XPL Engineering Ltd v K & J Townmore Construction Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice David Barniville
• Judgment Date: 11 October 2019
• Neutral Citation: [2019] IEHC 665
• Court: High Court
• Docket Number: [2018 No. 541 S.]
• Date: 11 October 2019

[2019] IEHC 665

HIGH COURT

David Barniville

[2018 No. 541 S.]

BETWEEN

XPL ENGINEERING LIMITED

APPLICANT

AND

K & J TOWNMORE CONSTRUCTION LIMITED

RESPONDENT

Arbitration – UNCITRAL Model Law on International Commercial Arbitration Article 8 (1) – Arbitration agreements – Defendant seeking an order referring the parties to arbitration – Whether the High Court was required to accede to the defendant’s application

Facts: The defendant, K & J Townmore Construction Ltd, applied to the High Court for an order under Article 8 (1) of the UNCITRAL Model Law on International Commercial Arbitration as incorporated into Irish law by s. 6 of the Arbitration Act 2010 referring the parties to arbitration in respect of the issues the subject of the proceedings. The defendant contended that there were two arbitration agreements between the parties which applied to the issues raised in the proceedings. While certain concessions had been made by the plaintiff, XPL Engineering Ltd, in respect of parts of the claims made by it in the proceedings, it had opposed the defendant’s application to refer the parties to arbitration in respect of a substantial part of its claim and did so on a number of grounds.

Held by Barniville J that, in respect of that part of its claim which the plaintiff had sought to pursue in the proceedings, there was a dispute between the parties which was the subject of an arbitration agreement to which the plaintiff and the defendant were parties and, as a consequence, he was required to accede to the defendant’s application and to make an order under Article 8 (1) of the Model Law referring the parties to arbitration in respect of that part of the plaintiff’s claim.

Barniville J held that, as regards the balance of the claims which the plaintiff initially sought to maintain in the proceedings, Article 8 (1) of the Model Law also required that they should be referred to arbitration having regard to the terms of the relevant arbitration agreements. While the plaintiff had not formally consented to those claims being referred to arbitration under the relevant agreements, and had raised the possibility of the parties mediating in respect of those claims, it seemed to Barniville J that Article 8 (1) of the Model Law required the parties to be referred to arbitration in respect of them. However, Barniville J held that he would discuss with counsel the terms of any order which might be made in that regard. Barniville J wished to make clear, however, that he was in no way precluding the parties from seeking to mediate those claims or indeed any of the plaintiff’s claims; on the contrary, he positively encouraged mediation.

Application granted.

Judgment of Mr. Justice David Barniville delivered on the 11th day of October, 2019

Introduction

1 This is my judgment on an application by the defendant, K & J Townmore Construction Ltd, for an order under Article 8 (1) of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”) as incorporated into Irish law by s. 6 of the Arbitration Act, 2010 (the “2010 Act”) referring the parties to arbitration in respect of the issues the subject of the proceedings. The defendant contends that there are two arbitration agreements between the parties which apply to the issues raised in the proceedings. While certain concessions have been made by the plaintiff, XPL Engineering Ltd, in respect of parts of the claims made by it in the proceedings, it has opposed the defendant's application to refer the parties to arbitration in respect of a substantial part of its claim and does so on a number of grounds.

2 For reasons set out in greater detail in this judgment, I have concluded that, in respect of that part of its claim which the plaintiff has sought to pursue in the proceedings, there is a dispute between the parties which is the subject of an arbitration agreement to which the plaintiff and the defendant are parties and, as a consequence, I am required to accede to the defendant's application and to make an order under Article 8 (1) of the Model Law referring the parties to arbitration in respect of that part of the plaintiff's claim.

3 As regards the balance of the claims which the plaintiff initially sought to maintain in the proceedings, it seems to me that Article 8 (1) of the Model Law also requires that they should be referred to arbitration having regard to the terms of the relevant arbitration agreements. While the plaintiff has not formally consented to those claims being referred to arbitration under the relevant agreements, and has raised the possibility of the parties mediating in respect of those claims, it seems to me that Article 8 (1) of the Model Law requires the parties to be referred to arbitration in respect of them. However, I will discuss with counsel the terms of any order which might be made in that regard. I wish to make clear, however, that I am in no way precluding the parties from seeking to mediate those claims or indeed any of the plaintiff's claims. On the contrary, I would positively encourage mediation.

Factual background

4 The plaintiff is an engineering company. The defendant is a construction company. In 2014, the defendant engaged the plaintiff as a subcontractor to provide mechanical works on two contracts under which the defendant was the main contractor. The first subcontract was entered into between the parties on 8th May, 2014 and was in respect of a construction project which the defendant was carrying out, as main contractor, at Stanhope Green in Smithfield, Dublin 7. That subcontract was in the RIAI form of subcontract issued by the Construction Industry Federation in 1989 (the “Stanhope subcontract”). The second subcontract was in respect of a construction project which the defendant was carrying out, as main contractor, at St. Etchen's National School in Kinnegad, County Westmeath. The plaintiff was appointed as the subcontractor responsible for mechanical works on the project on 23rd May, 2014. The parties entered into subcontract in respect of those mechanical works (in the form issued by the CIF in 2008 for use in conjunction with the forms of main contract for public works issued by the Department of Finance in 2007) on 5th June, 2014 (the “St. Etchen's subcontract” or the “subcontract”, where appropriate). The Stanhope subcontract and the St. Etchen's subcontract each contain an arbitration clause.

Differences between the parties: commencement and progress of proceedings

5 Differences arose between the plaintiff and the defendant in the course of both of the subcontracts shortly after they commenced. The plaintiff claims that monies are due to it under both subcontracts which the defendant has not paid. The plaintiff issued plenary proceedings against the defendant in 2014 seeking payment of the sums which it claimed were due and owing to it by the defendant under the two subcontracts (the “plenary proceedings”). Having entered an appearance to those proceedings in September 2014, the defendant's then solicitors, Nash McDermott & Co., wrote to the plaintiff's then solicitors, Dore & Co., on 9th September, 2014 asserting that the plenary proceedings arose out of a dispute or disputes between the parties in relation to the two subcontracts and that those subcontracts required such disputes to be dealt with by way of conciliation or arbitration under the relevant subcontracts. They further stated that the defendant was “now invoking the process as set out in the contractual documentation requiring the matters in dispute to be referred to conciliation/arbitration”. They warned that if the plaintiff sought to continue the plenary proceedings, an application would be made to the High Court to prevent the plaintiff from doing so having regard to the terms of the two subcontracts. Around the same time, further correspondence was sent to the plaintiff's then solicitors by a firm of dispute resolution professionals, Quigg Golden, acting on behalf of the defendant disputing the plaintiff's claims and referring to the dispute resolution provisions contained in the two subcontracts. I refer later in this judgment to contents of some of those letters.

6 It appears that, for whatever reason (and none has been offered by the plaintiff in any of the affidavits on which it has sought to rely for the purposes of the defendant's application), the plaintiff did not pursue the plenary proceedings. Rather, the plaintiff issued a summary summons almost four years later, on 2nd May, 2018, seeking to recover from the defendant the sum of €187,194.91 allegedly due and owing to the plaintiff under the two subcontracts (the “summary proceedings”). The plaintiff claimed the sum of €108,083.87 under the St. Etchen's subcontract and the sum of €79,111.04 under the Stanhope subcontract.

7 The plaintiff brought a motion for liberty to enter final judgment in the total sum of €187,194.91 in the summary proceedings on 20th September, 2018. That motion was returnable before the Master on 4th December, 2018. The plaintiff's motion was grounded on an affidavit sworn by David McEnroe, a director of the plaintiff company, on 18th September, 2018. Mr. McEnroe has also sworn an affidavit for the purpose of opposing the defendant's application under Article 8 (1) of the Model Law.

8 With respect to the sum of €108,083.87 which the plaintiff was claiming in respect of the St. Etchen's subcontract, Mr. McEnroe referred to certain payments which were made to the plaintiff by the defendant under that subcontract in June and July 2014 and referred to one payment certificate (in the sum of €47,856.36) dated 14th July, 2014 in respect of which payment had not been made by the defendant. Mr. McEnroe also referred to the minutes of a site meeting held on 18th July, 2014 (the “site minutes”) which he contended recorded Keith Screeney, the defendant's managing director, confirming the percentage of...