Effect of notice to withhold payment

Collins (Contractors) Ltd v Baltic Quay Management (1994) Ltd CA TLR 3 January

Section 111(1) of the Housing Grants, Construction and Regeneration Act 1997 provides that a party to a construction contract ‘may not’ withhold payment after the final date for payment of a sum due ‘unless he has given an effective notice’ of the intention to do so. The defendant had not done so but this did not deprive it of its right to seek a stay of proceedings where a dispute was to be referred to arbitration under the agreement. The defendant was entitled to continue to withhold the money and to seek a stay of proceedings pending the hearing of the arbitration.