Maxi Construction Management Ltd -v- Mortons Rolls Ltd
The contractor's 'interim valuation' document did not constitute an interim payment application under the contract and was instead a request for agreement of the valuation under the contract as a preliminary to the subsequent making of a payment application
7 August, 2001
The contractor contended that: (1) It was entitled to payment on an alleged interim payment application and (2) The employer had stated that it had no relevant defence to the claim. There was also a dispute as to the contract's terms Paragraph 12 of the Scheme for Construction Contracts provided that the word ?claim? was a notice by the party carrying out work specifying the amount of any payment(s) it considered to be due, to what the payment(s) related and the basis of calculation. Lord Macfadyen held that the contractor's ?interim valuation? document did not constitute an interim payment application under the contract and was instead a request for agreement of the valuation under the contract as a preliminary to the subsequent making of a payment application. This was on the basis that the employer's proposed amendments to the payment provisions of the standard form of building contract were validly incorporated into the contract with the results that the Scheme for Construction Contracts applied and that the employer's requirements document also formed part of the contract. The employer's requirements provided that the amount of each valuation was to be agreed before the submission of interim payment applications with the result that the contract made a clear distinction between (1) The valuation's agreement and (2) The subsequent payment application for the sum agreed to be due. Whilst there was force in the contractor's submission that the alleged payment application met the requirement of paragraph 12 of the Scheme that it should specify the amount of the payment which the contractor considered to be due, it was clear from the contractor's covering letter that it was (1) Not intended to operate as a payment application and (2) Instead an invitation to the employer's agent to agree the valuation. Advice Note The provision in the employer's requirements was inconsistent with section 110(1)(a) of the Construction Act 1996 insofar as it did not provide a timetable for the process of agreement or a means of resolving any failure to reach agreement with the result that the contract could not provide an adequate mechanism for determining when payments became due as was required by that section.