High Court of Ireland Decisions

1. This matter comes before the court as a motion brought by the defendant seeking an order pursuant to section 5 of the Arbitration Act 1980 staying the within proceedings pending arbitration.

In summary the issues between the parties can be stated as follows. The defendants are a building company who were engaged to develop a site in Mullingar, Co Westmeath and the defendants subcontracted the roofing aspect of the contract to the plaintiff company. The plaintiff company claims in the summary summons that there is the sum of £59,799.25 due on foot of this contract in respect of works carried out on the premises. The defendants say that the plaintiffs are estopped from maintaining these proceedings by reason of an arbitration clause contained in the contract entered into between them.

On behalf of the defendants it is submitted that the plaintiff company is one of the largest roofing contractors in the Midlands and in November 1996 an enquiry, for tenders for the job, was sent to Mr Noel Deane of the plaintiff company and the plaintiff company furnished a tender in writing. There then followed a meeting in December of 1996 between Mr Deane and Mr Bruton a Quantity Surveyor employed by the defendants.

It is alleged on behalf of the defendants that at that meeting the parties agreed on the price and terms on which the roofing subcontract would be awarded by the defendants to the plaintiff company and it is stated in Mr Bruton's affidavit that;

"it was perfectly clear to Mr Deane at that meeting that the conditions of contract would be as per the main conditions of contract RIAI (April, 1998 Edition) which includes a standard arbitration clause. We would not have had a detailed discussion on the individual terms of that contract at that meeting as Mr Noel Deane was an experienced man in the business, very familiar with the form of sub-contract documents and it would have been sufficient for us to agree that the standard conditions of contract RIAI (April, 1998 Edition) would apply to the job. This was specifically agreed between us".

On the 18 December, 1996 Mr Bruton sent a letter to the defendants for the attention of Mr Deane stating that the defendants (erroneously referred to as the plaintiffs in the affidavit) wished to enter into a domestic subcontract in respect of the roofing work and stating that the same would be subject to a written receipt of the conditions and terms detailed on form CBS/ACC which he had attached to the letter. Paragraph 38 of this Contract contains the arbitration clause upon which the defendants rely in this case.

No reply was received to this letter but Mr Deane of the plaintiff company attended on site and commenced the job on foot of the terms which, Mr Bruton says, they had agreed in December of 1996 and confirmed in the letter of the 18 December, 1996.

Problems arose in the performance of the contract terminating in a letter from the plaintiff's solicitors on the 19 January, 1998 seeking payment of the amount now claimed.

It is the defendants case that the conditions of the contract are as set out in form CBS which incorporates into the said contract the standard conditions of contract RIAI (April, 1998 Edition). The letter of the 18 December, 1996 written by Mr Bruton concludes with the words "failure to respond will deem your full acceptance of all conditions herein".

No response was received to this letter and the plaintiffs commenced work shortly after the receipt of the letter.

The defendants submit that the plaintiffs are bound by the terms of this contract which incorporate the arbitration clause and seek to have the within proceedings set aside on that basis.

The defendants have relied on British Crane Hire Corporation Limited v Ipswich Plant Hire Limited [1975] QB 303 in support of their case that the plaintiffs are bound by the terms of the agreement which require them to seek any relief which they claim by way of arbitration. In that case the facts shortly were that a crane was delivered on site for the carrying out of engineering works on marsh land and subsequently the plaintiff sent a printed form setting out the conditions of hire including the condition that the defendants should be responsible for the recovery of the crane from soft ground and the defendants should be responsible for and indemnify the plaintiffs against all expense arising out of the use of the crane. The defendants neither signed or returned the form to the plaintiffs.

The crane having sunk on soft ground and the issue arising as to whether the "printed form" formed part of the contract, it was held that "where parties to a contract of hire were both in the trade and of equal bargaining power the conditions habitually imposed in such contracts would be incorporated into the contract on the basis of common understanding of the parties that the usual conditions would apply; and that since the conditions set out in the plaintiffs printed form form part of the contract the plaintiffs were entitled under these conditions to the cost of recovering the crane . . .".

I respectfully agree with the principal enunciated by the Court of Appeal and two issues therefore appear to me to arise in this case. Firstly did the parties habitually trade under contracts which incorporated arbitration clauses so that a court would be forced to conclude that the parties expected and knew that this clause would govern their contract. Put another way, as Lord Denning said was there evidence that "it was clear that both parties knew quite well that conditions were habitually imposed by the supply of these machines and both parties knew the substance of these conditions".

In the present case I am satisfied that each party was sufficiently familiar with the trade so as to lead a court to conclude that, as Lord Denning put it in the British Crane Hire Case the defendants would be understood and presumed to say "of course that is quite understood". I would find it hard to believe that a large roofing contractor would undertake this contract without the benefit of a building contract.

Apart from the foregoing there is also the fact that a meeting was held between the parties on the 18 December, 1996 when the parties "agreed on the price and the terms on which the roofing subcontract would be awarded by (the defendants) to the plaintiff company" (see paragraph 5 of Mr Bruton's affidavit). He goes on to say that "it was perfectly clear to Mr Noel Deane at that meeting that the conditions of the contract would be as per the conditions of contract RIAI (April, 1998 Edition) which includes a standard arbitration clause . . . This was specifically agreed between us".

In the affidavit in reply by Mr Coleman Lynch on behalf of the plaintiffs he says that at no stage during the negotiations for the contract was an arbitration ever mentioned or brought to his attention however Mr Bruton sent a letter to the plaintiffs the second paragraph of which reads

"The above is subject to receipt of your written acceptance of the conditions and terms detailed on form CBS/ACC attached [subcontractor meeting form (QD/13) should also be filled out and returned]. We draw your attention to the special conditions on page 5 of this form. Failure to respond will deem your full acceptance of all conditions thereon".

There was no response to this letter. The work simply proceeded.

In my view the contract for this work was entered into between the parties on the occasion when the meeting was held between Mr Deane of the plaintiff company and Mr Bruton. This meeting was held at the defendants premises at Milltown Pass in County Westmeath when the plaintiffs representative discussed the job with Mr Pierce Murphy the project manager and Mr Bruton. At that meeting they agreed the price and the terms on which the roofing subcontract would be awarded by the defendants to the plaintiff company.

Having agreed that "the terms on which the roofing subcontract would be awarded" in my view it would be extremely unlikely that experienced contractors would have contemplated a contract such as this would be performed otherwise than being governed by the appropriate building contract and I accept the evidence of Mr Bruton.

Accordingly that being so the contract entered into between the parties provided for an arbitration clause and accordingly I grant the relief sought.