S.J.W. Facades Ltd v Bowen Construction Ltd and Another
| Jurisdiction | Ireland |
| Judge | Mr. Justice John MacMenamin |
| Judgment Date | 03 February 2009 |
| Neutral Citation | [2009] IEHC 49 |
| Court | High Court |
| Date | 03 February 2009 |
[2009] IEHC 49
THE HIGH COURT
AND
AND
AND
ARBITRATION ACT 1954 S38(1)(A)
RSC O.56 r4(e)
KEENAN v SHIELD INSURANCE CO LTD 1988 IR 89 1988/2/325
CLANCY & KEHOE v NEVIN & ORS UNREP LAFFOY 25.4.2008 2008 IEHC 121
LIMERICK CITY COUNCIL v UNIFORM CONSTRUCTION LTD 2007 1 IR 30 2005/36/7522 2005 IEHC 347
ARBITRATION ACT 1954 S38
GALWAY CITY COUNCIL v SAMUEL KINGSTON CONSTRUCTION LTD & HAWKER UNREP MCMAHON 17.10.2008 2008 IEHC 429
LONDON EXPORT CORP LTD v JUBILEE COFFEE ROASTING CO LTD 1958 1 WLR 661 1958 1 LLOYD'S REP 367 1958 2 AER 411
WILLIAMS v WALLIS & COX 1914 2 KB 478
MCCARTHY v KEANE & ORS 2004 3 IR 617 2005 2 ILRM 241 2004/33/7696 2004 IESC 104
SOCIETE FRANCO-TUNISIENNE D'ARMEMENT-TUNIS v GOVT OF CEYLON 1959 3 AER 25 1959 1 WLR 787 1959 2 LLOYD'S REP 1
FOX & ORS v PG WELLFAIR LTD; FISHER & ANOR v PG WELLFAIR LTD 1981 2 LLOYD'S REP 514
PACOL LTD v JOINT STOCK CO ROSSAKHAR 2000 1 LLOYD'S REP 109 2000 CLC 315 1999 2 AER (COMM) 778
MCCARRICK v GAIETY (SLIGO) LTD 2001 2 IR 266 2002 1 ILRM 55 2002/19/4846
UNIFORM CONSTRUCTION LTD v CAPPAWHITE CONTRACTORS LTD UNREP LAFFOY 29.8.2007 2007/59/12564 2007 IEHC 295
ARBITRATION
Award
Setting aside award - Principles - Alleged misconduct - Fair procedures - Claim by applicant that no challenge to its evidence - Court cannot weigh evidence - Desirability of finality - Construction of arbitration awards - Evidence - Allegation that arbitrator adopted documentary evidence of witness - Opportunity to deal with documents - Onus on applicant to object - Removal of arbitrator - Allegation that arbitrator acted unfairly - Allegation of bias - Whether impugned conduct substantial or indicative of real injustice - Whether one or both parties placed at disadvantage - Principles to be applied in assessing misconduct - Whether serious irregularities such that would justify removal of arbitrator - Duty of arbitrator - Keenan v Shield Insurance [1998] 1 IR 89, Irish Golf Design Ltd v Kelcar Developments Ltd [2007] IEHC 468 [2008] 1 IR 407, Clancy v Nevin [2008] IEHC 121 (Unrep, Laffoy J, 25/4/2008) and McCarthy v Keane [2004] IESC 104 [2004] 3 IR 617 applied; Limerick City Council v Uniform Construction Ltd [2005] IEHC 347 [2007] 1 IR 30, Galway City Council v Kingston [2008] IEHC 429 (Unrep, McMahon J, 17/10/2008), London Export Corporation Ltd v Jubilee Coffee Roasting Co Ltd [1958] 1 WLR 61, Williams v Wallis & Cox [1914] 2 KB 478, Societe Franco-Tunisienne d'Armement-Tunis v Government of Ceylon [1959] 3 All ER 25, Fox v Wellfair [1981] 2 Lloyds Rep 514, Pacol Ltd v Joint Stock Co Rossakhar [2000] 1 Lloyds Rep 109, McCarrick v The Gaiety (Sligo) Ltd [2001] 2 IR 266 and Uniform Construction Ltd v Cappawhite Contractors Ltd [2007] IEHC 295 (Unrep, Laffoy J, 29/8/2007) considered - Arbitration Act 1954 (No 26), s 38 - Rules of the Superior Courts 1986 SI 15/1986), O 56, r 4 - Relief refused (2008/92MCA - MacMenamin J - 3/2/2009) 2009 IEHC 49
SWJ Facades Ltd v Bowen Construction Ltd
Facts: The plaintiff sought orders pursuant to s. 38 Arbitration Act 1954 and Order 56, rules 4(e), Rules of the Superior Courts, setting aside an arbitration award made on the grounds of alleged misconduct, removing the arbitrator and appointing a replacement. The total claims under all headings amounted to €1,409,109.93 and the total sum recovered was €59,126.18 on foot of the award of the arbitrator. Two main issues arose in the claim of the plaintiff as to delay and disruption, firstly, as to fair procedures and secondly, as to whether the plaintiff was entitled to a finding in its favour in the alleged absence of counter evidence on the claim for loss by reason of delay. The arbitrator made an award in 2008 and relied on documents that the plaintiff alleged were not in evidence. The issue arose inter alia as to the entitlement of the arbitrator to make quantum meruit awards, the onus to object and whether there was any procedural mishap.
Held by MacMenamin J. That it was not incumbent on the arbitrator to make findings concerning each heading of delay or that it was significant or that there was an obligation on him to discount the value against the plaintiffs proven cost. The parties were bound by the award. It was entirely within his remit to find that the chain of causation had not been established. There was no obligation on him to put some or any value on the remainder of the claim. It could not be found that there was any procedural mishap. Relief pursuant to s. 38 of the Act of 1954 was discretionary. The application failed.
Reporter: E.F.
JUDGMENT of Mr. Justice John MacMenamin dated the 3rd day of February, 2009.
1. In these proceedings the plaintiff ("S.J.W.") seeks orders pursuant to s. 38(1)(a) of the Arbitration Act 1954 and O. 56, r.4(e) of the Rules of the Superior Courts:
(i) setting aside an arbitration award (interim award no. 1) of the second defendant Kevin Brady (the arbitrator) made on 21 st May, 2008, on the grounds of alleged misconduct in these proceedings;
(ii) for the removal of the arbitrator on grounds of misconduct; and
(iii) for the appointment of a person to act as arbitrator in place of the second defendant.
2. The case relates to a building contract arbitration arising from the construction of student accommodation at Victoria Hall, Victoria Cross in Cork where the first defendant ("Bowen") was the main contractor. S.J.W. was a nominated subcontractor. It was to carry out cladding works on the building being constructed by Bowen. S.J.W. said that Bowen caused delay and disruption which caused S.J.W. serious losses. The dispute could not be resolved. The matter was remitted to arbitration. S.J.W. made a claim inter alia for delay and disruption in the sum of €406,300.00. S.J.W. says that the arbitrator dismissed this aspect of the claim, relying on a case that was neither pleaded nor put to the applicant, and upon evidence of delays found in letters (which it is said) were not in evidence in the case. S.J.W contends that the arbitrator thereby exceeded his jurisdiction, breached rules of natural justice, failed to observe or apply due process and brought about a "procedural mishap". The total of S.J.W.'s claims in the arbitration under all headings amounted to €1,409,109.93. The total sum recovered by them on foot of the award of the arbitrator was €59,126.18. It will be seen therefore that the outcome of the arbitration was not favourable to S.J.W. in the overall. Calderbank letters had been exchanged. These may have a bearing on the issue of costs of this nine day arbitration including a counterclaim by Bowen which will be dealt with later.
3. The judgment focuses on the two main issues under the claim of S.J.W. for delay and disruption; the first a question of fair procedures; the second whether S.J.W. was "entitled" to a finding in its favour in the alleged absence of counter evidence from Bowen on S.J.W.'s claim for loss caused by delay.
4. Prior to consideration of the facts it is appropriate briefly to outline the considerations and principles applicable.
5. It has been frequently observed that finality is a keystone principle in the law of arbitration. The dictum of McCarthy J. in the Supreme Court in Keenan v. Shield Insurance [1988] I.R. 89 at p. 96 is so well known as to almost require no repetition;
"Arbitration is a significant feature of modern commercial life.... It ill becomes the courts to show any readiness to interfere in such a process; if policy considerations are appropriate as I believe they are in a matter of this kind, then every such consideration points to the desirability of making an arbitration award final in every sense of the term."
6. This dictum has been applied by the High Court repeatedly, most recently by Kelly J. in Irish Golf Design Ltd v. Kelcar Developments Ltd. [2007] I.E.H.C. 468 and by Laffoy J. in Clancy and Kehoe v. Nevin & Ors. [2008] I.E.H.C. 121. In the former decision, Kelly J. characterised the task of a party seeking to set aside an arbitrator's award as "an uphill struggle".
7. The second principle relates to the manner of the construction of arbitration awards in general. They are not to be minutely parsed or analysed but to be seen from the overall point of view so as to observe whether the arbitrator has properly dealt with the issues before him.
8. In Limerick City Council v. Uniform Construction Ltd. [2007] 1 I.R. 30, Clarke J. observed at p. 59:
"The approach to construing an award of an arbitrator by the courts is illustrated by Stillorgan Orchard Ltd. v. McLoughlin and Harvey [1978] I.L.R.M. 128, where Hamilton J. came to the conclusion that an award of an arbitrator will be sustained although the arbitrator may have omitted in his award to notice some claim put forward by a party if according to a fair interpretation of the award it is to be presumed that the arbitrator is taking the claim into consideration in making the award. The overall principle is that it is not appropriate to parse and analyse an arbitrator's award but rather to consider from an overall point of view whether it may be said that the arbitrator has dealt properly with each of the matters referred to him." [Emphasis added]
9. There is little dispute between the parties as to the principles applicable to a consideration of whether an arbitral award can...
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