Lynch Roofing Systems (Ballaghaderreen) Ltd. v. Bennet and Son (Construction) Ltd.

Factual and Procedural Background

The Defendant, a building company engaged to develop a site in Mullingar, Co Westmeath, subcontracted roofing work to the Plaintiff company. The Plaintiff claimed £59,799.25 for work performed under the contract. The Defendant contended that the Plaintiff was estopped from pursuing the claim due to an arbitration clause contained in the contract between the parties.

The Defendant submitted that the Plaintiff, a leading roofing contractor in the Midlands, was invited to tender for the job in November 1996. Following a meeting in December 1996 between representatives of both parties, it was agreed that the roofing subcontract would be awarded on terms including the standard conditions of contract RIAI (April 1998 Edition), which contained an arbitration clause.

On 18 December 1996, the Defendant sent a letter to the Plaintiff attaching form CBS/ACC, which incorporated the arbitration clause, stating that failure to respond would constitute acceptance of the terms. The Plaintiff did not reply but began work. Problems arose during the contract's performance, culminating in the Plaintiff's solicitors sending a letter on 19 January 1998 seeking payment.

The Defendant sought a stay of proceedings pending arbitration pursuant to section 5 of the Arbitration Act 1980, relying on the arbitration clause in the contract.

Legal Issues Presented

1. Whether the parties habitually traded under contracts incorporating arbitration clauses such that the Plaintiff was bound by the arbitration clause in this contract.
2. Whether the contract between the parties included the arbitration clause despite the Plaintiff’s lack of explicit acceptance of the written terms.

Arguments of the Parties

Defendant's Arguments

• The Plaintiff was one of the largest roofing contractors familiar with standard subcontract terms, including arbitration clauses.
• The parties agreed at a December 1996 meeting that the roofing subcontract would be governed by the RIAI standard conditions of contract (April 1998 Edition) which included an arbitration clause.
• The Defendant sent a letter on 18 December 1996 attaching form CBS/ACC containing the arbitration clause, stating that failure to respond would indicate acceptance.
• The Plaintiff commenced work without responding, thus accepting the contract terms including arbitration.
• Reliance on British Crane Hire Corporation Limited v Ipswich Plant Hire Limited [1975] QB 303 to support the principle that usual trade conditions are incorporated in contracts between experienced parties even without explicit agreement.

Plaintiff's Arguments

• At no stage during negotiations was arbitration mentioned or brought to the Plaintiff’s attention.
• The Plaintiff did not respond to the letter containing the arbitration clause but proceeded with work nonetheless.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined whether the arbitration clause was incorporated into the contract. It noted that both parties were experienced contractors familiar with standard trade contracts containing arbitration clauses. The court accepted the Defendant’s evidence that at the December 1996 meeting, the parties agreed on price and terms, including that the contract would be governed by the RIAI standard conditions (April 1998 Edition) which contain a standard arbitration clause.

The court also considered the 18 December 1996 letter attaching form CBS/ACC, which stated that failure to respond would constitute acceptance of the conditions, including arbitration. The Plaintiff’s failure to respond coupled with commencement of work indicated acceptance.

Relying on the principle from British Crane Hire, the court found that the arbitration clause was incorporated by common understanding and trade practice. The Plaintiff’s denial that arbitration was mentioned was outweighed by the evidence of customary trade practice and the parties’ conduct.

Therefore, the court concluded that the contract included the arbitration clause, and the Plaintiff was bound to seek relief via arbitration.

Holding and Implications

The court granted the Defendant’s motion to stay the proceedings pending arbitration pursuant to section 5 of the Arbitration Act 1980.

The direct effect is that the Plaintiff’s claim in court is stayed, requiring the parties to resolve their dispute through arbitration as provided in their contract. No new precedent was established; the decision applied established principles regarding incorporation of arbitration clauses in trade contracts between experienced parties.