High Court Clarifies Forum for Challenging Adjudicator’s Jurisdiction: K&J Townmore Construction Ltd v Keogh

01/09/2023

Introduction

The High Court's decision in K&J Townmore Construction Limited v Damien Keogh [2023] IEHC 509 is a landmark in Irish construction law, clarifying the process and timing for challenging an adjudicator's jurisdiction under the Construction Contracts Act 2013. The ruling ensures the statutory adjudication process remains a swift and cost-effective alternative to litigation, supporting the "pay now, argue later" principle central to the Act.

Basis of the Dispute

The dispute arose from a subcontract for mechanical and electrical works at a development in Dun Laoghaire, Co. Dublin, between Townmore (main contractor) and Cobec (subcontractor). Cobec submitted a payment claim of €3.79 million, which Townmore disputed. When Cobec referred the dispute to adjudication, Townmore challenged the adjudicator's jurisdiction on two main grounds:

The claim was not a "payment dispute" under section 6(1) of the 2013 Act, as it was either premature or related to damages for delay/disruption, which Townmore argued were outside the scope of adjudication.
Townmore contended that it should not be forced to participate in an adjudication process that, in its view, lacked jurisdiction, and sought to halt the process through judicial review before the adjudicator issued any decision.

What Was Said: Arguments and Court Reasoning

Townmore's Position:

Sought leave for judicial review to quash the adjudicator's decision not to resign, arguing it was inequitable to proceed through adjudication only to find later it was without jurisdiction.
Claimed that damages for delay/disruption are not "payment disputes" as defined by the Act, and so the adjudicator could not lawfully decide on them.
Asserted that the appropriate remedy was to resolve jurisdictional questions in advance, via judicial review, rather than after the adjudication.

Cobec's Position:

Argued the Act provides an appropriate remedy—namely, enforcement proceedings after adjudication—where jurisdictional challenges can be raised.
Emphasised that allowing judicial review before adjudication would undermine the speed and cost-effectiveness the Act was designed to achieve.

The Court's Analysis and Decision:

The High Court (Twomey J) refused leave for judicial review, holding that the correct forum for jurisdictional challenges is at the enforcement stage, not before or during adjudication.
The Court reasoned that the Act's purpose is to provide a quick and affordable resolution of payment disputes, and that judicial review would introduce delays and high costs, thereby defeating this purpose.
The judge noted that an adjudicator's decision is not self-executing; it is only enforceable after a High Court order, at which point jurisdictional issues can be fully argued and decided14.
The Court also highlighted that judicial review could incentivise parties to delay payments by launching pre-emptive litigation, undermining the "pay now, argue later" principle.

Key Elements and Takeaways

Enforcement Proceedings Are the Proper Forum: Challenges to an adjudicator's jurisdiction should be raised during enforcement proceedings in the High Court, not through judicial review before the adjudication is complete.
Preservation of Speed and Cost-Effectiveness: The judgment reinforces the legislative intent to resolve payment disputes in construction contracts quickly and cost-effectively, ensuring that contractors are not deprived of cash flow through protracted litigation.
Limited Role for Judicial Review: Judicial review will not be permitted as a means to pre-emptively halt adjudications on jurisdictional grounds, except in the rarest circumstances.
"Pay Now, Argue Later" Principle Upheld: The decision supports the statutory scheme's core principle that payments determined by adjudicators should be made promptly, with any disputes about jurisdiction or the merits to be resolved later
Deterrence of Tactical Litigation: The Court recognised that allowing judicial review would open the door to tactical delays by financially stronger parties, undermining the Act's objectives.

Conclusion

The High Court's ruling in K&J Townmore Construction Ltd v Keogh is a strong affirmation of the Construction Contracts Act 2013's purpose: to provide a fast, affordable, and effective mechanism for resolving payment disputes in the construction industry. By confirming that jurisdictional challenges are to be addressed at the enforcement stage, the Court has closed the door on pre-emptive judicial reviews that could delay or derail the adjudication process. This decision provides welcome clarity and certainty for all parties involved in construction contracts in Ireland