High Court dismisses application to set aside arbitration award for alleged misconduct and procedural mishap.

Neutral Citation Number: [2009] IEHC 49

THE HIGH COURT

2008 92 MCA

IN THE MATTER OF THE ARBITRATION ACTS 1954 - 1990

AND

IN THE MATTER OF AN ARBITRATION AWARD OF KEVIN BRADY ARCHITECT DATED 21ST MAY 2008

BETWEEN

S.J.W. FACADES LTD

PLAINTIFF

AND

BOWEN CONSTRUCTION LTD

AND

KEVIN BRADY

DEFENDANTS

JUDGMENT of Mr. Justice John MacMenamin dated the 3rd day of February, 2009.

1. In these proceedings the plaintiff (“S.J.W.”) seeks orders pursuant to s. 38(1)(a) of the Arbitration Act 1954 and O.

56, r. 4(e) of the Rules of the Superior Courts:

(i) setting aside an arbitration award (interim award no. 1) of the second defendant Kevin Brady (the arbitrator)

made on 21st May, 2008, on the grounds of alleged misconduct in these proceedings;

(ii) for the removal of the arbitrator on grounds of misconduct; and

(iii) for the appointment of a person to act as arbitrator in place of the second defendant.

2. The case relates to a building contract arbitration arising from the construction of student accommodation at Victoria

Hall, Victoria Cross in Cork where the first defendant (“Bowen”) was the main contractor. S.J.W. was a nominated sub-

contractor. It was to carry out cladding works on the building being constructed by Bowen. S.J.W. said that Bowen

caused delay and disruption which caused S.J.W. serious losses. The dispute could not be resolved. The matter was

remitted to arbitration. S.J.W. made a claim inter alia for delay and disruption in the sum of €406,300.00. S.J.W. says that

the arbitrator dismissed this aspect of the claim, relying on a case that was neither pleaded nor put to the applicant, and

upon evidence of delays found in letters (which it is said) were not in evidence in the case. S.J.W contends that the

arbitrator thereby exceeded his jurisdiction, breached rules of natural justice, failed to observe or apply due process and

brought about a “procedural mishap”. The total of S.J.W.’s claims in the arbitration under all headings amounted to

€1,409,109.93. The total sum recovered by them on foot of the award of the arbitrator was €59,126.18. It will be seen

therefore that the outcome of the arbitration was not favourable to S.J.W. in the overall. Calderbank letters had been

exchanged. These may have a bearing on the issue of costs of this nine day arbitration including a counterclaim by Bowen

which will be dealt with later.

3. The judgment focuses on the two main issues under the claim of S.J.W. for delay and disruption; the first a question of

fair procedures; the second whether S.J.W. was “entitled” to a finding in its favour in the alleged absence of counter

evidence from Bowen on S.J.W.’s claim for loss caused by delay.

4. Prior to consideration of the facts it is appropriate briefly to outline the considerations and principles applicable.

Legal principles in arbitration law applicable to this case

a) The desirability of finality

5. It has been frequently observed that finality is a keystone principle in the law of arbitration. The dictum of McCarthy J.

in the Supreme Court in Keenan v. Shield Insurance [1988] I.R. 89 at p. 96 is so well known as to almost require no

repetition;

“Arbitration is a significant feature of modern commercial life.…It ill becomes the courts to show any readiness to

interfere in such a process; if policy considerations are appropriate as I believe they are in a matter of this kind,

then every such consideration points to the desirability of making an arbitration award final in every sense of the

term.”

6. This dictum has been applied by the High Court repeatedly, most recently by Kelly J. in Irish Golf Design Ltd v. Kelcar

Developments Ltd. [2007] I.E.H.C. 468 and by Laffoy J. in Clancy and Kehoe v. Nevin & Ors. [2008] I.E.H.C. 121. In the

former decision, Kelly J. characterised the task of a party seeking to set aside an arbitrator’s award as “an uphill

struggle”.

b) The construction of arbitral awards and reasons

7. The second principle relates to the manner of the construction of arbitration awards in general. They are not to be

minutely parsed or analysed but to be seen from the overall point of view so as to observe whether the arbitrator has

properly dealt with the issues before him.

8. In Limerick City Council v. Uniform Construction Ltd. [2007] 1 I.R. 30, Clarke J. observed at p. 59:

“The approach to construing an award of an arbitrator by the courts is illustrated by Stillorgan Orchard Ltd. v.

McLoughlin and Harvey [1978] I.L.R.M. 128, where Hamilton J. came to the conclusion that an award of an

arbitrator will be sustained although the arbitrator may have omitted in his award to notice some claim put forward

by a party if according to a fair interpretation of the award it is to be presumed that the arbitrator is taking the

claim into consideration in making the award. The overall principle is that it is not appropriate to parse and analyse

an arbitrator’s award but rather to consider from an overall point of view whether it may be said that the

arbitrator has dealt properly with each of the matters referred to him.” [Emphasis added]

9. There is little dispute between the parties as to the principles applicable to a consideration of whether an arbitral

award can be set aside. It may be challenged only in limited circumstances, those of misconduct or improper procurement

of an award. These general principles are set out in s. 38 of the Arbitration Act 1954 (“The Act of 1954”). It is

unnecessary to consider the courts’ common law jurisdiction to set aside an award as no such challenge is made by the

applicant.

10. These principles have recently been summarised by McMahon J. in the case of Galway City Council v. Kingston & Anor.

(Unreported, High Court, McMahon J., 17th October, 2008). As that judge points out, s. 38 of the Act of 1954 provides

for the setting aside of an award where “an arbitrator or umpire has misconducted himself or the proceedings, or an

arbitration or award has been improperly procured…”

11. The term “misconduct” has a special meaning. As outlined by Jenkins L. J. in London Export Corporation Ltd. v. Jubilee

Coffee Roasting Co. Ltd. [1958] 1 W.L.R. 661 at p. 665, misconduct is “used in the technical sense in which it is familiar in

the law relating to arbitrations as denoting irregularity, and not any moral turpitude or anything of that sort” (see also

Williams v. Wallis & Cox [1914] 2 K.B. 478).

12. However it is apposite to emphasise the manner in which the misconduct threshold is expressed in recent Irish

authority. In McCarthy v. Keane & Ors. [2004] 3 I.R. 617, Fennelly J. observed at pp. 626-7:-

“Not surprisingly, cases in which arbitral awards have been set aside for misconduct are few and far between. We

can leave aside obvious or extreme cases of financial misbehaviour or personal misconduct, such as simple neglect

of the arbitrator to perform his task. Real cases of misconduct may arise in the conduct of the arbitration, where

the arbitrator acts unfairly either by clear acts of favouritism towards a party or adopts procedures which place one

or other party (perhaps even both) at a clear disadvantage.”

The judge continued:-

“It seems to me that the standard or test of misconduct of such a nature would be something substantial,

something that smacks of injustice or unfairness. In re Arbitration between Brien and Brien [1910] 2 I.R. 84 there is

an example of an arbitrator inspecting the farm he was to value in the presence of one party and in the absence of

the other party or of any representative of the other party. This was considered by Wright J. (at p. 93 of the

report) to be ‘improper and inconsistent with the judicial character of an arbitrator”’.

But he concluded:-

“There is a sharp distinction between acts committed in the course of the arbitration and its result. Mere error is

not misconduct. Parties submit disputes, including disputes as to the law, to arbitration. They expect the

arbitrator to rule on all matters in dispute, but they do not have any guarantee that the arbitrator will reach the

correct result. An arbitrator may err in his interpretation of the law or of the facts, without being guilty of

misconduct”. [Emphasis added]

The applicable test therefore is that the conduct impugned must be substantial, indicative of real injustice or unfairness,

or such that one or other party or both have been placed at a clear disadvantage.

13. English authorities in which the courts have seen fit to intervene include cases where the arbitrator in effect “gave

evidence himself” (Société Franco-Tunisienne d’Armement-Tunis v. Government of Ceylon [1959] 3 All E.R. 25;) where

the arbitrator took a view on the law as applied to the facts which involved a radical departure from the cases as

presented by the parties; or where an arbitrator actually gave evidence in contradiction of the evidence given by expert

witnesses (Fox v. Wellfair [1981] 2 Lloyd’s Rep. 514.). A fortiori a court might intervene where an arbitrator proceeded to

make an award in circumstances such as those outlined above, when, in addition to such impugned conduct, there was

also substantial evidence which could, or should have been laid before him. (Pacol Ltd. v. Joint Stock Co. Rossakhar

[2000] 1 Lloyd’s Rep. 109).

The relief claimed

14. S.J.W. submits that were it to succeed, the relief granted should be the removal of the arbitrator and his substitution

(now after the nine day hearing) with a replacement. While counsel for S.J.W. refined his position on this point so as to

countenance the possibility of a remittal to the present arbitrator, if the Court were persuaded there had been

misconduct it is apposite to outline the reasons for the stance originally adopted. These were first, that the plaintiff had

lost confidence in the arbitrator in the light of the award (and the statement of reasons therefor) and second, that the

arbitrator was by now aware of the fact that Calderbank letters had been exchanged which might have a bearing on the

issue of costs.

15. The judgment will also consider the extent of the application to this case of the decision of Herbert J. in McCarrick

v.The Gaiety (Sligo) Ltd [2001] 2 I.R. 266. There the court remitted an award back to an arbitrator because the subject

of the reference had been ruled upon without the benefit of submissions from both sides and where it was held that it

would have been inequitable to allow the award to stand. I turn to the next legal principle.

c) Can a court look to reasoning separate from the award?

16. In this case the arbitrator’s award was accompanied by a separate document, issued on the same day headed

“Reasoning for my award”. Can a court have recourse to this document in construction of the award or in ascertaining

whether there has been serious irregularity which might justify a finding of misconduct?

17. This issue was considered by the High Court in Uniform Construction Ltd. v. Cappawhite Contractors Ltd. [2007]

I.E.H.C. 295, where Laffoy J. made a number of observations as to the manner in which a court should approach such a

separate statement of reasons when a question of misconduct arises. Laffoy J. stated:-

“More recently the question whether, and, if so, and in what circumstances, a party to arbitration proceedings who

seeks to challenge the award may rely in support of his application on reasons published by the arbitrator separately

from the award and expressly on terms that no use shall be made of them in any proceedings relating to it, was

considered by the Queen’s Bench Division (Commercial Court) in Tame Shipping Ltd. v. Easy Navigation Ltd. (The

“Easy Rider”) [2004] 1 Lloyd’s Rep. 626. The question was considered in the context of an application under s. 68 of

the [U.K.] Arbitration Act, 1996 to set aside an award for serious irregularity. In dealing with that question, Moore-

Bick J. stated as follows (at p. 634):

‘The principle of party autonomy in relation to arbitration proceedings is clearly recognised by the Act

and it is both consistent with that principle and with the general public interest in securing finality in

arbitration proceedings that arbitrators should be free to publish reasons that do not form part of the

award if the parties to the proceedings so agree. On the other hand, it is difficult to see what public

interest there could be in allowing either arbitrators or the parties themselves to suppress evidence of

serious irregularities, whether that evidence is to be found in the arbitrator’s reasons or elsewhere.”’

18. The relief claimed by the applicant is statutory, pursuant to s. 38 of the Arbitration Act, 1954. No claim is made at

common law. I conclude from the observations of Laffoy J. that having regard to the public interest in ensuring that

justice is seen to be done, a court may look to an award made separately in order to ensure that no serious irregularity

affected the award, whether to be found in the arbitrator’s separate reasons or elsewhere. This conclusion must be seen

in light of the overarching principle that it is not open to a court to parse or analyse an arbitrator’s award. The test must

be confined to ascertaining whether there are irregularities, as illustrated by Fennelly J. in McCarthy v. Keane, such as

might provide a basis for a finding of misconduct. The exercise must not become an excuse for a form of “appeal”

necessitating minute consideration of the evidence – itself a matter for the arbitrator.

The works in question

19. S.J.W. specialises in cladding works (known as terracotta rainscreen cladding) carried out by clipping terracotta tiles

to an aluminium frame and fixings which are attached to the elevation of a building. The main contract was subject to the

normal Royal Institute of the Architects of Ireland’s (“R.I.A.I.”) conditions.

20. S.J.W. was invited to quote for the cladding works as a nominated sub-contractor. This invitation was issued by the

architect Derek Tynan & Associates by letter dated 12th September, 2003, with enclosed specifications and other

documents.

21. On 26th September, 2003, S.J.W. submitted a tender to Victoria Hall Developments Ltd. (“the employer”) in the sum

of €1,481,191.51. After clarifications to the tender, the architect appointed S.J.W. as nominated sub-contractor by letter

dated 19th November, 2003.

22. Thereafter Bowen sent S.J.W. a “letter of intent” dated 22nd December, 2003, and the cladding works proceeded on

the basis of this document. The letter of intent contained an arbitration clause, (clause 9) as follows:-

“any dispute or difference arising between the parties to this letter of intent shall be and as hereby, refer to the

arbitration and final decision of such persons as the parties hereunto may agree to appoint as arbitrator or failing

agreement as may be nominated on the request of either party by the president for the time being of the Royal

Institute of Architects of Ireland and the award of such arbitrator shall be final and binding on the parties. The

arbitrator shall have the power to open up, review and revise any opinion, decision, requisition or notice and to

determine all matters in dispute which shall be submitted to him and of which notice shall have been given as

aforesaid in the same manner as if no such opinion, decision, or requisition or notice had been given and every or

any such reference shall be deemed to be submitted to arbitration within the meaning of the Arbitration Acts 1954

and 1998 or any Act amending any of them.”

23. S.J.W. claimed that extra works and variations were ordered by Bowen and that completion was delayed and

disrupted by the latter as a result. In total S.J.W. claimed in the arbitration €464,726.93 in respect of unpaid works;

€500,508.00 in respect of a delay to the start of the works; the identified claim for €406,300.00 in respect of delay and

disruption during the execution of the works and €37,575.00 in respect of extra design costs. These amounted to a total

of €1,409,109.93, almost equivalent to the overall contract price of €1,477,000.00. Bowen counterclaimed in the sum of

€164,531.87 based on S.J.W.’s alleged failure to perform the works and the necessity for Bowen to provide labour to

S.J.W. in order to complete the contract.

Preliminary steps in the arbitration

24. S.J.W. was the claimant and Bowen the respondent in the arbitration. The second defendant was appointed by the

president of the R.I.A.I. in December, 2005. The arbitration took place over nine days between 5th February, and 31st

March, 2008. Both sides were represented by solicitors and counsel experienced in the field of arbitration.

The award

25. On 21st May, 2008, the arbitrator made his interim award no. 1 (“the award”). He also furnished a separate document

to the parties headed “Reasoning for my award”. These reasons were not part of the award itself. However in reliance on

the authorities cited earlier, I conclude that a court may look to the separate reasons in order to see whether serious

irregularities arose in the course of the arbitration which would be sufficient to justify the removal of an arbitrator. The

court will not parse and analyse the award, still less put itself in the position of criticising an arbitrator in his assessment

of the evidence.

S.J.W.’s case in these proceedings

26. In pursuance of its unfair procedure point S.J.W. fundamentally relies on the proposition that the arbitrator relied on

28 identified documents in the course of his reasoning. It contends that these documents (letters, minutes and

memoranda exchanged in the course of the work) were appended to a report of Mr. O’Leary an expert witness for Bowen

which were not “in evidence” in the arbitration as they had not been produced by the authors thereof. They say that the

facts in the documents were not validated in evidence, nor was there agreement that the documents were evidence of

the facts stated in them. S.J.W. claims that even if “bundles” of documents were “agreed” for the arbitration, which

bundles included these documents, this was so only for the purpose of potential production or reference in the arbitration

hearing not as evidence. The plaintiff says that it was inappropriate and wrong for the arbitrator to rely on anything in a

document not specifically referred to in evidence to support any deferral by Bowen of culpable delay by S.J.W. in the

delay and disruption claim.

How the issue of delayed disruption was pleaded

27. To place these contentions in context it is necessary first to consider the manner in which the issue of delay and

disruption came before the arbitrator. S.J.W.’s plea in the statement of claim was headed “Delays and Disruption caused

to the Claimant’s works by the Respondent”. It states:-

“17. The work which the claimant had to do pursuant to the letter of intent was delayed and disrupted by four

critical events namely:-

(i) The piecemeal handover of work areas by the respondent to the claimant.

(ii) The structural steel frame of the main contract works being out of tolerance.

(iii) The failure of the respondent to properly allow for deflection on the installed cantilever section of the Main

Contract Building causing it to sag when the claimants’ terracotta Rainscreen Works were being installed.

(iv) Inadequate provision by the respondent of hoisting and access facilities for the claimant.

18. Each of the above events is dealt with separately below. The claimant contends that the said events were

factually interlinked in such a way that it is not possible to allocate costs individually to each, but that taken

together the effect of all four was to significantly extend the claimant’s cost and expenses.”

28. S.J.W. contended that the extent of the interlinking between the four issues was such that it was not possible to

allocate costs individually under each heading; instead these four headings were to be taken together as a “global claim”.

Bowen pleaded in their defence:-

“30. It is denied that any such delay or disruption occurred. If, however, such delay or disruption did occur (which

is denied), the claimant was wholly responsible for, or in the alternative contributed to any loss sustained by it.

Further, and or, in the alternative if the claimant did sustain any loss as a result of the alleged delays in or

disruption to construction (which loss delay and disruption are denied by the respondent) the claimant failed to

mitigate the said loss by its actions and omissions. Accordingly the respondent denies that it is responsible for any

claim arising in this respect whether on the basis of the claim advanced in the statement of claim or at all.”

29. There followed particularised pleas and defences in relation to each of the four headings. Bowen also denied that the

claimant was entitled to make any claim on a quantum meruit basis. In fact no such claim was made in relation to these

four headings by the plaintiff.

Procedural hearing and directions

30. The arbitrator held a number of preliminary hearings to deal with procedural matters. On foot of these he made a

series of what are called “orders for directions”.

31. On 20th December, 2007, he directed that witness’ statements and experts’ reports should be exchanged. This was

done. He expressly stipulated that those experts’ reports which had been exchanged should stand as evidence-in-chief.

He directed that experts of like discipline should meet two weeks before the hearing to agree a note of the facts and

opinions on which they concurred and those upon which they did not. A copy of each note was to be exchanged and

delivered to the arbitrator one week before the hearing. The arbitrator made a further order which falls for close

consideration. His order no. 9 stated:-

“The parties shall agree a bundle of documents for use at the hearing and a core bundle of those documents

perceived as likely to be most frequently referred to. The bundle or bundles of documents are to be delivered to

the arbitrator no later than seven days before the hearing and each party is to inform the arbitrator as to which

documents they require the arbitrator to read before the hearing.” [Emphasis added]

The terms “for use” and “likely to be most frequently referred to” are consistent with his approach to the admissibility of

material in evidence generally.

32. It will be helpful here to briefly summarise what lies at the centre of the applicant’s complaint. One of the witnesses

brought to the arbitration by Bowen Construction was a Mr. David O’Leary B.S.C., A.S.C.S., M.R.I.C.S., A.C.I.R.B.,

Barrister-at-law. He furnished a report of some 78 pages, the last 28 of which consisted of two appendices. The first

appendix dealt with a review of the claim for construction phase delay and disruption, the second, dealing with delays and

inefficiencies alleged against S.J.W. on the progress of the works. Counsel for S.J.W. says now that Mr. O’Leary’s report

dealt with both issues of liability and quantum, and that the arbitrator ruled (as he did) that he was to be seen as a

witness to quantum only and that “liability issues”, although dealt with by Mr. O’Leary in his report, were in fact matters

for the arbitrator.

33. At the heart of this case is the plaintiff’s contention that these reports and memoranda were effectively “adopted” by

the arbitrator from the second appendix to Mr. O’Leary’s report and that the arbitrator thereby “gave his own evidence”,

in effect, by relying on the documents appended by Mr. O’Leary as evidence without any opportunity being given to deal

with these documents.

34. There is no doubt that if all of the documents so referred to by Mr. O’Leary were adopted, recited and relied on

without notice to the parties, S.J.W.’s argument would have considerable substance. However, on analysis, I find the true

position to be considerably more nuanced.

The origin of the documents

35. There are four preliminary points. First, to say simply that the documents “came from Mr. O’Leary’s report” would

suggest they had no other provenance within the arbitration. But this was not so. In fact all the documents in question

were already before the arbitrator. They were comprised in bundles prepared in accordance with his order no. 9. The

bundles so compiled were prepared by S.J.W.’s solicitors.

36. Second, the issue of the evidential status of certain documents, in the delay and disruption claim was raised on more

than one occasion in the arbitration. In particular, the arbitrator considered whether the admission of other quite different

documents was proof of their contents. The way in which he dealt with this issue is of significance. He indicated to

counsel that he considered that such documents were accurate in so far as he was concerned unless somebody said

that they were not accurate and that were there an issue in relation to the accuracy of the contents of a document the

matter might be dealt with on re-examination. This point arose on more than one occasion. The arbitrator outlined his

approach in similar terms. I consider that this placed a specific onus on the parties to indicate whether the contents of

any documents referred to were in dispute or not.

The arbitrators stance in these proceedings

37. Third, the stance of the arbitrator in these court proceedings is consistent with his approach in the arbitration. The

arbitrator himself did not participate at this hearing. However he was represented by a solicitor who made no submissions

but was in attendance throughout. Through him I requested that the arbitrator indicate to the Court what he said was

the evidential status of the witness statements (and ipso facto the O’Leary reports and appendices). The Court was

informed that he took the view that the witness statements, and the accompanying documents submitted to him were “in

evidence”. I allowed counsel to make any additional submissions that they might wish in the light of this indication.

On whom did the onus lie to object?

38. Fourth, the arbitration was by no means a “paper” arbitration. Expert witnesses were cross-examined in some detail in

relation to the statements which they submitted as evidence-in-chief. At no stage did either party seek an overarching

ruling in relation to the evidential status of the expert reports or the appendices. Thus the onus of objection to

admissibility remained on the parties, the arbitrator having made his approach clear.

39. In my view this onus was the higher in the light of the order for directions no. 9. There the arbitrator had clearly

indicated the type of documents which were to be in the bundles. They were clearly those to which reference would

frequently be made. If any party had a difficulty with these there was surely a higher onus on that party to make that

clear. Such a duty of clarification applied a fortiori in the circumstances where the arbitrator had outlined his general

approach to reports as outlined. No such objection to admissibility was made in relation to the appendices of Mr. O’Leary’s

report.

Was there misapprehension?

40. Finally, though it was not submitted in these proceedings, it may be that some misapprehension arose as to whether

certain parts of Mr. O’Leary’s evidence were, in fact, in relation to liability or quantum. Insofar as it related to liability his

report was ruled out by the arbitrator. But the proof of causation is not confined to liability; it goes to quantum.

Consequently if Mr. O’Leary’s evidence was relevant and admissible as to quantum (as the arbitrator held it was) there

was an onus upon any party seeking to dispute any evidential material relied on in relation to proof or negation of

quantum in the course of cross-examination. To take the simplest example by analogy, even in a personal injury action

where the issue of liability is abandoned, the onus remains upon the plaintiff to prove that the injuries and losses which he

suffered were attributable to the accident. A defendant may hotly dispute this issue of causation. But this is not a

dispute on liability. The evidential nexus between cause and effect must be established in quantum - as well as in liability.

But proof of loss was not a liability issue.

41. Thus the arbitration ruling as to the status of Mr. O’Leary’s evidence did not absolve S.J.W. from disputing his

evidence as to causation of the loss. It was the evidence on liability which had been ruled inadmissible not quantum. Thus

insofar as S.J.W. wished to dispute this evidence, or raise any question as to reliance on documents relating to quantum

the onus was on it to do so. Even if there had been misapprehension on this point I do not consider that it would

constitute misconduct on the part of the arbitrator. I do not consider that such a possible misapprehension would

constitute a form of procedural mishap either.

Consideration of the documents

42. Even at risk of transgression into the realm of the arbitrator I have examined the way in which the documents were

referred to by the arbitrator and Mr. O’Leary. The plaintiff faces a more fundamental problem. Having considered the

documents in some detail I find that the plaintiff’s contentions are as a matter of fact fundamentally flawed.

43. To carry out an analysis of the content of the 28 documents would be to go beyond the jurisdiction of this Court in

an application of this type. I have however carried out an analysis of the manner in which Mr. O’Leary on the one hand

refers to the documents in the appendix as compared to the way in which the arbitrator deals with them in his statement

of reasons.

44. In fact the arbitrator’s quotations from the letters, correspondence and memoranda are different. They are very much

the fuller. The arbitrator simply could not have relied on quoting the documents which in fact were only briefly summarised

in the “O’Leary report”. The fuller nature of the arbitrator’s quotations shows, at the very minimum, it would have been

necessary for him to go back to the original documents in the bundles in order to quote from them in the manner he did in

his statement.

45. Next, if the arbitrator had engaged in a process of adoption one might assume that the documents would have

appeared in the same sequence in the statement of reasons as in Mr. O’Leary’s report. In fact they appear in a quite

different sequence. Were there substance in the plaintiff’s case, one would expect a total correlation or overlap between

each document referred to in the report and those in the arbitrator’s statement. This is not so. The arbitrator refers to a

significant number of documents which are not referred to in the appendices to the O’Leary report at all. Of the total of

twenty eight letters and minutes referred to by the arbitrator, in fact just fifteen are referred to in the second appendix

of the report. A lesser number are also referred to in the first appendix to Mr. O’Leary’s report but this is not the focus of

the plaintiff’s complaint.

46. A small point is perhaps the most revealing. The arbitrator refers to a letter from S.J.W. to Stanta, a firm engaged in

external insulation systems on the project. In his “statement of reasons” he refers to this letter as having been dated

10th May, 2004. This was an incorrect date. In fact the letter was dated 11th May, 2004. But in the appendix to Mr.

O’Leary’s report the letter is correctly dated, that is to say, 11th May, 2004. If a document was simply copied or

“adopted” then one would expect that an error contained in one document would be carried on into the other.

47. For these reasons, I cannot conclude that S.J.W.’s central allegation is made out at all. The allegation made against

the arbitrator is a serious one. It is a matter of procedural bias. But it is not supported by the facts.

Decision on the first issue

48. I do not consider the fact that there may have been a procedural misapprehension as sufficient basis for a court to

intervene on the grounds of misconduct. Certainly there is nothing here redolent of an arbitrator inspecting a subject

property in the presence of one party and in the absence of another. I am unable to find evidence of the arbitrator having

acted unfairly by any clear act of favouritism. The evidence does not bear out the contention that the arbitrator adopted

a procedure which placed one party at a clear disadvantage. Had there been some apprehension of bias in the course of

an arbitral hearing one would envisage that counsel would have insisted that reasons be given as part of the award. No

such application was made. I do not consider that this facet of the case has been made out therefore. I turn to the

second main point.

S.J.W.’s claim of entitlement to a finding in its favour in the delay and dispute claim

49. Alternatively S.J.W. says that there occurred a procedural mishap. It contends that it was “entitled” to findings in its

claim for delay as there had been no real challenge to its evidence. S.J.W. refers to four witness statements served by it

in the arbitration which dealt with the claim for delay and disruption. These were witness statements of Shay Wheelock,

Isaac Wheelock, Slawomir Jnkoviak (the plaintiff’s foreman) and Kenneth O’Connor (the plaintiff’s quantum expert). It is

very difficult to avoid the conclusion that this point would be a question for an “appeal” rather than the basis of setting

aside an arbitral award. As a preliminary, I find that it is not an issue which should fall for consideration at all in the light

of the authorities cited. A question of “entitlement” to a finding is one for the arbitrator and for his determination. Even if

that were not so I would find as follows.

50. S.J.W. says that Bowen did “little” to contradict the weight of their evidence on the delay issues. It contends that

there was “minimal” cross-examination on the specific detail of the evidence. It suggests that in particular the evidence

of its quantum expert, Kenneth O’Connor should effectively have “bound” the arbitrator. 51. But Mr. O’Connor stated that

the plaintiff had correctly priced his tender, that there had been no increases in labour costs, no failings or inadequacies

on the part of management which would have affected labour costs and that the costs of delay and disruption were

€409,000.00, a figure in excess of the pleaded figure of €406,300.00. But that was all he said. The plaintiff says that it is

at a loss to comprehend how the arbitrator made no findings on the plaintiff’s case as to why and how much it was

delayed and disrupted and the cost of that delay and disruption. S.J.W. suggests that the arbitrator should have made

findings concerning the claim and should have stated and demonstrated that it was significant and sensibly discounted

the value of this against the plaintiff’s proven costs in order to arrive at a proper amount to be awarded to the plaintiff in

respect of this claim. These claims too, must be seen in the light of the submission that the arbitrator not give reasons.

52. One cannot even consider these contentions without having regard to the role of a court in dealing with an

arbitration. The clear line of demarcation which has been established repeatedly in case law is applicable here. It is not

for a court to engage in any form of minute mandatory supervision of an arbitrator or as to the manner in which he carries

out his function. The issue is whether there was irregularity amounting to misconduct.

53. Even were this not the case, in fact the “statement of reasons” explains the arbitrator’s approach. The arbitrator

considered the 28 letters to which reference has been made earlier. A substantial number of these were between Bowen

and S.J.W. None of the documents therefore came “out of the blue”. They were part of the documents which had been

submitted by S.J.W.’s solicitors to the arbitrator. The letters concerned delay by S.J.W. in carrying out the work. They

also raised issues involving other parties in the performance of the contract. It is not for this Court to weigh this

evidential material. The point is whether there was misconduct.

54. A significant number of the letters involved disputes between Bowen, S.J.W. and Stanta about the rate at which the

work was being done. Bowen said that S.J.W. were simply not devoting sufficient labour resources to the performance of

the contract. In a letter of 8th April, 2004, it was said that the S.J.W. site team allocated to Bowen had been taken to “a

more important” job in Killarney which had a higher priority than the Victoria project. Bowen said that S.J.W. appeared not

to have a full appreciation of the high priority nature of the contract for them. Fifteen of the letters and memoranda

emanated from S.J.W. themselves. All of them were documents adduced by S.J.W. and within their possession or

procurement.

55. For the reasons I have outlined earlier it cannot be said either that the documents lay outside the parameters of the

arbitrator’s consideration. They were before him: no application was made to rule them out. No application was made to

place in dispute the contents of these documents which related to causation of loss, not liability.

56. In dealing with the construction stage delay and disruption, the arbitrator identified the four different events pleaded

in the statement of claim before him. He commented that “no attempt is made to quantify the costs” against any

particular item or event. It was in effect therefore a global claim.

57. What then was his duty? It was to direct himself as to how such a claim should be dealt with in accordance with

decided authority. That is what he did. He adverted to two legal authorities in relation to how a global claim should be

approached. These were to the effect that to establish a global claim a claimant must identify first the existence of one

or more events for which the employer is responsible, second, the existence of loss or expense suffered by the contractor

and third, a causal link between the event or events and the loss and expense. He said that normally individual causal

links must be demonstrated between each of the events for which the employer is responsible with particular items of loss

and expense. However, frequently such loss and expense result from delay and disruption and may be caused by a number

of different events in such a way that it is impossible to separate the consequences of each of the events. In that case,

the events for which the employer is responsible may interact with one another in such a way as to produce a cumulative

effect. If however, the contractor is able to demonstrate that all of the events on which he relies are in law the

responsibility of the employer, it is not necessary for him to demonstrate causal links between individual events and

particular heads of loss. In such a case because all the causative events are matters for which the employer is

responsible, any loss and expense that is caused by those events and no others must necessarily be the responsibility of

the employer. The arbitrator further directed himself that if a global claim were to succeed, whether or not it is a total

cost claim or not, the contractor must eliminate from the causes of his loss and expense all matters that are not the

responsibility of the employer.

58. Having referred to these principles and the correspondence, he observed:-

“It would appear to me from all this correspondence that there are a myriad of reasons for the delays…”

He identified a number of parties as being the potential cause. He found that manpower was clearly a problem. This was

evidenced by the correspondence. He commented:-

“This could not be laid at the door of Bowen”.

59. He commented that the disruption claim of €406,300.00 was to be seen in the context of a total contract price of

only €1,477,000.00, which is 27.5% of the cost. He found that no direct causal link had been established by S.J.W.

between the losses claimed and the delays. He added:-

“Also no proof was produced as to what the effect of any delay was on the cost of the product apart from the

quantity surveyor for the plaintiff.”

60. The arbitrator referred to the evidence of Mr. Kenneth O’Connor, the quantum expert of S.J.W. He found that Mr.

O’Connor calculated the loss by:-

“comparison between the original tender labour allowance and the actual labour costs incurred in completing the

works. In my opinion this method is an accurate way to assess the cost of delay and disruption which has already

been proved to have occurred.”

But he found this statement was insufficient to prove the claim. That evidence did not establish events for which the

employer was responsible or any causal link between such events and any loss.

61. The arbitrator referred to documents with regard to manpower. This was in the context of S.J.W.’s claim for

acceleration of the works. He referred to a letter of the 17th February, 2004, from S.J.W. requesting an extension of time

and stating the number of persons who S.J.W. had identified as being necessary for the works at that stage, that is “one

site manager, one engineer, one supervisor, six fitters and two labourers”. He commented:-

“The actual manpower used, was way in excess of this and it would appear to suggest that S.J.W. underestimated

the demands of such a product with such a tight programme.”

62. In fact the arbitrator’s award makes clear the rationale for his decision. It was simply that S.J.W. had not made out

its global claim for loss on the evidence. The legal authorities to which he referred clearly establish the necessity to

identify the existence of one or more events for which the employer was responsible; the existence of loss and expense

suffered by the contractor; and a causal link between the event or events and the loss and expense. He warned himself

that if a global claim was to succeed whether or not it is the total claim, the contractor must “eliminate from the causes

of his loss and expense all matters that are not the responsibility of the employer”. It is clear that he concluded that this

is precisely what S.J.W. had failed to do in the course of the arbitration.

63. I do not accept that it was incumbent on the arbitrator to make findings concerning each heading of delay or that it

was significant, or that there was an obligation upon him to discount the value against the plaintiff’s proven cost.

64. In fact what he actually did was to find that the chain of causation between the alleged quantum of the global claim

had not been established and therefore he disallowed it. I consider that this was entirely within his remit, whether or not

there was a quantum meruit claim made by S.J.W. under this heading. There was therefore no obligation on him to put

some, or any, value on the remainder of the claim.

The counterclaim

65. In the light of these findings one may easily discern why the arbitrator decided who should succeed in that

counterclaim based on S.J.W.’s failure to perform the works in accordance with the contract. It was found necessary that

Bowen assign labour to achieve completion which caused loss as found in the “statement of reasons”.

Result

66. This aspect of the claim cannot succeed. I do not consider any basis has been established to remit the claim to the

arbitrator. I cannot find that there was any procedural mishap. If the arbitrator committed an error I do not consider it

comes within the realm of those which would justify the removal of an arbitrator for misconduct. The central factual

contention relied on by the plaintiff fails. The subsidiary point in “entitlement” to a finding fails also.

67. I would add finally that relief under s. 38 of the Act of 1954 is a discretionary remedy. The manner in which the

arbitrator approached this task was clearly outlined by him at the outset of his hearing. He stated that he intended to

furnish an award and would furnish his reason on a separate document. In fact counsel for S.J.W. specifically requested

at the conclusion of the hearing that the arbitrator not furnish reasons at all for a number of objectives which he outlined,

including the necessity for a speedy award and the desirability for finality and the avoidance of mischief which might be

caused by a statement of reasons which might in turn become the subject matter of proceedings being brought to court.

One might be forgiven for observing that these submissions now have an ironic ring.

68. In the light of the arbitration clause, I consider that S.J.W. and Bowen are bound by the award. On the ninth day of

the case, counsel for S.J.W. submitted that even if a court were to disagree with the arbitrator’s finding on a legal point

it would not make any difference as “the law is quite clear that unless the arbitrator says something completely

outrageous which goes against every common law convention we hold dear, we have made our bed and must lie in it and

whatever finding on the law we must live with”. Of course this submission was not binding on S.J.W. But however

informally put, one cannot help but note the contrast between those sentiments expressing a fundamental principle and

the basis of this application, brought now with the benefit of hindsight.

69. For the reasons outlined, I consider this application fails.