High Court of Ireland Decisions

Judgment Title: Clancy & Anor -v- Nevin

Neutral Citation: [2008] IEHC 121


High Court Record Number: 2008 35 & 36 MCA

Date of Delivery: 25 April 2008

Court: High Court

“… the award of costs is in my discretion which I will exercise judicially and according to settled principles: the dominant principle is that, in the absence of circumstances justifying some other order, costs should follow the event. As part of the arbitral process, I must consider the outcome of the proceedings to decide what the event is which costs should follow.”

“An application to remit or set aside an award shall be made within six weeks after the award has been made and published to the parties, or within such further time as may be allowed by the court.”

“‘Publication to the parties’ of an award (as distinct from ‘publication’ of it simply) entails both completion of the award, so that the arbitrator has finally adjudicated and retains no power of altering it, and also notice to the parties that this has been done. It is immaterial, however, whether or not the parties are then made acquainted with the contents of the award or receive copies of it.”

“The reported cases show that the period can in appropriate circumstances be enlarged. It is often convenient, for the purposes of discussion, to extract from these decisions a list of factors which are relevant to the question whether an extension of time should be granted. Such a list does not lay down a rigid test. The only criterion is whether the interests of justice require that the time should be enlarged, and the weight to be given to each factor will depend on the circumstances of the case.”

“1. The desirability of adhering to time limits prescribed by rules of court.
2. The likelihood of prejudice to the party opposing the application if time is extended.
3. The length of delay by the applicant.
4. Whether the applicant has been guilty of unreasonable or culpable delay.
5. Whether the applicant has a good arguable case on the merits.”

his solicitors sending him a copy of the Arbitrator’s letter of 5th December, 2007 setting out the Arbitrator’s assessment of the Claimants’ costs, he was not aware of “the amount of the final award”;

The first is that, as I have already found, the award was made and published to the parties on 11th July, 2007. The fact that the measurement of the costs did not take place until December, 2007 does not render the award of 11th July, 2007 less than final. On the making of the award the Arbitrator was functus officio, except in relation to taxation of costs.

Secondly, both the Claimants’ legal advisers and the Contractor’s legal advisers overlooked the procedural changes which the amendment of O. 56 of the Rules brought about when S.I. No. 109 of 2006 came into operation on 31st March, 2006. While it is true that the Claimants were not under a six-week time limit in relation to the initiation of the application to enforce the award, nonetheless, I think it appropriate to take a benign view, as Kelly J. did in the Kelcar case, and regard the Contractor’s application to have commenced on 1st February, 2008 when the Contractor’s special summons was issued.

Thirdly, I consider that on the facts this case is distinguishable from Vogelaar v. Callaghan [1996] 1 I.R. 88. Therefore, I do not think that the justice of the situation requires that the limitation period should run from the date on which the parties received copies of the award or became aware of its contents. The distinguishing feature is that the judgment of Barron J. in Vogelaar v. Callaghan records (at p. 91) that, having received notice of the making of the award, both parties sent a moiety of the Arbitrator’s costs to the Arbitrator. On the basis that the award was taken up jointly on a date when the six weeks period had already run, Barron J. held that it would be unfair to enforce the rule, since this would have required the issue of proceedings before it would have been known whether or not there was a need to do so. In this case, it was the Contractor who was constrained by the six weeks limitation period. Despite that, the Contractor did not take the step necessary, the payment of the costs of the award, as a precondition to the taking up of the award. On the contrary, the Contractor left it to the Claimants to take the necessary step, which necessitated the Claimants having to raise finance in circumstances in which it would have been obvious that it was the Contractor who would be liable for all or part of the costs of the award, having regard to the fact that it was made clear to the Arbitrator on 16th May, 2006 that it was the Contractor who was liable for the costs of the arbitration up to that date.

Having regard to the foregoing factors, in my view, the delay in this case was a delay of in excess of six and a half months from 11th July, 2007 to 1st February, 2008.

The issue which has been raised about the disclosure of the terms of the settlement agreement is analogous to the sealed offer issue considered in Tobin and Twomey Services Ltd. v. Kerry Foods Ltd. [1999] 3 IR 483. In my judgment in that case I quoted from Handbook on Arbitration Practice by Bernstein and Mees (2nd Ed.), where guidelines were suggested for dealing with a situation in which an offeror requests the arbitrator to resign because the offeree has disclosed to the arbitrator the content of a without prejudice offer. The guidelines suggested that, if one party to the arbitration requests the arbitrator to resign, but the other opposes that, the arbitrator should give each an opportunity of making submissions on the matter. The guidelines continued:
“In the light of those submissions he should consider whether the information has created a serious risk that he will be unable to approach the substantive issues in the arbitration with an open mind. For example, if the substance of the arbitration is the assessment of damages, and the arbitrator is told by the claimant of a substantial offer made ‘without prejudice’ by the respondent, the arbitrator may think that it will be impossible for him not to be influenced by the offer when arriving at his figure; and moreover that the respondent will not be able to believe that he has not been influenced by it.”
In my judgment (at p.526) I expressed the view that those guidelines accord with principle and are in line with the policy considerations set out in Keenan v. Shield Insurance Company Limited referred to earlier.
The most recent edition of Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (the 4th edition) replicates the first sentence in the passage quoted above and continues (at p. 268):
“But arbitrators should be robust. Obviously parties try to settle arbitrations for very good reasons, which have to do with the uncertainty, risk and cost of the process. The mere fact that the arbitrator is told by the claimant of a substantial offer made ‘without prejudice’ by the respondent, ought not to mean that the arbitrator cannot put the matter to one side in formulating his award, as in most cases the arbitrator should be able to disregard the knowledge of the actual amount when reaching a decision, considering as he must all the evidence and the weight to be given to it.”
In my view, the more robust approach advocated in that passage still accords with principle and the jurisprudence in this jurisdiction.
In this case, of course, there was a concluded agreement between the parties, not merely a without prejudice offer by the Contractor. The Arbitrator had been apprised by counsel for the Contractor of the existence of the agreement and of the liability of the Contractor for the Arbitrator’s costs to date. After the full terms of the settlement agreement were disclosed, the issue as to whether the Arbitrator could come to the arbitration with an open mind was raised by the solicitors for the Contractor. Subsequently, the Arbitrator was apprised of the views of each side on whether she should proceed with the arbitration. She decided she should. The issue was regurgitated from time to time on behalf of the Contractor and finally it was raised in the submissions of the Contractor’s counsel at the hearing on 11th June, 2007, as I have already outlined. In her comprehensive award the Arbitrator stated as follows:
“In making my award I have disregarded the Settlement Agreement and the [Contractor’s] failure to honour his obligations thereunder, save insofar as the Claimant has advised that he is happy to discount the sum received from [the Architect] from the amount of his claim.”
As regards the quantum of the Contractor’s liability, the fact that the amount awarded by the Arbitrator against the Contractor is almost twice the sum the Contractor agreed to pay under the settlement agreement is corroborative of that statement.
The jurisprudence to set aside an award under s. 38(1) arises where the arbitrator has misconducted himself or the proceedings or the award has been improperly procured. As Fennelly J. said, speaking on behalf of the Supreme Court, in McCarthy v. Keane [2004] 3 IR 617 (at p. 627), the standard or test of misconduct of such a nature as to justify setting aside an award would be “something substantial, something that smacks of injustice or unfairness”. I have no hesitation in concluding that the Contractor does not have a good arguable case on the merits by reference to that standard.