Greyridge Developments Ltd v McGuigan t/a McGuigan Construction
| Jurisdiction | Ireland |
| Judge | Mr. Justice Gilligan |
| Judgment Date | 28 June 2006 |
| Neutral Citation | [2006] IEHC 441 |
| Court | High Court |
| Date | 28 June 2006 |
[2006] IEHC 441
THE HIGH COURT
BETWEEN
AND
AND
ARBITRATION ACTS 1954-1980
ARBITRATION ACT 1954 S39
RSC O. 5
RSC O. 56
CUNNINGHAM-REID v BUCHANAN-JARDINE 198 2 AER 438 1988 1 WLR 678
ARBITRATION ACT 1950 S4(1)
ARBITRATION ACT 1950 S24(2)
ARBITRATION ACT 1950 S24(3)
WINTERTHUR SWISS INSURANCE CO v INSURANCE CORPORATION OF IRELAND 1990 2 IR 246 1990 ILRM 159 1989/8/2575
WORKMAN v BELFAST HARBOUR COMMISSIONERS 1899 IR 234
HOGAN v ST KEVINS CO 1986 IR 80
KEENAN v SHIELD INSURANCE CO LTD 1988 IR 89
VIA NET WORKS (IRL) LTD (FORMERLY MEDIANET (IRL) LTD), IN RE 2002 2 IR 47 2002/27/7100
CHANNEL TUNNEL GROUP LTD v BALFOUR BEATTY CONSTRUCTION LTD 1993 AC 334
ARBITRATION:
Contract
Fraud - Application for order that arbitration agreement ceased to have effect by reason of fraud - Forged invoice - Issues as to credibility of invoices - Whether allegations of fraud bona fide - Cunningham-Reid v Buchanan -Jardine [1988] 2 All ER 438; Administratia Asigurarilor de Stat v Insurance Corporation of Ireland [1990] 2 IR 246 and Workman v Belfast Harbour Commissioners [1899] 2 IR 234 followed - Hogan v St Kevin's Company [1986] IR 80; Keenan v Shield Insurance Company Ltd [1989] IR 89; Re Via Networks (Ireland) Ltd [2002] 2 IR 47 and Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 considered - Arbitration Act 1954 (No26), s 39 - Relief refused (2005/36 MCA - Gilligan J - 28/6/2006) [2006] IEHC 441
Greyridge Developments Ltd v McGuigan
section 39(2) of the Arbitration Act 1954 provides, inter alia, that “Where an agreement between any parties provides that disputes which may arise in the future between them shall be referred to arbitration and a dispute which so arises involves the question whether any party has been guilty of fraud, the Court shall…have power to order that the agreement shall cease to have effect…” The parties had agreed to refer all disputes relating to building works carried out for the plaintiff by the defendant to arbitration. As a result of a dispute concerning payments, arbitration commenced. Before the hearing date, the plaintiff sought an order from the High Court directing that the arbitration agreement shall cease to have effect by reason of the fact that the plaintiff alleged that a fraud had been committed by the defendant upon it and that the issue of fraud should be decided by the High Court. The defendant admitted that it had submitted a forged invoice to the plaintiff.
Held by Mr Justice Gilligan in exercising his discretion to refuse the relief sought that the arbitrator would be in a position to deal with the issues of fraud which arose and that to revoke the authority of the arbitrator five years into the arbitration procedure would only delay substantially the final determination of the proceedings which could not be justified.
Reporter: P.C.
JUDGMENT of Mr. Justice Gilligan delivered on the 28th day of June, 2006 .
These proceedings arise from two contracts as concluded between the parties on 7th day of March, 2000, in respect of a housing development scheme then being developed by the plaintiff at Carrick on Shannon in the County of Leitrim. In essence the plaintiff is a development company who employed the defendant as a building contractor to undertake certain building works on the plaintiff's lands. Both contracts were in the Royal Institute of Architects of Ireland form and both contained clause 38, an arbitration clause, which states as follows:-
" … In case any dispute or difference shall arise between the employer or the architect on his behalf and the contractor either during the progress of the works or after the determination of the employment of the contractor under the contract or the abandonment or breach of the contract, as to the construction of the contract or as to any matter or thing arising thereunder … such dispute or difference shall be and is hereby referred to the arbitration and final decision of such person as the parties hereunto may agree to a point as arbitrator … and the word of such arbitrator shall be final and binding on the parties … the arbitrator shall have power to open up, review and revise any opinion, decision, requisition or notice and to determine all matters in dispute which shall be submitted to him …".
During the progress of the works under both contracts a dispute arose between the parties largely regarding payment of sums allegedly due and the time for the performance of the contracts. As a result of this dispute the defendant stopped work and the matter was referred to arbitration in 2001 with Anthony Reddy, architect, the notice party, being the agreed arbitrator.
The arbitration proceedings duly commenced and points of claim were submitted by the defendant on 31st May, 2002, and a defence and counterclaim on the plaintiff's behalf was delivered on 3rd July, 2002, the document being amended on two further occasions. A reply to the defence and counter claim was served by the defendant on 21st March, 2003, and it then appears that there was a series of meetings and various documents were exchanged and on a number of occasions a date for the hearing of the arbitration was fixed but never in fact took place.
In these proceedings pursuant to a notice of motion dated 15th day of May, 2005, the plaintiff seeks an order directing that the arbitration agreement concluded inter partes pursuant to the contracts of 7th day of March, 2000, shall cease to have effect by reason of the fact that the plaintiff alleges that a fraud has been committed by the defendant upon the plaintiff company.
The original contract price was approximately €1.2 million. In the arbitration proceedings the defendant is claiming from the plaintiff a sum of €525,623.00. The defendant has been paid to date, pursuant to architect's certificates, a sum of €711,850.00. The plaintiff in the arbitration proceedings counterclaims against the defendant for damages for non completion by the defendant whether pursuant to s. 29 of the contract or otherwise and further counterclaims for the additional costs in completing the housing contract, additional costs in completing the roads and services contract remedial works in both contracts, defects in both contracts, rectification of a retaining wall making good the intentional damage inflicted on the site by the defendant and such further and other damages for breach of contract to which the counterclaimant is deemed to be entitled.
The nature of the fraud allegation is the furnishing of a purported invoice from an entity called Kreaney Concrete as dated 2nd May, 2000, which invoice claimed the sum of STG £8,547.50 in relation to a number of deliveries of concrete with a combined quantity of 125.5 metres3 of concrete. The plaintiff asserts that this document is a forgery and a fraud and during the course of the arbitration proceedings sought clarification and further detail thereof. It is clear that the defendant was not co-operative in respect of the additional information that was sought in respect of this document and eventually the defendant admitted that the invoice is a forgery and was used in support of a claim for payment of a total quantity of 498 metres3 of concrete poured on site. However, the defendant denies that any fraud was committed and alleges that his claim for payment in respect of the delivery and pouring of concrete was valid as to the quantity of concrete delivered to the site and poured and was in accordance with the quantity claimed by him in the course of the arbitration proceedings.
The defendant claims that the resolution of the sums that are properly due in respect of poured concrete can be quantified on the basis of measurements of quantity rather than on the basis of vouched invoices. The defendant maintains that the plaintiff's quantity surveyor carried out a measurement on site to determine the quantity of concrete delivered and indicated that he was prepared to certify a quantity of poured concrete of 445m3. The defendant alleges that the divergence of opinion in relation to the quantity of concrete delivered is not unusual in the determination of issues that arise in building disputes.
During the course of the hearing of the motion before this Court a dispute arose as to whether or not poured concrete can actually be measured post facto and it is clear that the expert witnesses as retained on behalf of the respective parties cannot agree on this particular issue both adopting a completely contrary view as to whether or not poured concrete can be measured after it has been poured and used as a foundation.
In any event the amount of the admittedly forged invoice is STG £8,847.50 and the volume involved is 125.5 metres3 of concrete against a background where the total claim was for 498 metres3 of poured concrete.
The plaintiff also queries a number of invoices from PT McWilliams Contracts and from a Colum McMahon all of which relate to a claim in respect of labour allegedly supplied by the defendant on site.
The total of the invoices from PT McWilliams Contracts is £8,063.27 and the total of the invoices from Colum McMahon amount to £37,474.00 sterling.
The plaintiff makes serious allegations in respect of the credibility of these invoices pointing out for example that the mobile...
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