The Court of Appeal has dismissed an appeal by Somague Engenharia Sociedad Anonima, trading as Bowen Somague Joint Venture, against a €6,364,978 summary judgment in favour of Kellys of Fantane (Concrete) Limited, which is in receivership.
The appeal concerned an order made by the High Court on 31 July 2017. That order required payment of the amount recommended by a conciliator after a dispute over termination-related sums under a construction subcontract. The Court of Appeal’s judgment, delivered by Mr Justice Michael Peart on 20 March 2019, upheld the High Court’s decision. It did not decide the final amount, if any, due in the parties’ ongoing arbitration.
Kellys of Fantane had carried out subcontract works for Bowen Construction Limited and the joint venture on the N7 Castletown to Nenagh Road Scheme. The subcontract was terminated in April 2011 after a receiver was appointed to Kellys of Fantane. The parties disputed the value of completed work and the additional cost of engaging another contractor to finish the work.
A conciliator recommended in December 2015 that €6,364,978 be paid to Kellys of Fantane. The defendants gave notice that they were dissatisfied. Under the contract terms considered by the courts, payment was still required pending arbitration if the same dispute had been referred to arbitration and the required bond had been provided. The judgment records that Kellys of Fantane met those conditions and sought recovery of the recommended sum without waiting for the arbitration to conclude.
The defendants argued that the dispute referred to the conciliator was not the same as the one before the arbitrator. They said the earlier referral concerned a claim for an extension of time and delay-related losses, while the later case sought different relief. They also relied on the subcontract’s termination provisions and argued that the court should leave the dispute questions to the arbitrator.
The Court of Appeal rejected those arguments. It held that the payment mechanism applied to disputes arising from the subcontract, including disputes over post-termination calculations. The court was satisfied that the dispute referred to arbitration was essentially the same dispute considered by the conciliator. It said the arbitrator could still reach a different final conclusion, with the bond intended to protect against that possibility.
The court noted that the bond had expired after the High Court proceedings. It did not decide what the parties should do about that later development, saying it had to determine the appeal on the evidence before the trial judge. The dismissal confirmed the High Court’s summary judgment; the final merits remained for arbitration.