Isovel Contracts Ltd (in Administration) V ABB Technologies Ltd
There should be summary judgement against the sub-contractor in respect of the dishonoured cheque for the certified value of the sub-sub-contractor's works notwithstanding its defence of a total or partial failure of consideration or of the certified sum not having become due
30 November, 2001
The sub-sub-contractor sued on the dishonoured cheque made out in its name by the sub-contractor in respect of two interim payment applications. The sub-sub-contractor brought court proceedings against the sub-contractor and applied for summary judgement. The sub-contractor relied on what it contended were the facts, as revealed by subsequent certificates, that: (1) No money was due as a result of the allegedly defective and incomplete work and (2) Clause 220.127.116.11 of DOM/2 (which was incorporated into the sub-sub-contract) required valuations to be of the total value of work properly executed. Judge Berry held that the sub-sub-contractor should have summary judgement against the sub-contractor for the amount of the cheque. In the instant case (1) There was no question of the sub-contractor having made a mistake in adding up an account or the work done (2) Instead the sub-contractor paid by way of cheque in accordance with the contractual payment scheme (3) The error, if there was an error, was that of the contractor when giving its certificates (rather than that of the sub-contractor) and (4) It was an essential element of the contractual payment scheme that errors in a valuation on which the certificate was founded should be taken account of in subsequent certificates. Whilst the errors might have been quantified in time for them to be taken account of in subsequent certificates and the sub-sub-cotnractor might have been in breach of contract, the position in respect of the interim payments in respect of which the cheque was drawn was that (1) Any claim of the sub-contractor at the time the cheque was issued was unliquidated and unquantified and (2) The mere fact that a subsequent certificate threw up errors in an earlier certificate in time for a cheque in respect of the earlier certificate to be countermanded could not change the fact that the quantification behind the subsequent certificate was only for the purpose of the subsequent certificate, particularly where, as in the instant case, it was unclear whether the defective work was carried out before or after the cheque was drawn. Advice Note This case represents an example of the court's reluctance not to treat a cheque as ?cash? unless the cheque was obtained fraudulently or there was a total (as opposed to a partial) failure of consideration.