K&J Townmore Construction Ltd v Kildare and Wicklow Education and Training Board

• Jurisdiction: Ireland
• Judge: Mr. Justice David Barniville
• Judgment Date: 21 December 2018
• Neutral Citation: [2018] IEHC 770
• Court: High Court
• Docket Number: [2018 No. 169S],[2018 No. 169 S]
• Date: 21 December 2018

[2018] IEHC 770

THE HIGH COURT

Barniville J.

[2018 No. 169S]

BETWEEN

K&J TOWNMORE CONSTRUCTION LIMITED

PLAINTIFF

AND

KILDARE AND WICKLOW EDUCATION AND TRAINING BOARD

DEFENDANT

Summary judgment – Arbitration – Estoppel – Defendent seeking an order referring the parties to arbitration in accordance with an arbitration agreement between the parties – Whether the defendant was estopped from relying on the arbitration agreement

Facts: The defendant, Kildare and Wicklow Education and Training Board (the Board), entered into a Public Works Contract for Minor Building and Civil Engineering Works designed by the Employer with the plaintiff, K&J Townmore Construction Ltd (the contractor), on 6th October, 2014 (the PWC) under which the Board engaged the contractor and the contractor agreed to carry out construction works at St. David’s National School in Naas, County Kildare. The contractor claimed that the Board was indebted to it in the sum of €206,245.72 (exclusive of VAT) in respect of the construction works carried out by it. It claimed that that sum was due and owing by the Board by way of an account stated and settled and sought judgment in that amount in proceedings commenced by a summary summons issued on 13th February, 2018. The Board applied to the High Court for an order pursuant to Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) referring the parties to the proceedings to arbitration in accordance with an arbitration agreement between the Board and the contractor. In the alternative, the Board sought an order pursuant to the inherent jurisdiction of the court staying the proceedings to enable a conciliation to take place between the parties pursuant to a provision of the PWC. The Board contended that the PWC contained an arbitration agreement (in clause 13.2) under which the parties agreed that any dispute arising “under” the PWC was required to be “finally settled” by arbitration in accordance with the arbitration rules identified in a schedule to the PWC. The Board contended that such a dispute had arisen in relation to the contractor’s claim and that it therefore fell within the scope of the arbitration agreement. The contractor said that, as its claim was made on foot of an account stated and settled, the dispute in relation to it had not arisen “under” the PWC but under or on foot of a separate agreement which superseded the PWC and the arbitration agreement contained in it and was not subject to that arbitration agreement. The contractor also contended that the Board was estopped from relying on the arbitration agreement by virtue of its alleged agreement of the contractor’s final account (giving rise to the account stated and settled) and further contended that the agreement was “inoperative” within the meaning of that term in Article 8(1) for the same reason.

Held by Barniville J that clause 13.2 of the PWC contained an arbitration agreement which covered the dispute in relation to the claim which the contractor had brought by way of summary proceedings in the High Court. Barniville J was satisfied that the Board was not estopped from relying on the provisions of clause 13.2 and that there was no other basis on which that provision was or had become “inoperative”. In those circumstances, Barniville J held that he was required by Article 8(1) of the Model Law to refer the parties to arbitration in accordance with the provisions of clause 13.2 of the PWC. Barniville J confirmed that the arbitrator appointed under clause 13.2 of the PWC would have jurisdiction to determine any dispute between the parties concerning the existence, enforceability and any other issues in relation to the account allegedly stated and settled.

Barniville J held that he would make an order pursuant to Article 8(1) of the Model Law referring the parties to arbitration in accordance with clause 13.2 of the PWC.

Application granted.

JUDGMENT of Mr. Justice David Barniville delivered on the 21st day of December, 2018

Introduction

1 This is my judgment on an application by the defendant, Kildare and Wicklow Education and Training Board (the ‘Board’), for an order pursuant to Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration (the ‘Model Law’) referring the parties to these proceedings to arbitration in accordance with an arbitration agreement between the Board and the plaintiff, K&J Townmore Construction Limited (the ‘contractor’). In the alternative, the Board seeks an order pursuant to the inherent jurisdiction of the court staying the proceedings to enable a conciliation to take place between the parties pursuant to a provision of the contract to which they are parties.

Background

2 In very brief summary, the Board, a statutory body corporate established pursuant to s. 9 of the Education and Training Boards Act, 2013, entered into a Public Works Contract (Public Works Contract for Minor Building and Civil Engineering Works designed by the Employer) with the contractor on 6th October, 2014 (the ‘PWC’) under which the Board engaged the contractor and the contractor agreed to carry out construction works at St. David's National School in Naas, County Kildare. The contractor claims that the Board is indebted to it in the sum of €206,245.72 (exclusive of VAT) in respect of the construction works carried out by it. It claims that that sum is due and owing by the Board by way of an account stated and settled and seeks judgment in that amount in proceedings commenced by a summary summons issued on 13th February, 2018.

3 The Board contends that the PWC contains an arbitration agreement (in Clause 13.2) under which the parties agreed that any dispute arising ‘under’ the PWC is required to be ‘ finally settled’ by arbitration in accordance with the arbitration rules identified in a schedule to the PWC. The Board contends that a dispute has arisen in relation to the contractor's claim, that the dispute has arisen ‘ under’ the PWC and that it, therefore, falls within the scope of the arbitration agreement.

4 The contractor says that, as its claim is made on foot of an account stated and settled, the dispute in relation to it has not arisen ‘ under’ the PWC but under or on foot of a separate agreement which supersedes the PWC and the arbitration agreement contained in it and is not subject to that arbitration agreement.

5 The contractor also relies on other grounds on which it contends that the arbitration agreement should be disapplied in respect of its claim. Those other grounds include a contention that the Board is estopped from relying on the arbitration agreement by virtue of its alleged agreement of the contractor's final account (giving rise to the account stated and settled) and a further contention that the agreement is ‘ inoperative’ within the meaning of that term in Article 8(1) for the same reason.

The issues

6 The essential, or principal, issue which I have to decide, therefore, is whether the claim made by the contractor, which is ostensibly made on the basis of an account allegedly stated and settled and which is disputed by the Board, is one which arises ‘ under’ the PWC, thereby falling within the scope of the arbitration agreement between the parties contained in clause 13.2 of the PWC or whether the contractor's claim falls outside the scope of that agreement. A number of subsidiary issues also arise such as whether the Board is estopped from relying upon the arbitration agreement or whether that agreement is ‘ inoperative’ on the grounds for which the contractor contends.

The PWC

7 As noted earlier, the Board and the contractor entered into the PWC on 6th October, 2014, to carry out construction works consisting of the construction of six classrooms, a sports hall, a library, common areas and access roads, a parking area and a basketball court at St. David's National School in Naas, County Kildare.

8 The contractor claims that by a certificate dated 14th September, 2015, issued by MCOH Architects (‘MCOH’), the appointed representatives of the Board under the PWC, it was certified that the works the subject of the PWC were practically complete on 31st August, 2015. It is alleged that the contractor sent its proposed final account to MCOH on 28th October, 2015. The contractor claims that at a meeting between the contractor's representatives and representatives of the Board, including its then chief executive, Seán Ashe, and its quantity surveyors, on 27th September, 2016, agreement was reached on the contractor's final account in the sum of €1,891,125.00 (excluding VAT) subject to deductions as appropriate for any retention moieties and any previously paid amounts. The contractor claims that following such deductions, the total due and owing to it is €206,245.72 (exclusive of VAT).

9 The contractor relies on correspondence from Mr. Ashe, the Board's former chief executive, dated 27th May, 2017 confirming the Board's agreement, as employer, to the sum agreed at the meeting on 27th September, 2016 and confirming that the Board would provide instructions to its representative (MCOH) to arrange for payment of the sum agreed, subject to the appropriate deduction in respect of previously paid amounts and any retention moieties which would be appropriate at that juncture. The contractor further relies on a letter sent on the same date (29th May, 2017) by Mr. Ashe on behalf of the Board to MCOH requiring them to issue the penultimate payment certificate in the amount agreed. The contractor claims that notwithstanding further demands, the balance due of €206,245.72 (exclusive of VAT) has not been paid and remains due and owing on foot of the agreed final account.

The proceedings

10 The contractor issued a summary summons seeking payment of the amount allegedly due on 13th February, 2018. The contractor's claim is described at para. 3 of the special indorsement of claim as being for...