The High Court has directed a preliminary issue in a dispute over a building contract, to determine whether an independent valuation binds the parties and whether claims for remedial work and consequential loss can still be pursued. The court did not decide either question on its merits.
The proceedings arise from a building project that included a swimming pool. James O’Mahony alleges that the pool was completed in an unacceptable condition, with leaking, water penetration and cracking, and that a new shell had to be built inside the existing one. The claim against the defendants seeks €576,451, the amount paid under an insurance policy.
The first three defendants, referred to in the judgment as the O’Connor defendants, pleaded that O’Mahony and Patrick O’Connor had agreed to have an independent valuer assess the work. They say the valuation found a sum due from O’Mahony and seek €1,606,934.06, which they describe as the unpaid balance. O’Mahony’s side argued that even if the valuation binds the parties on the value of the work, it does not prevent a separate claim for remedial costs or consequential loss. The defendants contend that it does.
The dispute is one of three linked proceedings. The Supreme Court ordered in July 2004 that they be heard by the same High Court judge. In this case, O’Mahony is the nominal plaintiff, with his insurers maintaining the claim under a subrogation arrangement; the judge said he had no commercial interest in its outcome.
Mr Justice Clarke considered whether the valuation’s effect should be tried before the wider claims. He identified three possible outcomes: the valuation may not bind the parties; it may bind them as to the value of the work without excluding remedial or consequential-loss claims; or it may also exclude those claims. He expressed no view on which outcome was correct.
The judge said an early hearing could save substantial technical evidence about alleged defects if the defendants’ position prevailed. He considered the issues sufficiently distinct that a preliminary hearing followed by a substantive trial was unlikely to make the overall proceedings significantly longer.
The proposed first question asks whether the valuation, furnished in or about May 2002, binds O’Mahony and O’Connor. Clarke added a second question: if it is binding, may O’Mahony maintain proceedings for damages relating to remedial works allegedly required because of defects, or for consequential loss flowing from them? He said he would hear the parties further on whether other defendants should also be entitled to be heard.