Dunnes Stores v McCann

• Jurisdiction: Ireland
• Judge: Ms. Justice Dunne
• Judgment Date: 22 January 2020
• Neutral Citation: [2020] IESC 1
• Court: Supreme Court
• Date: 22 January 2020
• Docket Number: [S.C. No. 140 of 2018]

BETWEEN

DUNNES STORES

PLAINTIFF/APPELLANT

AND

PAUL MCCANN, STEPHEN TENNANT

AND

POINT VILLAGE DEVELOPMENT LIMITED

DEFENDANTS/RESPONDENTS

[2020] IESC 1

Clarke C.J.

McMenamin J.

Dunne J.

O'Malley J.

Irvine J.

THE SUPREME COURT

Contract – Dispute – Independent expert – Appellant seeking to appeal against Court of Appeal judgment – Whether a court can be asked in advance to determine questions of law which may arise in the course of the resolution of a dispute

Facts: This case gave rise to an issue as to the relevant principles to be applied in circumstances where the parties to a contract agreed that in the event of a dispute the parties would refer the dispute to an independent expert for resolution. In essence, the case focused on the extent to which an expert can decide questions of law or whether a court can be asked in advance to determine questions of law which may arise in the course of the resolution of the dispute. A second issue arose in this case as to the order made by the Court of Appeal in this case. The proceedings commenced by the plaintiff/appellant, Dunnes Stores, were the subject of an application for a stay in the High Court. The stay was sought to prevent the plaintiff from taking any further step in the proceedings pending the determination by the independent architect of the dispute between the parties. The High Court in its judgment of the 2nd of June 2016 and order of the 28th of June 2016, refused the application for a stay. The Court of Appeal, in a judgment delivered by Hogan J on the 23rd of July 2018, allowed the appeal of the defendants/respondents, Mr McCann, Mr Tennant and Point Village Development Ltd, and went on to dismiss the proceedings as an abuse of process. This was somewhat unusual in that the application originally before the Court was simply for a stay and it was argued by the plaintiff that the question of a dismissal of the proceedings never arose before the Court of Appeal. Thus, in giving its determination in this case the Supreme Court considered it appropriate to grant leave to appeal as to the question of whether it was appropriate for the Court of Appeal to also dismiss the proceedings in the context of an appeal against a stay application.

Held by Dunne J that this was a case in which the parties agreed to resolve the dispute at issue by means of an independent determination by an expert; the independent architect had been appointed, and in accordance with the terms of the agreement, submissions had been furnished to him. Dunne J held that the architect should be allowed to proceed with his function; the fact that he may be obliged in the course of carrying out his function to interpret the terms of Clause 7.7.2 of the Development Agreement did not preclude him from exercising his function and his function necessarily involved the resolution of mixed questions of law and facts. Dunne J found that, as a matter of practicality, it was difficult to see how he could actually decide whether or not the Point Village Square had been completed in an appropriate fashion by reference to the three comparator squares without interpreting what was meant by Clause 7.7.2; that clearly had to have been within the contemplation of the parties when the agreement was entered into by them. Dunne J noted that the parties in this case agreed at an early stage that the expert should not complete his function having regard to the institution of these proceedings. Dunne J held that, in the circumstances of this case, it was premature to issue these proceedings and it would have been preferable to allow the expert to complete his function before issuing any proceedings, if necessary. Finally, Dunne J could see any basis for labelling the conduct of Dunnes in these proceedings as an abuse of process; it was never contended by Point Village that that was the case and Dunne J could not see any evidential basis for coming to a conclusion that the issuing of these proceedings was an abuse of process.

Dunne J held that the appeal would be dismissed.

Appeal dismissed.

Judgment of Ms. Justice Dunne delivered the 22nd day of January 2020

1 This case gives rise to an issue which has not previously been determined in this jurisdiction as to the relevant principles to be applied in circumstances where the parties to a contract agreed that in the event of a dispute the parties would refer the dispute to an independent expert for resolution. In essence, the case focuses on the extent to which an expert can decide questions of law or whether a court can be asked in advance to determine questions of law which may arise in the course of the resolution of the dispute.

2 A second issue arises in this case as to the order made by the Court of Appeal in this case. The proceedings commenced by Dunnes Stores were the subject of an application for a stay in the High Court. The stay was sought to prevent the plaintiff from taking any further step in the proceedings pending the determination by the independent architect of the dispute between the parties. The High Court in its judgment of the 2nd day of June 2016 and order of the 28th day of June 2016, refused the application for a stay. The Court of Appeal (Peart J., Hogan J. and Whelan J.) in a judgment delivered by Hogan J. on the 23rd day of July 2018 allowed the appeal of the defendants/respondents and went on to dismiss the proceedings as an abuse of process. This was somewhat unusual in that the application originally before the Court was simply for a stay and it is argued by the plaintiff/appellant (hereinafter referred to as Dunnes) that the question of a dismissal of the proceedings never arose before the Court of Appeal. Thus, in giving its determination in this case this Court considered it appropriate to grant leave to appeal as to the question of whether it was appropriate for the Court of Appeal to also dismiss the proceedings in the context of an appeal against a stay application.

Background

3 A contract was entered into on the 27th February, 2008 between Dunnes and the third named respondent, Point Village Development Limited (hereinafter referred to as Point Village) at North Wall Quay, Dublin 1. The overall development was intended to include retail, leisure and residential facilities and Dunnes was to be the anchor tenant in the retail centre of the development which was to be constructed together with an outdoor public area known as Point Square. Dunnes was to pay Point Village a sum of €46m in return for the construction of the anchor unit in the retail centre. That sum was payable in stages in accordance with the terms of the original Development Agreement.

4 Unfortunately, the development of Point Village did not proceed as planned and as a result, a dispute arose between Dunnes and Point Village. The dispute resulted in litigation between the parties and that litigation was compromised with the result that certain terms of the original Development Agreement were amended by terms of settlement dated the 27th July, 2010 and also by supplemental terms of settlement dated the 1st November, 2010. As a result of that settlement the contract sum payable by Dunnes to Point Village was reduced from €46m to €31m which was to be paid into a nominated account. This agreement will, in the course of this judgment, be referred to as the Settlement Agreement. At the heart of the dispute between the parties now are the circumstances in which a sum of €3m was said to be due by Dunnes to the developer. This payment arose from the terms of Clause 11(d) of the Settlement Agreement which is in the following terms:

“The sum of €3,000,000.00 (plus accrued interest to date) shall be released within five 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.”

5 It is not in dispute between the parties that on the 15th March, 2013 Point Village's architect, Scott Tallon Walker, produced a certificate pursuant to Clause 11(d) of the terms of settlement which certified that “the Point Square has been completed in accordance with the Development Agreement.” The certificate was then sent to Dunnes, together with a letter from Point Village's solicitors dated the 19th March, 2013, demanding that the sum of €3m be released from the nominated account in accordance with the provisions of the Settlement Agreement.

6 Dunnes did not release the sum of €3m from the nominated account as requested. Dunnes' solicitors wrote to Point Village's solicitors by letter of the 28th March, 2013 stating that Dunnes refused to consent to the release of its monies because “no supporting documentation or verification whatsoever has been supplied to either our client or to Dunnes' representatives … to vouch the contents of the certificate or to provide evidence that Point Square has been completed …” Hogan J. in his judgment observed at paragraph 18 that there was no requirement in Clause 11(d) for the production of any such “documentation or verification”. However, in the letter of the 28th March, 2013 it was noted that Clause 4.14 of the Development Agreement contained a covenant to inter alia, “… provide Dunnes' representative with such plans, information, papers and explanations so that Dunnes' representative may reasonably satisfy itself that the developer is complying fully with its obligations under [the Development Agreement] or which Dunnes representative may otherwise reasonably request”.

7 As a result of correspondence between the parties a fresh certificate was issued on the 11th August, 2014 to the effect that Point Square had been completed in accordance with the Development Agreement. This further certificate was sent to Dunnes on the 11th August, 2014 and on foot of that...