This was an action of payment arising from a building contract between the parties whereby Fab-Tek was instructed by Carillion to manufacture and install equipment at a leisure development in Edinburgh. During the dependence of the action, Fab-Tek obtained warrant and served arrestments which Carillion sought to have recalled.

One of Carillion’s arguments was that the same criteria relied upon by Lord Drummond Young in Karl Construction Limited v Palisade Properties plc in relation to inhibitions on dependence (whereby a party can obtain security over property of a debtor by preventing the debtor from disposing of it) should be applied to arrestments on dependence (the process whereby a party can obtain security for a claim before judgment by freezing property of the debtor which is held by third parties).

Fab-Tek contended that inhibitions and arrestments were distinct (and therefore the criteria in Karl Construction should not be applied). One of Fab-Tek’s arguments in support of this was that:

• In the event of an inhibition, if there was a success in the action, the pursuer was not left with an enforceable remedy as they would be required to proceed to an action of adjudication which would result in them being under pressure to make the defender insolvent to secure a cash settlement. If the debtor only had inheritable assets, then they were locked into possession of them for years;
• The remedy available to an inhibiting creditor was more severe than that available to an arresting creditor where an arrestment on the dependence became an arrestment in execution on the grant of a decree. This was a swifter remedy than adjudication, although in the case of an arrestment in execution, the pursuer would still be required to raise an action of furthcoming to make cash available to pay the decree;
• In addition, after a decree had been obtained following upon an action of adjudication after inhibition the creditor could not obtain a good title until after a period of ten years had elapsed.

Having considered all the arguments, the Sheriff confirmed that the criteria relied upon by Lord Young in Karl Construction in relation to inhibitions also applied to arrestments on the dependence. Accordingly, the Sheriff ordered that the arrestments be recalled.