Final certificates are essential parts of JCT Intermediate Building Contracts as they close and resolve projects. However, as they require both parties’ satisfaction and call for payment, they are often debated. Here is an example of one such issue.
The Problem
I work for a construction company. In 2014, we formed a JCT Intermediate Building Contract 2011 with a health and fitness company to extend their centre.
When we started working on-site, it became clear that the individual nominated as contract administrator by the external building consultants was inappropriate. Despite this setback, we continued through the project and met the original completion date.
Once the defects period ended in mid-2016, the contract administrator delivered a list of defects. After resolving them, the contract administrator issued the certificate of making goods and the final certificate. The final certificate agreed to our final account and released the retention.
However, the client has since refused to make payment in line with the final certificate as it disagrees with the final amount certified. They also claim the administrator should not have issued a certificate of making goods as defects still exist, which the contract administrator missed on her initial list.
The final certificate specified the monies owed near the end of 2016, but the client is yet to issue a pay less notice. How should we proceed?
Jake, Stapleford.
Response
With the difficulties of working with a ‘below-par’ contract administrator, your company deserves credit for fulfilling its obligations on time, and your client, at least after completion, must have been pleased to access their new facilities when expected.
What is a JCT Contract Final Certificate?
Your final certificate is a document stating the contract sum, as adjusted according to the project, the interim payment sums and the required final payment.
Typically, without a timeous pay less notice, which you stated has not been issued, your client must pay the amount certificated and then argue it later. However, your situation is different as the contract administrator issued the final certificate.
With your contract, once issued, the final certificate becomes conclusive evidence defining whether the standard of work and the quality of the materials are as described in the contract documents or whether the adjusted contract sum follows its terms. This evidence can be challenged in legal proceedings no later than 28 days after the final certificate is issued.
How to Dispute Your Final Certificate
Under clause 1.9.2 of JCT contracts, the client had 28 days to dispute the final certificate after it was issued. They did not issue a timeous pay less notice.
Therefore, you should instigate adjudication, arbitration or court proceedings to claim the monies certified in the final certificate. The final certificate is evidence against proceedings that your client may initiate to recover (what it may see as) over-payment or concerning alleged defects, notwithstanding latent defects. You are not liable to make good of any outstanding defects when the contract administrator issued the final certificate (even if they were missed by the contract administrator). Your client’s only recourse is to claim against the building consultant who employed the contract administrator.
Instruct our Solicitors Today
If you are involved in a JCT contract dispute, contact our construction dispute solicitors today. We can arrange a free consultation to learn about your situation and recommend the best action.
The advice above is intended to be a general guide only and should not be viewed as a definitive legal analysis.
Pexels Licence - Jiyoung Kim
