In a recent article we discussed adjudication in the context of the Construction Contracts Act 2013 (the Act). In particular we looked at Section 6(11) of the Act, which provides that an adjudicator’s decision, in the context of a construction dispute, can, with the leave of the court, be enforced in the same manner as a judgment or Order of the High Court.
Since then, there have been three cases in which the High Court in Ireland has enforced an adjudicator’s decision following an adjudication under the Act. In the most recent of these decisions, the High Court has reinforced the key principles underpinning adjudication in Ireland.
Aakon Construction Services Ltd v Pure Fitout Associated Ltd1 – The Adjudication
A dispute arose between the sub-contractor Aakon Construction Services Limited (the applicant) and the main contractor Pure Fitout Associated Limited (the respondent). The applicant delivered a payment claim notice to which the respondent did not respond. The payment dispute was referred to adjudication under section 6 of the Act by the applicant.
The adjudicator issued a decision in favour of the applicant, finding that the payment claim notice was valid and that the respondent’s failure to reply to the payment claim notice resulted in a requirement to pay the full amount claimed. The adjudicator acknowledged that the respondent would be entitled to adjudicate the true value of the claim subsequently, but the respondent had to comply with the adjudicator’s decision before the respondent could dispute the true value of the claim. The applicant sought leave of the High Court to enforce the adjudicator’s decision and the respondent resisted by arguing that the decision was “invalid” on the basis that the adjudicator:
- exceeded his jurisdiction in reaching the decision; and
- breached the rules of fair procedures by failing to address a substantive defence raised by the respondent in its written submissions.
The respondent sought to criticise the notice of intention to refer the payment dispute for adjudication (known as the “Notice of Intention to Refer”) as being “ambiguous”, saying that it was not apparent from the notice whether the claim had been made in respect of an interim payment or a termination payment.
Judge Simons found that the content of the notice met the requirements of both the sub-contract and the Act. The Judge decided that issue underpinning the dispute decided by the adjudicator was obvious from the details in the notice, so there was no basis for saying the adjudicator exceeded his jurisdiction. Furthermore, the Judge noted that the respondent had the opportunity to prepare a response to the payment claim notice, but that it had failed to do so.
The second basis upon which the application for leave to enforce was resisted was on the grounds of fair procedures. The respondent argued that the adjudicator failed to consider and/or improperly rejected a significant defence raised and failed to give reasons for having done so.
In rejecting this defence, Judge Simons said that the adjudicator made a reasoned decision that a valuation of the claim could not be commenced until the adjudicated amount had been paid by the respondent. The Court was satisfied that leave to enforce should be granted to the applicant.
Accordingly, the applicant was granted leave, pursuant to section 6(11) of the Act, to enforce the adjudicator’s decision. Judgment was entered against the respondent in the sum of €257,165.09.
The decision of Judge Simons in this case puts further flesh on the bones of the enforcement mechanisms provided for by the Act in relation to decisions of adjudicators. There is likely to be further judicial consideration of these provisions of the Act. However, it is already clear that there is a willingness on the part of the Courts to support the determinations of adjudicators who act fairly, reasonably and in accordance with the provisions of the Act.
The case is a strong example of the importance for construction contractors of engaging with the statutory adjudication process provided for by the Act. The failure to engage can result in Judgment being entered against a party to a construction dispute even where there is a good basis for disputing the sums claimed.
For further information or to discuss, please contact Jackie Buckley firstname.lastname@example.org Matthew Austin email@example.com or Gill Cotter firstname.lastname@example.org at Hayes solicitors LLP.
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About the Authors
Jackie is Head of the Property team at Hayes solicitors. She is a highly experienced adviser to clients in the banking, public and retail sectors on all aspects of the sale, purchase, leasing, development and financing of properties. She has extensive experience of advising landlords and tenants in insolvency situations and has advised in recent high profile examinerships.
Matthew is a partner in the Commercial & Business team and has considerable expertise in a range of practice areas, having acted for Irish and International clients in domestic and multi-jurisdictional issues. Matthew has advised in civil and administrative law disputes and in regulatory and advisory matters including insolvency/restructuring, IP, defamation and media law, competition and consumer protection and data protection.
Gill is an Associate in the Commercial & Business team. Gill acts for a variety of private companies and financial institutions in the High Court and Commercial Court. Gill advises commercial clients on a broad range of topics including contract disputes, insolvency, enforcement and recovery actions.