Pierce Design International Ltd V Johnston

The contractor was entitled to the interim payments which had fallen due under JCT 98 WCD more than 28 days before the purported determination of the contractor's employment (for alleged poor progress) on the basis that the proviso to clause applied in such circumstances

Technology and Construction Court
His Honour Judge Peter Coulson QC
17 July 2007
The contract incorporated JCT 98 With Contractor's Design. The homeowners did not make a number of interim payments to the contractor which had fallen due, did not serve any withholding notices in respect of those payments and purported to determine the contractor's employment (for alleged failure to proceed regularly and diligently). The interim payments had fallen due for payment more than 28 days before the purported determination. The contractor brought proceedings in which it claimed the interim payments and applied for summary judgment. Clause of JCT 98 provided that in the event of the employer determining the contractor's employment (i) the provisions of the contract which required any further payment or any release or further release of retention were not to apply but (ii) the clause was not to be construed so as to prevent the contractor's enforcement of any of its contractual rights in respect of amounts properly due to be paid by the employer to the contractor which the employer had unreasonably not paid and had accrued due 28 days or more before the date on which the employer could first have given notice to determine the contractor's employment.
Judge Coulson held that the contractor was entitled to summary judgment in respect of the unpaid sums on the basis that (1) the proviso to clause of JCT 98 WCD applied so as not to prevent the contractor from enforcing its rights in respect of sums properly due which the homeowners had, in the words of the proviso, "unreasonably not paid" and that (2) the employer's failure to serve withholding notices constituted unreasonably not paying. Whilst the judge rejected the contractor's contention that clause fell outside section 111, he found that the proviso to clause operated to prevent the homeowners from resisting the contractor's claims for sums due under the contract on the basis that these sums had been "unreasonably not paid" and had become due under the contract more than 28 days before the contractor's employer was determined in the absence of any withholding notices. Judge Coulson in coming to these conclusions took into account the decision of the majority of the House of Lords in Melville Dundas v George Wimpey (2007).