Arnold v Mitchell O'Donoghue and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Hedigan
• Judgment Date: 04 September 2012
• Neutral Citation: [2012] IEHC 368
• Court: High Court
• Docket Number: Record No. 2006/1833P
• Date: 04 September 2012

Arnold v Duffy Mitchell O'Donoghue (A Firm) & Anor

BETWEEN

DAVID ARNOLD

PLAINTIFF

AND

DUFFY MITCHELL O'DONOGHUE (A FIRM)

DEFENDANT

AND

AND BAM BUILDING LIMITED (FORMERLY KNOW AS ROHCON LIMITED)

THIRD PARTY

[2012] IEHC 368

Record No. 2006/1833P

THE HIGH COURT

Construction -Building contract - Third party agreeing to construct office for plaintiff - Third party entering into sub- contract for certain works - Dispute between parties - Whether conclusion to arbitration prevents further action against third party by plaintiff - S 17 Civil Liability Act 1961

Facts: The plaintiff had contracted with the third party for the construction of an office building in a large industrial estate in Dublin. The defendant was the plaintiff's architect, and the third party had sub-contracted elements of the construction to SIAC Architectural Limited ("SIAC").

The defendant considered that thee work carried out by SIAC was sub-standard and de-certificated a sum of fees from the monies due to SIAC by the third party. As the third party had already paid these sums to SIAC, they were effectively out of pocket. The third party had tried to sue SIAC, but the application for summary judgment was refused in 2003.

The plaintiff had in the same period issued his own proceedings against SIAC. In an effort to resolve the matter, without prejudice discussions took place but in the absence of agreement the third party referred the matter to arbitration. The plaintiff having agreed to pay the third party the monies outstanding, the parties now confined the arbitration to interest and costs. The arbitrator having determined the matter on those issues, the third party now sought to prevent the plaintiff disputing them again in this claim. The plaintiff had sued the defendant who joined the third party to the claim.

Held by Hedigan J, that the building contract stated that any party could refer "any dispute or difference" to arbitration upon giving notice. The plaintiff had failed to concede the third party's claims in the notice to refer, and a number of issues were to be determined by the arbitrator. The plaintiff had failed to contest the matter and later agreed to concede his claim, and by ordinary inference could be said to have abandoned any relevant submissions or arguments. Allied Marine Transport Limited v Vale De Rio Doce Navegacao ("The Leonidas D'') [1985] 1 WLR 925 applied.

The third party had made submissions on the rule set out in Henderson v Henderson (1843) 3 Hare 100. Said rule prevented parties re=opening matters, both express and ancillary, that formed a part of an earlier compromise. In the instant case, the plaintiff had shown no reason why this rule should not be applied. Considering the effect of s 17 of the Civil Liability Act 1961, the compromise of the arbitration proceedings was a complete accord between the plaintiff and the third party, and relief would be granted to the third party to that effect. Henderson v Henderson (1843) 3 Hare 100 applied.

CIVIL LIABILITY ACT 1961 S17(2)

CIVIL LIABILITY ACT 1961 S35(1)(H)

HENDERSON v HENDERSON 1843-60 AER REP 378 67 ER 313 1843 3 HARE 100

CIVIL LIABILITY ACT 1961 PART III

CIVIL LIABILITY ACT 1961 S17

ST JOHN SUTTON & ORS RUSSELL ON ARBITRATION 23ED 2007 PARA 5.003

AMEC CIVIL ENGINEERING LTD v SECRETARY OF STATE FOR TRANSPORT 2005 1 WLR 2339 101 CON LR 26 2005 EWCA Civ 291

ANALOG DEVICES BV & ORS v ZURICH INSURANCE CO & AMERICAN GUARANTEE & LIABILITY INSURANCE CO 2005 1 IR 274 2005 2 ILRM 131 2005 2 242 2005 IESC 12

INVESTORS COMPENSATION SCHEME LTD v WEST BROMWICH BUILDING SOCIETY 1998 1 WLR 896 1998 1 AER 98 1998 1 BCLC 493

ALLIED MARINE TRANSPORT v VALE DO RIO DOCE NAVEGACAO SA 1985 1 WLR 925 1985 2 AER 796 1985 2 LLOYDS 18

A (A) v MEDICAL COUNCIL 2003 4 IR 302 2004 1 ILRM 372 2003/1/49

JOHNSON v GORE WOOD & CO (A FIRM) (NO 1) 2002 2 AC 1 2001 2 WLR 72 2001 1 AER 481

CIVIL LIABILITY ACT 1961 S11

LYNCH v BEALE & ORS UNREP HAMILTON 25.11.1974

BEALE & ORS CHITTY ON CONTRACTS 30ED 2008 PARA 22.013

BRITISH RUSSIAN GAZETTE & TRADE OUTLOOK LTD v ASSOCIATED NEWSPAPERS LTD 1933 2 KB 616

EL-MIR v RISK UNREP 24.6.2005 2005 NSWCA 215

1 Final draft of Judgment of Mr. Justice Hedigan delivered the 4th day of September, 2012

1. Application

2 2 1.1 This matter comes before the Court by way of an application for determination of a preliminary issue. The third party seeks:-

3 (i) a Declaration that the partial compromise and/or settlement, through correspondence in August 2007, and/or the subsequent determination and conclusion of the said arbitral proceedings between the plaintiff and the third party constitutes a release and/or accord such as to render operative, in these proceedings, the provisions of Section 17 (2) and/or 35(l)(h) of the Civil Liability Act, 1961 as amended;

4 (ii) a Declaration that the plaintiff's release and/or accord with, the third party and/or subsequent determination and conclusion of the said arbitral process, has released and discharged the third party from all claims by the plaintiff against the third party which either were, or could have been, or should have been taken, pursuant to the rule in Henderson v Henderson (1843) 3 Hare 100, by the plaintiff in the said arbitral proceedings, including, in particular, all such claims as have been made by the plaintiff against the defendant herein in respect of which the defendant and the third party are concurrent wrongdoers within the meaning of Part III of the Civil Liability Act, 1961;

5 (iii) a Declaration that, by reason of the plaintiff's said release of, or accord with, the third party, and/or by reason of the subsequent determination and conclusion of the said arbitral process, the plaintiff is, for the purpose of these proceedings, to be identified, pursuant to section 17(2) of the Civil Liability Act, 1961 as amended, with the third party in its continuing proceedings against the defendant in accordance with section 35 (1) (h) of the said Act;

6 (iv) a Declaration that the plaintiff's claim against the defendant to these proceedings is deemed, pursuant to Statute, to be reduced in accordance with the provisions of Section 17 (2) of the Civil Liability Act 1961 as amended, including, in particular, to the extent that the third party would have been otherwise liable to contribute if the plaintiff's total claim had been paid by the defendant.

7 (v) if necessary, a Declaration that, by reason of the Main Contract and Sub-Contract provisions, the plaintiff has no entitlement in any event to recover against the third party any damages arising from alleged defective work or design on the part of SIAC.

8 (vi) a Declaration that the plaintiff's claim as against the defendant, to the extent that it seeks damages in respect of matter for which the third party would have been liable to contribute, but for said release and accord, and/or the subsequent determination and conclusion of the said arbitral process, accordingly discloses no bona fide or reasonable continuing cause of action and is to be struck out;

9 (vii) a Declaration that the third party can, accordingly, have no remaining or other liability to contribute in respect of the damages (if any) properly claimable herein by the Plaintiff as against the defendant;

10 (viii) a Declaration that the defendant's third party proceedings accordingly disclose no reasonable cause of action against the third party;

11 (ix) an Order directing that the defendant's third party proceedings be struck out and that the third party be released from the proceedings;

12 (x) further and other relief, and;

13 (xi) costs.

2. Parties

14 2 2.1 The plaintiff and the third party entered into a building contract dated 1 ^st March, 1999 whereby the third party agreed to build a new office building at Ballymoss House, Sandyford Industrial Estate for the plaintiff. The defendant was the plaintiff's architect. SIAC Architectural Limited (hereafter referred to as 'SIAC') was to be the nominated sub-contractor in respect of the cladding, curtain walling and windows of the development and a written sub-contract was put in place between the third party and SIAC.

3. Factual Background

15 2 3.1 The works proceeded and were completed in May 2000. During this time, the third party received Interim Certificates from the defendant in respect of monies due to it, including monies payable on account of submissions from SIAC. These certificates were honoured by the plaintiff.

16 3 3.2 In September 2001, the defendant took the view that the work carried out by SIAC was defective and issued a further Interim Certificate through which they effectively de-certified the sum of €618,807.05 from the value of the monies otherwise due to the third party.

17 4 3.3 The third party had already paid SIAC in full for the sub-contract works, and the effect of the de-certification was to leave the third party out of pocket in respect of the de-certified monies, together with VAT.

18 5 3.4 The third party sued SIAC for the return of the monies by way of Summary Summons issued on the 13 ^th December, 2001, but an application for summary judgment was rejected by the High Court on the 10 ^th October, 2003. In the meantime, the plaintiff issued his own High Court proceedings in July 2002 directly against SIAC on foot of a collateral warranty provided to him by SIAC.

19 6 3.5 'Without prejudice' discussions took place between the plaintiff, the defendant, the third party and SIAC with a view to seeing whether a multi-party conciliation might take place which would resolve matters. Although the correspondence generated in this period was largely marked 'Without Prejudice', the plaintiff and the third party are agreeable to waiving that privilege for the purposes of the resolution of the within preliminary issue.

20 7 3.6 In...