decision:
- the notice of intention to refer to adjudication was invalid in that it encompassed a dispute in relation to more than one payment claim notice;
- the formal referral of the payment dispute to the adjudicator was made outside the seven-day period prescribed;
- the adjudicator acted in breach of fair procedures in deferring her decision in respect of a claim for defective works to be addressed in two related adjudications then pending before her and as such the Respondent claimed they were losing their right to set-off; and
- the ability of the Referring Party (the Applicant) to repay the adjudicator’s award in the event that it transpired that those monies were not properly owing to it.
Right To Refer more than one “Payment Dispute”
The Court upheld the adjudicator’s finding that the notice of intention to refer had been valid and was binding on the parties. The Court stated it is not open to the Respondent, having conferred jurisdiction on the adjudicator to determine this issue, to seek to challenge the adjudicator’s finding in these enforcement proceedings.
It concluded that there is no legislative requirement for separate referrals in respect of individual payment claim notices. The claim advanced was correctly characterised as a singular “payment dispute” and it was properly advanced in one notice of intention to refer.
Whether Referral to Adjudicator Made Within Time
The Respondent contended that the referral was not made to the adjudicator within seven days of her appointment and that, in consequence, the entire adjudication process was invalid. This contention was grounded on the argument that, when sent by way of email, a referral is not made until such time as it reaches the email inbox of the intended recipient. It was argued that it was not sufficient that the email had entered into the IT system of the intended recipient within time.
Section 6(5) of the Construction Contracts Act 2013 provides that the referring party shall refer the payment dispute to the adjudicator within seven days of their appointment and at the same time, provide a copy of the referral and all accompanying documents to the other party to the construction contract.
The Court cited the Electronic Commerce Act 2000 and concluded that the referral to adjudication in the present case was deemed to have been received at 23.59 hours on 21 November 2023. The Court concluded it was the time it entered the IT system that was relevant, not the time it entered the adjudicator’s inbox (which occurred at 00.01 on 22 November 2023). Therefore, the Court was satisfied the referral was made within the seven-day time-limit.
The Respondent also attempted to introduce an argument that the referral was deficient on the separate and distinct ground that it had not been accompanied by all of the documents which had been cited in the referral.
The Court concluded that the supposed failure to provide appendices within seven days of the date of appointment would not have invalidated the referral. The Court confirmed it is a question of fact in any particular case as to whether the material, which has been furnished to an adjudicator within the seven-day time-limit, is sufficient to constitute the making of a referral. The principal determinant of the validity of a referral is whether the content of same (and such supporting documentation, if any, as accompanies it) describe the nature and extent of the payment dispute in sufficient detail to allow the adjudicator to understand same and to allow the other party a meaningful opportunity to respond to same. Here, the Court found the payment dispute was comprehensively set out.
Failure to Consider a Defence
The Respondent alleged that there had been a breach of fair procedures as the adjudicator failed to consider a defence advanced on behalf of the Respondent in that the Respondent had sought arguing that any monies payable to the Applicant (the Referring Party for the purposes of the adjudication) should be reduced by way of set-off or damages for allegedly defective works.
In assessing the complaint of unfairness, the Court referred to the principle that the Court will not enforce an adjudication decision which has been reached in breach of fair procedures. As explained in the judgment in John Paul Construction Ltd v. Tipperary Co-operative Creamery Ltd1 the Court will not lend its authority to the enforcement of an adjudicator’s decision, even on a temporary basis, where there has been an obvious breach of fair procedures.
The Court concluded that there had been no breach of fair procedures here. The Court was satisfied that the Respondent had been afforded a full opportunity to ventilate its argument in relation to the allegedly defective works in two separate adjudications. The Court also noted how a determination in those separate adjudications had been made by the adjudicator in advance of the deadline for payment by the Respondent of the first adjudication award.
Ability to Pay
The fourth ground of opposition that the Respondent raised was the question over the ability of the Applicant to repay the adjudicator’s award in the event that it transpired that monies were not properly owing to it.
The Court was satisfied it was neither necessary nor appropriate to consider, in the context of these proceedings, the difficult question of whether, it would ever be appropriate to refuse to enforce an adjudicator’s award by reference to the financial position of the Applicant. The Court further noted the Respondent had failed to adduce any credible evidence which might suggest that the Applicant was in financial difficulties such that it would be unable to repay the sum if required.
Conclusion
Mr Justice Simons concluded that the Respondent had failed to establish any grounds for refusing the application to enforce the adjudicator’s award and granted leave to the Applicant to enforce the adjudicator’s decision of 31 December 2023, entered judgment in favour of the Applicant and awarded costs to the Applicant. This decision is consistent with previous decisions of the Irish High Court endorsing adjudication as a means for resolving construction disputes and not entertaining arguments which seek to challenge the adjudicator’s decision.
To read the full judgement for this case, click here.
This article was written with the assistance of Una O’ Doherty.
- [2022] IEHC 3 (at paragraphs 9), “Importantly, the High Court retains a discretion to refuse leave to enforce an adjudicator’s decision. This is so notwithstanding that, on a narrow literal interpretation of section 6 of the Construction Contracts Act 2013, there might appear to be an automatic right to enforce once the formal proofs have been met. The High Court will not lend its authority to the enforcement of an adjudicator’s decision, even on a temporary basis, where there has been an obvious breach of fair procedures. This restraint is necessary to prevent an abuse of process and to uphold the integrity of the statutory scheme of adjudication.” ↩︎
