S L Timber Systems Limited V Carillion Construction Limited

The adjudicator was wrong to decide that the contractor's failure to serve valid or timeous notices under sections 110(2) and 111 of the Construction Act meant that he was not required to determine whether the sums claimed were due under the sub-contract
 
SL TIMBER SYSTEMS LTD v CARILLION CONSTRUCTION LTD

Scotland, Outer House, Court of Session
Lord Macfadyen
27 June 2001

 
The adjudicator made decisions in the sub-contractor's favour on the basis that: (1) The contractor did not serve a notice under section 110(2) of the Construction Act 1996 and that its purported notice of intention to withhold payment under section 111 was served out of time. (2) The adjudicator was not required (or entitled) to determine whether the sums claimed were due under the contract in the light of these failures. The sub-contractor applied to the court for enforcement of the adjudicator's decisions.
 
Section 110(2) of the Construction Act 1996 provides that every construction contract is to make provision for the giving of a notice specifying the amount of the payment to be made and its basis of calculation. Section 111(1) provides that a party cannot withhold payment after the final date for payment of a sum due under the contract unless he gives an effective notice of intention to withhold payment.
 
Lord Macfadyen held that the adjudicator was in error in deciding that the contractor's late service failure to serve a notice under section 110(2) and that its service out of time of a notice of intention to withhold payment under section 111 meant that he was not required (or entitled) to determine whether the sums claimed were due under the sub-contract. This was on the basis that he ought properly to have held that the failure to serve a section 110(2) notice was irrelevant to the question of any payment which the contractor ought to have made. The judge went on to hold that the adjudicator was also in error in deciding that the contractor's failure to serve a timeous notice of intention to withhold payment under section 111 meant that the sub-contractor was relieved of the requirement under the section to show that the sums it claimed were due under the sub-contract.
 
Advice Note
This decision emphasises that adjudicators should not award sums to claimants simply because the defendant has failed to serve the required notices under sections 110 and 111 of the Construction Act. The claimant has to be establish and the adjudicator has to determine that the sum claimed was "due under the contract".
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