This dispute arose out of works done on contracts to renovate some schools in Midlothian. The claimant sought periodical payments but was met with refusal because the Defendant claimed that it had large and on-going contra set-offs which were much more than what the claimant was pursuing.

The claimant argued that while the withholding notices had been issued, they had to specify an amount, grounds and then an attribution to each ground. Therefore, any “counter-notice” had to be effective under section 111 of the Housing Grants, Construction and Regeneration Act 1996 (“the Act”).

The defendant claimed that none of the counter-notices should be subjected to fine textual analysis. They were not addressed to lawyers but to contract managers and others who were aware of what was happening on site in an ongoing contract concerning several places. The defendant argued that the grounds and amounts had been specified and that was enough.

The issue before Lord McEwan was whether or not the withholding notices specified in sufficient detail, the grounds for set-off.