Melville Dundasn Ltd v. George Wimpey UK Ltd & Anor [2005] ScotCS CSIH_88 (15 December 2005)

Melville Dundasn Ltd v. George Wimpey UK Ltd & Anor [2005] ScotCS CSIH_88 (15 December 2005)

Section 111(1) of the 1996 Act applies to prohibit the employer from withholding payment of a sum certified and overdue after the final date for payment, regardless of subsequent determination of the contractor's employment, unless an effective withholding notice was served; contractual provisions purporting to suspend payment after insolvency do not retrospectively alter the final date for payment and are overridden by statute.

Citation
[2005] ScotCS CSIH_88
Parties
Pursuers and Reclaimers: Melville Dundas Limited (in receivership) and the Joint Receivers thereof; Defenders and Respondents: George Wimpey UK Limited; Third Parties: Norwich Union Insurance Limited
Jurisdiction
Scotland
Judgment Date
15 December 2005
Procedural Posture
Reclaiming Motion (appeal) / Court of Session, Inner House, Extra Division, Final Judgment
Outcome
Reclaiming motion allowed; interlocutor of Lord Ordinary recalled; action sustained for pursuers.
Legal Topics
Payment Provisions in Construction Contracts, Statutory Regulation of Construction Payments, Freedom of Contract Under Housing Grants, Construction and Regeneration Act 1996, Effect of Insolvency on Contractual Payment Rights
Construction Law Contract Law Insolvency Law Payment Provisions in Construction Contracts Statutory Regulation of Construction Payments Freedom of Contract Under Housing Grants, Construction and Regeneration Act 1996 Effect of Insolvency on Contractual Payment Rights

Case Brief

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Parties

Melville Dundas Limited (in receivership) and the Joint Receivers thereof

Pursuers and Reclaimers

George Wimpey UK Limited

Defenders and Respondents

Norwich Union Insurance Limited

Third Parties

Procedural Posture

Reclaiming Motion (appeal) / Court of Session, Inner House, Extra Division, Final Judgment

Legal Issues

  1. 1 Whether section 111 of the Housing Grants, Construction and Regeneration Act 1996 overrides contractual provisions suspending payment after contractor insolvency
  2. 2 Whether the contract's clause 27 validly alters the final date for payment after determination of contractor's employment
  3. 3 Whether the employer can withhold payment after the final date for payment without a statutory withholding notice

Ratio Decidendi

Section 111(1) of the 1996 Act applies to prohibit the employer from withholding payment of a sum certified and overdue after the final date for payment, regardless of subsequent determination of the contractor's employment, unless an effective withholding notice was served; contractual provisions purporting to suspend payment after insolvency do not retrospectively alter the final date for payment and are overridden by statute.

Court Disposition

Reclaiming motion allowed; interlocutor of Lord Ordinary recalled; action sustained for pursuers.

Orders

  • Repel pleas-in-law for defenders and third parties
  • Sustain pleas-in-law for pursuers