The JCT suite of contracts contains a familiar regime in
relation to final certificates. In the case
mentioned below, the relevant contract was JCT 2009 without quantities. Under that contract, a final certificate has
effect as ‘conclusive’ evidence as to variations, extensions of time and loss
or expense except in one scenario. The
exception relates to matters which are referred to any adjudication,
arbitration or other proceedings commenced by either party within 28 days after
the final certificate. There is a further qualification which effectively
allows a party to commence court proceedings in relation to an adjudicator’s
award where the award itself is after the final certificate. Again, the proceedings have to be commenced
within 28 days of the award.
All of this is pretty sensible stuff. The parties need to know where they
stand. A final certificate should be
conclusive and if a party wishes to challenge it, it should do so in a timely
manner. Put up or shut up.
The recent case of The
Trustees of the Marc Gilbard 2009 Settlement Trust v OD Developments and
Projects Limited (2015) required
the court to consider a novel argument on a challenge to a final certificate.
The claimant was the employer and the defendant the
contractor. The contract was for
construction works at a property in Mayfair.
The contract administrator issued the final certificate in December
2013. This showed that the employer owed
the contractor £232,153 plus VAT. The contractor issued court proceedings
within 28 days, challenging the validity of the final certificate.
13 months later little progress had been made in the court
proceedings. The contractor therefore
decided to commence an adjudication, challenging the final certificate on the
same basis as the court proceedings. Was the adjudication out of time because
of the 28 day time limit within which to challenge the final certificate? Or,
as the contractor had issued proceedings (albeit different ones) within the 28
day period, was it now free to pursue the adjudication?
Coulson J decided that the adjudication proceedings were out
of time. The JCT contract intended that there should be one set of proceedings to
challenge the certificate. Just because
one set of proceedings had been started in time, that did not mean that further
proceedings could be commenced out of time, even where they dealt with the same
subject matter. In the judge’s view,
that made commercial sense and helped achieve certainty regarding future
disputes, which is the underlying goal of a conclusive evidence clause.
By Bill Mackie
Bill is a consultant in the Construction team at
Cripps. To find out more about Bill
please click here