Court strikes out action by Dunnes as ‘entirely without merit’

The Court of Appeal has struck out as "entirely without merit" a legal action by Dunnes Stores as part of a long-running dispute over the Point Village development in Dublin's Docklands.

Dunnes claimed Point Village Development (PVD) had, in its construction of Point Square in the Point Village, failed to comply with a clause of a 2008 development agreement regarding the quality and standing of the square. On that basis Dunnes refused to release a €3 million sum payable to PVD on completion of the square.

The relevant clause provided the design and specification of Point Square shall be to a “first class standard” akin to the newly redeveloped Eyre Square, Galway; Grand Canal Square, Dublin; and the Civic Plaza at Dundrum Town Centre.

Mr Justice Gerard Hogan said Dunnes’ action was “abusive” because it was brought despite an independent expert architect having been appointed in October 2014 to assess whether Point Square had been completed in accordance with the 2008 agreement.

That adjudication remained on hold because of this case, which was “an attempt to frustrate and repudiate a commercial agreement negotiated at arms length” to which Dunnes “had freely agreed”.

Dunnes took the case against PVD and Paul McCann and Stephen Tennant in their capacity as receivers appointed by the National Assets Management Agency over PVD. The receivers and PVD appealed after the High Court refused to stay Dunnes’ case to allow the independent expert process proceed to a decision.

Giving the three-judge court’s unanimous judgment on Monday, Mr Justice Hogan said Dunnes’ case should not just be stayed but should be struck out under the Appeal Court’s inherent jurisdiction as “an abuse of process”.

Independent architect

The 2008 agreement provided, if there was a dispute between the sides as to whether Point Square was completed in accordance with that agreement, that an independent architect, acting as expert, be appointed to determine that dispute, with the expert’s decision “final and binding” on the parties.

The entire object of that was to achieve a speedy and final resolution of the dispute even if the ultimate conclusions and the reasoning contained in an expert’s adjudication was not always perfect or completely justified on the evidence.

He said there were compelling policy reasons which warrant the courts respecting parties choosing to submit to adjudication by expert in commercial disputes of this nature.

In this case, the 2008 agreement provided for the independent architect to give his decision within 20 working days of his appointment but, although the architect was appointed on October 16th, 2014, the effect of this litigation was to entirely frustrate the underlying objective of the sides.

The judge found the dispute which Dunnes sought to have the court decide – how to interpret the clause concerning whether the Point Square meets the necessary standard – “falls squarely” within the ambit of the dispute referred to the expert, and said Dunnes’ assertion otherwise appeared “essentially contrived” and specious.

All the expert has done so far was to seek submissions from the sides but Dunnes essentially wanted the court to assume the expert will stray from the terms of the 2008 agreement unless he was subject to stringent judicial control. There was “absolutely no basis” for such an assumption, and, in the circumstances, the claim advanced by Dunnes was “entirely without merit”.

‘Abusive’

It was also “abusive” as not only had the Dunnes case no realistic prospect of success, the effect of the “unconscionable” delays generated by the litigation has been to undermine the efficacy of the underlying agreement, the speedy and final adjudication by an expert.

He said for future guidance the High Court, unless there were “special circumstances”, should be ready at the earliest opportunity to strike out abusive attempts of this nature to frustrate and undermine commercial agreements providing for adjudication by expert.

Formal orders in the case will be made later.