A legal battle over an unpaid invoice has concluded with a ruling against a Scottish contractor.
- The contractor was found to have mounted a ‘frivolous defence’ to delay payment.
- Ogilvie Construction, the main contractor, failed to pay the subcontractor, ATG Services.
- The court confirmed the adjudicator’s decision in favour of the subcontractor.
- The case highlights potential pitfalls in construction law compliance.
In a recent legal dispute, a Scottish contractor has been ordered by the Court of Session to pay £1.1 million to a subcontractor. This ruling follows a contentious legal battle where the main contractor, Ogilvie Construction, was found to have presented a ‘frivolous defence’ in court, asserting arguments deemed as an inversion of reality by the judge.
The incident began on a £17 million construction project intended to develop a housing and care facility in Dalkeith, near Edinburgh. Assigned to build 50 homes and a 40-bed care facility, Ogilvie Construction subcontracted ATG Services (Scotland) Ltd to handle the groundworks. However, complications arose when Ogilvie failed to process a £1.1 million invoice from the subcontractor.
The adjudicator initially directed Ogilvie to pay the outstanding invoice, including interest, fees, and expenses. Nevertheless, Ogilvie contested the validity of the invoice submission method, claiming it deviated from the contractual stipulation to send invoices via first-class recorded post. Instead, the invoice was emailed, which Ogilvie argued made it ‘invalid’, although they did not dispute receipt until much later.
Ogilvie further contended the adjudicator breached rules of natural justice by incorporating a case under English law into the proceedings, despite knowledge that the case was governed by Scots law. The adjudicator’s reasoning was dismissed by the judge, who clarified that the reference to English law merely illustrated the acceptability of electronic submissions.
The court’s decision underscores the necessity for clarity and adherence to contractual terms within construction agreements. Lord Sandison, presiding over the case, criticised Ogilvie’s approach as lacking merit and warned that such tactics could unjustly delay payments across the sector. This case serves as a cautionary tale for contractors regarding the perils of non-compliance with agreed-upon legal standards.
The ruling emphatically reaffirms the need for procedural diligence and legal adherence in construction contracts.
