Delargy v Hickey

• Jurisdiction: Ireland
• Judge: Mr. Justice Paul Gilligan
• Judgment Date: 24 June 2015
• Neutral Citation: [2015] IEHC 436
• Court: High Court
• Docket Number: [2014 No. 548 MCA]
• Date: 24 June 2015

[2015] IEHC 436

THE HIGH COURT

Gilligan J.

[2014 No. 548 MCA]

IN THE MATTER OF THE ARBITRATION ACT 2010,

AND IN THE MATTER OF AN ARBITRATION

BETWEEN

MARY DELARGY

APPLICANT

AND

JOHN HICKEY AND ANN HICKEY

RESPONDENTS

Contract – Breach of contract – Arbitral award – Setting aside of arbitrator's award – UNCITRAL Model Law – Arbitration Act 2010 – Due process

Facts: The applicant sought leave of the Court to enter judgment in terms of the arbitral award made in favour of the applicant against the respondent for alleged construction defects in the property possessed by the applicant in pursuance of a contract between the applicant and the respondents. The respondents sought an order for setting aside the arbitral award pursuant to art. 34 of the UNCITRAL Model Law. The applicant contended that the respondents had failed to take active participation in the proceedings.

Mr. Justice Paul Gilligan refused to grant an order for setting aside the arbitral award. The Court observed that the powers of the Court under art. 34 and art. 36 of the UNCITRAL Model Law to set aside an award were discretionary and required the respondent to discharge the burden of proving that the contravention of art. 34 of the said Model Law had in fact taken place. The Court held that it would not simply annul or remit the award if a party owing to its own fault did not take part in the arbitral process earlier and now wanted to escape the liability decided against it. The Court opined that the due process of law would presume that the party that comes to the Court would come with clean hands and not with an intent to hide its own guilt and fault.

JUDGMENT of Mr. Justice Paul Gilligan on the 24th day of June, 2015.

1 The applicant, Mary Delargy, entered into a combined contract for sale and building agreement with the respondents, John and Ann Hickey, on the 2nd September, 2008, whereby the respondents agreed to sell a site to the applicant at Garrai Glass, Ballydavid South, Athenry, County Galway, and to build a crèche thereon in consideration of a sum of €550,000.00 inclusive of VAT.

2 The parties executed a separate deed of indemnity on the 7th August, 2009, wherein the respondents, inter alia, covenanted to ‘rectify and make good… all the Major Defects in the building notified to the builder during the Defects Period.’

The said ‘Major Defects’ are defined as-

‘…any fault, defect, shrinkage, error or omission in (a) the structure of the building or (b) any part of the building (other than the structure) arising from or a direct consequence of any fault, defect, shrinkage error or omission in the structure of the building and which shall (in the case of the items specified at both (a) and (b) above occur and be notified to the vendors before the expiry of the Defects Period and which shall arise from any failure by the Vendors, the servants or agents, to exercise all proper skill and care in:-

(a) the design of the building;

(b) the selection of materials and goods for the construction of the building;

(c) the provision of all other services and duties performed or undertaken or to be performed or undertaken in the construction of the building;

And or making good any physical damage resulting from such fault, defect, shrinkage, error or omission or other default.’

3 Paragraph 11 of the combined building agreement and contract for sale entered into by both parties on the 2nd September, 2008, expressly provides for arbitration in the event of any dispute between the parties. It states that:

‘11. Any dispute between the parties hereto shall be referred to arbitration by an arbitrator who shall, in default of agreement between the parties, be appointed on the application of either party by either the President of the Law Society of Ireland or the President of the Construction Industry Federation, such arbitrator to be appointed from a list of arbitrators approved jointly by the President of the Law Society and the president of the Construction Industry Federation or in the event of either of such persons being unable or unwilling to act by the next senior officer of the respective institutions.’

4 Under Paragraph 3 of the indemnity, a number of limitations to the respondents' liability were set out, and in particular it was provided under Paragraph 3.2 that -

‘the liability of the [respondents] under this deed shall be limited to the costs and expenses of rectifying and making good the Major Defects and notwithstanding anything to the contrary in this deed, the [respondents] shall not be liable to the [applicant] by reason of any representation or warranty, condition or other term or any duty of common law, or under the express terms of this agreement for any consequential or incidental loss or damage, (whether for loss of profit or otherwise) and whether occasioned by the negligence of the parties, or the [respondents'] representatives, or otherwise.’

5 Shortly after the applicant took possession of the property in 2009, she noticed the alleged defects. The subsequent arbitration between the parties thus concerned a claim for damages arising from the defective construction of the property. The parties could not agree on the nomination of an arbitrator so Mr. Daly, a solicitor, was appointed by the President of the Law Society. A preliminary meeting was held on the 17th November, 2011, attended by the applicant and the respondents, as well as the arbitrator. It was agreed between the parties at the preliminary meeting in November, 2011, that the arbitration would be conducted by way of written submissions, and this was followed by an exchange of pleadings. It does not appear that there was any actual reference or submission to arbitration.

6 The pleadings closed on the 19th April, 2012, with the issue by the respondents of their points of defence. The arbitrator struck out the defence of the respondents on the 4th March, 2014, by reason of their failure to comply with an order of discovery and a refusal to take any further active involvement in the proceedings.

7 On 15th April, 2014, the arbitrator issued an interim award awarding the applicant such monies ‘as may be determined by [the Arbitrator] to be due arising from the matters set out and claimed in the claimant's Point of Claim.’ Finally, pursuant to written submissions made by the applicant on the matter of quantum and costs, and in the absence of any further engagement by the respondents, the arbitrator made his final award in favour of the applicant on the 6th October, 2014, and awarded the applicant the sum of €101,202.07, being made up of the following sums:

(a) Damages €29,673.33

(b) Loss of Earnings €24,130.00

(c) Interest €1,680.07

(d) Costs €45,718.67

8 The applicant, by way of originating notice of motion, grounded on two affidavits, seeks, inter alia, leave of the Court, firstly, to enter judgment in the terms of the award, and secondly, leave to enforce same.

9 By way of response, the respondents, grounded on the affidavit of the first named respondent, Mr. John Hickey, seek, inter alia, to set aside the award, either in part or in full, pursuant to Article 34 of the Model Law.

Background.

10 As set out in the applicant's points of claim, a report prepared by Westcon, on behalf of the respondents, confirmed the existence of insulation difficulties. The survey indicates areas of defects in the general construction of the premises in question, including;

(a) Significant heat escape through the window and external door structure.

(b) Heat escape at the windows and doors and at construction details with the walls.

(c) Cold bridging at junctions of windows and walls.

(d) Infiltration of cold air at junctions of floors and walls.

(e) Lack of insulation at the top of the cavities adjacent to the parapet walls, flat roof and at external walls adjacent to the flat roof in PVC panels and other areas.

(f) Inadequate ventilation.

(g) Dampness.

11 In the respondents' defence to points of claim, there is no dispute that the two agreements that were before the arbitrator provide specifically for arbitration. The balance of the defence to the points of claim is a denial of each and every allegation and claim as made out. In particular it is denied that the premises and construction was not in compliance with the relevant building regulations, and it is further denied that there is or was any lack of ventilation and/or insulation as set out in the applicant's points of claim. Furthermore, it is denied by the respondents that the report prepared on their behalf by Westcon confirms or otherwise identifies the respondents as in any way responsible or liable for the existence of any insulation difficulties. It is further denied by the respondents that there is any excessive heat escape at the junctions of the flat roofs with the parapet walls and external walls of the building or at all. It is further denied that any escape of heat as alleged is the liability or responsibility of the respondents in accordance with the agreement. It is denied that there are defects in the general construction of the crèche. The alleged leak in the flat section of the roof of the applicant's premises is also denied. If, which is denied by the respondents, the plaintiff did suffer, sustain or incur the alleged or any loss, damage, inconvenience or expense, then the respondents deny that same were caused or was in any way contributed to by way of negligence or breach of duty or breach of statutory duty or breach of contract on their part whether as alleged or at all.

12 Clause 8 of the combined agreement – which, inter alia, explicitly addresses the issue of defects – was deleted in the Deed of Indemnity of the 7th August, 2009.

13 It does appear to be clear from the affidavit of John Hickey as sworn...