The High Court has restrained Cordil Construction Limited, which is in receivership, from pursuing a winding-up petition against White Cedar Developments Limited over a disputed construction contract debt. The injunction will remain in place pending trial of the action, and Cordil may apply to have it discharged if circumstances change and it becomes entitled to present a petition.
The dispute arose from a 2009 design-and-build contract for a retail and commercial centre and associated works at Pairc an Clochar, Oranmore, Co Galway. Its contract sum was €17,414,911 excluding VAT. After receivers were appointed over Cordil in May 2011, White Cedar terminated its obligation to complete the works. The court said there was no issue about White Cedar’s entitlement to terminate, and found the contract had been properly terminated for Cordil’s default.
A conciliation process that had begun before termination continued. In October 2011, the conciliator recommended that White Cedar pay Cordil €700,649 excluding VAT. Neither party notified the other of dissatisfaction, making the recommendation conclusive and binding under the contract. But the court said the recommendation was one part of the parties’ wider contractual obligations after termination.
The contract provided for an Employer’s Representative to calculate the termination value and, after the works were complete, the termination amount. The latter included White Cedar’s additional completion costs, losses and damages, and amounts owed by Cordil. The sums would then be compared to determine whether either party owed a balance. White Cedar said the representative had calculated a termination value of €710,746 and that its completion payments to subcontractors totalled €924,046. Cordil’s counsel challenged evidence about the calculations as hearsay and argued that an analysis showed €149,841 remained due to Cordil. Those figures had not been resolved by the representative’s final determination.
In October 2012, Cordil’s receivers demanded the recommended €700,649 plus VAT under section 214 of the Companies Act 1963 and threatened winding-up proceedings if it was not paid. White Cedar sought an injunction, arguing that no debt was then due or, alternatively, that its cross-claim exceeded the amount demanded.
Justice Laffoy held that whether anything was payable to Cordil could not be determined until the termination amount was assessed. If Cordil were then owed a balance, the contract required it to invoice White Cedar, which would have 15 working days to pay. The section 214 demand was premature; the court found White Cedar had disputed the debt in good faith and on substantial grounds, and that it had not been shown to be indebted. It also held that presenting a petition on the basis of that demand would be an abuse of process.
The ruling concerns the interlocutory injunction application. It does not determine the final balance between the parties, which remained dependent on the contractual calculations.