He writes such good judgments. They are so easy to read. Apparently he is never wrong. Certainly, as far as I am aware, the Court of Appeal has never found that he has erred. So it is with some trepidation and hesitation that I suggest that, when it comes to what happens if the payment provisions in a construction contract do not comply with all the relevant provisions of the Construction Act 1996, Coulson J has got it wrong.
In Fenice Investments Inc v Jerram Falkus Construction Ltd, Coulson J appears to suggest that if any part of the payment provisions of the Construction Act 1996 are not properly and fully incorporated into the contract, the payment provisions as set out in the Scheme for Construction Contracts 1998 apply, lock stock and barrel (see paragraphs 40, 41 and 43 of the judgment). This follows the line which he appears to set out in his book, Construction Adjudication (Oxford University Press, 2007) at paragraphs 3.10 and 3.97. However, he does suggest that the matter should be determined by the appellant courts.
The Scots of course have concluded that the payment provision in the Scheme only apply in so far as, and to the extent that, the contract does not contain the particular provision required by the Construction Act 1996 (Hills Electrical & Mechanical Plc v Dawn Construction Ltd). In my opinion, the Scots are right. Importing all of the payment provisions does not have proper regard to the wording of either the Construction Act 1996 or the Scheme. Coulson J refers to two cases in his book: Aveat Heating Ltd v Jerram Falkus Construction Ltd and John Mowlem Ltd v Hydra-Tight Ltd [2002] 17 Const LJ 358, but these concern adjudication and not payment.
If one looks more closely at the payment provisions in, for example, section 110 of the Construction Act 1996, both sections 110(1) and 110(2) require the contract to provide, amongst others, an adequate payment mechanism for determining what payments becomes due and a payment notice. Section 110(3) goes on to state that:
“If or to the extent that a contract does not contain such provision as is mentioned in subsection (1) or (2), the relevant provisions of the Scheme [applies]…” (my emphasis).
Turning to Part II of the Scheme, in my opinion, paragraph 1 refers to inserting no more than the “relevant provisions” of paragraphs 2-4 of the Scheme.
While this is not the first time that I have stuck my neck out, only to have my head chopped off (metaphorically speaking), I have a feeling that, unlike the adjudication provisions, where I accept that it is an “all or nothing” situation, Coulson J is wrong when he says the same about payment. I believe the Scheme simply fills the gap, if necessary, very much on a “pick and mix” basis rather than “take it or leave it”.
