Ashford Castle Ltd v E.J. Deacy Contractors & Industrial Maintenance Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Garrett Simons
• Judgment Date: 13 August 2021
• Neutral Citation: [2021] IEHC 549
• Court: High Court
• Docket Number: 2018 No. 792 P

Between

Ashford Castle Limited

Red Carnation Hotels (UK) Limited

Plaintiffs

and

E.J. Deacy Contractors & Industrial Maintenance Limited

Consarc Design Group Limited

Justin McCarthy & Associates

Defendants

Conservation and Restoration (Ireland) Limited

Third-Party

[2021] IEHC 549

2018 No. 792 P

THE HIGH COURT

Third-party notice – Joinder – Delay – Third-party seeking to set aside third-party notice – Whether the delay in applying to join the third-party as a third-party was unreasonable

Facts: Restoration works were carried out at a hotel known as “Ashford Castle”, involving, inter alia, the installation of “cavity trays” in the exterior walls of the building. The plaintiffs, Ashford Castle Ltd and Red Carnation Hotels (UK) Ltd, alleged that the cavity trays installed by the defendants, their servants or agents, were installed in a negligent manner, and not in accordance with the manufacturer’s instructions and specifications. It was pleaded that this resulted in a number of rooms at Ashford Castle experiencing an ingress of water in the vicinity of their windows. The plaintiffs claimed damages for, inter alia, building repairs and business interruption. The first defendant, E.J. Deacy Contractors & Industrial Maintenance Ltd, had been the main contractor in respect of the restoration works. The second defendant, Consarc Design Group Ltd, had been the architect engaged in respect of the works. The third defendant, Justin McCarthy & Associates, had been appointed as project manager. The main contractor pleaded in its defence that the allegedly defective works were conducted by a nominated subcontractor, namely, Conservation and Restoration (Ireland) Ltd. That company was joined as the third-party. It was further pleaded that the subcontractor had been appointed by the second and/or third defendants as a nominated subcontractor; and was not a domestic subcontractor whose works would have been under the control of the main contractor. The subcontractor applied to the High Court to set aside the third-party notice on the grounds of delay. The application was made pursuant to Order 16, rule 8(3) of the Rules of the Superior Courts.

Held by Simons J that the delay of some twenty-one months in applying to join the subcontractor as a third-party was unreasonable and did not comply with the requirements of s. 27(1)(b) of the Civil Liability Act 1961. Simons J held that, on a subjective analysis, the second defendant had failed to discharge the onus upon it to explain and justify the delay. Simons J held that, in particular, no proper explanation had been provided for the delay following the receipt of the expert’s report on 3 March 2019. Simons J held that, at the very latest, the architect had sufficient information from that date to meet the threshold for pursuing a claim for contribution against the subcontractor. Simons J held that, on an objective analysis, the delay of twenty-one months between the delivery of the statement of claim and the issuance of the motion to join the third-party was unreasonable and out of all proportion to the progress of the main proceedings.

Simons J held that an order would be made, pursuant to Order 16, rule 8(3), setting aside the third-party proceedings. As to costs, Simons J’s provisional view was that the third-party, having been entirely successful in its application to set aside, was entitled to its costs against the second defendant in accordance with the principles prescribed under Part 11 of the Legal Services Regulation Act 2015, such costs to be adjudicated upon by the Office of the Chief Legal Costs Adjudicator in default of agreement. Simons J held that the costs order was to be stayed in the event of an appeal.

Application granted.

Appearances

Patricia Hill for the third-party instructed by Eugene F Collins

Jennifer M. Good for the second named defendant instructed by Kennedys Solicitors

JUDGMENT of Mr. Justice Garrett Simons delivered on 13 August 2021

INTRODUCTION

1 This judgment is delivered in respect of an application to set aside a third-party notice on the grounds of delay. The application is made pursuant to Order 16, rule 8(3) of the Rules of the Superior Courts.

PROCEDURAL HISTORY

2 The underlying claim in the main proceedings concerns the carrying out of restoration works at a hotel known as “Ashford Castle”. The summary which follows is based solely on the pleadings, and does not entail the making of any findings of fact by this court on the merits of the claim.

3 The restoration works involved, inter alia, the installation of what are described as “cavity trays” in the exterior walls of the building. The plaintiffs allege that the cavity trays installed by the defendants, their servants or agents, were installed in a negligent manner, and not in accordance with the manufacturer's instructions and specifications. It is pleaded that this resulted in a number of rooms at Ashford Castle experiencing an ingress of water in the vicinity of their windows. The plaintiffs claim damages for, inter alia, building repairs and business interruption.

4 The first named defendant had been the main contractor in respect of the restoration works (“ the main contractor”). The second named defendant had been the architect engaged in respect of the works (“ the architect”). The third named defendant had been appointed as project manager (“ the project manager”).

5 The main contractor has pleaded in its defence that the allegedly defective works were conducted by a nominated subcontractor, namely, Conservation and Restoration (Ireland) Ltd. This is the company which has since been joined as the third-party (“ the subcontractor”). It is further pleaded that the subcontractor had been appointed by the second and/or third named defendants as a nominated subcontractor; and was not a domestic subcontractor whose works would have been under the control of the main contractor.

6 The defence continues as follows (at paragraph 7(iii)).

“(iii) The First Named Defendant had no hand, act and/or part in the appointment of Conservation & Restoration (Ireland) Limited and furthermore had no hand, act and/or part in relation to the scope of works and/or the manner in which the said scope of works were conducted by Conservation & Restoration (Ireland) Limited save for and with the exception of the First Named Defendant was responsible for and in control of (a) basic health and safety issues while on Conservation & Restoration (Ireland) Limited were on site, (b) the scaffolding by which Conservation & Restoration (Ireland) Limited gained access to and egress from the area they conducted their work and (c) the processing of stage payments to Conservation & Restoration (Ireland) Limited which processing was requested by the First and/or Second Named Plaintiffs. Furthermore, no payments were processed by the First Named Plaintiff ( sic) for Conservation & Restoration (Ireland) Limited unless and until the works for which payment was sought were certified by the Second and/or Third Named Defendants.”

7 The main contractor's defence was delivered to the plaintiff on 6 March 2019. On the same date, the main contractor sought voluntary discovery from the architect. The categories of documentation sought included documentation in relation to the nomination and appointment of the subcontractor, and all architect's certificates of approval of the works.

8 In circumstances where the architect did not, seemingly, receive a copy of the main contractor's defence until 27 January 2020, the content of this request for voluntary discovery is relevant to the question of the state of knowledge of the architect. It is necessary, therefore, to set out the relevant part of the request for voluntary discovery as follows.

“It is the First Named Defendant's defence that the Second and/or Third Named Defendants nominated and/or appointed Conservation and Restoration (Ireland) Limited as a nominated subcontractor to carry out works. The First Named Defendant denies that Conservation and Restoration (Ireland) Limited was a domestic subcontractor and as such requires the above documentation so as to prove that Conservation and Restoration (Ireland) Limited were a nominated rather than a domestic subcontractor.

In addition to the above reasons why the documents at category (c) are both necessary and relevant is the fact that the First Named Defendant alleges that all payments processed by the First Named Defendant for works done by Conservation and Restoration (Ireland) Limited were done so on the certification of the works by the Second and/or Third Named Defendant.”

9 As appears, the architect was on notice, as of 6 March 2019, that the main contractor would be defending the proceedings on the basis (i) that the allegedly defective works had been carried out by a subcontractor for which the main contractor had no responsibility, and (ii) that the architect had certified the works.

10 The principal explanation offered on affidavit for the delay in joining the third-party is that it would have been “entirely inappropriate” for the architect to seek to join a third-party against whom “professional negligence was to be alleged without having a sufficient expert opinion available that would allow an assessment to be made that there was a stateable case for such a claim”. The point is made that the motion to join the subcontractor as a third-party issued some fifteen days after receipt of an addendum report dated 2 February 2020 from an expert. The initial report has not been exhibited in the proceedings, but it is common case that same is dated 3 March 2019. The only explanation proffered for the delay of some eleven months in obtaining the addendum report is that the proceedings entail a “highly technical” construction case encompassing numerous defects and three different defendants.

11 The addendum report, in relevant part, reads as...