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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Gleeson v. Grimes [2002] IEHC 108 (1 November 2002) URL: http://www.bailii.org/ie/cases/IEHC/2002/108.html Cite as: [2002] IEHC 108

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Gleeson v. Grimes [2002] IEHC 108 (1 November 2002)

THE HIGH COURT

RECORD NUMBER 2001 16198P

NIALL GLEESON AND LOUISE GLEESON

PLAINTIFFS

AND

FINAN P. GRIMES AND EUGENE MCQUILLAN

DEFENDANTS

Judgment of Ms. Justice Finlay Geoghegan delivered the 1st day of November, 2002.

1.      This is an application brought by the second named defendant for an order pursuant to Order 56 rule 2 of the Rules of the Superior Courts staying these proceedings as against the second named defendant pursuant to the provisions of section 5 of the Arbitration Act, 1980.

2.      Section 5(1) of the Arbitration Act provides:-

5. – (1) If any party to an arbitration agreement, or any person claiming through or under him, commences any proceedings in any court against any other party to such agreement, or any person claiming through or under him, in respect of any matter agreed to be referred to arbitration, any party to the proceedings may at any time after an appearance has been entered, and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings, and the court, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings

3.      The plaintiffs oppose the application upon the grounds that a step has been taken in the proceedings and hence the second named defendant is no longer entitled to the order sought. The alleged step is the request made to the Court by the second named Defendant in paragraph 7 of the affidavit grounding this application. Therein the second named Defendant stated

7. The works were intended to be carried out and were in fact carried out by McQ Construction Limited. Payments in respect of the works were made to McQ Construction Limited. In defending these proceedings I will be asserting that I have been wrongfully joined as a Defendant. I am willing to consent to the issue of who the contracting party was being determined at arbitration. However, if the Plaintiffs, wish the issue of whether or not I am the party with whom they contracted to be determined as a preliminary issue to this application, I am willing to consent to this Honourable Court so doing if it is deemed by this Honourable Court to be an issue necessary and consequential to the determination of the application for a stay. In so consenting I am not waiving my right to a stay pursuant to the Arbitration Act, 1980 or taking any step in these proceedings inconsistent with the application for a stay.

4.      When the matter came on for hearing before me Counsel for the second named defendant indicated that the second named defendant was no longer seeking to assert that he was not the party to the contract. Quite clearly he could not do so and pursue the application for a stay as the basis of such application is that the proceedings relate to a contract in which there is an enforceable arbitration clause. Counsel for the plaintiffs submitted that it is now too late to withdraw the issue as to whether the second named defendant or McQ Construction Limited was the party to the contract. It was submitted that the second named defendant having sought to invoke the assistance of the Court in paragraph 7 of the affidavit must be regarded as having taken a step in the proceedings and was now precluded from pursuing his application for a stay. Counsel for the plaintiffs made this submission in reliance upon the decision of O'Hanlon J. in MacCormac Products Limited v. Monaghan Co-operative Limited 1988 I.R. 304 where at p. 306 he stated:

"It appears to me to be the clear intention of our legislation on arbitration that a party to an arbitration agreement is put to his election to proceed on foot of that agreement, or to concur in a resort to court proceedings to determine disputes, and if he takes steps which may be regarded as invoking the aid of the court he may well find that he has burned his boots if the other party to the arbitration agreement prefers to retain the matter in court instead of going back to arbitration".

5.      I agree with that statement of principle but do not consider this decision to be of assistance to the plaintiffs in these proceedings. In MacCormac Products Limited the steps taken by the plaintiff therein prior to the application for a stay included the application for and obtaining of interim and interlocutory injunctions. In those proceedings O'Hanlon J. did not have to consider the issue which arises here namely where a party brings an application for a stay and simultaneously with that application may be considered to have alternatively or conditionally sought the assistance of the Court is he precluded from obtaining a stay.

6.      Of assistance are the decisions of Jacob J. in the English High Court and the Court of Appeal in Capital Trusts Investments Limited v. Radio Design T.J., A.B. and Others 2001 3AER 756 affirmed on appeal at 2002 2AER 159. Those decisions concerned an application for a stay under similar English Arbitration provisions where the applicant for the stay had also brought an application for summary judgment in the event that the stay application was unsuccessful. It was held that a party who has initiated an application for a stay pending an arbitration has not taken a "step" in the proceedings within the meaning of the relevant U.K. provision if he, either simultaneously or subsequently, invokes or accepts the courts jurisdiction provided he does so only conditionally on his stay application failing.

7.      In reaching this conclusion, Jacob J. relied inter alia on a passage in Mustill and Boyd Commercial Arbitration (second edition 1989) p. 474 approved of by Woolf MR in Pattel v. Pattel 2000 Q.B. 551 where the author stated:

"The reported cases are difficult to reconcile, and they give no clear guidance on the nature of the step in the proceedings. It appears, however, that two requirements must be satisfied. First, the conduct of the applicant must be such as to demonstrate an election to abandon his right to stay, in favour of allowing the action to proceed. Second, the act in question must have the effect of invoking the jurisdiction of the court."

8.      Jacob J. also referred to two statements in Merkin Arbitration Law 1991 p. 6-15 approved of by Otton L.J. in Pattel v. Pattel where it is stated:

"The old authorities, which remain good law under the 1996 Act, establish the following propositions...

(e) An act which would otherwise be regarded as a step in the proceedings will not be treated as such if the applicant has specifically stated that he intends to seek a stay… the right to apply for a stay will also be lost if the defendant in the judicial proceedings has expressly or impliedly represented that he does not intend to refer the issues in dispute to arbitration. The matter is determined by the usual rules applicable to estoppel, i.e. has the defendant unequivocally represented that there will be no reference to arbitration, and has the plaintiff conducted his affairs on the basis that the matter will be determined by the court, in reliance on that representation".

9.      The Court of Appeal also relied on these statements of principles and stated at p.175

"In Merkin's words, approved by Otton LJ, the application made it clear that it was specifically seeking a stay with the result that a step which would otherwise be a step in the proceedings, namely an application for summary judgment s not so treated."

10.      These statements of principle appear to reflect the law in this jurisdiction and are applicable to the facts of this case. The second named defendant in paragraph 7 of the grounding affidavit to this application makes it quite clear that he intends pursuing the application for a stay and it does not appear to me any reasonable interpretation of what is stated therein that it could be found to be conduct which demonstrates an election by the second named defendant to abandon his right to a stay.

11.      Accordingly I hold that the second named defendant in making the averments in paragraph 7 of the affidavit grounding the application for a stay cannot be considered as having elected to abandon his right to a stay. In such circumstances it is therefore unnecessary to consider whether the statements made therein have the effect of invoking the jurisdiction of the court as required to constitute a step in proceedings.

12.      Counsel for the plaintiffs also sought in oral argument to raise an issue as to whether or not the agreement relied upon by the second named defendant as incorporating the arbitration clause was the agreement which governed the works in respect of which the claim is sought to be made in these proceedings. The grounding affidavit of the second named defendant clearly identifies the contract alleged to have been entered into as being a contract executed on the 8^th of July, 1999 and incorporating the RIAI conditions from the 1996 edition. The replying affidavit from the first named Plaintiff does not dispute this and on the contrary at paragraph 5 refers to the execution of the RIAI conditions on the 8^th of July, 1999. Having regard to those facts it does not appear to me open to Counsel for the plaintiffs to seek to raise any such argument at the hearing of this application.

13.      Accordingly I grant the order sought pursuant to Order 56 rule 2 of the Rules of the Superior Courts staying the within proceedings as against the second named defendant pursuant to the provisions of section 5 of the Arbitration Act, 1980.