The standard forms of building contract are full of clauses requiring the parties (and the architect) to do things within time limits – information release, compliance with instructions, issuing of certificates, payment and so on.
When a project gets to the stage of settling the final account, the parties are meant to comply with a timetable that culminates in the issuing of a final certificate. But what happens if that certificate is not issued when it should be? If it is issued months, or even years, out of time? Does that mean it is invalid?
As everyone knows, the final certificate has some extremely important consequences. If it is not challenged within a short time, all payments properly due under the contract (including loss and expense) will be deemed to have been certified, and all extensions of time due to the contractor will be deemed to have been awarded.
The case of Cantrell vs Wright & Fuller concerned a client that was very unhappy with a final certificate. In its view, the sum due to the contractor had been seriously overcertified. Its problem was that it had left it too late to challenge it. The only argument available was that the certificate itself was invalid because it was issued way beyond the contract timetable and certain essential preliminary steps had not been taken.
The judge held that in order to make the contract workable the time limits imposed by the contract for the issuing of certificates and the like had to be treated as "neither rigid nor immutable". It is clear enough that the client is not automatically put in breach of contract by its architect's failure to issue a certificate on time, because it does not warrant that the architect will always get it right. It merely promises to the contractor that it will allow the architect to do the job without improper pressure. But once the contractor puts the client on notice that this is happening, it is under a duty to instruct the architect to perform. This is not spelled out in the contract but arises as a matter of implication. Accordingly, the judge reasoned that the architect had an implied power to issue a certificate out of time. It was necessary to allow for a relaxation of the prescribed timescales subject to the imposition of a requirement of reasonableness. It was all part and parcel of the need for the parties and the certifier to co-operate with each other.
Once the certificate is out of time, an obligation to give prior notice to both parties arises before it can be issued
In a previous case, London Borough of Merton vs Lowe, the client had asked the architect to delay issuing the final certificate for it own reasons. Then, when it was issued years out of time, the client argued that it was invalid. The Court of Appeal rejected this, reasoning that the client could not invalidate the final certificate by its own conduct. But if the delay had been caused by the architect, the client would "have first had to give notice of its intention to issue the final certificate years out of time".
This is the practical point for certifying officers to note. Once the certificate is out of time, an obligation to give prior notice to both parties arises before it can be issued. Both client and contractor can then make representations about the contents of the certificate, which the certifying officer is obliged to take into account.
But if these time limits are more flexible than they appear to be, certain other requirements are "rigid and immutable". These are the steps that have to be taken by the architect before it can issue a final certificate. They include adjusting the contract sum and dealing with nominated subcontractors accounts. Also obligatory is the need to review all extensions of time and to issue a certificate of non-completion if the final completion date and practical completion do not coincide. If these things are not attended to, the final certificate will be invalid whether or not it is issued late. And on this basis, the employer's case in the Cantrell case was lost, since some of these necessary preliminaries had been ignored.
Tony Blackler is a partner in solicitor Macfarlanes.