The pursuers, Va Tech and the Miller Group, entered into a construction consortium agreement. In accordance with that agreement they were to jointly offer to design, procure and construct a sludge treatment centre at Daldowie and, if their bid was successful, carry out those works. The offer was successful: Va Tech and Miller Group entered into a construction contract with SMW, a subsidiary of Scottish Power, for the design, procurement and construction of the works. SMW had been established for the purposes of the provision of the works under the PFI. In September 2000 the Miller Group novated its part of the construction consortium agreement and the construction contract to Morgan, the defender. In accordance with the construction consortium agreement, money received pursuant to the construction contract was to be paid to Va Tech and Morgan in accordance with percentage quotas set out in the construction consortium agreement. A joint bank account had been set up for that purpose. In order that money paid into the account could be paid out to the parties, the consent of both parties was required.
Payment certificate number 24 was issued and paid. There was a dispute between Va Tech and Morgan about the extent of the works carried out in respect of the construction consortium agreement. The defender, Morgan, refused to consent to the distribution of the monies in the joint bank account. The purser sought a declaration that that the defender was not entitled to withhold agreement or otherwise prevent the prompt distribution of monies received in the joint bank account pursuant to the construction consortium agreement.
Lord Drummond Young held that the question turned upon the construction of the construction consortium agreement. That agreement was only to be adjusted in accordance with variations made to the construction contract, and Va Tech's claim was independent of that contract and therefore Morgan was obliged to consent to the distribution of the money held in the joint account.
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The defender could have pursued the dispute over the ancillary services provided by adjudication. It was merely attempting to achieve an illegitimate negotiating position by interrupting the pursuer's cash flow.