Can a solicitor's letter constitute a payment notice?

  • Insight

11 April 2017

It has been a while since a construction case in the Scottish courts makes one sit up and take notice.  It is even more unusual for such a case to come from the Sheriff Court as opposed to the Court of Session.

However, this is what happened in the case of Trilogy Services Scotland Ltd –v- Windsor Residential.  This was a decision of the new Sheriff Appeals Court in which the leading decision was issued by Sheriff Principal Turnbull, someone with a deep understanding of construction law.

The issue before the Court was whether a letter sent by one of the parties’ solicitors could constitute a notice in terms of Section 110A(3) of the 1996 Housing Grants Construction & Regeneration Act so as to create a “notified sum”.  Sheriff Turnbull was clear that such a letter could constitute a notice for the purposes of the section, and thereby the sum stated as being due would become the notified sum in the absence of a pay less notice.  

It was, I suspect, important that the letter (there was in fact more than one letter sent to each of the partners of the partnership who owed the money) included a copy of the outstanding invoice which had been issued previously.  It was argued before the court that such a letter could not be an application for payment under the legislation on the basis that the letter did not, on its face, make it clear that it was applying for payment and that, looking at the matter objectively, it could not have been the intention of the author of the letter that it be considered a notice under the Act.  The Court was quick to reject this argument and had no hesitation in stating that the letter was a notice under the legislation.

The lesson to be learned from this, therefore, is that if a solicitor or debt recovery letter is received which makes it clear that a sum is stated to be due under a building contract, it has to be responded to by either a payment or pay less notice if the payer wishes to avoid the consequences of having to make the payment in full.

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