10/09/2021 Briefing

Background

The case concerned a dispute over payment for electrical works carried out by OCS One Compete Solution Ltd for Cork GAA at Páirc Uí Chaoimh. OCS referred a payment dispute for adjudication, and the Chairperson of the Panel of Adjudicators, Dr Bunni, appointed an adjudicator, James Bridgeman.

Following the appointment of the adjudicator, Cork GAA argued that the adjudicator had no jurisdiction to hear the dispute on the basis that the relevant “construction contract” was a letter of intent agreed on 10 June 2016, prior to the date the Act came into effect (25 July 2016), which meant that there could be no dispute arising under a construction contract capable of reference to adjudication under the Act. The adjudicator considered written submissions from both sides and issued his view that he did have jurisdiction. Cork GAA then applied to Court and obtained leave to apply for judicial review of this decision, as well as a stay on the continuance of the adjudication pending conclusion of the judicial review.

The High Court granted the stay on the adjudication process. We previously commented on that judgment, which marked an interesting development in statutory adjudication in Ireland. It made it clear that adjudicators’ decisions may be subject to judicial review proceedings, albeit that adjudication remained an expeditious mechanism used to resolve the payment disputes that sometimes do arise in the normal course of business in the construction industry.

The High Court has now issued its judgment in the substantive proceedings (having indicated its preliminary view in July 2021) and, in doing so, has agreed with the adjudicator that he did indeed have jurisdiction to hear the dispute.

 

It was clear that the 2017 contract governed the relevant works

The Court considered that the letter of intent was not the relevant “construction contract” for the purposes of the Act; rather the “construction contract” was the contract subsequently entered into by the parties in 2017.

The context of both the letter of intent and the 2017 contract was plain. Cork GAA signed the letter of intent on the basis that it provided a sufficient legal framework for the works to begin. Commencement of activity on site was so imminent that a final contractual document was unlikely to be agreed before OCS began its work.

The letter of intent provided that it would ultimately be replaced by a formal, negotiated contract.  It stated: “This Letter of Intent is deemed to be satisfactory to allow you to proceed, pending signing of the Contract.” The parties proceeded on that basis: OCS began work, and the parties then negotiated the final form of contract.

The works were at a very advanced stage when the 2017 contract was signed. The Court considered that, notwithstanding this, it was clear that the parties had carefully considered the text of the 2017 contract, demonstrated by changes to the draft version which the parties had “studiously negotiated”.

It was also clear that the parties intended the 2017 contract to cover all the works carried out or to be carried out by OCS (evident in several provisions and reflected in the contract sum, the contract drawings and specifications, and the bill of quantities).

Further, the 2017 contract included provision that it represented the entire agreement between the parties and superseded and replaced any and all prior agreements or understandings, representations or communications, including any letter of intent.

 

Conclusion

The Court noted that the relevant case law here was the case law on how contracts are to be interpreted, a line of authority “so well known, and so settled” that it was not in dispute between the parties.  This judgment gives useful confirmation of what those working in construction have typically understood to be the relative status of both letters of intent and subsequent contracts entered into by parties, and provides a helpful reminder of the importance of clear contractual drafting, which the courts will support.