| Date | 10 March 1999 |
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| Judgment | Oxford University Fixed Assets Ltd -v- Architects Design Partnership, ORB 13 January 1999 |
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| The Issue | Contractor's liability in contribution proceedings for defects in the work following the issue of a Final Certificate. |
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| Implication |
Prior to the July 1995 amendment to JCT 80, a Final Certificate discharges the liability of the contractor for defects in the work both to the employer and in any third party contribution proceedings. |
printIn 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 a 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 architects "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……" The unamended provisions were however recently re-examined in the case of Oxford University Fixed Assets Ltd-v-Architects Design Partnership. This case concerned the situation where an architect had issued a Final Certificate thereby denying the employer an opportunity to recover damages from the contractor for defects in the works. In consequence the employer, Oxford University, had commenced proceedings against the architect who in turn had claimed a contribution from the contractor under the Civil Liability (Contribution) Act 1978. His Honour Judge Humphrey Lloyd QC remarked that if the architect was indeed entitled to a contribution from the contractor in such circumstances, this would drive a coach and horses through the structure of the JCT conditions where the Final Certificate was to be held as effectively discharging the liability of the contractor towards the employer. It was alleged that the contractor, Tarmac Construction (formerly Wimpey Construction), had constructed blockwork walls which had been plastered in an abnormally wet condition causing widespread cracking. Remedial work was carried out by the contractor and a Certificate of completion of making good defects and Final Certificate were subsequently issued. Evidently the remedial works were unsuccessful and in due course the employer sued the architect for failure to inspect the blockwork during construction; failure to require the contractor to rectify the defects; negligently certifying practical completion; failure to ensure the proper carrying out of the remedial works, and negligently issuing the Certificate of making good defects and Final Certificate. Judge Lloyd was satisfied that the JCT conditions envisaged that finality should be achieved by the issue of the Final Certificate both as regards the final account, and also as to the contractor's liability for the extent and quality of the work, materials and services which it undertook. However, the Final Certificate operated with respect to the state of affairs at the date of its issue and did not provide conclusive evidence that the works had always been "perfect". Accordingly, apart from the direct cost of putting the work right, and even though a Final Certificate had been issued, an employer would be able to claim from the Contractor damages for a prior breach of contract which had not been made good physically or by the payment of damages. It was argued that this distinction caused a liability to exist in contribution proceedings under the 1978 Act. Judge Lloyd concluded that this would cause an injustice. The Final Certificate provided evidence that the contractor could not be liable to the employer in respect of the defects alleged and accordingly that Certificate must be given the same effect in the contribution proceedings brought by the architect.
CJ-9910
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