This case note deals with a very interesting judgment delivered on 26 January 2021, by the High Court of Ireland, in the matter between Gravity Construction Limited (the applicant hereinafter referred as “Gravity”) v Total Highway Maintenance Limited (the respondent hereinafter referred as “Total Highway”).
This judgment turned around an application to enforce an adjudication award pursuant to the Construction Contracts Act 2013.
In brief overview, the Construction Contracts Act 2013 is broadly modelled on the UK’s Housing Grants, Construction and Regeneration Act 1996 and the Construction Contracts (Northern Ireland) Order 1997 and makes it possible and provides for the enforcement of adjudications in construction disputes on an expedited basis. Similar to many dispute resolution clauses found in standard form construction contracts known in South Africa, adjudications under this act are binding pending the resolution of further dispute between the parties by way of arbitration or legal proceedings.
Section 6(10) of the Construction Contracts Act, 2013, stipulates:
“The decision of the adjudicator shall be binding until the payment dispute is finally settled by the parties or a different decision is reached on the reference of the payment dispute to arbitration or in proceedings initiated in a court in relation to the adjudicator’s decision.”
Summary of facts
The adjudicator’s decided that a sum of €135,458.92 was payable by Total Highway to Gravity within fourteen days of the date of the decision, plus the adjudicator costs in the sum of €13,168.75, plus VAT as applicable. Total Highway did not comply with the decision, resulting in Gravity to proceed with an application to enforce the adjudicator’s decision.
During the application proceedings, Total Highway’s initial response to Gravity’s claim was that the matter should be referred to arbitration, and that payment of the award be stayed pending the outcome of the arbitration proceedings. Later in the proceedings, this changed, and Total Highway indicated that it was prepared to pay Gravity the costs of the award, together with the adjudicator’s costs and interest. Because of this change compared to Total Highway’s initial position, the court had to determine two issues:
Total Highway’s counsel submitted that, in circumstances where an undertaking can be provided to the court that the award would be paid within two weeks, the proceedings should be adjourned to allow this to happen and further submitted that it was unnecessary to enter judgment against Total Highway. In the alternative, if the court was against this, they suggested that the court make an “unless” order. Gravity’s counsel in response submitted that
Gravity is entitled to judgment, and that the court should have regard to the legislative intent underlying the Construction Contracts Act 2013.
It was viewed that the framing of the order as an “unless” order, represented an appropriate compromise in that it respected the statutory entitlement of Gravity to relief in terms of the Construction Contracts Act 2013, while it afforded Total Highway a very short period of time within which to make the payment without a judgment being formally entered against it, which would further avoid the negative implications thereof.
The court decided that the appropriate form of order is an “unless” order. It still provides that Gravity has leave to enforce the adjudicator’s decision in the same manner as a judgment or order of the High Court, and that judgment is to be entered against Total Highway in favour of Gravity in the sum claimed, unless the said sum is paid to Gravity’s attorneys within seven days of 26 January 2021.
This case is very interesting, and it leaves uncertainty how this is going to impact any future applications for enforcement of adjudicator’s decisions (if at all) in the UK courts. The effect and result of the order that was given, resulted that the time for payment by Total Highway was pushed out a little further by extra few days, which avoided an immediate judgment against them for payment, and further negative consequences related thereto.
To date, our South African courts have continued to enforce adjudicator’s decisions, as it remains binding on the parties, pending finalisation of a dispute referred to arbitration or other proceedings