In a recent decision that will be of particular interest to employers, contractors and subcontractors, the High Court has shed some much needed light on the ambit of the statutory adjudication processes provided for under the Construction Contracts Act 2013 (the CCA).
The judgment of Simons J in Albert Connaughton v Timber Frame Projects Ltd [2025] IEHC 469 (Timber Frame Projects) confirms that the right to refer a dispute to adjudication under the CCA is strictly confined to circumstances in which the dispute relates to a payment which is provided for under the relevant contract. Crucially, it was found that this right to referral does not extend to a claim consequent upon the termination of a construction contract which is not linked to an express contractual provision, ie a common law termination.
The Facts
The parties entered into a construction contract in the form of a quotation and revised quotation for the design, supply and erection of a timber frame structure. The applicant employer made aggregate payments of €124,981 and subsequently purported to terminate that contract for repudiatory breach, at which point most, if not all, of the timber frame had yet to be erected. The applicant then sought to recover the purchase price paid plus its consequential losses, and obtained an adjudication award in its favour. The applicant then sought leave of the High Court to enforce that decision.
The central issue in Timber Frame Projects concerned whether an adjudicator had the appropriate jurisdiction to determine a dispute referred to it under Section 6(1) of the CCA.
The Law
Section 6(1) of the CCA provides that:
"A party to a construction contract has the right to refer for adjudication in accordance with this section any dispute relating to payment arising under the construction contract (in this Act referred to as a "payment dispute")."
It was a commonly held view in the construction industry, in the absence of any judicial authority, that “any dispute relating to payment” would likely be interpreted as including claims of any nature, the resolution of which would result in a requirement for one party to make payment to the other.
The Decision
A critical consideration for the court was that it would not lend its authority to enforce an adjudicator's decision unless the underlying dispute is one which is properly amenable to statutory adjudication. It would undermine the legislative intent were the "pay now argue later" concept to be erroneously extended to disputes other than those identified in the CCA.
In assessing whether the adjudicator had authority to hear the dispute, Simons J addressed the key question of whether the dispute was one "relating to payment arising under the construction contract" as required by the CCA.
In doing so, he noted that the right to refer a dispute to statutory adjudication "is confined to circumstances where the dispute relates to a payment which is provided for under the contract" (emphasis added). While the defence of a claim may necessarily extend the parameters of the dispute beyond this point (e.g. to more substantive arguments such as defective work), Simons J emphasised that such dispute must have its foundations in a particular term under the construction contract which allows for such a claim for payment to be made.
The typical standard form construction contracts used in Ireland include an express contractual provision relating to the payments which should flow from a termination under the contract (for example Clause 33 of the RIAI form and Clause 15 of the FIDIC Red Book). The termination in this case, however, was a "common law" termination based on a repudiatory breach by the contractor (in this case being a failure to carry out and complete the works which it had been paid to do).
Further to this point (and central to the outcome of the decision) it was held that a "right to refer does not extend to a dispute in relation to a claim for common law damages". The judgment notes explicitly that the concept of a "payment" under a contract is not synonymous with "monetary damages" or "financial consequences". Accordingly, the applicant's claim for common law damages was not a payment dispute referable under Section 6 of the CCA.
The court confirmed that this interpretation does not preclude all disputes relating to termination from referral to statutory adjudication – the right to refer a payment dispute can arise due to the exercise of a contractual right to terminate.
Takeaways
There was a widely held view in the industry that the term "dispute relating to payment" would be interpreted broadly by the Irish Courts, however Timber Frame Projects has drawn a line (for now) on the ambit of Section 6 of the CCA. While this clarity is welcome, the question remains open as to whether compliance with Section 4 of the CCA (which regulates the making of, and response to, a payment claim notice) will in any circumstances be a prerequisite to a subsequent referral to adjudication. While Simons J did acknowledge an organic link between the provisions of Section 4 and those of Section 6 which provide for adjudication in the event of a payment dispute, he declined to explicitly consider the issue.
If you would like to discuss the above case and its implications in further detail, please contact Fiona Egan or your usual Beauchamps contact. With many thanks to Andrew Smylie for his contribution.
