Gravity Brought to Bear on Adjudication
Adjudication is a process for resolving payment disputes arising under construction contracts, introduced in Ireland in 2016. For the first time we now have a judgment from the High Court enforcing an adjudicator’s decision.
In Gravity Construction Limited v Total Highway Maintenance Limited the respondent did not pay the adjudication award within the time specified by the adjudicator. The applicant, in whose favour the award had been made, applied to court to have the award enforced. In response, the respondent sought to refer the matter to arbitration and have the payment of the adjudicator’s award stayed. The respondent then also indicated (in a settlement offer in December 2020) that it was prepared to pay the award without prejudice to its right to pursue arbitration, and it offered to provide an undertaking to the court to pay the award within two weeks of the hearing (which was on 26 January 2021). The Court nonetheless decided to enforce the adjudicator’s decision. It is useful to know the approach the Court took to two issues:
- First, the Court considered whether it should make an order against the respondent when the respondent’s solicitor was prepared to give a formal undertaking that the monies would be paid within two weeks. The Court decided to make a form of “unless” order which gave the applicant leave to enforce the adjudicator’s decision in the same manner as a judgment or order of the High Court unless the sum was paid to the applicant within seven days. The Court described this order as being made pursuant to section 6(11) of the Construction Contracts Act 2013. The Court rejected the respondent’s argument that its offer of an undertaking obviated the need for any court order. By framing the order as an “unless” order, the Court respected both the statutory entitlement of the applicant to relief, as well as affording the respondent a short period of time to make payment.
- Second, the Court considered that the applicant should recover its costs from the respondent. In other words, the applicant, having been entirely successful in the proceedings, was entitled to its costs in the ordinary way. The reasons were: (a) timing of the respondent’s settlement offer, made at the eleventh hour; (b) wording of the settlement offer, which was at best ambiguous; and (c) the conduct of the respondent, wherein it raised grounds of opposition it did not ultimately pursue, thus delaying proceedings (and allowing the applicant to rack up costs preparing for them). The Court contrasted the way things had played out with the intention behind the Act, namely expeditious resolution of payment disputes.
Update in April 2021: In the Gravity case, even though the adjudicator’s decision was enforced, it took nine months to obtain the enforcement order. Since then, the High Court has issued Practice Direction HC 105 to help make the process quicker. The Practice Direction requires that all applications for leave of the Court to enforce an adjudicator’s decision shall be made returnable before the High Court (Mr. Justice Simons) at 10.30 a.m. on the first available Wednesday, with papers required to be filed the preceding Friday. The presiding judge on the return date will give directions as considered necessary to ensure that the application will be heard and determined with all due expedition.