McGurran Civils ROI Ltd v K&J Townmore Construction Ltd; McGurran Civils ROI Ltd v K&J Townmore Construction Ltd (Approved)

Factual and Procedural Background

This opinion concerns an application for leave to enforce two adjudicators' awards made under the Construction Contracts Act 2013. The awards involve the same parties but relate to two separate construction projects, referred to as the "Eblana Avenue" award and the "Carr's Lane" award. The applicant sought enforcement of these awards following payment disputes. The respondent opposed the application, not by challenging the validity of the awards, but by disputing minor elements such as interest calculations and VAT recoverability. Procedurally, the applicant initially requested payment pursuant to the Eblana Avenue award in December 2022 and January 2023, followed by correspondence attempting to agree a payment schedule, which ultimately failed. Proceedings to enforce the awards were instituted in May 2023 under two separate High Court motions. The applications were heard in June 2023.

Legal Issues Presented

1. Whether the High Court should grant leave to enforce the adjudicators' awards under the Construction Contracts Act 2013.
2. The proper calculation and application of interest as directed by the adjudicators.
3. The recoverability of VAT on adjudicator's fees and payments between subcontractors and principal contractors.
4. The applicability of the rule in Clayton’s case regarding the allocation of payments between multiple debts.
5. The procedural requirement, if any, to send a formal solicitor's letter prior to initiating enforcement proceedings.

Arguments of the Parties

Respondent's Arguments

• The respondent opposed the application for leave to enforce but did not dispute the validity of the adjudicators' awards.
• They sought minor reductions in the amounts claimed, principally disputing the calculation of interest and the recoverability of VAT.
• The respondent complained that the applicant did not send a formal solicitor's letter before initiating proceedings.
• The respondent argued that the daily interest rate should abate proportionately to staged payments made after the adjudicator’s award.
• The respondent submitted that VAT paid on adjudicator's fees should not be recoverable from them as it is a trading expense recoverable by the applicant.
• They contended that the initial payment of €75,000 should be credited first to the Carr’s Lane award under the rule in Clayton’s case, rather than exclusively to Eblana Avenue.

Applicant's Arguments

• The applicant sought enforcement of the adjudicators' awards as valid and binding decisions under the Construction Contracts Act 2013.
• The applicant acknowledged and corrected an initial overstatement of the claim regarding retention monies and VAT.
• They argued that the adjudicator’s interest rate was fixed and did not contemplate staged payments; thus, no abatement was warranted.
• The applicant maintained that VAT on adjudicator’s fees was payable by the respondent as per the adjudicator’s award, with any VAT recovery issues being a matter between the applicant and the tax authorities.
• Regarding payment allocation, the applicant relied on correspondence evidencing the parties’ intention that the €75,000 payment be applied to the Eblana Avenue award, rebutting the presumption under Clayton’s case.
• The applicant contended that no formal solicitor's letter was required prior to issuing proceedings, given the warning given through correspondence and the expedited nature of adjudication enforcement.

Table of Precedents Cited

Court's Reasoning and Analysis

The court noted that the respondent did not dispute the validity or fairness of the adjudicators' awards but sought only minor adjustments. The court found that the respondent’s approach prolonged the proceedings unnecessarily and was not justified given the outstanding sums. Regarding the alleged binding agreement on a payment schedule, the court found no evidence of a formal agreement, as prior correspondence indicated any agreement was subject to formal solicitor involvement.

The court rejected the respondent’s objection about the absence of a formal solicitor’s letter, reasoning that any such requirement is contextual and that the applicant had provided sufficient informal warning. The expedited nature of adjudication enforcement militates against delays caused by such procedural formalities.

On the retention monies, the court accepted the applicant’s corrected claim and found no prejudice to the respondent. Concerning interest, the court held that the adjudicator’s award did not provide for abatement due to staged payments, as the award required full payment within seven days, and the fixed daily interest rate was appropriate.

Regarding VAT on adjudicator’s fees, the court determined that the award was clear that the respondent must pay the amount including VAT. The issue of VAT recovery is a matter between the applicant and tax authorities and does not affect enforcement.

The court found that the rule in Clayton's case was rebutted by contemporaneous correspondence indicating the payment was intended for the Eblana Avenue award, thus rejecting the respondent’s allocation argument.

Holding and Implications

The court GRANTED LEAVE to enforce the two adjudicators’ awards pursuant to Section 6(11) of the Construction Contracts Act 2013 and Order 56B of the Rules of the Superior Courts. Judgment was entered against the respondent in the total sum of €45,824.75, comprising €39,179.08 for the Eblana Avenue award and €6,645.67 for the Carr’s Lane award, with further interest accruing from the date of the order.

In relation to legal costs, the court awarded the applicant 90% of its costs for the Eblana Avenue proceedings and 100% for the Carr’s Lane proceedings, reflecting a minor overstatement in the initial claim and the conduct of the litigation. The decision reinforces the expedited enforcement regime under the Construction Contracts Act 2013 and clarifies that minor procedural formalities, such as solicitor’s letters, are not prerequisites to enforcement where adequate warning has been given. No new precedent was established beyond application of existing principles.