Furey and Another v Lurganville Construction Company Ltd & Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 21 June 2012
• Neutral Citation: [2012] IESC 38
• Court: Supreme Court
• Docket Number: [S.C. No. 86 of 2007]
• Date: 21 June 2012

[2012] IESC 38

THE SUPREME COURT

Denham C.J.

Hardiman J.

Clarke J.

[Record No: 86/07]

Furey v Lurgan-ville Construction Co Ltd & Ors

Between/

John Furey and Lucy Furey

Plaintiffs/Appellants

and

Lurgan-ville Construction Company Limited, Patrick Duff and David J. O'Daly

Defendants/Respondents

ARBITRATION ACT 1980 S5

HALSBURYS LAWS OF ENGLAND 4ED REISSUE VOL 2 627

FORDS HOTEL COMPANY LTD v BARTLETT 1896 AC 1

BRIGHTON MARINE PALACE & PIER LTD v WOODHOUSE 1893 2 CH 486

RSC O.26 r8(1)

RULES OF SUPERIOR COURT ORDER 27 (AMDT) RULES 2004

O'FLYNN v BORD GAIS EIREANN 1983 1 ILRM 324

COUNTY THEATRES & HOTELS LTD v KNOWLES 1902 1 KB 480

RICHARDSON v LE MAITRE 1903 2 CH 222

GLEESON v GRIMES & ANOR 2007 4 IR 417

MERKIN ARBITRATION LAW 1992 ED 6-15

PATTEL v PATTELL 2000 QB 551 1999 3 WLR 322

TRUCK & MACHINERY SALES v MARUBENI 1996 1 IR 12

TANTON-COLLINS v CROMIE & ORS 1964 1 WLR 633

ARBITRATION ACT 1950 S4 (UK)

PRACTICE AND PROCEDURE

Stay

Step in proceedings - Estoppel - Multiplicity of actions - Clause providing that disputes be submitted to arbitration - Statutory interpretation - Consent order extending time for delivery of defence - Whether step taken in proceedings - Whether clear unequivocal promise or representation made - Level of general discretion of court - Brighton Marine Palace and Pier Limited v Woodhouse [1893] 2 Ch 486; County Theatres and Hotels Limited v Knowles [1902] 1 KB 480; Ford's Hotel Company Limited v Bartlett [1896] AC 1; Gleeson and Gleeson v Grimes and McQuillan (2002) [2007] 4 IR 417; O'Flynn v An Bord Gáis Eireann [1982] ILRM 324; Patel v Patel [2000] QB 551; Richardson v Le Maitre [1903] 2 Ch 222; Taunton-Collins v Cromie and Others [1964] 1 WLR 633 and Truck and Machinery Sales Limited v Marubeni Komatsu Limited [1996] 1 IR 12 considered - Arbitration Act 1980 (No 7), s 5 - Appeal dismissed (86/2007 - SC - 21/6/2012) [2012] IESC 38

Furey v Lurgan-ville Construction Co Ltd

Facts: A building contract had been entered into and the plaintiffs had become dissatisfied with the transaction. Proceedings were initiated and Lurgan-ville asserted a right to rely on a clause so as to stay the proceedings pending arbitration, pursuant to Arbitration Act 1980. The High Court had acceded to the application. It was argued that Lurgan-ville had taken a step in the proceedings such as to debar Lurgan-ville from being able to rely on the arbitration clause. The conduct of Lurgan-ville in the manner in which proceeded were alleged to give rise to a multiplicity of separate legal processes.

Held by Clarke J. for the Supreme Court (Denham CJ, Hardimann J. concurring), that Lurgan-ville did not take a step in the proceedings in the sense that the term was used in s. 5 of the Act of 1980. There was no actual basis for treating Lurgan-ville as being estopped from relying on the relevant arbitration clause. The trial judge was entirely correct to stay the proceedings. The appeal would be dismissed and the order of the High Court affirmed.

1. Introduction

2 1.1 A building contract was entered into on the 16 ^th October, 2002 between the first named plaintiff ("Mr. Furey") and the first named defendant ("Lurgan-ville") as a result of which it was agreed that a building at no. 1 Lurgan-ville, Bailieboro, in Co. Cavan would be constructed for the contract price of €146,020.10 (inclusive of V.A.T.). The second named defendant ("Mr. Duff") was also involved in the contractual arrangements as he appears to be the owner of the lands on which the property was to be built and a separate contract for the sale of the relevant site was entered into by Mr. Duff also on the 16 ^th October, 2002. Mr. Duff also signed the building contract on behalf of Lurgan-ville, a company of which he is the principal. The third named defendant ("Mr. O'Daly") was the architect involved in the project.

3 1.2 It would also appear to have been intended that the second named plaintiff ("Ms. Furey"), who is the wife of Mr. Furey, would be involved in the transaction. In any event the plaintiffs ("the Fureys") became dissatisfied with many aspects of the transaction and ultimately commenced these proceedings on the 9 ^th June, 2005. The proceedings progressed to some extent but, in circumstances which it will be necessary to analyse in more detail, Lurgan-ville asserted a right to rely on clause 11 of the relevant building agreement so as to have the proceedings stayed pending arbitration under s.5 of the Arbitration Act, 1980 ("the 1980 Act"). Ultimately the High Court (McKechnie J.) acceded to that application and made the order sought. The Fureys appeal to this court against that order. Against that background it is necessary to turn to the specific issues relied on on behalf of the Fureys.

2. The Issues

2 2.1 In pursuing an appeal to this court the Fureys filed written submissions which sought to rely on three separate contentions as a result of which, it was said, the trial judge was wrong.

3 2.2 First, it was said that Lurgan-ville had taken a "step" in the proceedings, in the sense in which that term is used in arbitration law, such as debars Lurgan-ville from being now able to rely on the arbitration clause in question.

4 2.3 Second, it was said that the conduct of Lurgan-ville in the manner in which the proceedings were pursued up to the point when the application for a stay was moved was such, in all the circumstances, that the Fureys were reasonably entitled to assume that the proceedings were to be defended by Lurgan-ville. In those circumstances it is said that Lurgan-ville has lost its entitlement to have the matter referred to arbitration.

5 2.4 Third, it was said that the consequence of the proceedings as against Lurgan-ville being stayed pending arbitration in circumstances where the proceedings against the other defendants are not so stayed, would give rise to a multiplicity of separate legal processes which would, in all the circumstances, be unjust to a sufficient extent to justify the proceedings against Lurgan-ville not being stayed pending arbitration. However, this third point was not pursued in oral argument and it will, therefore, only be necessary to address it briefly. As each of the issues involve, to some extent, an analysis of the procedural history of this case I turn first to a description of the sequence of events which led to the proceedings being stayed by McKechnie J.

3. Procedural History

2 3.1 As noted earlier a plenary summons was issued on the 9 ^th June, 2005. Appearances were entered by the same solicitors on behalf of Lurgan-ville and Mr. Duff on the 20 ^th June while an appearance was entered on behalf of Mr. O'Daly on the 20 ^th July. A statement of claim was delivered on behalf of the Fureys on the 8 ^th August. A notice for particulars was raised on behalf of Mr. O'Daly on the 26 ^th October, 2005 which was replied to by the Fureys on the 1 ^st June, 2006.

3 3.2 Thereafter, a motion for judgment in default of defence as against Lurgan-ville and Mr. Duff was issued and made returnable before the High Court on the 17 ^th July, 2006. When the matter came before the court (McKechnie J.) an order was made on consent providing for an additional three weeks for the delivery of a defence with costs in favour of the Fureys. The facts which led to that consent order derived from a letter written by the solicitors for Lurgan-ville and Mr. Duff on the 11 ^th July (some six days before the motion was due before the court) in which it was confirmed that the solicitors concerned were "arranging to draft (their) defence and seeking time to file (their) defence". Those solicitors asked for confirmation that the Fureys' solicitor would "be agreeable to us seeking time to file our defence". On that basis agreement to an extension of time was sought. It would appear that the solicitors acting on behalf of the Fureys agreed to that arrangement provided that costs were conceded. On that basis the consent order to which reference has been made was agreed to.

4 3.3 Keeping to the sequence of events a defence was filed on behalf of Mr. O'Daly on the 18 ^th September, 2006. A second motion for judgment against both Lurgan-ville and Mr. Duff was issued which was returnable for the 13 ^th November, 2006. However, on the 3 ^rd November a defence on behalf of Mr. Duff was filed. No point was made about that defence being late so that the question of judgment against Mr. Duff became moot.

5 3.4 However, on the 3 ^rd November, 2006, along with filing a defence on behalf of Mr. Duff, the solicitors who acted for both Lurgan-ville and Mr. Duff asserted, for the first time, an alleged right to rely on clause 11 of the relevant building agreement so as to stay the proceedings pending arbitration.

6 3.5 Insofar as material to the issues already identified the questions which seem to arise are as to whether, first, it can be said that Lurgan-ville had, on those facts, taken a step in the proceedings and second whether it can be said the Lurgan-ville is estopped from now seeking to have the proceedings stayed pending arbitration while the third question as to whether, having regard to the fact that no application to stay has or could be made on behalf of either Mr. Duff or Mr. O'Daly, it is unjust for the proceedings to, in substance, go ahead as an arbitration between the Fureys and Lurgan-ville and as proceedings before the court as and between the Fureys and both Mr. Duff and Mr. O'Daly was, as already noted, not pursued. While there is, therefore, something of a connection between each of those issues, they are, to a significant extent, stand-alone legal points and I propose, therefore, to address them separately. I, therefore, turn to the question of whether a step was taken in the proceedings.

4. Was a step taken in the...