Franmer Developments Ltd v L&M Keating Ltd and Others
| Jurisdiction | Ireland |
| Judge | Mr. Justice Ryan |
| Judgment Date | 04 June 2014 |
| Neutral Citation | [2014] IEHC 295 |
| Court | High Court |
| Date | 04 June 2014 |
[2014] IEHC 295
THE HIGH COURT
BETWEEN
AND
ARBITRATION ACT 2010 S6
UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION 21.6.1985 ART 8
UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION 21.6.1985 ART 8(1)
LUCKY-GOLDSTAR INTERNATIONAL (HK) LTD v NG MOO KEE ENGINEERING LTD 1993 2 HKLR 73 1993 1 HKC 404
FUREY v LURGAN-VILLE CONSTRUCTION CO LTD & ORS 2013 2 ILRM 110 2012/15/4437 2012 IESC 38
TAUNTON-COLLINS v CROMIE & ORS 1964 2 AER 332 1964 1 WLR 633 1964 108 SJ 277
ARBITRATION ACT 1950 S4 (UK)
ROYAL INSTITUTE OF THE ARCHITECTS OF IRELAND AGREEMENT AND SCHEDULE OF CONDITIONS OF BUILDING CONTRACT 2012 CLAUSE 38
ROYAL INSTITUTE OF THE ARCHITECTS OF IRELAND AGREEMENT AND SCHEDULE OF CONDITIONS OF BUILDING CONTRACT 2012 CLAUSE 38(B)
MOUNT JULIET PROPERTIES LTD v MELCARNE DEVELOPMENTS LTD (T/A WALSH BROTHERS) & ORS UNREP LAFFOY 19.6.2013 2013/35/10570 2013 IEHC 286
Arbitration – Building Works – Contract – Damages – Arbitration Act 2010 s. 6 – UNCITRAL Model Law Article 8.
Facts: In this case the plaintiff was the developer, the first defendant was the contractor, the second defendant the architect, the third defendant the quantity surveyor, the fourth defendant the windows and doors subcontractor and the fifth defendant the consulting engineer. The first defendant had put forward the architect as quantity surveyor and the the fifth defendant had been retained by the first defendant under a subcontract. The plaintiff claimed loss and damages against all of the defendants in repect of building works carried out, remedial works and the supervision of the supply and installation of a fire alarm. The first defendant applied under s. 6 of the Arbitration Act 2010 and Article 8 of the UNCITRAL Model Law for an order staying proceedings so that the matter could be referred to arbitration as provided for by the arbitration clause in the contract. The plantiff accepted that the first defendant was entitled to have the matter referred to arbitration and that Article 8 of the UNCITRAL Model Law applied but stipulated that there were exceptions provided for in Article 8 which would prevent the arbitration clause from becoming operative. This would occur where the agreement is null and void, inoperative or incapabable of being performed. In this instance it was argued that the agreement was incapable of being performed as only the first defendant was bound by the arbitration clause and this would result in practical incoveniences and difficulties when claiming for damages against all five defendants.
Held by Ryan J., that the first defendant was prima facie entitled to have the matter referred to arbitration and that Article 8 of the UNCITRAL Model Law applied. As regards the exceptions provided for by Article 8 and in particular the contention that the agreement is incapable of being performed, it was stipulated that, the fact that the second defendant was employed as a supervisor by the first defendant and was also being sued as a defendant himself, did not provide grounds to prevent the first defendant from referring this case to an arbitrator. The fact that this case was extremely complex and potentially involved inter defendant claims did not result in the agreement becoming incapable of being performed. An agreement would only be held incapable of being performed where such an agreement is ‘incapacitated’ as opposed to being merely inconvenient, complex or practically difficult to carry out.
Held: Matter referred to arbitration.
JUDGMENT of Mr. Justice Ryan delivered on the 4th June, 2014.
1. This is an application by the first defendant for an order under s. 6 of the Arbitration Act 2010 and Article 8 of the UNCITRAL Model Law or pursuant to the inherent jurisdiction of the Court staying the proceedings in the case pending the arbitration of the dispute as between the plaintiff and the first defendant under, and in accordance with, an arbitration agreement between those parties.
2. The plaintiff is a developer and the first defendant a building contractor. Those parties entered into a building contract in the standard RIAI form containing clause 38 providing for arbitration of disputes in or about April, 2007. The contract was for the building of 24 apartments in one block located at Kilrush, Co. Clare. The other defendants are respectively as follows: the second defendant is the architect; the third defendant, the quantity surveyor; the fourth defendant, a windows and doors domestic subcontractor retained by the first defendant building contractor; and the fifth defendant is the consulting engineer engaged by the architect, the second defendant, in connection with the fire alarm system. The architect is nominated in the contract as is the quantity surveyor.
3. The dispute arose as a result of alleged substandard building works carried out on the apartments in Kilrush. The plaintiff's claim is that the defendants each failed in their individual contractual duties to carry out their work to an adequate standard. The allegations include failing to exercise due care and attention, failing to comply with building regulations, providing substandard materials and failing to carry out the development in accordance with the contract documents.
4. By plenary summons dated 9 th August, 2012, and statement of claim dated 5 th April, 2013, the plaintiff claims damages from the first, second and third defendants for alleged loss and damage arising out of breach of contract, negligence, breach of duty and/or breach of professional duty and breach of statutory duty and breach of retainer in respect of the development at Quay Mills, Kilrush, Co. Clare. The plaintiff seeks damages against the fourth defendant in respect of the windows and doors and associated remedial works and also claims damages against the fifth defendant arising out of the supervision of the supply and installation of the fire alarm.
5. The affidavit grounding the application is dated 3 rd May, 2013 and sworn by Mr Louis Keating, managing director and owner of the first defendant.
a a. He states that throughout the period of works on the Merchants Quay development, the plaintiff had the benefit of a full time clerk of works whose role was to oversee quality control. The clerk of works occasionally gave directions to the first defendant and had some interaction with the design team on behalf of the plaintiff. Snagging of the building began in 2008 with a final list submitted by the architect in August of that year. This contained minor items that were being dealt with by the first defendant.
b b. On 2 nd March, 2009, the first defendant was informed by way of letter from the plaintiff of a number of additional defects, including a condemnation of the windows provided. Mr Keating avers that over the following three months every effort was made to address the outstanding snags onsite and suggestions for dealing with the windows were put to the architect and design team. He says that the plaintiff agreed in principle to the suggestions to remedy the windows but sought an undertaking in the form of a letter from the manufacturer, SAPA, which was not possible to secure. The plaintiff, he avers, sought warranties from him that were not required to be given under the terms of the building contract.
c c.Mr Keating avers that every effort was made to reach agreement with the plaintiff to arrange remedial works from October, 2009 onwards. In April, 2010 the first defendant contacted the architect, Mr Neil Bennett, seeking the final certificate and outlining their intention to proceed to conciliation. Mr Bennett and Mr Aidan Walsh, the quantity surveyor, attempted to set up a conciliation process but the plaintiff did not participate. The first defendant received a 10-day notification that the final certificate would be issued, on the 23 rd March, 2011, from Mr Bennett. On the 6 th April, 2011, the plaintiff's solicitor was in contact seeking an arbitration hearing. It was Mr Keating's position at that stage that the plaintiff company had been dissolved and had no legal existence. The RIAI confirmed, by letter of the 20 th July, 2011, that there would be no arbitration. The final certificate was never furnished to the first defendant by Mr Bennett.
d d. Mr Keating says that the plaintiff has since been restored to the register of companies and the objection on the ground of its capacity no longer exists. His preferred course of dealing with the matters is arbitration as set out in clause 38(b) of the Articles of Agreement. He argues that the first defendant is entitled to refer the dispute to arbitration because of clause 38(b) and also because of the plaintiff's failure to engage with the previously arranged conciliation process.
6. Mr Dermot Reidy, director of the plaintiff, swore a replying affidavit of the 15 th...
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