Rentokil Ailsa Environmental Ltd v Eastend Civil Eng Ltd [1999] CILL 1506

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

12 and 31 March 1999

E entered into a series of contracts with R to carry out minor engineering works at 15 sites. In November 1998 R indicated that it would make no further payments for any sites because of concerns about defects on 4 sites. Three of the contracts were entered into after 1 May 1998, but contained no adjudication provisions, therefore the Scottish Scheme for Construction Contracts applied. E issued notices of adjudication for these 3 contracts claiming payment of unpaid invoices

The adjudicator awarded sums totalling £141,000 to E, but R did not pay nor did it sign its consent to the decisions being registered in the Books of Council and Session. E applied to the court for enforcement of the decisions, but shortly before the hearing, R delivered a cheque for the full amount due to E's solicitors. Simultaneously, an arrestment was lodged with E's solicitors in the sum of £182,000. The arrestment had been authorised by a payment writ raised by R claiming damages for breach of various contracts. Two of these contracts had been the subject of the adjudications, and R had raised the issue of defective work before the adjudicator. E applied for the arrestment to be recalled alleging that it was oppressive as it defeated implementation of the adjudicator's decisions.

E was initially successful and the arrestment was recalled. R appealed to the Sheriff Principal. The court held that the arrestment should be reduced so that there was no arrestment of sums in respect of damages claimed for contracts which had been the subject of the adjudication. However, R was entitled to arrestment in respect of claims under contracts which had not been subject to adjudication. The fact that the arrestment attached to monies paid under an adjudicator's decision did not amount to bad faith on the part of R, neither did the fact that the arrestment was timed to attach to payments made in implementation of the decisions.

Arrestment is not available against contracts where an adjudicator's decision has been made in favour of defender. Arrestment is available against other contracts even where money has been paid in compliance with adjudicator's decision.

 

This summary was provided by CMS Cameron McKenna LLP.

 

For more information visit http://www.cms-lawnow.com/adjudication

 

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