Construction adjudication in Ireland
Stephen McKenna, Senior Associate, Quigg Golden
THE judgment in DNCF Ltd v Genus Homes Ltd (2023) IEHC 490 shows that the Irish High Court will not resist the enforcement of an adjudicator’s decision over trivial matters, unless there is an obvious breach of fair procedures such that it would be ‘unjust’ to enforce the immediate obligation to make payment.
The judgement confirms that the Irish High Court continues to really support statutory adjudication in Ireland under the Construction Contracts Act 2013 (CCA). At the outset, Justice Garrett Simons reiterated that the default position is that the successful party is entitled to enforce an adjudicator’s decision ‘pro tem’, with the unsuccessful party having a right to reargue the underlying merits of the payment dispute in subsequent arbitral or court proceedings.
Background
The decision reapplies some of the principles defined in Aakon Construction Services Ltd v Pure Fitout Associated Ltd (2021) IEHC 562 that adjudication is not an iterative process as it is designed to be far more expeditious than arbitration or litigation and that the adjudication process must (by necessity) be less elaborate than arbitration/litigation, not by accident; this is the precise purpose of the CCA.
In this case, the payer sought to resist enforcement citing that the adjudicator breached fair procedure by not properly considering the respondent’s defence in relation to a payment certificate:
“... in essence, that the adjudicator had regard to issues which had not been raised by the parties and failed to canvass the views of the parties on these issues.”
Simons noted that the question was ‘one of principle’ i.e. whether conduct of the type alleged (against the adjudicator) would, if it had occurred, justify the High Court in refusing leave to enforce an adjudicator’s decision.
Ireland vs other jurisdictions
It was Genus’ position that the adjudicator dismissed its claim for a set-off by reference to issues which had not been raised by the parties. It argued that it is incumbent upon an adjudicator to ‘canvass’ an issue that has not been addressed by the parties (material to his decision) with the parties, something they argued was ‘well recognised’ as a breach in other jurisdictions, citing ‘an impressive body’ of caselaw from the UK (which he stated none of which suggested that the adjudicator is obliged to seek further and better particulars of a point which has been raised by one of the parties).
Simons reiterated the position in Aakon Construction Services Ltd v Pure Fitout IEHC562 that case law from England and Wales must be approached with a degree of caution:
“because there are significant differences between the legislative schemes (and procedure) adopted in the two jurisdictions.”
Simons pointed out that express provision is made under the act for an adjudicator’s decision to be enforced as if it were an order of court, that:
“An adjudicator’s decision thus has an enhanced status under our domestic legislation as compared to the UK legislation.”
Simons continued:
“... the legislative regime applying in this jurisdiction is very different to that in the United Kingdom, and places a higher premium on the enforcement of an adjudicator’s decision.”
The judgement holds that the Irish High Court will only refuse to enforce an adjudicator’s decision on the grounds of blatant or obvious procedural unfairness, and that the appropriate remedy for a party is aggrieved by an adjudicator’s decision, will be to pursue the issue in subsequent arbitral or court proceedings, outside of the ‘pay now argue later principle’, confirming that payment is ultimately interim.
No requirement to cajole parties to elaborate or improve upon their case
In response to Genus’ position, Simons noted that the adjudication process is not iterative, and said that an adjudicator is not required to enter into a dialogue with the parties, nor to provide the parties with an indication of his proposed findings.
In response to Genus’ position, Simons noted that the adjudication process is not iterative, and said that an adjudicator is not required to enter into a dialogue with the parties, nor to provide the parties with an indication of his proposed findings (something we see parties try to cajole adjudicators into quite often).
Simons set out that there is no ‘positive duty’ upon an adjudicator to do so as ‘this is not what the law requires’ and that ‘there would be no such obligation on a court of law to do so in similar circumstances’.
“The adjudication process is, primarily, adversarial in nature. Whereas an adjudicator has discretion to adopt an inquisitorial role, he is not obliged to do so... there was no obligation upon the adjudicator to seek further and better particulars from the parties.”
Simons outlined that an adjudicator could reach their own conclusions (making use of their specialist knowledge) on the basis of the materials before them, stating that the adjudicator does not have to ‘plump’ for the portion of either party.
Failure to consider the case properly
On the point of failure to consider defences, Simons referred to John Paul Construction Ltd v Tipperary Co-Operative Creamery Ltd (2022) IEHC 3 that:
“The High Court will not lend its authority to the enforcement of an adjudicator’s decision, even on a temporary basis, where there has been an obvious breach of fair procedures... the discretion to refuse to enforce is a narrow one.
.
... parties, in an attempt to evade enforcement, will seek to conjure up breaches of fair procedures where, in truth, there are none. The High Court will only refuse to enforce an adjudicator’s decision on the grounds of procedural unfairness where there has been a blatant or obvious breach such that it would be unjust to enforce the immediate payment obligation.”
DNCF, Justice Simons noted:
“... one contingency that may lead the High Court to refuse the leave to enforce when the adjudicator refused even to consider a defence or right to set off which was legitimately asserted by the respondent.”
Looking back to John Paul he stressed that it is important to differentiate between the adjudicator dismissing a line of defence on the merits of the argument vs the failure to consider a line of defence.
“... the decision is not to be parsed line-by-line... It is important to distinguish between (i) the rejection of a line of defence as inadmissible, and (ii) the failure to consider a line of defence... Similarly, it is important to distinguish between (i) the dismissal of a defence on the merits, and (ii) the failure to consider a line of defence... ”
In working through the judgement, Simons found that the adjudicator did in fact address the information put to him, considered it and:
“the adjudicator did address the merits of the defence raised by the employer and found that the revised valuation had not been substantiated by a detailed breakdown. Put otherwise, the adjudicator did consider the evidence which had been put before him and found it to be wanting. This is a very different matter from refusing to consider the evidence at all.”
Conclusion
In closing, Simons noted that in seeking for a decision to not be enforced, the onus is on the party resisting enforcement to demonstrate that there has been an obvious breach of fair procedures such that it would be unjust to enforce the adjudicator’s decision (even on a temporary basis). He set out that any such breach must be ‘material’ i.e. having had a potentially significant effect on the overall outcome of the adjudication, and that if parties aggrieved with an adjudicator’s decision have a remedy open to them: arbitration or further legal proceedings.
So there you have it. A very high bar for resisting enforcement, and a robust endorsement of the process. That will provide more comfort for clients considering referring matters to adjudication in Ireland.
Stephen McKenna, Senior Associate, Quigg Golden
Stephen.McKenna@QuiggGolden.com
To view the DNCF Ltd v Genus Homes Ltd (2023) IEHC 490 case, visit https://tinyurl.com/bdeysum3.