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.
Had the determination provisions of clause 27 superseded the interim payment procedure, such that any payment that had accrued could no longer be demanded by Melville? Further, were the contractual provisions in clause 27 compliant with Section 109, so that a Section 111 withholding notice was not required?
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 18.104.22.168 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.
*Full case details
15 December 2005, Extra Division, Inner House, Court of Session, [2005 CSIH 88], Nimmo Smith L, Mackay L, MacLean L.
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Under the JCT, contract clause 27 provides an accounting procedure after a determination of the contract. The interim payment process of clause 30 no longer applies. However, in this case an interim certificate had been issued pursuant to clause 30 before clause 27 was operated. As a result the certificate was valid and had to be paid. Any future payments, if any, would then be governed by clause 27, but clause 27 did not operate retrospectively.