Hart Builders (Edinburg) Ltd v St. Andrews Ltd [2003] ScotSC 14 A69/02

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

The Court dismissed a claim in respect of an interim payment.  The claim was on the basis that no withholding notice had been served. If there was a dispute about whether or not sums were due, in reliance on SL Timber, no withholding notice was required.

Sheriff Principal Iain Macphaill QC, Appeal

10 January 2003

This was an appeal from an interlocutory judgment given by Sheriff Poole in August 2002.

Hart Builders had been engaged by St Andrew to undertake works at a new development, the Caledonian Village, near Haymarket Station in Edinburgh. A dispute arose when St Andrews failed to pay Hart pursuant to an interim certificate. No withholding notice had been served.

Hart issued proceedings for payment on the basis that no valid withholding notice had been served by St. Andrew. St Andrew sought dismissal of the proceedings. St Andrew claimed that, following SL Timber, Hart were not entitled to judgment solely on the basis that no notice of withholding had been served, but instead they had to show that the sums claimed in the interim valuation were in fact due. Further, St Andrew claimed that the amounts claimed in the interim valuation were not in fact due as they claimed that works were defective and they were entitled to set off liquidated damages from the sums due. 

At the first hearing, despite acknowledging that Hart could not simply rely on a lack of withholding notice to justify its case and would have to set out its claim for the sums set out in the interim valuation, Sheriff Poole held that, as St Andrew had failed to issue a withholding notice, that precluded them from raising issues such as set-off, liquidated damages, snagging etc in defence to the current proceedings.

St Andrew appealed against this ruling. They claimed that the interim valuation did not fall under the definition of a "claim by the payee" in paragraph 12 of the Scheme (which they contended applied to the contract) as the parties were in dispute as to whether the sums stated in the valuation were in fact 'due'. Accordingly, and in reliance upon SL Timber, St Andrew did not need to issue a withholding notice against that interim valuation.

The Sheriff Principal agreed with St Andrew's submissions. He ruled that, as Hart's claim was based solely on the failure by St Andrew to issue a withholding notice, but a withholding notice was not if fact required because the interim valuation was not a claim for sums 'due' to Hart, the action should be dismissed.

The Court dismissed a claim in respect of an interim payment. The claim was on the basis that no withholding notice had been served. If there was a dispute about whether or not sums were due, in reliance on SL Timber, no withholding notice was required.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

Click here to read full-screen | Click here to print the case