Ocean Point Development Company Ltd ((in Receivership)) v Patterson Bannon Architects Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice David Barniville
• Judgment Date: 10 May 2019
• Neutral Citation: [2019] IEHC 311
• Court: High Court
• Docket Number: [2014 No. 7827 P.]
• Date: 10 May 2019

IN THE MATTER OF THE ARBITRATION ACT 2010

BETWEEN

OCEAN POINT DEVELOPMENT COMPANY LIMITED (IN RECEIVERSHIP)

PLAINTIFF

AND

PATTERSON BANNON ARCHITECTS LIMITED, P.H. McCARTHY CONSULTING ENGINEERS LIMITED, MULCAHY McDONAGH & PARTNERS LIMITED, CALLAN MAGUIRE PARTNERSHIP

AND

CLANCY PROJECT MANAGEMENT LIMITED TRADING AS CLANCY CONSTRUCTION

DEFENDANTS

[2019] IEHC 311

[2014 No. 7827 P.]

THE HIGH COURT

Arbitration – Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration – Arbitration agreement – Defendant seeking an order under Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration referring the dispute between the plaintiff and the defendant to arbitration on the basis that the dispute was the subject of an arbitration agreement between the parties – Whether the arbitration agreement was incapable of being performed for the purposes of Article 8(1) of the Model Law

Facts: The fifth defendant, Clancy Project Management Ltd trading as Clancy Construction, applied to the High Court for an order under Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration referring the dispute between the plaintiff, Ocean Point Development Company Ltd (in receivership), and Clancy to arbitration on the basis that the dispute was the subject of an arbitration agreement between the parties. The arbitration agreement on which Clancy relied was clause 38 of a written contract in the standard RIAI form (2002 version) dated 2nd March, 2007. Ocean Point resisted Clancy’s application on two principal grounds. First, Ocean Point contended that Clancy repudiated the arbitration agreement by commencing summary proceedings in the High Court in October 2008 seeking payment on foot of an architect’s certificate issued on 15th September, 2008, on foot of which Clancy obtained liberty to enter final judgment in the sum of €768,379.45 from the Master of the High Court on consent on 10th December, 2009. Ocean Point contended that it accepted that repudiation by commencing these plenary proceedings against Clancy on 5th September, 2014. Second, Ocean Point contended that the court should refuse to make an order under Article 8(1) of the Model Law referring the parties to arbitration as the arbitration agreement was “incapable of being performed” within the meaning of that term in Article 8(1) of the Model Law. Ocean Point asserted that the arbitration agreement was “incapable of being performed” as the claimant was the only one of the five defendants in the plenary proceedings which would be a party to any arbitration. Ocean Point contended that the absence of the other defendants in any such arbitration would present real and practical difficulties in various respects which render the arbitration agreement “incapable of being performed” as that term is properly to be construed.

Held by Barniville J that the commencement of the summary proceedings by Clancy in October 2008 did not amount to a repudiation of the arbitration agreement and, consequently, the commencement of the plenary proceedings by Ocean Point in September 2014 did not amount to an acceptance by it of any repudiation by Clancy. Barniville J held that the arbitration agreement comprised in clause 38 of the contract was, therefore, not repudiated and remained in force. Barniville J held that the arbitration agreement was not “incapable of being performed” for the purposes of Article 8(1) of the Model Law. The fact that Clancy was only one of the five defendants that were sued in the plenary proceedings which would be involved in the arbitration with Ocean Point did not, in Barniville J’s view, render the arbitration agreement, or any arbitration taking place under it, “incapable of being performed”.

Barniville J held that, as the parties were agreed that, subject to the points referred to above (which Barniville J had decided against Ocean Point), the court has no discretion as to whether to make an order under Article 8(1) of the Model Law, he was satisfied that he was required to make the order sought by Clancy referring Ocean Point and Clancy to arbitration under clause 38(b) of the contract in respect of the dispute the subject of the plenary proceedings.

Order granted.

JUDGMENT of Mr. Justice David Barniville delivered on the 10th day of May, 2019.

Introduction

1 This is my judgment on an application by the fifth defendant, Clancy Project Management Limited trading as Clancy Construction (‘Clancy’), for an order under Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration (the ‘Model Law’) which has force of law in the State by virtue of section 6 of the Arbitration Act 2010 (the ‘2010 Act’), referring the dispute between the plaintiff, Ocean Point Development Company Limited (in receivership) (‘Ocean Point’), and Clancy, which is the subject of these proceedings, to arbitration on the basis that the dispute is the subject of an arbitration agreement between the parties. The arbitration agreement on which Clancy relies is clause 38 of a written contract in the standard RIAI form (2002 version) dated 2nd March, 2007.

2 While the motion issued by Clancy seeks other reliefs, including orders pursuant to the inherent jurisdiction of the court referring the dispute to arbitration or, alternatively, staying, dismissing or striking out the proceedings by reason of the arbitration agreement, Clancy confirmed at the outset of the hearing of the application that the only order sought by it is an order under Article 8(1) of the Model Law.

3 Ocean Point has resisted Clancy's application on two principal grounds. First, Ocean Point contends that Clancy repudiated the arbitration agreement by commencing summary proceedings in the High Court in October 2008 seeking payment on foot of an architect's certificate issued on 15th September, 2008, on foot of which Clancy obtained liberty to enter final judgment in the sum of €768,379.45 from the Master of the High Court on consent on 10th December, 2009 (the ‘summary proceedings’). Ocean Point contends that it accepted that repudiation by commencing these plenary proceedings against Clancy on 5th September, 2014 (the ‘plenary proceedings’). Second, Ocean Point contends that the court should refuse to make an order under Article 8(1) of the Model Law referring the parties to arbitration as the arbitration agreement is ‘incapable of being performed’ within the meaning of that term in Article 8(1) of the Model Law. Ocean Point asserts that the arbitration agreement is ‘ incapable of being performed’, as the claimant is the only one of the five defendants in the plenary proceedings which will be a party to any arbitration. Ocean Point contends that the absence of the other defendants in any such arbitration would present real and practical difficulties in various respects which render the arbitration agreement ‘ incapable of being performed’ as that term is properly to be construed.

Summary of decision

4 For the reasons set out in this judgment, I have concluded:

(1) The commencement of the summary proceedings by Clancy in October 2008 did not amount to a repudiation of the arbitration agreement and, consequently, the commencement of the plenary proceedings by Ocean Point in September 2014 did not amount to an acceptance by it of any repudiation by Clancy. The arbitration agreement comprised in clause 38 of the contract was, therefore, not repudiated and remains in force.

(2) The arbitration agreement is not ‘ incapable of being performed’ for the purposes of Article 8(1) of the Model Law. The fact that Clancy is only one of the five defendants that are sued in the plenary proceedings which will be involved in the arbitration with Ocean Point does not, in my view, render the arbitration agreement, or any arbitration taking place under it, ‘ incapable of being performed’.

(3) As the parties are agreed that, subject to the points referred to above, (which I have decided against Ocean Point), the court has no discretion as to whether to make an order under Article 8(1) of the Model Law, I am satisfied that I am required to make the order sought by Clancy referring Ocean Point and Clancy to arbitration under clause 38(b) of the contract in respect of the dispute the subject of the plenary proceedings.

Relevant factual background

5 I set out below the relevant factual background to the application. The facts set out by me are either not in dispute between the parties or have been found as facts by me on the basis of the evidence.

6 On 2nd March, 2007 Ocean Point entered into the contract with Clancy, a construction company, for the construction by Clancy of a mixed use residential/commercial development (the ‘works’) at Courtown Harbour in Co. Wexford. The contract was in the standard RIAI form (2002 version). The architect under the contract was Mark Bannon of Patterson Bannon Architects Limited, the first defendant in the plenary proceedings (‘architect’). The second defendant, P.H. McCarthy Consulting Engineers (‘McCarthy’), was engaged by Ocean Point as the structural engineers for the works. The third defendant, Mulcahy McDonagh & Partners Limited, were engaged as the project managers. The fourth defendant, Callan Maguire Partnership, was appointed as the quantity surveyor in respect of the works (replacing another firm which had originally been appointed). Clancy was appointed the contractor under the contract.

7 While a number of lengthy affidavits have been sworn in connection with Clancy's application and many issues have been raised by Ocean Point in response to the application, I shall confine myself to setting out and summarising only those facts which I believe are relevant to the issues which require to be determined on this application.

8 Ocean Point and Clancy were in dispute in relation to various issues concerning the works in early 2008. It was agreed by them to refer those disputed...