Rentokil Ailsa Environmental Limited -v- Eastend Civil Engineering Limited
The arrestments by the employer of the sums awarded by the adjudicator were vexatious and oppressive (and should be recalled) on the basis that they were mainly used to embarrass the contractor, to defeat the awards and to strain the contractor's financial credit
12 March, 1999
The employer began proceedings against the contractor seeking damages for breaches of various contracts in relation to the contractor's alleged failure to carry out works in a good and workmanlike manner. Before starting those proceedings the employer paid the sums awarded by an adjudicator in four adjudications between the parties in the contractor's favour to the contractor's solicitors but on the basis that the monies were to be arrested under Scottish court procedure so that those sums were paid to the contractor's solicitors on the basis that they could not be released to the contractor. The contractor applied for the recall of the arrestments on the ground that they were nimious and oppressive. The Sheriff held that the arrestments were vexatious and oppressive (and should therefore be recalled). This was on the basis that they were not used to protect the legitimate interests and right of the employer but were instead mainly used to embarrass the contractor, to defeat the adjudicator's awards and to strain the contractor's financial credit. It was clear that it was Parliament's intention that the decisions of adjudicators should be complied with until the dispute was finally resolved by court proceedings, arbitration or agreement with the result that it would be almost obtuse if the employer could circumvent that intention having participated in the adjudications. In addition the employer had failed to give notice of any intention to withhold payment in the terms of section 111 of the Construction Act 1996 after the final date for payment of sums due under two of the contracts which formed the subject of two of the adjudications as they were required to do. The Act heralded a new regime in relation to construction contacts with the results that (1) a party seeking to rely on arrestment had to ensure compliance with its provisions and (2) in the event of the party not complying with its provisions, courts would more readily infer or assume that the arrestment had not been used principally to protect the interests of a pursuer. Advice Note This decision emphasises that court procedures will not get in the way of the enforcement of adjudicators' decisions so that a successful claimant is not kept out of his money.