Contractors need to beware of employers giving early withholding notices, say Alexander Hickey and Elspeth Owens
In Reinwood v Brown [2008] UKHL 12, [2008] All ER (D) 283 (Feb) the House of Lords has revisited withholding notices under s 111 and the payment regime of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) as incorporated in the Joint Contracts Tribunal Standard Form of Building Contract 1998 edition (JCT 1998). In Reinwood the law lords gave another ruling in favour of employers which may prove to be as controversial as last year's decision in Melville Dundas Ltd (in receivership) v George Wimpey UK Ltd and others [2007] UKHL 18, [2007] All ER (D) 226 (Apr). HGCRA 1996, s 111 provides:
- (1) 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.
- (2) To be effective
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