Melville Dundas Limited -v- George Wimpey UK Limited & Norwich Union Insurance Limited
Case reference:
[2005] CSIH 88
Thursday, 15 December 2005
Key terms: HGCRA payment provisions - Section 109 - Section 110 - Section 111 - Scottish Building Contract With Contractor’s Design - JCT With Contractor’s Design 1998 - Clause 30 - Clause 27 - Determination - Application of Section 111 - Insolvency
Melville entered into a contract for the design, construction and completion of a residential development in Glasgow. The contract form was the Scottish Building Contract with Contractor’s Design Sectional Completion Edition (January 2000 Revision) issued by the SBCC. It incorporated the conditions of the JCT With Contractor’s Design 1998.
Melville made an application for payment on 30 April 2003. The employer’s agent issued an interim certificate on 30 April 2003 for £396,630 excluding VAT. The final date for payment pursuant to clause 30.3.6 was 16 May 2003. On 22 May, receivers were appointed in respect of Melville.
Wimpey refused to pay. A withholding notice was not served. There was an adjudication and the Adjudicator awarded payment of the amount of the interim certificate.
During the enforcement proceedings Wimpey argued that the determination provisions of clause 27 had superseded the interim payment procedure, and that any payment that had accrued could no longer be demanded by the Melville. Further, the contractual provisions in clause 27 were compliant with Section 109, and therefore Section 111 in respect of withholding did not apply.
The opinion of the court was delivered by Lord Nimmo Smith. The court held that clause 27.3.4 did not determine the contract but determined the employment of the Contractor. The Contract remained in force. Clause 27 did not alter the payment arrangements in respect of amounts certified under clause 30. Clause 27.6.5.2 went no further than providing for the preparation of an account after completion of the works. As the contract remained in force, Sections 109 and Section 111 continued to apply. The final date for payment of the amount certified had passed and the amount should be paid. The court granted a decree for a payment together with interest.
Melville made an application for payment on 30 April 2003. The employer’s agent issued an interim certificate on 30 April 2003 for £396,630 excluding VAT. The final date for payment pursuant to clause 30.3.6 was 16 May 2003. On 22 May, receivers were appointed in respect of Melville.
Wimpey refused to pay. A withholding notice was not served. There was an adjudication and the Adjudicator awarded payment of the amount of the interim certificate.
During the enforcement proceedings Wimpey argued that the determination provisions of clause 27 had superseded the interim payment procedure, and that any payment that had accrued could no longer be demanded by the Melville. Further, the contractual provisions in clause 27 were compliant with Section 109, and therefore Section 111 in respect of withholding did not apply.
The opinion of the court was delivered by Lord Nimmo Smith. The court held that clause 27.3.4 did not determine the contract but determined the employment of the Contractor. The Contract remained in force. Clause 27 did not alter the payment arrangements in respect of amounts certified under clause 30. Clause 27.6.5.2 went no further than providing for the preparation of an account after completion of the works. As the contract remained in force, Sections 109 and Section 111 continued to apply. The final date for payment of the amount certified had passed and the amount should be paid. The court granted a decree for a payment together with interest.