Key Contacts: Angelyn Rowan – Partner | Claire Wallace Duffy – Senior Associate | Michael Cahill – Senior Associate |
Introduction
The Construction Contracts Act 2013 (the “Act”) established a scheme for “disputes relating to payment” under construction contracts to be referred to statutory adjudication, with decisions being provisionally binding and subject to summary enforcement. One cannot contract out of the Act.
The recent High Court case of Albert Connaughton v Timber Frame Projects Ltd t/a Timber Frame Ireland [2025] IEHC 469 has provided much needed clarity on what constitutes a “payment dispute” in the context of the Act.
Of note is that the equivalent legislation in the UK provides for adjudication for any dispute under a construction contract and, therefore, unlike the Irish regime, it is not confined to disputes relating to payment only.
Background
Albert Connaughton (the “Employer”) entered into a contract with Timber Frame Projects Ltd t/a Timber Frame Ireland (the “Contractor”), for the design, supply, and erection of a timber frame structure. The contract took the form of a quotation and revised quotation, which included payment terms. When the Contractor failed to erect the timber frame house by an agreed deadline, the Employer purported to terminate the contract. The Employer alleged a repudiatory breach and sought common law damages. This remedy did not arise on foot of the specific payment terms in the contract (which did not include provisions relating to payment in the case of termination), rather, the Employer relied on the standalone regime for common law damages which has developed by Court precedent.
At adjudication, the Employer was ultimately successful and was awarded compensation, which included the purchase price paid, compensation for alleged consequential losses and sums of purported reliance loss and loss of bargain. Subsequently, the Employer sought to enforce in this decision in the High Court under the Act.
“Dispute Relating to Payment”
The central question before the High Court was whether the adjudicator had jurisdiction over the dispute. Did this claim for common law damages qualify as a “dispute relating to payment” for the purpose of the Act?
In refusing the application, the Court held the right to refer a dispute to statutory adjudication is confined to circumstances where the dispute relates to a payment which is provided for under a construction contract. The right to refer does not extend to a dispute in relation to a claim for common law damages for breach of contract.
The construction contract between the parties was described as “remarkably spare“. In contrast with standard form construction contracts, it did not provide for termination payments to the Employer in the event of a breach by the Contractor. In the present case, the Employer sought to terminate the contract due to a repudiatory breach, which is a common law right, rather than exercising a contractual right to terminate which may have triggered a payment obligation.
As the dispute did not relate to a payment specifically provided for under the terms of the construction contract, the High Court ruled that the adjudicator lacked jurisdiction and the decision was declared a nullity and unenforceable.
Key Takeaways
This is a welcome judgment as it clarifies the application of the Act and the type of payment disputes that can (or cannot) be referred to statutory adjudication. It is evident that the Court will apply the Act strictly, which is important for parties to construction contracts to bear in mind when negotiating terms of contracts, particularly when considering terms related to contractual damages. The Court’s narrow interpretation further emphasises the difference between the Irish and UK statutory adjudication regimes, where adjudication is available in the context of any dispute under a construction contract, whereas in Ireland adjudication is limited to disputes relating to payment only.
