Are final certificates final?
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.
Reviewed in 2015