SECTION 111 NOTICE REQUIREMENT DOES NOT APPLY TO A DEFENDER WHO DISPUTES THAT THE SUM CLAIMED IS CONTRACTUALLY DUE

SL Timber Systems Ltd v Carillion Construction Ltd [2001] BLR 516

In SL Timber Systems Ltd v Carillion Construction Ltd [2001] BLR 516 Lord Macfadyen, sitting in the Outer House of the Court of Session, held that the requirement to issue a notice under s111 of the Housing Grants, Construction and Regeneration Act 1996 does not apply where the defender disputes that the sum claimed is due under the terms of the contract. Rather, the notice requirement applies where the defender is seeking to withhold on some separate ground (such as a right of retention in respect of a counterclaim) a sum which is due under the contract. In some circumstances it may be difficult to distinguish between these two categories but the distinction is nevertheless crucial to the existence of the requirement under s111 to issue a notice. In such a case a defender would be well advised to err on the side of caution and issue a s111 notice. The adjudicator in the present case adopted a different construction of s111 and, while Lord Macfadyen held that he was mistaken, that mistake was not one which related to the scope of his jurisdiction and so did not entitle the defenders to reduce the award. Finally, Lord Macfadyen held that, in the case of a pursuer company which is not in liquidation, a mere averment of insolvency is not a relevant defence to an enforcement action.