The Construction Contract Act 2013 (the plot) governs payments under construction contracts and introduces case law as a rapid dispute resolution mechanism for resolving payment disputes between parties to construction contracts. The law came into force in April 2016 and since then the decision has been taken relatively slowly. In the most recent case of Gravity Construction Limited v Total Highway Maintenance Limited [2021] IEHC 19The High Court (Justice Garrett Simons) has for the first time enforced a judge’s decision under Section 6 (11) of the Act.

background

According to Section 6 (10) of the Act, the judge’s decisions are binding until a payment dispute between the parties has been settled through arbitration or court proceedings.

This case concerned an application from Gravity Construction Limited (Heaviness) to the High Court for an action against Total Highway Maintenance Limited (THML) according to the law. Gravity was assessed at € 135,458.92 as part of a decision by the judge on April 28, 2020. This amount was payable by THML within fourteen days of the date of the judge’s decision. THML did not pay within that time, so Gravity opened the case in the High Court.

THML’s first response to the request for enforcement of the arbitrator’s decision was that the matter should be referred to an arbitration tribunal and that payment of the award would remain pending determination of the arbitration. THML then stated that it was ready to pay the award. This meant that THML did not pursue their case that the payment should be suspended pending the outcome of the arbitration. Accordingly, two questions remained to be decided by the High Court when the matter was before him. First, whether the court should order the enforcement of the award against THML even though the attorney says he is willing to give the court a formal promise that the funds will be paid within two weeks of the date of the hearing. Second, although THML had made an offer of settlement as to whether Gravity was entitled to reimburse its costs in the THML High Court proceedings.

evaluation

Justice Garrett Simons, who passed judgment on January 26, 2021, gave Gravity permission to enforce the judge’s decision in the same manner as a judgment or order from the High Court, unless the amount due was received within 7 November 2021 Days after the date of the judgment. The order was made in accordance with Section 6 (11) of the Act, which states; “The judgment of the judge, if binding, is enforceable by action or by the permission of the High Court in the same manner as any judgment or order of that court with the same effect, and if permission is given, a judgment may have been given in entered the terms of the decision. “

The court believed that while hiring a lawyer would eliminate the need for a formal court order, Gravity was entitled to relief if THML did not object to the proceedings at the time of the hearing. The court held that Gravity was entitled to have the matter decided by the High Court, “taking into account the legislative intent underlying the Construction Contracts Act 2013 and, in particular, the need for an expedition”.

When deciding on the costs, the court took into account (i) the time of the settlement offer, (ii) ambiguities regarding the settlement offer and (iii) the legislative intention underlying the law.

While THML had made a settlement offer, the court held that the offer was made at the “eleventh hour” and was sent out at lunchtime on December 23, 2020, when most of the offices would close for Christmas. Accordingly, the court proposed treating the Effective Date as the first normal working day after the vacation period on January 4, 2021 – three weeks before the hearing date on January 26, 2021. The court found that reality was the most costly would have been made well before the date of the settlement offer and the hearing.

The court found the wording of the offer letter to be “ambiguous at best,” as THML had made an offer to make a “reasonable contribution” to Gravity’s legal fees. The court was of the opinion that a better approach is to state in the settlement offer that the settlement party is willing to pay the other side’s costs, but reserves the right to contest certain fee items.

Regarding the legislative intent underlying the law, the court stressed “the need for an expedition”. It is also worth citing questions that influenced this aspect of the court’s decision on costs. “The simple fact is that by raising grounds for objection that they ultimately failed to pursue, the respondent successfully delayed this process for a period of about six months.” And; “When sharing the costs, I have the right to take the respondent’s behavior into account.” The court found that a simple application for enforcement under the law was made more difficult by the introduction of the issue of pending arbitration.

Due to the timing and ambiguity of THML’s settlement offer, as well as the legislative intent underlying the law, the court declined to exercise its discretion and depart from the standard position that claimant Gravity is entitled to its costs from THML completely successfully of obtaining the requested relief.

Key to success is the court’s stance on THML’s behavior, which resulted in a delay in payment of eight months (or approximately). The legislative intent on which the law is based focuses on immediate payment on construction contracts. This intention extends to the immediate payment of arbitral awards.

This decision may encourage parties to payment disputes relating to construction contracts to more easily rely on the law and attempt to resolve payment disputes through decision. Contracting parties to construction contracts can now assume that the courts will support the arbitrator’s decisions, particularly with regard to the timely payment of the arbitral awards in accordance with the law.

In granting the “unless” line, the court recognized Gravity’s legal right to relief under the law and gave THML a short period of time to make the payment without a formal judgment being issued against it.