James O'Mahony v Patrick O'Connor Builders (Waterford) Ltd & others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 22 July 2005
• Neutral Citation: [2005] IEHC 248
• Docket Number: [2003 No. 6794 P]
• Court: High Court
• Date: 22 July 2005

O'MAHONY v PATRICK O'CONNOR BUILDERS (WATERFORD) LTD & ORS

BETWEEN

JAMES O'MAHONY

PLAINTIFF

AND

PATRICK O'CONNOR BUILDERS (WATERFORD) LIMITED, PATRICK O'CONNOR, POC CONSTRUCTION LIMITED, AQUALINE ENGINEERING LIMITED, FENWALL POOLS LIMITED, EASTERN REGIONAL CONSULTANCY SERVICES LIMITED, BREFFINI McGRANE AND TERENCE McSWEENEY

DEFENDANTS

[2005] IEHC 248

[No. 6794 P/2003]

THE HIGH COURT

CONTRACT:

Terms

Expert - Agreement to appoint expert - Independent valuation - Determination of expert - Finality of determination - Departure of expert from process agreed between parties - Misunderstanding on part of expert as to his task - Whether expert determination binding where process carried out by expert not same as that agreed between parties - Whether expert can initiate own process - Severance - Whether expert has decided all issues - Whether determination binding as to part of task actually carried out - Interim determination - Failure of party to make representations - Whether expert bound to give notice of intention to issue final decision - Whether in absence of set time limit expert can issue final determination - Whether determination binding as between parties - Finding that valuation on binding on parties (2003/6794P - Clarke J - 22/7/2005) [2005] IEHC 248; [2005] 3 IR 167

O'Mahony v Patrick O'Connor Builders (Waterford) Ltd

Facts: the High Court directed that the question of whether the plaintiff was bound by a valuation produced by a quantity surveyor, in respect of a dispute between the parties which had arisen in relation to the building of a house by the defendant for the plaintiff, be tried as a preliminary issue. The plaintiff contended that he was not bound by the findings of the expert as he failed to carry out the process in the manner agreed between the parties. The surveyor, in carrying out his duties, did not consider that it was his obligation to resolve any disputed issues between the parties as to whether work was defective or had been carried out, which differed from what the parties had envisaged in appointing him. The surveyor produced an interim report and invited the parties to consult with him prior to finalising it but failed to put the parties on notice that his report was going to become final in the event of a culpable absence of consultation with him within a specified time frame. The plaintiff failed to communicate with the surveyor despite being requested to do so and contended that the final report of the surveyor was void in those circumstances.

Held by Clarke J in declaring that the expert's report was not binding on the parties that where parties agreed to be bound by the report of an expert, such report could not be challenged on the ground that mistakes had been made in its preparation unless it could be shown that the expert had departed from the instructions given to him in a material respect or had acted in bad faith. That ultimately, the process which an expert was to engage in was the one specified in the agreement between the parties and insofar as the process agreed required him to consult with or consider the representations of the parties he had to do so and in doing so had to act fairly. It was desirable that an expert, before proceeding to give a final determination, should give a defaulting party clear warning that that was what he proposed to do. Where a party was in default of making representations, the expert was entitled to reach a final determination without reference to such representations. Whether a point had been reached which entitled the expert to make a final determination without reference to the representations of a party in such circumstances depended on all the circumstances of the case and in particular the extent to which the party in default could be said to be in specific breach of a defined obligation to make representations in a particular manner or within a particular time scale. The process actually embarked on by the expert was different to that which was the subject of the agreement between the parties and the agreement between the parties could not be severed in such a manner as to give effect to what was actually determined by the expert. It was not open to the expert to make his report final without giving the parties notice of his intention to do so, in the absence of compliance within a specified period of time of his requirements in relation to consultation.

Reporter: P.C.

JONES v SHERWOOD COMPUTER SERVICES PLC 1992 1 WLR 277

KENDALL EXPERT DETERMINATION 3ED PARA 13.6.6

RAJDEF v BECKETTS 1989 2 EGLR 144

1 JUDGMENT of Mr. Justice Clarkedelivered 22nd July, 2005.

1. The Preliminary Issue

2 1.1 I have already given judgment in respect of one aspect of this matter on1st March, 2005. As appears from that judgment these proceedings are connected with two other proceedings as set out on p. 1 of the judgment. As is further pointed out in that judgment these proceedings are, insofar as possible, being used as a vehicle for the resolution of as many issues as possible. This judgment is, therefore, potentially relevant to all three proceedings. Furthermore the judgment outlines the course, up to the 1st March last, of the management of all three cases. For the reasons set out in the judgment of 1st March I directed that a preliminary issue be tried to the following effect:-

3 2 "1. Is the valuation attached (to the draft preliminary issue produced by counsel for the O'Connor defendants and) furnished in or about May 2002 binding as between the plaintiff (James O'Mahony) and the second named defendant (Patrick O'Connor) and, if so, is the plaintiff (James O'Mahony) entitled to bring a separate claim in respect of alleged defects in the works, the subject matter of the valuation, against Patrick O'Connor.

4 2. In the event that the valuation referred to at 1. above is found to be binding is the plaintiff entitled to maintain proceedings in respect of damages claimed relating to remedial works which allegedly require to be carried out by virtue of alleged defects and/or consequentional loss flowing from such alleged defects".

5 The valuation referred to is a valuation of Patrick Devlin to which I will refer in more detail in the course of this judgment.

6 1.2 Subsequent to that judgment points of claim were delivered on 2nd March, 2005, a response on 21st March, 2005 and a reply on 15th April, 2005. The reply made significant concessions in that at paragraphs 5 and 7 thereof, paragraphs 5 and 11 of the response was admitted. Paragraph 5 of the response pleaded as follows:-

"Further or in the alternative, without prejudice to the above, if the claimant and respondent entered into the said or any agreement, which is not admitted, the said agreement was limited, as pleaded by the claimant to the value of any building works carried out by the claimant and expressly or by implication did not include any claim for loss due to defective workmanship design or manufacture as claimed by the respondent in these proceedings".

7 Paragraph 7 of the reply admitted paragraph 11 of the response which provided as follows:-

"Further or in the alternative the said Mr. Devlin in his report valued the works as though there were no defects".

8 The Mr. Devlin referred to was, of course, the author of the report set out at para 1. of the preliminary issue direction and was a quantity surveyor appointed by the parties in circumstances which I will consider in greater detail in the course of this judgment.

9 1.3 Therefore it will be seen that subsequent to the direction that a preliminary issue be tried and prior to same coming on for hearing there was a narrowing of the issues between the parties.

2. Background Facts

10 2.1 Certain of the background facts to this dispute are not, in themselves, controversial. Mr. O'Connor is a builder. Mr. O'Mahony is a solicitor. In 1999 Mr. O'Mahony and Mr. O'Connor entered into a contract whereby Mr. O'Connor would carry out certain works at Mr. O'Mahony's residence at Garryhankard House in County Cork. The contract was, strictly speaking, oral although there was some documentation in the form of plans and specifications. It is also common case that significant works were carried out between March 1999 and June 2001. It is also common case that during the construction period certain moneys were paid by Mr. O'Mahony to Mr. O'Connor. Equally there is no dispute but that the parties could not agree as to how the balance which might be due and owing was to be computed. It is also clear that the parties entered into certain discussions which led to the appointment of Patrick Devlin to carry out a certain role in respect of the valuation of the works. These proceedings concern the extent, if any, to which a report prepared by Mr. Devlin binds the parties. As the precise circumstances in which Mr. Devlin came to be appointed and, consequently, the precise terms agreed between the parties to these proceedings as to his appointment are a matter of some controversy I will return to that issue in due course.

11 2.2 However it is common case that Mr. Devlin (together with others from his office) commenced on the task of valuing the works at Garryhankard House in the early part of 2002. The manner in which that process was conducted as a question of fact appears not to be the subject of any significant dispute between the parties or, indeed, Mr. Devlin. However certain aspects of that process are crucial to a determination of the issues between the parties and I will, therefore, also return to a description of that process in more detail in the course of this judgment.

12 2.3 Ultimately Mr. Devlin produced what might be described as an interim report ("the interim report") which was submitted to the parties in May 2002. Thereafter various attempts were made, to which I will again refer...