O'Donovan & anor v Bunni & anor (Approved)

Factual and Procedural Background

The Plaintiff and Company A engaged Company B to carry out electrical works on a redevelopment project at a stadium in The City. Initially, a Letter of Intent was signed on 10th June 2016, as a formal contract could not be executed pending EU funding clearance, which was granted on 26th June 2016. Works commenced in August 2016, and a formal contract superseding the Letter of Intent was signed on 12th May 2017. The redevelopment was completed by July 2017, with a final account submitted by Company B in December 2017.

Following disputes over payment, Company B sought conciliation between July 2017 and May 2018, which the Plaintiff withdrew from in May 2019. Arbitration proceedings commenced in July 2020 with an arbitrator appointed in September 2020. Subsequently, Company B initiated adjudication proceedings in late September 2020 concerning a payment dispute of approximately €1 million related to containment works under the Construction Contracts Act 2013.

The Chairman of the Construction Contracts Adjudication Panel appointed an adjudicator to resolve this dispute. The Plaintiff challenged the adjudicator’s jurisdiction, and after the adjudicator expressed his view that he had jurisdiction, the Plaintiff withdrew from the adjudication and obtained leave from the High Court on 19th November 2020 to judicially review the jurisdiction issue, accompanied by a stay on the adjudication pending the review.

Company B applied to lift the stay on the adjudication process, prompting the present proceedings. The judicial review was admitted to the commercial list with a hearing scheduled for February 2021.

Legal Issues Presented

1. Whether the adjudicator has jurisdiction to adjudicate the payment dispute arising from the contract between the parties, given that the bulk of the works were performed under a Letter of Intent predating the Construction Contracts Act 2013.
2. Whether the stay on the adjudication process should be lifted pending the determination of the judicial review proceedings.
3. How to balance the interests of the parties and the public interest in the orderly operation of the statutory adjudication scheme under the 2013 Act when deciding on the appropriateness of continuing or lifting the stay.

Arguments of the Parties

Company B's Arguments

• The burden of proof lies with the Plaintiff to justify the stay continuation.
• The adjudication provisions in the Construction Contracts Act 2013 provide a fast, fair, and efficient mechanism for resolving payment disputes, with strict timelines (28 days, extendable to 42 days), which should not be undermined by judicial review stays.
• The stay’s continuation would deprive Company B of its statutory right to adjudication because the adjudicator’s time to issue a decision would expire during the stay.
• The Plaintiff would not suffer prejudice if the stay were lifted, as jurisdictional challenges could still be raised at enforcement of any adjudicator’s award.
• The Plaintiff delayed unreasonably in seeking the stay and judicial review, only acting after an adverse jurisdictional ruling.
• The stay undermines the statutory dispute resolution scheme established by the Oireachtas, contrary to public interest.
• Clause 42 of the formal contract, signed after the Letter of Intent, supersedes prior agreements, thus the adjudicator has jurisdiction over the dispute.
• Precedent from the UK Supreme Court in Bresco Electrical Services Ltd v. Michael J Lonsdale (Electrical) Ltd supports refusal of injunctions to restrain adjudications pending jurisdictional challenges.
• The balance of justice favors lifting the stay to avoid depriving Company B of its adjudication rights.

Plaintiff's Arguments

• The Plaintiff accepts the burden to justify the stay and acknowledges the test from Okunade v. Minister for Justice.
• The Plaintiff is not seeking to deprive Company B of adjudication rights and has offered to consent to resumption of adjudication if judicial review is decided against them.
• The judicial review will be resolved within a short timeframe, thus the stay only postpones adjudication rather than denying it.
• The substantial final claim is already subject to arbitration with a timetable extending to late 2021, and the adjudication claim is a relatively small part of the overall dispute.
• Company B delayed over three years after completion of works before initiating adjudication, undermining urgency arguments.
• Lifting the stay would be futile as enforcement of any adjudicator award would be stayed pending resolution of the jurisdictional challenge.
• Allowing adjudication to proceed risks multiple overlapping adjudications and undermines orderly dispute resolution.
• The public interest in this case is limited as the jurisdiction question arises from a contract predating the 2013 Act and is unlikely to recur frequently.
• Precedent exists for granting stays on adjudication pending jurisdiction challenges, including a previous High Court case involving the respondents.
• The Plaintiff has a strong and bona fide arguable case that the adjudicator lacks jurisdiction as the contract predates the 2013 Act and the Letter of Intent constitutes a binding contract.
• The balance of justice favors continuing the stay to avoid injustice to the Plaintiff if the judicial review is successful.

Table of Precedents Cited

Court's Reasoning and Analysis

The court acknowledged the agreed burden on the Plaintiff to justify the stay and applied the test from Okunade, which requires establishing an arguable case and then balancing the risk of injustice, public interest, and other relevant factors.

The court recognized the public interest in supporting the statutory adjudication scheme established by the Construction Contracts Act 2013, designed to resolve payment disputes quickly and fairly within tight timeframes. It noted the importance of allowing such statutory processes to operate without undue interference, referencing dicta from Okunade and Krikke.

However, the court emphasized the necessity of considering the overall circumstances, including the contractual history and procedural context. It noted that Company B had already been paid a substantial sum, and the final claim was subject to ongoing arbitration with a timetable extending into late 2021.

The court found the Plaintiff’s delay in invoking adjudication notable, as the works were completed in August 2017 but adjudication was only sought in September 2020.

Regarding Company B’s argument that the stay would deprive it of its statutory right due to the adjudicator’s time limits expiring, the court found this unpersuasive in light of the Plaintiff’s offer to consent to resumption of adjudication if the judicial review was unsuccessful. The court also accepted that the adjudication timeframe could be extended by agreement to accommodate the judicial review process.

The court considered the strong arguable case presented by the Plaintiff that the adjudicator lacked jurisdiction, given the Letter of Intent predated the 2013 Act and the formal contract’s clause 42’s interpretation was nuanced and central to the dispute.

It also accepted that enforcement of any adjudication award would be subject to judicial scrutiny and likely delayed pending the judicial review outcome, limiting prejudice to Company B if the stay remained.

Balancing all factors, the court concluded that justice favored continuing the stay until the judicial review was determined, to avoid potential injustice to the Plaintiff from an unenforceable adjudication award and to respect the bona fide jurisdictional challenge.

Holding and Implications

The court REFUSED the application by Company B to lift the stay on the adjudication proceedings imposed by the High Court on 19th November 2020.

The stay was re-imposed with immediate effect and will continue until the judicial review proceedings concerning the adjudicator’s jurisdiction are finally determined.

The direct effect is that the adjudication process remains suspended pending resolution of the jurisdictional challenge, preserving the status quo and the parties’ rights. No new precedent beyond the application of established principles was set by this decision.