The Highland Council

An interim suspension of the contractor's charge in its favour following the adjudicator's decision should be ordered where the disputed amount had been put into a joint account

Scotland, Inner House, Court of Session
Lords MacLean, Osborne and Johnston
23 January 2004
This action concerned Scottish procedural law. The adjudicator made an award in favour of the contractor. The contractor went into receivership after the decision had been issued. It was held in court proceedings that the decision should be enforced in favour of the contractor and the contractor executed a charge in respect of this decision. The employer then began a fresh adjudication in which it claimed liquidated damages. The adjudicator made a decision in favour of the employer. The employer began court proceedings to enforce this decision. These proceedings were stayed. The employer brought a petition seeking a suspension of the contractor's charge in relation to the first decision in the contractor's favour.
The Inner House of the Court of Session in Scotland ordered an interim suspension of the charge. On the authorities there was an arguable case that compensation or retention in bankruptcy by way of balancing of accounts was open at any stage because it was an equitable remedy. Equity was plainly in favour of a suspension at the stage of the process reached in order to preserve the status quo. There was no risk to the contractor since by agreement the disputed amount had been lodged on a deposit receipt in joint names. If the interim suspension was not granted there was a serious risk that the employer might have to pay twice if the contractor ultimately became insolvent. In any event the employer might face unknown consequences when it came to enforcement of the decree albeit that there was an agreement to withhold such action until the matter was resolved. In the circumstances a prima facie case had been made out to justify an interim suspension of the charge. The reclaiming motion should therefore be allowed, there should be an order for suspension ad interim and the matter should be remitted to the judge for the issues finally to be resolved.
Advice Note
The Scottish courts will take a pragmatic view of the state of accounts between parties involved in adjudication proceedings where one of the parties has an award made in its favour by the adjudicator but is in danger of becoming insolvent.