Hart Builders (Edinburgh) Ltd v St Andrew Ltd (Part II)

The contractor's claim for an interim payment should be dismissed on the basis that it had not sought to prove that the monies claimed under the interim payment application were due under the contract
Scotland, Sheriff of Lothian and Borders
Sheriff Principal Iain MacPhail QC
10 January 2003
This case concerned Scottish procedural law. The pursuer was the contractor and the defender was the developer. The contractor applied for an interim payment and when the developer refused to pay, the contractor began the present court proceedings for such a payment. The developer began separate court proceedings in respect of the contractor's standard of workmanship.
No notice of intention to withhold payment was served by the developer pursuant to the Construction Act 1996. Section 111 provides that a party to a construction contract may not withhold payment after the final date for payment of a sum due under the contract unless he has given an effective notice of intention to withhold payment. It was common ground that a pursuer in the position of the contractor had to set out a claim and the basis of the claim and could not simply rely on notice of intention to withhold payment having been served. The developer attacked the contractor's pleadings and insisted on the dismissal of the contractor's case despite the contractor having offered to amend its pleadings if that were to be held to be necessary. Sheriff Poole at first instance stated that there was a basis for claim set out in the contractor's pleadings, namely that there was a contract for particular works that were carried out and that an interim payment application was made. The contractor's case should not be dismissed and instead a proof before answer should be allowed to the contractor. The developer's appeal to Sheriff Principal MacPhail succeeded and the case was dismissed. The Sheriff Principal stated that the contractor's claim was inconsistent with the law as explained by Lord Macfadyen in SL Timber v Carillion Construction that a claimant must prove that a payment is contractually due even if the defendant has failed to serve a notice of intention to withhold payment. The contractor wrongly contended that simply because it claimed payment and no notice of intention to withhold payment had been served, the sum claimed was due and payable. Advice Note A contractor cannot sustain a claim for payment under the contract simply because the employer has failed to serve a notice of intention to withhold payment under the Construction Act. The contractor is required to prove that the sum claimed is contractually due.