| Date | 19 January 2000 |
|
|
| Judgment | Tameside Metropolitan Borough Council -v- Barlows Securities Group Services Ltd TCC 28 April 1999. |
|
|
| The Issue | Consequences of failure to issue a final certificate under the terms of contract |
|
|
| Implication |
Where parties have agreed all outstanding matters under the contact, but a final certificate has not been issued, the contractor may nevertheless be entitled to the same protection it would have had if the certificate had been issued. |
printI have in the past reported cases dealing with final certificates under certain standard forms of contract. Depending on the wording of the contract, the issue of the final certificate by the architect or engineer may be taken as conclusive evidence that all obligations under the contract have been met. In such circumstances a contractor will be afforded protection by the final certificate against any subsequent claim by the client in respect of defective works. The certificate will in effect act as evidence that the works were completed in all respects in accordance with the contract. As a consequence of previous litigation in this area, in current editions the JCT have revised their provisions for final certificates, to the effect that the certificate is final only in respect of amounts due under the contract. Unless there is something expressly to the contrary in the contract documents the issue of the final certificate will not displace the common law rights of each party in respect of breaches of contract. Often however the issue of the final certificate is overlooked, perhaps as a consequence of the parties attentions being drawn elsewhere once completion of the works has been achieved. On occasions there may be a dispute concerning the quality of the completed works which leads to a refusal to issue a final certificate. The case of Tameside Metropolitan Borough Council -v- Barlows Securities Group considered circumstances where there had been a failure to issue a final certificate, notwithstanding that the parties had reached agreement as to the final account. The court had to decide whether in the absence of a final certificate having been formally issued, a contractor was nevertheless entitled to the protection the certificate would have afforded had it been issued under the terms of the contract. The contract was in the JCT Standard Form of Building Contract for use with quantities, local authorities edition 1963. In this contract the issue of the final certificate would have given the main contractor protection against an allegation of defects in the work. On completion of the defects liability period, representatives of the parties had met and agreed that no further monies were payable on either side. This was to be taken as meaning that the final certificate, had it been issued, would have shown a £nil balance due to the contractor. The client argued that the effect of this meeting was restricted to the final account, and to the question of whether any further monies were payable. The contractor argued that the meeting had wider effect, and that a line was being drawn under the whole matter. Subsequently to this, the architect had not issued the final certificate and nor had the contractor pressed for its issue. His Honour Judge Gilliland QC held that this indicated an intention that there should be finality in relation to the whole of the contract so far as there were remaining obligations to be performed on either side. In his view it would be wholly unreal to suggest that after a meeting at which it had been agreed that no more payments were to be made on either side and that a line was to be drawn under the matter, it could have been intended that the contractor should have still to apply for a final certificate, and if it were refused, refer the matter to arbitration. Moreover, Judge Gilliland was satisfied that the doctrine of "promissory estoppel" would apply. This had the effect that the employer in such circumstances could not seek to rely on the fact that the final certificate had not been issued, to establish obligations of the contractor under the contract. Four ingredients had to be established before any such 'estoppel' could arise. Firstly, there had to be a legal relationship between the parties. This was shown to exist by the terms of the contract. Secondly, there must be a promise or representation expressly or impliedly by one party that he will not enforce his strict legal rights. Again Judge Gilliland was satisfied that this was the case. The effect of the meeting between the parties to agree the final account carried the clear intention that all outstanding matters under the contract were to be regarded as having been performed and that nothing further remained to be done on either side. It was represented by implication that the contractor need do no more to obtain a final certificate. Thirdly, there must be reliance on that representation. Again Judge Gilliland was satisfied that such reliance was present. The contractor had taken no further steps to insist on the issue of the final certificate. Finally for a promissory estoppel to arise, it must be inequitable for the promisor to resile from this promise. That requirement was also clearly satisfied since to allow the employer to argue that no final certificate had in fact been issued, would deprive the contractor of the protection of a final certificate, when it had been agreed that a line was to be drawn under the contract. The consequence for all of this was that the contractor was entitled to the same protection it would have had, if the final certificate had been issued by the architect immediately following the meeting between the parties in which the final account was settled.
CJ-0002
|
|||
|
© Brewer Consulting |
|||
 |
|||