Rentokil Ailsa Environmental has appealed a Lanark Sheriff Court ruling that last week threw out its attempt to avoid acting on an adjudicator's payment order. The appeal was due to be heard in Edinburgh yesterday.
Eastend Civil Engineering won an adjudication decision that ordered Rentokil to pay it £173 000. Rentokil failed to comply with the decision until Eastend issued a petition for enforcement. At this point, Rentokil released a cheque to Eastend's lawyers for the amount owed.
However, Rentokil then started "arrestment", a process available in Scotland to freeze payment due on a writ. The arrestment order was applied for in conjunction with a counter-writ for damages for work carried out on other contracts by Eastend, including two that had formed part of the adjudicator's ruling.
Eastend applied successfully for the arrestment order to be overturned in the Lanark Sheriff Court. However, Rentokil appealed the ruling, so the money that the adjudicator ordered to be paid to Eastend still cannot be released.
Giving the judgment, the sheriff said: "It can be inferred the arrestments were not used to protect legitimate interests of the pursuers … but … to defeat the adjudicator's awards." Lindy Patterson, head of construction with Edinburgh-based lawyers MacRoberts, which is acting for Eastend, said: "If we are successful, it should speed up future compliance with adjudicators' decisions." However, Patterson added that the appeal process could drag on for some time, further delaying payment to her client.
Constructors' Liaison Group legal adviser Rudi Klein said: "It's worrying in that if arrestment is allowed it could become standard practice in Scotland. Companies in Scotland will have to insist on payment in cash if this isn't addressed." He added: "The positive aspect is that the sheriff is telling them to comply as the courts in England have done. But the act is the same in England and Scotland, and it's strange if an arrestment can be used to frustrate an act of parliament which courts in England have said must be complied with." Rentokil Initial director of corporate affairs Charles Grimaldi said the firm was unhappy with Eastend's quality of work, and was not satisfied that the contractor was financially secure.