Dunnes Stores v McCann
| Jurisdiction | Ireland |
| Judge | Mr. Justice Binchy |
| Judgment Date | 02 June 2016 |
| Neutral Citation | [2016] IEHC 344 |
| Docket Number | [Record No. 2014/10040 P] |
| Court | High Court |
| Date | 02 June 2016 |
[2016] IEHC 344
THE HIGH COURT
Binchy J.
[Record No. 2014/10040 P]
Arbitration – Contract – Breach of agreement – Settlement agreement – Stay on main proceedings – Alternative dispute resolution – Expert evaluation
Facts: Following the decision of the expert appointed by the parties to stay its proceedings pending the determination of the present proceedings instituted by the plaintiff seeking certain declaratory reliefs, the defendants now sought an order for stay of the present proceedings. The plaintiff asserted that defendants should have sought an order for striking out the present proceedings rather than seeking stay. The defendants argued that the issues involved in the present proceedings were the subject of an alternative dispute resolution clause and therefore, the present proceedings should be stayed.
Mr. Justice Binchy refused to grant stay on the present proceedings. The Court cited with approval the dicta of Lord Mustill in Re Via. Networks (Ireland) Ltd. [2002] 2 IR 47 wherein it was held that the Court should direct the parties to resolve their conflict by an alternative dispute resolution mechanism, if it was expressly agreed by the parties. The Court however, held that an expert or arbitrator would have no jurisdiction beyond what had been conferred upon him by terms of the agreement. The Court found that while the expert recommendation was binding upon the parties, the issues that were the subject of the present proceedings namely, the interpretation of the development clause was kept outside his domain and hence, there was no basis on which a stay could be granted. The Court suggested that it was open for the expert to reconvene the proceedings pending before for equity reasons.
This is an application brought on behalf of the first, second and third named defendants to these proceedings to stay the proceedings pending the determination of a dispute that has arisen between the parties, by an expert appointed for that purpose by agreement between the parties.
By agreement made 27th February, 2008, the third named defendant and the plaintiff entered into an agreement (hereinafter the ‘development agreement’) whereby the third named defendant (hereinafter the ‘developer’) agreed to develop, on a site to be acquired by the plaintiff from the developer, pursuant to an agreement for sale made on 26th February, 2008, a retail centre within the development to be known as Point Village located at the Docklands in Dublin. The plaintiff was to be the anchor tenant in the development, which formed part of a much larger scheme including: inter alia, the development of a hotel (now the Gibson Hotel); a large apartment complex to be known as the ‘Watch Tower’ a museum to be known as the ‘U2 Experience’, a spire and other facilities centred around a public area to be known as the Point Square, which is central to the dispute that has now arisen. The first and second named defendants in these proceedings are the receivers appointed over the assets of the third named defendant.
It will come as no surprise to anybody with even a passing knowledge of recent Irish economic history that the development soon afterwards ran into difficulties, the precise details of which were not opened to the Court but which are in any event not relevant to these proceedings. What is relevant is that these difficulties gave rise to litigation between the parties, which was ultimately resolved by a settlement agreement concluded in the early hours of 7th July, 2010 (hereinafter the ‘settlement agreement’), some of the provisions which are also central to this application.
Clause 15.1 of the development agreement provides:-
‘Where in this agreement it is stated that a dispute or difference shall be determined by Expert Determination of either the Independent Architect or the Independent Surveyor in accordance with this clause 15, then either party may forthwith give notice in writing to the other of such dispute or difference and the same shall thereupon be referred to such a person agreed upon between the parties or failing such agreement within 5 working days after either party has given to the other a written request to concur in the appointment of a person to be appointed in the case of the Independent Architect by the President of the Royal Institute of Architects of Ireland, and in the case of the Independent Surveyor by the President or other Chief Acting Officer for the time being of the Society of the Chartered Surveyors in Ireland, which appointee in both cases shall act as an Expert and not as an Arbitrator and his decision shall be final and binding on the parties hereto’.’
Clause 7.7.2 of the Development Agreement provides:-
‘The design and specification for Point Square shall be to a first class standard appropriate to a prestigious shopping centre commensurate with the newly redeveloped Eyre Square in Galway and Grand Canal Square, Dublin and the Civic Plaza at Dundrum Town Centre.’
Clause 11(d) of the settlement agreement provides:-
‘The sum of €3 million (plus accrued interest to date) shall be released within 5 Working Days of receipt by Dunnes of a certificate by PVDL's Architect (or in the event of a dispute, the Independent Architect within the meaning of the Development Agreement) confirming that the Point Square has been completed in accordance with the Development Agreement.’
The development agreement in its original form (i.e. prior to amendment by the settlement agreement) provided that the Developer would procure for the plaintiff the construction of the building works which, as defined in the development agreement, comprised the “Store Works”, the “Centre Works” and the “Minimum Works” (each of which has a defined meaning) all of which were to be completed in accordance with obligations set out in the development agreement. The plaintiff was to pay the developer the sum of €46 million, in stages, as provided for in clause 9.1 of the development agreement. Under the terms of the settlement agreement, the contract sum payable by the plaintiff to the developer was reduced to €31 million; that sum was to be paid into a nominated account by the plaintiff and the settlement agreement provided for the release of these monies from the nominated account in four separate stages.
On 15th March, 2013, the developer's architect, Scott Tallon Walker produced a certificate pursuant to clause 11(d) of the Settlement Agreement which certified that ‘ the Point Square has been completed in accordance with the Development Agreement.’ This certificate was sent to the plaintiff together with a letter from the developer's solicitors of 19th March, 2013, demanding that the sum of €3 million be released from the nominated account in accordance with clause 11(d) of the settlement agreement.
The plaintiff did not release the sum of €3 million from the nominated account as requested and instead its' solicitors wrote to the solicitors for the developer by letter dated 28th March, 2013 stating that the plaintiff would not consent to the release of the monies because of the failure by the developer to provide the plaintiff with plans, information, papers and explanations as required by clause 4.14 of the development agreement to enable the plaintiff to satisfy itself that the Developer had complied with its obligations under the development agreement. Correspondence then followed between the first and second named defendants and the plaintiff, and the solicitors for the defendants and the plaintiff. The developer's architect, Scott Tallon Walker, issued a further certificate that the Point Square had been completed in accordance with the development agreement on 11th August, 2014. On the basis of this certificate, the defendants again demanded the release of the sum of €3 million.
There followed further correspondence between the plaintiffs and the solicitors for the defendants, but no agreement was reached and ultimately on 12th September, 2014 the solicitors for the defendants wrote to the plaintiff stating that in view of the fact that it had failed to release the sum of €3 million from the nominated account as previously demanded, it was apparent that the plaintiff did not accept the validity of the certificate issued by the developer's architect of 11th August, 2014. Referring to clause 11(d) of the settlement agreement, they nominated two individuals to fulfil the role of independent architect to determine the dispute and gave the plaintiff until 19th September, 2014 to indicate whether or not it would accept either of these nominees, in default of which they stated they would write to the President of the Royal Institute of Architects of Ireland (‘RIAI’) to appoint an independent architect in accordance with clause 15.1 of the development agreement. Ultimately that is what occurred and Mr. Anthony Reddy was appointed, as expert by the President of the RIAI to determine the dispute on 16th October, 2014.
It should be noted as this juncture that no issue was raised at this time by the plaintiff either in relation to the validity of Mr. Reddy's appointment, or as regards whether or not the dispute was one which could be referred for determination by an expert, in accordance with the terms of the development agreement and the settlement agreement. In response to a question from the Court, counsel for the plaintiff accepted that the dispute was one which could be so referred (notwithstanding some correspondence from the plaintiff's solicitors suggesting otherwise). The solicitors for the...
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