Limerick City Council v Uniform Construction Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 01 November 2005
• Neutral Citation: [2005] IEHC 347
• Docket Number: [2005 Nos. 420 and 445 SP]
• Date: 01 November 2005
• Court: High Court

[2005] IEHC 347

THE HIGH COURT

[No. 420 S.P./2005]

[No. 72 COM/2005]

LIMERICK CITY COUNCIL v UNIFORM CONSTRUCTION LTD

COMMERCIAL

IN THE MATTER OF THE ARBITRATION ACTS 1954 TO 1998

AND IN THE MATTER OF AN ARBITRATION

BETWEEN

LIMERICK CITY COUNCIL

PLAINTIFF

AND

UNIFORM CONSTRUCTION LIMITED

DEFENDANT

ARBITRATION ACT 1954 S35

ARBITRATION ACT 1954 S35(1)

ARBITRATION ACT 1954 S36(1)

EEC DIR 93/37KEENAN v SHIELD INSURANCE CO LTD 1988 IR 89

MCSTAY v ASSICURAZIONI GENERALI SPA 1991 ILRM 237 1991 ILT 126

TOBIN & TWOMEY SERVICES LTD v KERRY FOODS LTD 1996 2 ILRM 1

PORTSMOUTH ARMS HOTEL LTD v ENNISCORTHY UDC UNREP HIGH COURT O'HANLON 14.10.1994 1995/4/1501

MCCARTHY v KEANE & ORS 2004 3 IR 617 2005 2 ILRM 241

MCCARRICK v GAIETY (SLIGO) LTD 2001 2 IR 266 2002 1 ILRM 55

ACQUISITION OF LAND (ASSESSMENT OF COMPENSATION) ACT 1919

SHEEHAN v FBD INSURANCE PLC UNREP SUPREME 20.7.1999 1999/23/7358

DOYLE v KILDARE CO COUNCIL & SHACKLETON 1995 2 IR 433 1996 1 ILRM 252

HENRY DENNY & SONS (IRL) LTD v MIN SOCIAL WELFARE 1998 1 IR 34

CARRICKDALE HOTEL LTD v CONTROLLER OF PATENTS DESIGNS & TRADE MARKS & PHONOGRAPHIC PERFORMANCE (IRL) LTD 2004 3 IR 410 2004 2 ILRM 401

DS BLAIBER v LEOPOLD NEWBORNE (LONDON) LTD 1953 2 LLOYD'S REP 427

HALSBURY LAWS OF ENGLAND 4ED 1973 VOL 2 PARA 623

ABSALOM (FR) LTD v GREAT WESTERN (LONDON) GARDEN VILLAGE SOCIETY 1933 AC 592

NILS HEIME AKT v G MEREL 1959 2 LLOYD'S REP 292

SAMUEL v COOPER 1835 2 AD & EI 752

STILLORGAN ORCHARD v MCLOUGHLIN & HARVEY LTD UNREP HAMILTON 1978 ILRM 128

WHITWORTH v HULSE 1866 LR 1 EXCH 251

SOCIETE FRANCO-TUNISIENNE D'ARMEMENT TUNIS v GOVERNMENT OF CEYLON 1959 3 ALL ER 25

LAMPRELL v BILLEIRCAY UNION 1849 18 LJ EX 283

ARBITRATION

Award

Fundamental error of law on face of award - Standard of review - Materials to be considered - Whether court entitled to review matters specifically referred to arbitrator for resolution - Jurisdiction to set aside or remit award under common law and statute - Whether such jurisdictions co-terminus - Misconduct - Whether arbitrator entitled to decide matters on point not put to parties - McStay v Assicurazione Generali SPA [1989] IR 248, Keenan v Shield Insurance Co Ltd [1988] IR 89, In Re Strabane RDC [1910] 1 IR 135, Doyle v Kildare Co Co [1996] 1 ILRM 252 applied; Honorable Irish Society v Minister for Finance [1958] NI 170, Nils Heime Akt v G Merel & Co Ltd (1959) 2 Lloyds Rep 292, FR Absalom Ltd v Great Western (London) Garden Village Society [1933] AC 592, Société Franco - Tunisienne d'Armenmen-Tunis v Government of Ceylon [1959] 3 All ER 25 and Whitworth v Hulse (1866) LR 1 Exch 251 followed; DS Blaiber & Company Limited v. Leopold Newborne (London) Ltd (1953) 2 Lloyds Rep 427, McCarthy v Keane [2004] 3 IR 617, McCarrick v Gaiety (Sligo) Ltd [2001] 2 IR 266, Tobin & Toomey Services v Kerry Foods Ltd [1996] 2 ILRM 1 and Portsmouth Arms Hotel Ltd v Enniscorthy UDC (Unrep, O'Hanlon J, 14/10/1994), Stillorgan Orchard Ltd v McLoughlin [1978] ILRM 128 considered - Arbitration Act 1954 (No 26), ss 36 and 38 - Order setting award aside refused - (2005/420SP & 445SP - Clarke - 1/11/2005) [2005] IEHC 347

LIMERICK CITY COUNCIL v UNIFORM CONSTRUCTION LTD

1 JUDGMENT of Mr. Justice Clarke delivered on the 1st November, 2005

1. Introduction

2 2 1.1 There are currently two sets of proceedings involving the above parties before the Commercial Court. In the first proceedings (record number 2005 No. 420 SP.) Limerick City Council ("Limerick") seeks various reliefs which challenge certain aspects of an interim award published in arbitration proceedings between Limerick and Uniform Construction Limited ("Uniform"). The arbitration arose principally from the forfeiture by Limerick of a contract between Limerick and Uniform for the installation of approximately 2.6kms of sewer by open cut and trenchless methods underneath the city of Limerick. The tendered price for completion of the works required by the contract (which was known as contract 4.2) was IR £7,537,500 (the approximate equivalent of euro €9.57million). That contract formed part of a much larger infrastructural project known as the Limerick Main Drainage Project which involved the connection of the existing Limerick city drainage system to a new treatment works.

3 3 1.2 The second proceedings (record number 2005 No 445 SP.) again had Limerick as plaintiff and Uniform together with George David Guy Cottam as defendants. Mr. Cottam, ("the arbitrator") is the arbitrator in the arbitration proceedings to which I have referred. In these latter proceedings Limerick make application under s. 35 of the Arbitration Act, 1954 for an order directing the arbitrator to state certain questions of law in the form of a special case for the decision of this court.

4 4 1.3 On 8th September, 2005, the Commercial Court ordered the consolidation of the two proceedings.

5 5 1.4 It being common case that Limerick's application in the second proceedings is largely contingent (save in respect of one matter which Limerick contends but Uniform does not accept is not contingent) on Limerick succeeding in the first proceedings in obtaining an order setting aside or remitting the contested portion of the award, it was agreed between the parties that I should determine the issues in the first proceedings and leave over further consideration of the second proceedings until that determination.

6 6 1.5 For that reason this judgment is concerned solely with the first proceedings.

2. The first proceedings

7 2 2.1 In the first proceedings Limerick seeks a series of orders each of which attempts to interfere with the first interim award of the arbitrator issued and published on 27th June, 2005 ("the award"). The jurisdictional bases relied upon are alternatively:-

8 (a) S. 38(1) of the Arbitration Act, 1954 whereby it is sought to have the interim award set aside on the grounds of the misconduct by the arbitrator of either himself or the proceedings;

9 (b) S. 36(1) of the Arbitration Act, 1954 whereby it is sought that certain matters be remitted to the reconsideration of the arbitrator; and/or

10 (c) the courts common law jurisdiction to the extent that same allows that certain matters be set aside or remitted to the reconsideration of the arbitrator on the basis of an error of law on the face of the award

11 3 2.2 While there are certain differences between the specific issues relied upon under each heading, it is fair to say that the totality of the matters which Limerick says entitles it to one or other of the above reliefs can be enumerated as follows:-

12 (a) It is said that the award shows on its face two fundamental errors of law made by the arbitrator in reaching a conclusion that Uniform was entitled, as a matter of contract, to tunnel at a lower level than that contained in the original design and that, as a consequence, a letter of 13th of June, 2000, instructing Uniform to tunnel at an original design level amounted to a variation instruction under Clause 51 of the contract. It will, of course, be necessary to return in more detail to both the context and substance of those contentions in due course;

13 (b) Secondly it is suggested that the arbitrator failed to consider and decide a central issue in the arbitration namely the effect of a letter written on 18th May, 2000, by the project engineer to Uniform;

14 (c) Thirdly it is contended that the award shows on its face a fundamental error of law made by the arbitrator in reaching a conclusion (which he did) that Uniform was not in "persistent" breach of the contract;

15 (d) Fourthly it is contended, in relation to the decision by the arbitrator as to whether Uniform was in persistent breach of its obligations, that the test applied by the arbitrator was one which, as Limerick contends, "he invented for himself" and that the arbitrator thus deprived Limerick of its right to address further argument on the case which it had to answer; and

16 (e) Fifthly it is contended that the arbitrator failed to make any decision as to whether a reasonable engineer could have issued a certificate under Clause 63 of the contract so as to permit the termination of the contract on the grounds of persistent breach.

17 4 2.3 In summary Limerick suggests that each of the above five grounds amount to misconduct entitling them to an order under s. 38 setting aside the award.

18 5 2.4 Secondly it is contended that a jurisdiction to remit under s. 36(1) arises in circumstances where there are present on the face of the record fundamental errors of law (and it is contended that items 1 and 3 above amount to same) or where there is misconduct by the arbitrator of the proceedings (and it is contended that items 2 and 4 amount to same for these purposes) or where there is the presence of a fundamental mishap which renders the proceedings unfair (where it is again contended that the matters set out at paragraphs 2 and 4 give rise to the courts jurisdiction).

19 6 2.5 Finally in respect of the common law jurisdiction it is contended that the above identified alleged errors of law entitle the court to exercise such jurisdiction.

3. Background

20 2 3.1 The contract with which these proceedings are concerned was clearly a major public contract and was, as a matter of European Union Law (E.U. Council Directive 93/37/EEC (the "works directive") (as amended) required to be put out to tender using the open tender procedure.

21 3 3.2 Uniform submitted, on 21st May, 1999, an unqualified tender to carry out the construction of the works contained in contract 4.2 in the sum of IR£7,537,500 inclusive of VAT. Limerick had appointed a consortium consisting of three firms of consulting engineers as its Engineer for the purposes of the project. The consortium was known as...