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It should be no surprise that courts are routinely asked to deal with  issues arising from final certificate provisions in the JCT Standard Forms. Long before the JCT took over responsibility for the contract, the final certificate had special status so arguments about defects, time and money would be regarded as settled by it for all time, unless a challenge was made soon after its issue. For a time these challenges came from employers anxious that final certificates should not prevent them from complaining about defective work. Now the modern form has largely abandoned any attempt to deem work satisfactory by the issuing of a certificate, and the pressure points come from elsewhere. These days challenges to conclusivity of the final certificate will come more often from contractors who disagree with valuations or assessments made by the contract administrator. The clause now states that if adjudication, arbitration or other proceedings start within 28 days of issue of the certificate, it shall have conclusive effect as to adjustments to the contract sum, extensions of time and loss and expense awarded, save only in respect of matters to which those proceedings relate.

This sounds straightforward. If court proceedings are started by a claim form, or a notice of arbitration is issued, it is clear whether or not the 28 day period has been complied with. But, it is not so straightforward if the chosen method of challenge is adjudication; there are ample opportunities for procedural mishaps. 

Firms making a challenge by adjudication should bear in mind Mr Justice Coulson鈥檚 advice on simultaneous proceedings

What if, for example, a referring party issues a notice of adjudication but, due to delays in applying for appointment of an adjudicator, the referral notice is served outside the seven day period and the adjudicator resigns? The adjudication has to be started again. If we are now beyond the 28 day saving period is the contractor now faced with a conclusive final certificate? And what if the referring party, following a notice of adjudication, applies to the wrong adjudicator nominating body (ANB) to appoint an adjudicator, and the adjudicator realises the error and resigns. Again, a fresh adjudication must be started which may be out of time. In these scenarios courts have held in favour of the contractor by deciding that the initial valid notices, even though superceded by later notices, were sufficient to stop the clock running (see Mr. Tracy Bennett vs FMK Construction Ltd, 2005; and University of Brighton vs Dovehouse Interiors Ltd, 2014). But there are other possible pitfalls where it might be impossible for the courts to be so accommodating. What if the adjudicator鈥檚 decision is given late and well beyond the 28 day period? If that happens the whole proceedings are a nullity and a new adjudication notice would be too late.

Mr Justice Coulson, in his book on adjudication, recommends that a contractor wanting to challenge a final certificate by way of adjudication would be well advised to take a cautious approach and start arbitration or court proceedings at the same time, just in case something goes wrong with the adjudication during the reference.

The latest in this series of cases came before that same judge a few weeks ago. OD Developments and Projects Ltd had contracted to carry out works for the trustees of the Marc Gilbard 2009 Settlement Trust on the standard form of contract. A final certificate was issued showing a balance in favour of the trustees. The contractor challenged this by issuing court proceedings within the 28 day period. Those proceedings advanced at a leisurely pace with no case management conference fixed over a year later. The contractor then announced its intention to start an adjudication. The employer went to court for a declaration that the contractor could not do this because, although existing proceedings were a legitimate challenge to the final certificate, further proceedings by way of adjudication would not have been begun within the 28 day period. The contractor argued that the matters to which the existing proceedings related were properly exempt from the conclusivity of the final certificate and could therefore be pursued in subsequent adjudication proceedings which, under the Housing, Grants, Construction and Regeneration Act 1996 (HGCRA), could be started 鈥渁t any time鈥�.  In the judge鈥檚 view the saving provision of the contract contemplated a choice of proceedings by the challenger and only one set of proceedings was permitted. Common sense required that a final certificate should be challenged in one place, in one set of proceedings, promptly commenced.

But what of the statutory right to start adjudication 鈥渁t any time鈥�? The judge explained that nothing was stopping the contractor from starting an adjudication, but, if it did, the final certificate would remain conclusive. The clause in the contract providing for conclusivity was not contrary to the 1996 act. In any event the contractor could have started adjudication initially and arbitrated or litigated if it was displeased with the result. Instead it chose to litigate.

The court has opted for a purposive construction of the conclusivity clause in the standard form that makes it impossible for serial proceedings on final certificate issues to postpone the resolution of outstanding issues. Contractors making a challenge by adjudication should bear in mind Mr Justice Coulson鈥檚 advice about simultaneous proceedings and the time limit for 鈥渁ppealing鈥� the adjudicator.  But the attempt to have a second bite of the cherry by adjudication after court proceedings have started is now shown to be unacceptable.

Tony Blackler is a contracts adviser