Melville Dundas Ltd (in Receivership)+colin Peter Dempster+thomas Merchant V. George Wimpey Uk Limited+norwich Union Insurance Ltd
| Jurisdiction | Scotland |
| Judge | Lord Clarke |
| Date | 22 October 2004 |
| Court | Court of Session |
| Published date | 22 October 2004 |
| OUTER HOUSE, COURT OF SESSION | |
|
| OPINION OF LORD CLARKE in the cause (1) MELVILLE DUNDAS LIMITED (IN RECEIVERSHIP), (2) COLIN PETER DEMPSTER, AND (3) THOMAS MERCHANT Pursuers; against GEORGE WIMPEY UK LIMITED Defenders; NORWICH UNION INSURANCE LIMITED Third Party: ________________ |
Pursuers: Howie, Q.C.; Maclay Murray & Spens
Defenders: Currie, Q.C., Henderson; Lindsays, W.S.
Third Party: McNeil, Q.C.; MacRoberts
22 October 2004
[1]The dispute in this commercial action arises out of a construction contract, under which the first named pursuers were engaged to carry out the design and construction of a housing development on behalf of the defenders. The contract entered into between the first named pursuers and the defenders, was on the terms of the Standard Form of Building Contract issued by the Scottish Building Committee, known as the "Scottish Building Contract With Contractor's Design Section on Completion Edition" in the January 2000 version of its May 1999 edition.
[2]In the present action, the pursuers seek payment of the sum of £396,630, together with interest thereon from 17 May 2003, which sum they claim is due to them by the defenders in terms of the said contract. The defenders deny that the said sum is due to be paid to the pursuers. The third party was convened to the proceedings by the defenders, on the basis that, esto the defenders are liable to the pursuers for the sum in question, they are entitled to recover payment of any such sum from the third party under a performance bond issued by the third party in favour of the defenders. The case came before me for debate on all the parties' preliminary pleas, as to the relevancy and specification.
[3]The basis of the pursuers' claim is to be found in clause 30 of the said contract which is concerned with interim payments. The provisions of that clause are somewhat elaborate and complex. The following specific provisions are relevant for present purposes. Clause 30.1.1. provides:
"Interim Payments shall be made by the Employer to the Contractor in accordance with clause 30.1. to 30.4 and whichever of the Alternatives A or B in Appendix 2 applies to this Contract."
It was a matter of agreement among the parties that Appendix B applies to the contract in question. Clause 30.3.1. provides:
"The Contractor shall make Applications for Interim Payment as follows: ...
where Alternative B applies, Application for Interim Payment shall be made at the Period for Applications for Interim Payment stated in Alternative B in Appendix 2 up to and including the end of the period during which the day named in the Statement of Practical Completion occurs. Thereafter Application for Interim Payment shall be made as and when further amounts are due to the Contractor and after the expiration of the Defects Liability Period named in Appendix 1 or on the issue of the Notice of Completion of Making Good Defects (whichever is the later) provided that the Employer shall not be required to make any Interim Payment within one calendar month of having made a previous Interim Payment."
Clause 30.3.2 then provides:
"Each application for Interim Payment shall be accompanied by such details as may be stated in the Employer's Requirements."
Clause 30.3.4. goes onto provide as follows:
"Not later than 5 days before the final date for payment of an amount due pursuant to clause 30.3.3 the Employer may give a written notice to the Contractor which shall specify any amount proposed to be withheld and/or deducted from that due amount, the ground or grounds for such withholding and/or deduction and the amount of withholding and/or deduction attributable to each ground."
Clause 30.3.5 then states:
"Where the employer does not give any written notice pursuant to clause 30.3.3. and/or to clause 30.3.4, the Employer shall pay the Contractor the amount stated in the Application for Interim Payment."
Clause 30.3.6 is to the following effect:
"The final date for payment of an amount due in an Interim Payment shall be 14 days from the date of receipt by the Employer of the Contractor's Application for Interim Payment."
In Article 4 of condescendence the pursuers aver, inter alia, as follows,
"Clause 4 of the said Scottish Building Contract, as completed by the parties, made Messrs. Robinson Low Francis, Claremont House, 20 North Claremont Street, Glasgow, the agent of the defenders for the purpose of receiving or issuing applications or notices under any of the conditions of the contract. The pursuers duly commenced the works entrusted to it under the said contract, and, on 2 May 2003, following the procedure in the said clause 4, it submitted to the defenders' said agents, Messrs. Robinson Low Francis, an Application for Interim Payment (No.20) for the work done by the pursuers from the time of its eighteenth application for interim payment down to 30 April 2003. The same day, Messrs. Robinson Low Francis issued a Valuation No.20, certifying that the sum in which they valued (at the rates and prices provided for in said contract) the work done by the pursuers between the date of their interim certificate 19 and 30 April 2003 was £396,630, exclusive of VAT. A copy of that Valuation was issued to the pursuers, which thereupon invoiced the defenders for payment of the said £396,630, that sum attracting, in the circumstances, no VAT. No notice under either sub-clause 30.3.3 or sub-clause 30.3.4 of the said contract, has been served on the pursuers by the defenders in respect of the said £396,630, or any part thereof. Accordingly, that sum became due by the defenders to the pursuers on 2 May and overdue for payment on 17 May 2003, following the passing of the final date for payment in respect of said sum."
[4]It was accepted, on behalf of the defenders, that no notices were served by them, or anyone on their behalf, in terms of clause 30.3.3 or 30.3.4 of the contract. It was accepted, furthermore, on behalf of the defenders, that the said sum sued for was, in terms of clause 30, due to be paid no later than 16 May 2003. Nevertheless the defenders, and the third party, resist payment of the said sum, in the present action, because of the operation of a separate chapter of the contract, namely the provisions of clause 27 thereof. Clause 27 is headed "Determination by Employer".
[5]It is a matter of agreement among the parties that on 22 May 2003, the first named pursuers had receivers appointed to them. Clause 27.3.1, 27.3.3 and 27.3.4 of the contract provide:
"27.3.1 If the Contractor -
makes a composition or arrangement with his creditors, or becomes bankrupt, or
being a company,
makes a proposal for a voluntary arrangement for a composition of debts or scheme of arrangement to be approved in accordance with Companies Act 1985 or the Insolvency Act 1986 as the case may be, or any amendment or re-enactment thereof, or
has a provisional liquidator appointed, or
has a winding up order made, or
passes a resolution for voluntary winding up (except for the purposes of amalgamation or reconstruction) or
under the Insolvency Act 1986 or any amendment or re-enactment thereof has an administrator or administrative receiver appointed
then:
...
27.3.3 Where a provisional liquidator or trustee in bankruptcy is appointed or a winding up order is made or the Contractor passes a resolution for voluntarily winding up (except for the purposes of amalgamation or reconstruction) the employment of the Contractor under this Contract shall be forthwith automatically determined but the said employment may be reinstated if the Employer and the Contractor (v) shall so agree;
27.3.4. where clause 27.3.3 does not apply, the Employer may at any time, unless an agreement to which clause 27.5.2.1 refers has been made, by notice to the Contractor determine the employment of the Contractor under this contract and such determination shall take effect on the date of the receipt of such notice."
It is a matter of further agreement among the parties that on 30 May 2003 the defenders, by notice in terms of clause 27.3.4, determined the employment of the first named pursuers. In...
To continue reading
Request your trial