Construction Law Update: Adjudication going strong as Irish Courts enforce Fourth Decision
For the fourth time the High Court in Ireland has enforced a decision of an adjudicator, following reference of a payment dispute to adjudication under the Construction Contracts Act 2013.
To date, all applications for enforcement of an adjudicator’s decision have been successful. We looked at the judgments in the three previous applications here, here and here. What did the latest case, John Paul Construction v Tipperary Co-operative Creamery Ltd, involve?
Fair Procedures and Natural Justice
First, the paying party, Tipperary Co-operative Creamery Ltd., in resisting enforcement of the adjudicator’s decision, argued that the adjudicator failed to comply with the requirements of fair procedures and natural justice because he failed to consider the defence put forward by Tipperary. Mr Justice Simons said that, were this claim to be made out on the facts, it would justify refusal of leave to enforce the decision: fair procedure demands a right to be heard (though not necessarily in an oral hearing).
However, the Judge considered that the section of Tipperary’s defence response, which it alleged was ignored, was in fact a background / introductory section of around 20 pages which, rather than setting out a freestanding defence separate from the remaining 142 pages, raised issues which were expanded on in more detail later in the document. The Judge considered that it was readily apparent from the adjudicator’s decision that he fully understood the overall nature of the defence being put forward by Tipperary. Notably, the Judge emphasised that the Court would not be “drawn into a detailed examination of the underlying merits of an adjudicator’s decision under the guise of identifying a breach of fair procedures”.
The Judge set out helpful guidance on the Court’s approach to complaints that an adjudicator has expressly but wrongly decided not to consider a line of defence, or has apparently not considered a line of defence at all, or has considered a line of defence but dismissed it on its merits.
Second, Tipperary argued that the adjudicator failed to comply with the requirements of fair procedures and natural justice because he allowed John Paul Construction to introduce a new claim during the adjudication process. However the Judge considered that the supposed new claim was simply a better particularised version of the original claim.
The Adjudicator’s Jurisdiction
A third argument advanced by Tipperary was that the adjudicator exceeded his jurisdiction by determining issues relating to delay event number 6 which he had already decided in an earlier adjudication between the parties. However, the Judge found that the issue addressed in the second adjudication was not the same as that addressed in the first adjudication. (The first adjudication appears to have concerned valuation of a variation; the second an extension of time claim and prolongation costs.) As it happened, the objection that an issue had already been determined was expressly addressed by the adjudicator in his second decision.
The Court noted that a fourth ground, comprising an allegation that the adjudicator had acted unfairly in not directing an oral hearing, was “very sensibly withdrawn”, and commented that the right to be heard does not necessarily extend to a right to an oral hearing and, having regard to the summary and expeditious nature of statutory adjudication, it will be rare, if ever, that an adjudicator is required to convene an oral hearing.
The Judge made interesting observations on judicial view. (His remarks were made in the context of John Paul arguing that Tipperary’s attempt to resist enforcement on the grounds of breach of fair procedures was an attempt to judicially review the adjudicator’s decision by the back door.)
The Judge noted that, whereas the Act expressly contemplates that proceedings may be “initiated in a court in relation to” an adjudicator’s decision, it did not stipulate that such proceedings had to be by way of judicial review. The Act was also silent on whether judicial review lies to restrain an adjudicator from reaching a decision on a pending adjudication. (As a proposition this appeared to have been accepted without argument by the parties in O’Donovan v Bunni.) However, “the difficult question of whether adjudication under the Construction Contracts Act 2013 is amendable to judicial review” did not have to be resolved in the present proceedings.
This case is further endorsement by the High Court of the principles and intent behind the swift process of adjudication envisaged by the legislator in 2013. As for the issue of the interaction between adjudication and judicial review, that will be for another day!