THE HOUSE OF LORDS CONSIDERS ADJUDICATION PROVISIONS

Melville Dundas Ltd v George Wimpey UK Ltd [2007] UKHL 18 (unreported, 25 April 2007)

The House of Lords was given its first opportunity to consider the adjudication provisions to be found in the Housing Grants, Construction and Regeneration Act 1996 in Melville Dundas Ltd v George Wimpey UK Ltd [2007] UKHL 18 (unreported, 25 April 2007). Two principal issues arose in the appeal from the decision of the Inner House of the Court of Session (on which see our May 2006 issue, pp. 9–12). The first concerned the meaning of the words ‘any further payment’ in clause 27.6.5.1 in the contract which the parties had concluded. It was held that these words meant what they said, namely that the employer was entitled to withhold any payment whatever. Second, their Lordships held that clause 27.6.5.1 did not conflict with the requirements of s111(1) of the 1996 Act. In so concluding (by a majority of 3-2), they adopted a purposive approach to the interpretation of s111(1) of the Act. They held that the purpose of the notice requirement in s111(1) was to enable the contractor to know immediately and with clarity why a payment is being withheld; the aim was not to take away the parties’ freedom of contract by invaliding a clause such as clause 27.6.5.1.