Aedas Architects Ltd V Skanska Construction UK Ltd

It could not be said that the contractor's defence was bound to fail by reason of its withholding notices not being effective since there had been no attempt to attribute the individual sums sought to be withheld to individual grounds for withholding
 
AEDAS ARCHITECTS LTD V SKANSKA CONSTRUCTION UK LTD

Scotland, Outer House, Court of Session
Lord McEwan
17 April 2008
 
 
The contractor by way of defence purported to set off sums against periodical payments otherwise due to the architect which were greater than the sum of the payments. The contractor gave six notices of intention to withhold payment in letter form and cited nine grounds for withholding. Only five of the grounds had figures attributed to them in the calculations which accompanied the letters. Three of the notices cited the five grounds which had figures attributed to them and in each case the total sum being withheld exceeded the sums otherwise due to the architect. The other three notices did not attempt to attribute figures to individual grounds and instead the sum being set off was attributed to all five grounds for which there were calculations. Section 111(2) of the Construction Act provided that to be effective a withholding notice had to specify the amount proposed to be withheld and the ground for withholding payment or, if there was more than one ground, each ground and the amount attributable to it. The architect applied to the court for a motion for summary decree on the basis that the contractor's defence was bound to fail by reason of its withholding notices not being effective since there had been no attempt to attribute the individual sums sought to be withheld to individual grounds for withholding.
 
Lord McEwan refused the architect's application. The contractor's defence that it had given effective notices of withholding was not bound to fail. Issues of fact could arise from the notices and this would allow evidence of meetings and conversations to explain the letters comprising the notices and the events surrounding the notices. If, however, evidence should not be allowed to explain the letters and the events surrounding the notices, the letters and their attachments were themselves "effective" under section 111 because (i) as to the first three notices cited, the five grounds which had figures attributed to them (and in each case the total sum being withheld exceeded the sums otherwise due to the architect) and (ii) as to the second three notices, the global attribution of the total sums sought to be set off to all five grounds for withholding was sufficient to satisfy the requirements of section 111 (as well as the architect's appointment which mirrored those requirements).
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