It might have taken a while before we started to see enforcement decisions in Ireland’s High Court arising from adjudications under the Construction Contracts Act 2013 but they now seem to be on a roll, with the latest (John Paul Construction Ltd v Tipperary Co-Operative Creamery Ltd) handed down just a few weeks ago.
This one was all about whether the adjudicator was guilty of some form of procedural unfairness, which the judge decided he wasn’t, and so enforced his decision.
Principles of enforcement
Unlike the UK’s Construction Act 1996, Ireland’s Construction Contracts Act 2013 expressly provides for the enforcement of adjudicators’ decisions through the High Court. The applicable principles were considered in Principal Construction Ltd v Beneavin Contractors Ltd and Aakon Construction Services Ltd v Pure Fitout Associated Ltd, both of which I discussed at the time.
In John Paul Construction, Garrett Simons J explains the rationale behind the High Court’s role in enforcement, and how the legislation is designed to provide a “special dispute resolution mechanism” for construction contracts to “fulfil the need for prompt payments in the construction industry”. The so called “pay now, argue later” policy that we are so very familiar with.
The judge also highlights the discretion that a court has to refuse to enforce an adjudicator’s decision, and that includes where there has been an “obvious breach of fair procedures”. This is to “prevent an abuse of process and to uphold the integrity of the statutory scheme of adjudication”. He described this judicial discretion as an important safeguard to ensure confidence in the statutory scheme of adjudication.
Again, this all seems familiar with what happens in the TCC, with the default position being that the adjudicator’s decision will be enforced and the onus is on the party resisting enforcement to demonstrate grounds that justify a refusal to enforce. Words like “fair”, “breach” and “material” all spring to mind.
What the judge said next made me smile:
“One inevitable consequence of the existence of this judicial discretion is that parties, in an attempt to evade enforcement, will seek to conjure up breaches of fair procedures where, in truth, there are none.”
He then talks about how this refusal to enforce will only arise where there has been a “blatant or obvious breach such that it would be unjust to enforce the immediate payment obligation” (Ireland’s Construction Act only deals with payment disputes). He also refers to the court not carrying out a:
“… detailed examination of the underlying merits of an adjudicator’s decision under the guise of identifying a breach of fair procedures.”
Again, all very familiar.
With that in mind, it’s time to look at the alleged breaches in John Paul Construction. The resisting party (the employer) put forward three arguments:
- The adjudicator’s failure to consider its defence.
- That the adjudicator allowed a new claim to be made during the adjudication.
- The adjudicator exceeded his jurisdiction by purporting to determine issues that were the subject of an earlier adjudication.
Failure to consider its defence
As the judge says, this allegation is based on “a small segment of the written response”, namely a section in the employer’s response running to 20 pages out of some 142 pages, which the judge describes as the “introductory sections” because it describes the background to the project, the tendering process, the changes to the contractor’s management team and a narrative of meetings. He explains how the themes that emerge from this section then “run like a thread through the entirety of the employer’s response”. However, to suggest this is a “freestanding defence”, separate and distinct from the balance of the 142 pages of the response is “artificial and contrived”. Further, the adjudicator “fully understood the overall nature of the defence”, and summarised it accurately in his decision:
“The approach which the adjudicator took to the claim was to analyse each of the ten delay events in sequence, and to make determinations in each instance as to which party is responsible for the delay and the length of that delay. This was an eminently sensible approach to adopt.”
The adjudicator also expressly referenced the employer’s general complaint that the referring party (the contractor) failed to assign competent and experienced senior management personnel to the project. Ultimately, the adjudicator decided most of the delay events were the employer’s responsibility, and those findings were made within jurisdiction. The judge noted that if the employer was unhappy at that outcome, it has the right to refer the matter to arbitration. It cannot have the court “embark upon a reconsideration of the underlying merits of the adjudicator’s decision”.
The judge held there is no basis for saying the adjudicator failed to consider the defence, “still less that he ignored the defence”.
Allowing a new claim
The judge dealt with this point succinctly. He simply noted that the complaint was premised on the employer’s misunderstanding of the contractor’s claim – the supposed new claim was actually a better particularised version of the original claim. In fact, it was the employer that had requested further and better particulars during the adjudication and had been given a reasonable time to consider the information the contractor provided.
This point concerned delay to the completion of the RC tower lifts, an issue that the first adjudicator had determined. The second adjudicator (who was also the first adjudicator) expressly addressed this point in his decision and drew a distinction between the two claims, noting that the first adjudicator had not dealt with an extension of time or prolongation costs.
Consequently, the judge was able to address this point briefly, finding that the second adjudicator’s decision did not trespass on issues determined in the first adjudication.
We often see parties in the TCC resisting enforcement on what some might consider to be questionable grounds. Here the challenge to enforcement also failed on its merits.
It seems to me that the judge is sending a clear message that he wants parties to understand the importance of complying with adjudicators’ decisions. Also, that the court will not tolerate:
“… blatant attempts to reagitate the arguments made to – and rejected by – the adjudicator … under the guise of identifying a breach of fair procedures.”
As Garrett Simons J is the judge assigned to deal with adjudication enforcement, I think parties should take note of his words.