Melville Dundasn Limited (in Receivership) And The Joint Receivers Thereof V. George Wimpey Uk Limited+norwich Union Insurance Limited
| Jurisdiction | Scotland |
| Judge | Lord Nimmo Smith,Lord Mackay of Drumadoon,Lord MacLean |
| Date | 15 December 2005 |
| Docket Number | A752/04 |
| Court | Court of Session |
| Published date | 15 December 2005 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Nimmo Smith Lord Mackay of Drumadoon Lord MacLean
| [2005CSIH88] A752/04 OPINION OF THE COURT delivered by LORD NIMMO SMITH in the cause MELVILLE DUNDAS LIMITED (in receivership) AND THE JOINT RECEIVERS THEREOF Pursuers and Reclaimers; against GEORGE WIMPEY UK LIMITED Defenders and Respondents; and NORWICH UNION INSURANCE LIMITED Third Parties: _______ |
Act: Howie, Q.C.; Maclay Murray & Spens (Pursuers and Reclaimers)
Alt: Currie, Q.C., Henderson; Lindsays, W.S. (Defenders and Respondents)
Alt: McNeill, Q.C.; MacRoberts (Third Parties)
15 December 2005
The reclaiming motion
[1]This is a reclaiming motion by the pursuers against a decision of Lord Clarke dated 22 October 2004. The pursuers conclude for payment to them by the defenders of a sum of money and interest. They aver that they are entitled to receive payment from the defenders of this sum in terms of a contract between them. The Lord Ordinary, however, having considered the relevant provisions of the contract and of the Housing Grants, Construction and Regeneration Act 1996 ("the 1996 Act"), in the circumstances which had occurred, held that the pursuers are not entitled to claim payment of this sum and accordingly dismissed the action as being irrelevant. The question for us to consider is whether the Lord Ordinary's interpretation of the statutory and contractual provisions was correct.
[2]On 7 and 26 March 2002 the first-named pursuers (who are now in receivership, but whom for convenience we call "the pursuers", although the receivers are also pursuers) entered into a contract with the defenders for the design, construction and completion of a residential development at Ayr Road, Whitecraigs, Glasgow ("the contract"). The form of contract was the Scottish Building Contract with Contractor's Design Sectional Completion Edition (January 2000 Revision), issued by the Scottish Building Contract Committee ("SBCC"). In terms thereof the rights and duties of the pursuers as the employer and the defenders as the contractor thereunder were regulated by inter alia the Conditions of the Standard Form of Building Contract with Contractor's Design 1998 Edition, issued by the Joint Contracts Tribunal Limited ("JCT 1998"), amendments thereto made by the JCT Amendment 1 dated June 1999 and JCT Amendment 2 dated January 2000, and the amendments and modifications contained in the Scottish Supplement for Sectional Completion issued by the SBCC.
[3]In furtherance of the project the defenders entered into a contract performance guarantee bond with the third parties. The third parties were 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 it from the third parties. The third parties contest the liability of the defenders to pay the pursuers this sum. It is a matter of agreement among all the parties that the third parties have an interest in the subject-matter of this action, and it is accepted accordingly that they had been properly convened.
[4]Part II of the 1996 Act contains provisions, set out in sections 104 to 117, relating to construction contracts. The expression "construction contract" is defined in section 104, in terms which need not be repeated here because it is not in dispute that the contract was a construction contract as so defined.
[5]Section 109 provides inter alia:
"(1)A party to a construction contract is entitled to payment by instalments, stage payments or other periodic payments for any work under the contract unless -
(a)it is specified in the contract that the duration of the work is to be less than 45 days, or
(b)it is agreed between the parties that the duration of the work is estimated to be less than 45 days.
(2)The parties are free to agree the amounts of the payments and the intervals at which, or circumstances in which, they become due.
(3)In the absence of such agreement, the relevant provisions of the Scheme for Construction Contracts apply.
(4)References in the following sections to a payment under the contract include a payment by virtue of this section."
[6]Section 110 provides:
"(1)Every construction contract shall -
(a)provide an adequate mechanism for determining what payments become due under the contract, and when, and
(b)provide for a final date for payment in relation to any sum which becomes due.
The parties are free to agree how long the period is to be between the date on which a sum becomes due and the final date for payment.
(2)Every construction contract shall provide for the giving of notice by a party not later than five days after the date on which a payment becomes due from him under the contract, or would have become due if -
(a)the other party had carried out his obligations under the contract, and
(b)no set-off or abatement was permitted by reference to any sum claimed to be due under one or more other contracts,
specifying the amount (if any) of the payment made or proposed to be made, and the basis on which that amount was calculated.
(3)If or to the extent that a contract does not contain such provision as is mentioned in subsection (1) and (2), the relevant provisions of the Scheme for Construction Contracts apply."
[7]Section 111 provides inter alia:
"(1)A party to a construction contract may not withhold payment after the final date for payment of a sum due under the contract unless he has given an effective notice of intention to withhold payment.
The notice mentioned in section 110(2) may suffice as a notice of intention to withhold payment if it complies with the requirements of this section.
(2)To be effective such a notice must specify -
(a)the amount proposed to be withheld and the ground for withholding payment, or
(b)if there is more than one ground, each ground and the amount attributable to it,
and must be given not later than the prescribed period before the final date for payment.
(3)The parties are free to agree what that prescribed period is to be.
In the absence of such agreement, the period shall be that provided by the Scheme for Construction Contracts."
[8]For Scotland, the Scheme for Construction Contracts is contained in the Scheme for Construction Contracts (Scotland) Regulations 1998 (S.I. 1998/687) ("the scheme"). It was not suggested to us that any provision of the scheme was of relevance for present purposes.
JCT 1998
[9]JCT 1998 was a revision which took account of the provisions of the 1996 Act. Clause 30, so far as material for present purposes, provides inter alia:
"30Payments
30.1.1.1Interim Payments shall be made by the Employer to the Contractor in accordance with clauses 30.1 to 30.4 and whichever of the Alternatives A or B in Appendix 2 applies to this Contract."
By Appendix III to the contract (as distinct from the conditions) the parties made provision in respect of alternative methods of payment. The Appendix provides:
"Clause 30.1: Interim Payments shall be made in accordance with Clause 30 and:
periodically in accordance with Alternative B and Clause 30.2A shall not apply."
[10]Clause 30.3, so far as material, provides as follows:
"30.3.1The Contractor shall make Applications for Interim Payment as follows:
...
.1.2where 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.
...
30.3.3Not later than 5 days after the receipt of an Application for Payment the Employer shall given [sic] a written notice specifying the amount of payment proposed to be made in respect of that Application, the basis on which such amount is calculated and to what the amount relates and, subject to clause 30.3.4, shall pay the amount proposed no later than the final date for payment.
30.3.4Not 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.
30.3.5Where 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.
30.3.6The 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."
[11]It is also necessary, as will be seen, to quote various provisions of Clause 27, which relate to determination by the employer of the employment of the contractor under the contract. So far as material for present purposes, the clause provides:
"27.3.1If the Contractor... 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 the 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...
To continue reading
Request your trial