The Gazette 1989

JULY 1989

GAZETTE

with the intention of the parties and in normal circumstances it would not be proper to grant a stay of execution. He pointed out that the Court still had discretion in cases such as this to grant a stay of execution but there must be "special reasons" for overriding the intention of the parties and in this case, not only were there no special reasons for doing so, but there were reasons of some substance against granting a stay namely, that a considerable portion of the A r c h i t e c t 's Ce r t i f i ca te was earmarked for sub-contractors and the principal contractors were effectively trustees of this money and the sub-contractors ought not to be prejudiced in this way simply because the employers raise a counterclaim against the principal contractors. In the light of the decision of Costello J. in Rohan Construction -v- Antigen, it seems clear that P. J. Hegarty -v- Royal Liver Friendly Society no longer represents good law in this j u r i sd i c t i on and Architect's Interim Certificates issued under the 1977 edition of the R.I.A.I. Standard Form cannot be subject to a set off in respect of claims for unliquidated damages nor, in the absence of special circumstances, can judgments for sums owing on foot of Architect's Interim Certificates be subject to a stay of execution so as to enable employers to prosecute claims in respect of defective workmanship or materials. •

can be seen, the law in relation to this area was left in a most unsatis- factory situation as a result of the conflict between these two Irish decisions. Rohan Construction Ltd. -v- Antigen This is the importance of the recent decision of Costello J. The claim by Rohan Construction Limited was for summary judgment on foot of an Architect's Interim Certificate in the sum of £191,116 and interest accruing thereon. The Defendants brought a Motion seeking to stay the proceedings pending arbitration of a claim by them for a sum of approximately £400,000 damages in respect of alleged defective workmanship and materials. It had been agreed between the parties that this proposed claim against the contractors should be referred to arbitration and final decision of an agreed arbitrator. However, the Plaintiffs disputed the Defendants entitlement to stay their claim on foot of the Architect's Interim Certificate pending the outcome of the arbitration or to seek ultimately to set off the Defendants' award in the arbitration (if any) against the claim on foot of the certificate. Costello J. held that just like the 1966 ed i t i on of the R.I.A.I. Standard Form, the relevant terms of the 1977 ed i t i on were inconsistent with the exercise of a right of set off against a claim on foot of an Architect's Certificate. He expressly followed the decision of Finlay P. in Sisk -v- Lawter and declined to follow the decision of Murphy J. in P. J. Hegarty -v- Royal Liver. Accordingly, he refused to stay the claim for summa ry judgment pending arbitration. However, the Defendants also raised the additional point of a stay of execu t i on pending the determination of the arbitration. This application was made under Order 42 Rule 17 of the Rules of the Superior Courts. Referring to the unreported decision of Barrington J. in Agra Trading -v- The Minister for Agriculture (19th May, 1988) Costello J. refused a stay of execution on the basis that the agreement of the parties as reflected by the terms of the 1977 edition of the R.I.A.I. Standard Form was that there should be no set off and accordingly, to grant a stay of execution would be inconsistent

decree on the counterclaim could be set off against the claim on foot of an Architect's Certificate. This decision appears to be diametrically opposed to the decision of Finlay P. in Sisk -v- Lawter. Murphy J. (who was considering a contract in the form of the 1977 edition of the R.I.A.I. Standard Form) chose not to follow that case. He accepted that the principles were correctly set out by Finlay P. in the passage quoted above, and said that he would have been extremely slow to differ from the conclusion reached by the President of the High Court were it not for what he regarded as "an important distinction" namely, that the latter half of clause 38 (the arbitration clause) of the 1977 edition of the R.I.A.I. form provides that "such reference, e x c ep t . .. on the question of certificates, shall not be opened . . ." This it is sub- mitted, was not an important distinction at all for t wo reasons. Firstly, it is submitted that if one reads the clause in its entirety, the clause appears to contemplate that the principal " q u e s t i on of certificates"'about which there will be a dispute or difference is the withholding of one (the clause begins . . . " i n case any dispute or difference shall arise between the employer and the architect on his behalf and the c on t r a c t o r . .. as to the construction of the contract or as to any matter or thing arising thereunder or as to the withholding by the architect of any certificate . . ."). It is possible to imagine a dispute arising during the course of the contract as to the interpretation of a certificate. Apart from that however, it is submitted that the mere use of the words "question of certificates" in the context of the arbitration clause does not justify an inference that the liability to pay an interim certificate on presen- tation, is anything other than an absolute one. Secondly, apart from one or two minor differences, there is no distinction between the wording of the arbitration clause in the 1966 and 1977 editions of the R.I.A.I. standard form. Murphy J. concluded his judgment in the P. J. Hegarty case saying that even if he had decided it differently, he would nevertheless have granted a stay of execution on the judgment on foot of the certificate to enable the counterclaim to be prosecuted. As

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