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Complexities of final certificates give us much food for thought

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legal matters

For those of us who work with the subject of construction law (or, in the case of some, live and breathe it), the simple phrase 'the final certificate' encapsulates all the subject's complexities.

'What did you talk about?' one's devoted spouse might enquire upon my return from a meeting of the Society of Construction Law, or dinner with members of the building bar or, occasionally, a quick drink with a judge. 'Oh, you know, the final certificate, ' I would reply.

We probably didn't. We probably talked about assignment of causes of action, whether adjudicators are obliged to act fairly as well as impartially or perhaps we talked about whether construction professionals were entitled to claim a contribution towards the cost of repairing fire damage from the contractor who was jointly insured with the employer under the main contract.

But the words 'the final certificate' say it all and one's spouse need say no more.

The importance of the final certificate was highlighted again in Sam Webb's recent piece posted on the discussion forum at ajplus. co. uk entitled, 'How final is the final certificate?'

So what is all the fuss about? After all, the final certificate is just a piece of paper, signed by the architect to mark the conclusion of the long struggle to get the building built and to signify a job well done.

The trouble started in the 1970s when the House of Lords held in Kaye v Hosier & Dickinson (1972) that a final certificate issued under the 1963 JCT standard form of contract was conclusive evidence that the works had been carried out in accordance with the contract.

Subsequently, the JCT amended the standard form to limit the conclusive effect of the final certificate and thereby still permit a claim against the contractor for defective work. Gradually, conclusive final certificates became a thing of the past, cropping up only in unusual circumstances.

In the case of Camden v Thomas McInerney (1986), the local authority's architect had died before issuing a final certificate for a 20-storey housing block built under the old version of the 1963 JCT contract. The building developed defects in the brickwork and Camden claimed against the contractor. A final certificate would have provided the contractor with a defence, but without the certificate it was obliged to prepare its case and grind on to trial.

Camden, like many local authorities at the time, was a little behind with its trial preparation and eventually, in an act of desperation, engaged a young barrister a few weeks before trial to help catch up. Imagine her surprise when sorting through the documents she found a final certificate, signed by the architect but still in its book.

Had the certificate been issued by the architect?

Was the contractor off the hook? A long trial on the brickwork rapidly became a short trial of a preliminary issue on just these points. The judge decided that, although the certificate satisfied all the essential requirements of the contract as to form and substance, it had not actually been issued. So the answer to the second question was no.

In the 1980s, various attempts were made to argue that a particular certificate issued under a particular form of contract was conclusive (or not, as the case may be), and the courts' decisions varied according to the particular terms of the contract and the judge's overall approach. In Crestar v Carr (1987) for example, the court held that a final certificate issued under the JCT Minor Works Contract had no conclusive effect.

These attempts culminated with the Court of Appeal's decision in Crown Estates v Mowlem (1994), which reinstated the conclusive status of certificates issued under the JCT 1980 contract.

The standard form has since been amended again and, under the 1998 version, the final certificate is conclusive in respect of some but not all matters which can arise out of the contract.With all this going on, it is no wonder we talk about it.

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