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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Regan Civil Engineering Ltd -v- Minister for Defence [2012] IEHC 463 (06 November 2012)
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Cite as: [2012] IEHC 463
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Judgment Title: Regan Civil Engineering Ltd -v- Minister for Defence Neutral Citation: 2012 IEHC 463 High Court Record Number: 2012 121 MCA Date of Delivery: 06/11/2012 Court: High Court Composition of Court: Judgment by: Hogan J. Status of Judgment: Approved |
Neutral Citation 2012 [IEHC] 463 THE HIGH COURT [2012 No. 121 MCA] IN THE MATTER OF SECTION 45 OF THE ARBITRATION ACT 1954, AND IN THE MATTER OF AN INTENDED ARBITRATION BETWEEN/ REGAN CIVIL ENGINEERING LIMITED APPLICANT AND
MINISTER FOR DEFENCE RESPONDENT JUDGMENT of Mr. Justice Hogan delivered on the 6th November, 2012 1. This application for an extension of time under s. 45 of the Arbitration Act 1954 ("the 1954 Act"), arises in the following circumstances. On 18th October, 2002, the applicant, Regan Civil Engineering Ltd. ("Regan Engineering"), entered into a contract with the Minister for Defence to execute and complete certain engineering works. The Minister appointed Ryan Hanley Consulting Engineers ("the engineer") to act as the contract administrator on his behalf. 2. Regan Engineer had originally submitted a tender for some €632,000. It appears, however, that the value of the actual works actually amounted to a figure in excess of €1.3m. (excluding VAT). In June 2005 the applicant applied to the engineer for payment of the latter sum. When, however, the engineer certified only a sum of€640,756 (excluding VAT), Regan Engineer invoked clause 66 of the contract on 4th October, 2006, by notifying the engineer that a dispute existed. 3. The engineer delivered his decision in writing on 2nd January, 2007. By virtue of clause 66(5)(a) then either the employer or the contractor might
5. As it happens, however, the Minister raised any issue as to the validity of or timeliness of the notice. Rather, by letter dated 31st May, 2007, the Minister refuted the merits of the claim and invited Regan Engineering to substantiate it, as otherwise the "Department will be left with no option but to proceed to arbitration". 6. A long silence then fell over the arbitral claim. The claim only then emerged from what appears to have been a long slumber when the applicant's solicitors wrote on 2nd February 2011 to the Minister indicating that, further to the notice to refer, Regan Engineering wished to engage in conciliation in respect of the dispute before proceeding to arbitration, as required by clause 66. In its response of 16th February, 2011, the Minister raised the question- admittedly for the first time- of whether the notice to refer was a valid and timely one. 7. The letter further indicated that as the Minister did not accept that there had been a valid reference, he did not propose to engage with the claim. The Minister observed, moreover:
Whether the Arbitration Act 2010 applies to this claim? 10. In On-Site Welding the circumstances were not entirely dissimilar, inasmuch as the applicant had sought to make a late reference to arbitration. As this event had preceded the operative date of 8th June, 2010, Laffoy J. considered that it came within the saving clause contained ins. 4(2) as the right to apply for an extension of time under s. 45 of the 1954 Act was an acquired right for the purposes of that sub-section. As I have noted, the parties are agreed that the present case is governed by On-Site Welding so that this application for an extension is governed by the 1954 Act. If, nevertheless, an extension of time were to be granted and the matter did proceed to arbitration, then that arbitration would be governed by the terms of the 2010 Act: sees. 3(1) of the 2010 Act. Was the notice to refer served in a timely fashion? 12. Regan Engineering certainly sent a notice to refer on 2nd April, 2007, which appears to have been sent by both electronic mail and by post. But clause 66(5)(a) required that it do so by "serving on the other party a written notice". All of this means that for the notice to refer to be valid and timely, it would have to have been served on the other party (i.e., the Minister) by 2nd April, 2007. 13. All of this means is that, strictly speaking, the notice to refer was not validly served on the correct person within the relevant time period. This in turn meant that an application pursuant to s. 45 of the 1954 Act for an extension of time to this Court was accordingly necessary. Whether time should be extended? 15. In the case of s. 45 of the 1954 Act a somewhat different formulation of the power to extend time has been employed, namely, whether, "undue hardship would otherwise be caused". It is, however, necessary to set out the full statutory context in which these words appear. Section 45 provides:-
(a) the terms of any agreement refer disputes to arbitration provide that any claims to which the agreement applies shall be barred unless notice to appoint an arbitrator is given or an arbitrator is appointed or some other step to commence arbitration proceedings is taken within a fixed time fixed by the agreement, and (b) a dispute arises to which agreement applies, the Court, if it is opinion that in the circumstances of the case undue hardship would otherwise be caused and notwithstanding the time so fixed has expired, may on such terms, if any, as the justice of the case may require, and without prejudice to s. 42 of this Act extend the time for such period as it thinks proper."
(2) "undue hardship" means excessive hardship and, where the hardship is due to the fault of the claimant, it means hardship the consequences of which are out of proportion to such fault. (3) In deciding whether to extend time or not, the court should look to all relevant circumstances of the particular case. (4) In particular the following circumstances should be considered:- (a) the length of the delay; (b) the amount at stake; (c) whether the delay was due to the fault of the claimant or to circumstances outside of his control; (d) if it was due to the fault of the claimant, the degree of such fault; (e) whether the claimant was misled by the other party; (f) whether the other party has been prejudiced by the delay, and if so, the degree of such prejudice." 17. Once this was pointed out to Regan Engineering by the engineer, the notice was duly served on the Minister within a relatively short period thereafter. Such errors as Regan Engineering had made - in particular in sending the notice of reference to the engineer and not to the Minister- were relatively trifling in the context of a short and non-prejudicial delay where a substantial sum was now being claimed. In that sense, therefore, the degree of fault was minimal and the hardship in striking out the claim would have been considerable. 18. This, however, cannot be regarded as dispositive in itself. It must be recalled that this Court is being asked to exercise its statutory discretion pursuant to a motion which was issued on 3rd April, 2012, almost five years to the day since the issue first potentially arose. This application itself relates to a dispute which arises from works carried out sometime between 2005 and 2006. Before examining the reasons for the delay and whether such are excusable, the preliminary question which arises is whether this delay is relevant at all to the exercise of my discretion. 19. It is true that so far as the arbitration process itself is concerned, the principle of striking out for inordinate or prejudicial delay does not seem heretofore to have been developed. In other words, once the arbitration process itself has properly commenced the arbitrator generally does not enjoy the power to strike out for inordinate delay. There may be several reasons for this. It may be supposed that this is mainly because for the most part arbitration is an expeditious means of resolving commercial disputes and that it is neither party's interest to delay unduly. Another possible, if related, explanation is that it is heretofore never been considered necessary to clothe arbitrators with these sort of powers. 20. But it would be strange and anomalous if questions of delay of this sort did not feature in an application pursuant to s. 45 of the 1954 Act. The discretion must, after all, be exercised by this Court in a constitutional fashion - is it even necessary to cite East Donegal Co-Operatives Ltd. v. Attorney General [1970] I.R. 317 for this purpose?- and it may be recalled that the resolution of civil litigation within a reasonable time is a key and inherent feature of the judicial mandate as provided for by Article 34.1: see, e.g., my own judgment in Donnellan v. Westport Textiles Ltd. [2011] IEHC 11. The overlapping guarantee of trial within a reasonable time contained in Article 6(1) ECHR also hovers in the background. 21. Here particularly it may be noted that no action was taken by Regan Engineering in the interval between 31st May, 2007 and February, 2011. In passing, I would be prepared for present purposes to excuse the delay between February, 2011 and April, 2012 by reason of the endeavours of the plaintiff to have the matter resolved by a conciliation process. But what about the remarkable delay which took place between 31st May, 2007, the start of February 2011? The proprietor of the plaintiff, Mr. Bartley Regan, ventured the following explanation for this delay:-
23. When that response did not materialise and when no further action was taken for another three years and six months by reason of a unilateral decision taken by it to prioritise other work, I fear that Regan Engineering cannot be heard to complain if, when the arbitral process resurrects itself after such a long period of abeyance, the necessity for a court application is maintained by a respondent. 24. In the context of commercial arbitration, a delay of this period is plainly inordinate and in itself prejudicial. The Department had, after all, with some justice, put away its own files and quite reasonably assumed that the claim was now dormant. Here one may also apply by analogy the comments of Fennelly J. in Dekra Eireann Teo. v. Minister for Environment [2003] IESC 25, [2003] 2 IR 270:-
Conclusions 27. But this is not what, in fact, happened. Rather, as we have seen, Regan Engineering elected unilaterally not to take any further action as it prioritised other more pressing work. Nor was the Minister informed of this development. It was for all of these reasons that the re-activation of the claim well over three and a half years later came as a complete surprise to the Minister. This delay was wholly inordinate in the context of a commercial arbitration. Such a delay is itself prejudicial and cannot be objectively excused. 28. These considerations must be regarded as critical in any assessment in 2012 as to whether the refusal to grant an extension of time would now cause the applicant undue hardship. Applying the approach enunciated by Brandon L.J. in The Jocelyne, I am of the view that it would not cause Regan Engineering undue hardship. This is because the effective striking out of the proceedings by reason of inordinate delay would itself be proportionate to the degree of objective fault which the company must bear in unilaterally deciding to wait so long before reactivating the claim in February 2011. 29. It is for these reasons that I must decline to grant an extension of time pursuant to s. 45 of the 1954 Act.
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