| Date | 25 October 2000 |
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| Judgment | London Borough of Barking & Dagenham -v- Terrepin Construction Limited CA 3 July 2000 |
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| The Issue | Operation of Clause 30.8.11 in pre-1998 amendments of the JCT 1981 with Contractor's Design form of contract. |
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| Implication |
The defence of conclusive evidence does not apply to the design element of the JCT 1981 design and build contract. |
printIn the recent case of London Borough of Barking & Dagenham -v- Terrapin Construction Limited the Court of Appeal examined the effect of a final certificate issued under a JCT 1981 With Contractor's Design form of contract. The Court of Appeal have already had to look at this clause in the context of the JCT 1980 standard form of contract. In 1994 the decision in the case of Crown Estate Commissioners -v- John Mowlem & Company caused consternation within the Joint Contracts Tribunal. The Court of Appeal held that once a Final Certificate had been issued under a JCT 80 contract, the contractor would be free from any liability in respect of defects in materials and workmanship. This was because the Final Certificate was to be treated as conclusive evidence that the works in their entirety complied with the contract requirements as to quality of materials and standards of workmanship. The part of Clause 30.9.1 which had been examined closely stated that "…….the Final Certificate shall have effect in any proceedings arising out of or in connection with this contract as …….. conclusive evidence that where and to the extent that the quality of materials or the standards of workmanship are to be to the reasonable satisfaction of the architect the same are to such satisfaction …………..". The intention behind the drafting of this clause was that the architect should generally determine the standards to be achieved in all those areas of subjective quality in which architects will be notoriously interested, such as the standards of finishing joinery work and decorations. It was not the intention of the JCT, and particularly its RIBA constituents, that upon issue of the Final Certificate the contractor would no longer be liable for a failure to meet the express standards of the contract, irrespective of the architect's "satisfaction". Nevertheless the Court of Appeal was clear that the clause in question could not be construed in this way. It was impossible to isolate works or aspects of works which would be required to meet the satisfaction of the architect, as distinct from other works which should meet some other objective test. Accordingly, the court held that the Final Certificate would be conclusive in respect of all materials and workmanship, whether any defects subsequently complained of were patent or latent at the time of the Certificate. In response to this decision the JCT produced amendment 15 revising Clause 30.9.1.1 with the effect that "the Final Certificate shall have effect in any proceedings as conclusive evidence that where and to the extent that any of the particular qualities of any materials or goods or any particular standard of an item of workmanship is described expressly in the contract …. to be for the approval of the architect, the particular quality or standard is to the reasonable satisfaction of the architect ……..". These issues affected the London Borough of Barking & Dagenham in their relationship with Terrapin under their design and build contract for additions and modifications to a school. After the works had been completed and the Borough had made final payment, defects in the work appeared. The Borough brought a claim against Terrapin for breach of contract including allegations of poor workmanship, faulty design and breach of statutory duties. Terrapin sought a declaration from the Court that all the Borough's claims were barred by the conclusive evidence provisions of the Final Account and Final Statement which had been issued under clause 30.8.1.1. of the contract. This clause is given in effectively the same terms as clause 30.9.1 of the JCT 1980 form mentioned above, save that since there is no architect named under the design and build form, the clause makes reference to the "reasonable satisfaction of the employer". A further clause had been added to the effect that "the contractor shall and will execute, complete and maintain the works in all respects to the satisfaction of the controller of development of technical services". Bound by the decision of the Court of Appeal in the Mowlem case, and relying on this clause (which did not separately identify any specific aspects of materials and workmanship which were to be executed to the satisfaction of the Borough), the Judge granted a declaration barring all claims, except those based on Terrapin's alleged failure to comply with statutory requirements. The matter then came before the Court of Appeal with both parties unhappy with the Judge's findings. The Court of Appeal held that based on the wording of the design and build contract, there is no reason to treat this conclusive evidence clause any differently from the clause considered in the Mowlem case. In effect the employer's agent under the design and build contract performs the same supervisory role as an architect. Importantly however, the Court of Appeal recognised that Clause 30.8.1.1 of the design and build form related only to the quality of materials and standards of workmanship and made no mention of the contractor's design obligations. Accordingly it was held that the Borough's claims with respect to failure of design would not be barred by the operation of this clause.
CJ-0042
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