S & R Motors (Donegal) Ltd v Bradley Construction

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 12 December 2008
• Neutral Citation: [2008] IEHC 383
• Court: High Court
• Date: 12 December 2008

[2008] IEHC 383

THE HIGH COURT

[No. 152 M.C.A./2008]

S & R Motors (Donegal) Ltd v Bradley Construction

IN THE MATTER OF THE ARBITRATION ACTS 1954- 1998, AND

IN THE MATTER OF AN ARBITRATION

BETWEEN

S & R MOTORS (DONEGAL) LIMITED

CLAIMANTS

AND

KATHLEEN MOOHAN AND JOHN BRADLEY, TRADING AS BRADLEY CONSTRUCTION

RESPONDENTS

AND

KEVIN BRADY

NOTICE PARTY

MOOHAN & BRADLEY T/A BRADLEY CONSTRUCTION v S & R MOTORS (DONEGAL) LTD UNREP HIGH CLARKE 14.12.2007 2007/42/8816

LLOYD DEL PACIFICO v BOARD OF TRADE 1930 46 TLR 476

STOTESBURY v TURNER 1943 KB 370

MATTESON & CO LTD v A TABAH & SONS 1963 2 LLOYD'S REP 270

L E CATTAN LTD v A MICHAELIDES & CO 1958 2 ALL ER 125

VEOLIA WATER UK PLC & ORS v FINGAL CO COUNCIL UNREP HIGH CLARKE 22.6.2006 2006/57/12085

LIMERICK CITY COUNCIL v UNIFORM CONSTRUCTION LTD 2007 1 IR 30

UNIFORM CONSTRUCTION LTD v CAPPAWHITE CONTRACTORS LTD UNREP HIGH LAFFOY 29.8.2007 2007/59/12564

ARBITRATION

Award

Application to set aside - Dispute in relation to construction of car showrooms - Liberty to enter final judgment for sums due to contractor on foot of architect's certificates - Stay on execution until determination of arbitration - Claim of breach of contract - Defective construction - Whether arbitrator incorrect in making award on foot of architect's certificates - Amounts due previously determined by High Court - Res judicata - Interest payable on sum subject of court order matter for court - Excess of jurisdiction - Knock-on effect on costs award - Principles to be applied in exercise of discretion - Justice between parties - Failure of significant claim - Whether award in relation to damages for defective workmanship in error - Whether fundamental error on face of award - Whether failure to accept only expert evidence tendered - Moohan v Bradley [2007] IEHC 435 (Unrep, Clarke J, 14/12/2007), Lloyd Del Pacifico v Board of Trade (1930) 46 TLR 476, Stotesbury v Turner [1943] KB 370, Matteson & Company Ltd v A Tabah & Sons [1963] 2 Lloyds Rep 270, LE Cattan v A Michaelides & Co [1958] 2 All ER 125, Veolia Water UK plc v Fingal County Council [2006] IEHC 240 [2007] 2 IR 81, Limerick County Council v Uniform Construction Ltd [2005] IEHC 347 [2007] 1 IR 30 and Uniform Construction Ltd v Cappawhite Contractors Ltd [2007] IEHC 295 (Unrep, Laffoy J, 29/8/2007) considered - Arbitration Act 1954 (No 26) - Award remitted for ensuring award reflected issues within jurisdiction (2008/152MCA - Clarke J - 12/12/2008) [2008] IEHC 383

S & R Motors (Donegal) Ltd v Bradley Construction

Facts: the respondents, in High Court proceedings brought by them had been previously granted liberty to enter final judgment against the claimant for the sum claimed but a stay had been placed on its execution until the determination of an arbitration in respect of counter claims made by the claimant of defective work and delay under the contract. The approach of the arbitrator was to make an award in favour of the respondents on the view that certain sums should be allowed in favour of the claimant for defective workmanship and deducted those sums from the amounts due to the respondents under the contract with the balance forming the award. It also awarded the respondents interest thereon of €9,639.88 and the costs of the reference. The claimant sought an order setting aside the award on the basis that the only issue before the arbitrator concerned the question of the extent to which the claimant might succeed in their claim for defective workmanship and that the amounts due by the claimant to the respondent on foot of the contract had already been determined by the High Court and were, therefore, no longer in issue. On that basis, the award was manifestly incorrect. It also contended that, as they should be seen as having succeeded in the arbitration, the costs should have been awarded to them. It also contended that the arbitrator erred in the assessment of the amounts due for the defective workmanship.

Held by Mr Justice Clarke in remitting part of the award back to the arbitrator for amendment that the question of the entitlement of the respondents to payment under the contract per se was res judicata as it had already been determined by the High Court and was not a matter, therefore, that could have properly been re-opened or decided by the arbitrator. The arbitrator should have confined himself to assessing the amounts which he considered to be appropriate to allow for defective construction. That the arbitrator had exceeded his jurisdiction was apparent on the face of the record. Accordingly, the award of interest and costs which followed therefrom were also made in excess of the arbitrator's jurisdiction.

That an award could only be set aside where there was an error of law on the face of the award which was so fundamental that the court could not stand aside and allow it to remain unchallenged. On that basis, the arbitrator was entitled to take the view that the proper approach to the assessment of damages was not that contended for on behalf of the claimant and his assessment did not involve an error on the face of the record that it would justify setting that part of the award aside.

Reporter: P.C.

1. Introduction

2 2 1.1 In this application the claimant ("S & R Motors") seeks an order setting aside an award of the notice party ("the arbitrator") arising from a dispute between S & R Motors and the respondents ("Bradley Construction") relating to the construction of a car showrooms at Drumlonagher in Donegal Town.

3 3 1.2 That dispute has already been the subject of a judgment ("the earlier judgment") given by me in Moohan and Bradley, trading as Bradley Construction v. S & R Motors (Donegal) Limited [2007] IEHC 435. The general circumstancesgiving rise to the dispute between those parties are set out in the earlier judgment and it is unnecessary to repeat them here. As appears from that judgment, Bradley Construction sought summary judgment for sums allegedly owing on architects certificates arising out of the construction contract which was at the heart of the dispute between the parties. For the reasons set out in that judgment I gave liberty to Bradley Construction to enter final judgment for the sum claimed, but placed a stay on the execution of any sum in excess of €100,000 "until the determination of an arbitration in respect of the claims made by S & R Motors relating to defective construction or further order", (see para. 7.2).

4 4 1.3 The arbitration contemplated by that part of the order ultimately proceeded before the arbitrator, and it is as to aspects of the resultant award of the arbitrator that this application is directed. In that context it is appropriate to turn, firstly, to the process before the arbitrator.

2. The Process before the Arbitrator

2 2 2.1 On the 24 ^th January of this year, solicitors for S & R Motors wrote to solicitors for Bradley Construction. Having referred to the earlier judgment the solicitors for S & R Motors stated the following:-

"We hereby contend that the matters in dispute between the parties relate principally to the construction of a defective floor at our clients premises, a Volkswagen car showroom at Drumlongaher, Donegal town, the inordinate delay in the construction of same and outstanding construction "snags" to be rectified and also the failure to furnish all remaining documents pertaining to the premises to our client."

3 3 2.2 Notice was also given that the matter was being referred to arbitration pursuant to the provisions of the Arbitration Acts 1954- 1998.

4 4 2.3 On the 12 ^th February, 2008, the arbitrator agreed to act and suggested a preliminary meeting which did not proceed due to the inability of the legal representatives of Bradley Construction to attend. However, the arbitrator gave appropriate directions including a requirement that pleadings be exchanged, together with witness statements and expert reports.

5 5 2.4 In its statement of claim, S & R Motors contended for a breach of contract in the manner in which the relevant building works were allegedly carried out, including a repetition of the allegation concerning the manner in which the floor to the premises had been constructed. The statement of claim also made complaint in respect of alleged delay in the completion of the relevant works. In its defence Bradley Construction denied any breach of contract, but went on to make complaint about the fact that, it was said, S & R Motors had failed to make payments on foot of both interim certificates and the order which I had already made giving Bradley Construction liberty to enter final judgment with a partial stay. In its reply and defence to counterclaim, S & R Motors said, in relation to the latter matter, the following:-

"The High Court has adjudicated upon the respondents claim and granted judgment in final satisfaction of same. It stayed execution on all amounts over €112,000 to allow the claimant to bring its claim to arbitration. The claimant promptly paid €112,000 to the respondents on foot of the said judgment. Save where admitted, para. 11 is denied in full."

6 6 2.5 Thereafter, a hearing was convened by the arbitrator on the 24 ^th June, 2008, and lasted one day. It will be necessary to refer in somewhat more detail to what transpired at that hearing in due course. However, for the purposes of describing the process it is only necessary to note that, on the 30 ^th July, 2008, the arbitrator issuedhis award which, having recited the process, was, in its operative part, in the following terms:-

2 "1. The claimant shall pay to the respondent the sum of €107,573.18 (one hundred and seven thousand five hundred and seventy three euro and eighteen cent) inclusive of VAT at a rate of 13.5% within two weeks of the date of this my award.

2 The claimant shall pay to the respondent the sum of €9,639.88...