Costain Building and Civil Engineering Ltd v Scottish Rugby Union Plc
| Jurisdiction | Scotland |
| Judgment Date | 26 November 1993 |
| Date | 26 November 1993 |
| Docket Number | No. 63 |
| Court | Court of Session (Inner House - Full Bench) |
FULL BENCH
Lord President (Hope), Lord Allanbridge Lord Mayfield, Lord McCluskey, Lord Clyde
ContractBuilding contractConstructionCondition precedent to paymentWhether engineer's certificate condition precedent to payment being dueI.C.E. Conditions of Contract (5th edn., June 1973, revised January 1979), cll. 60 (2) and 66 (2)
PracticeAppealAppeal to House of LordsRecall of substantial arrestmentRecall granted on basis that arrestment incompetentWell-established lawWhether leave to appeal to House of Lords be granted
PracticeDiligenceArrestment on dependenceRecallConstructionWhether pursuers' claim for payment for building works for which engineers' certificate not yet granted contingent claimWhether arrestment competent
The parties entered into a building contract for Phase I of the redevelopment of a stadium in Edinburgh. The contract incorporated the I.C.E. Conditions of Contract (5th edn., June 1973, revised January 1979). A certificate of completion in terms of cl. 48 (1) of those conditions was issued to the pursuers in January 1993. A number of variations in the course of the works had been done and, in terms of cl. 60 (2) certificates had been issued by the engineers certifying amounts the engineers thought due in respect of, inter alia, the estimated contract value of the works. The pursuers were not satisfied that the engineers had made sufficient allowance for loss and expense suffered by them due to circumstances outwith their control. In May 1993 the pursuers submitted supporting statements and calculations showing the amount due to them as being over 7.5 million which included a substantial sum by way of interest financing. No certificate for payment was issued by the engineer in response to that application, resulting in the pursuers bringing an action of payment against the defenders for the claimed amount. The pursuers arrested 8.1 million in the defenders' bank account on the dependence of that action. The defenders moved to recall the arrestment. The vacation judge (Lord Morton of Shuna) refused the motion as he was bound by Taylor Woodrow Construction (Scotland) Ltd, v. Sears Investment Trust Ltd.SC1991 S.C. 140 which had held that an arrestment in similar circumstances was not nimious or oppressive, the claims not being contingent or future. The defenders reclaimed and argued (a) that in terms of the contract they were not under any present obligation to pay the sums sued for as that obligation was contingent on the issue of an engineers' certificate or the decision of an arbiter; and (b) that, as there were no averments that they were vergens ad inopiam or in meditatione fugae, the arrestments should be recalled.
Held (rev.judgment of Lord Morton of Shuna) (1) that the effect of a contract governed by the I.C.E. Conditions was that a certificate for payment had to have been issued before there was a right to demand payment; (2) that, in this case, the pursuers' claim had been dependent upon a decision by the engineer or an arbiter that the sums claimed to be due were amounts payable to them under the contract; accordingly (3) that the claim was future or contingent for which arrestment in security without change of circumstances was incompetent; and (4) that, the ground upon which the arrestment had been held to be incompetent being well settled, with no new point of difficulty or importance arising, and it being inappropriate for the very large sum to remain arrested pending an appeal to the House of Lords, leave for such an appeal should be refused; and reclaiming motionallowed and motion for recall granted.
Authorities considered.
Taylor Woodrow Construction (Scotland) Ltd. v. Sears Investment Trust Ltd.SC1991 S.C. 140overruled in part.
Costain Building And Civil Engineering Limited brought an action against Scottish Rugby Union plc for payment of sums allegedly due to them in respect of a building contract entered into between the parties. The pursuers arrested 8.1 million in the hands of the defenders' bank on the dependence of the action.
The defenders enrolled a motion for recall of that arrestment.
The motion for recall was heard in the vacation court by the vacation judge (Lord Morton of Shuna).
At advising, on 30th July 1993, the vacation judge refused the motion. The reasons for his Lordship's decision and the averments of parties are adequately set forth in the opinion of the Lord President (Hope).
The defenders reclaimed.
The cause called before the First Division on summar roll on 14th October 1993 when it was continued to be heard before a bench of five judges.
The cause subsequently called before a court of five judges, comprising the Lord President (Hope), Lord Allanbridge, Lord Mayfield, Lord McCluskey and Lord Clyde for a hearing on 23rd, 24th and 26th November 1993.
The following opinions were subsequently delivered.
LORD PRESIDENT (Hope)In this reclaiming motion the defenders seek recall of an arrestment on the dependence of the action which the pursuers effected on a sum of money in the hands of the defenders' bankers. The motion for recall came before the vacation judge, who would have recalled the arrestment had it not been that he was bound by the decision in Taylor Woodrow Construction (Scotland) Ltd. v. Sears Investment Trust Ltd.SC 1991 S.C. 140 in which it was held, in similar circumstances to those in the present case, that the arrestments could not be regarded as nimious and oppressive and should not have been recalled. It became clear when the reclaiming motion was heard on the summar roll on 14th October 1993 that it would be necessary for that decision to be reconsidered and the matter was appointed to be reheard by a court consisting of five judges. We then heard detailed argument in the case on 23rd, 24th and 26th November 1993 and we are indebted to counsel on both sides for the assistance which they gave us in the course of this debate.
The action arises out of a contract which the pursuers entered into with the defenders in December 1991 for Phase I of the redevelopment of the Murrayfield Stadium. This phase consisted of the building of the north and south stands in place of the open terracing which had been there before. The contract works included a complex structural design for the roof and the construction of precast columns. The pursuers commenced work on the site on 9th March 1992 and the contract period was 42 weeks, with a completion date of 28th December 1992. There was a provision in the contract for payment of liquidate and ascertained damages for any delay in completion beyond 15th January 1993. The contract incorporated the I.C.E. Conditions of Contract, fifth edn. (June 1973, revised January 1979), as amended by the tender document.
We were informed that a certificate of completion in terms of cl. 48 (1) of the conditions of contract was issued to the pursuers on 12th January 1993. There had been a number of variations in the course of the works and from time to time certificates had been issued by the engineer in terms of cl. 60 (2), certifying the amounts which in the opinion of the engineer were due to the contractor in respect of inter aliathe estimated contract value of the works. The pursuers were not satisfied that the engineer had made sufficient allowance for the loss and expense which they claim to have suffered due to circumstances outwith their control as previously notified to the engineer. On 10th May 1993 they submitted a monthly statement no. 14 with supporting statements and calculations showing that the amount due to them was 7,585,456.98. That amount included a figure of 224,783.41, which was described as interest/financing. No certificate for payment was issued to them by the engineer in response to that application. The pursuers then decided to raise an action in the Court of Session for payment of the sums which had been claimed by them in the monthly statement. On 2nd July 1993 the summons in the present action was signeted and the sum of 8.1 million was arrested in an account held for the defenders by The Royal Bank of Scotland. The summons was served on the defenders on 5th July 1993 and the motion for recall of the arrestment was heard by the vacation judge on 29th July 1993 and refused by him the next day. The defenders have not yet lodged defences to the action, as the interlocutor which was pronounced on 30th July 1993 was then reclaimed to the Inner House.
The summons contains two conclusions, the first of which seeks payment of the sum of 7,320,366.80. This is said to include amounts due to the pursuers in respect of their claims for varied and additional works which have not been certified by the engineer or paid by the defenders, together with their claims for loss and expense for which they say they are entitled to be paid under cl. 52 of the Conditions of Contract. The second conclusion seeks payment of the sum of 224,783.41 which was included in the monthly statement in respect of interest/financing. This is said to be due to the pursuers in terms of cl. 60 (6) of the contract conditions in respect of the failure of the engineer to certify sums due to the pursuers on the dates when they say these sums ought to have been certified. There is a single plea-in-law which states: "The defenders being due to make payment to the pursuers of the sums sued for in terms of the contract between them, decree therefor should be pronounced as concluded for."
It is plain from the terms of this plea and from the averments in arts. 5 and 6 of the condescendence which also state that the sums sued for are due to the pursuers, that the pursuers' claim is that the defenders are now due to make payment to them of the sums sued for. The defenders do not dispute that if, ex hypothesi of the pursuers' averments, these sums were due for payment when the action was raised, the pursuers were entitled to arrest on the...
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