Final certificates

Introduction

Two aspects of final certificates require particular consideration:

  1. Procedure for issuing the final certificate
    Construction contracts generally require a certain procedure to be followed prior to the issue of the final certificate. It is important that all affected parties follow the procedure to ensure that the final certificate is issued validly and timeously.
  2. Conclusive effect of the final certificate
    It is common for construction contracts to provide that the final certificate is conclusive of certain matters. Both the employer and the contractor must be wary of this possibility and if either disagrees with the content of the final certificate they should ask themselves the following questions:
    1. Is the final certificate conclusive as to a matter that I do not agree with and that I wish to challenge?
    2. If so, do I need to serve a a pay less notice? Invariably the answer is yes if you are the party found to owe money under the final certificate.
    3. Further, is there any action I can or must take to prevent the final certificate from becoming conclusive?

It is important to realise that contractual provisions involving the conclusive effect of the final certificate are often drafted in a complex manner with potentially serious consequences if swift action is not taken. If a party is uncertain as to the meaning of the contract, legal advice should be sought at the first available opportunity.

Procedure for issuing the final certificate

It is important for all parties to comply with the contractual procedure for issuing the final certificate. Failure to do so may mean that the resulting certificate is invalid or that the architect or contract administrator is under no obligation to issue the certificate.

As with all matters surrounding final certificates, each contract must be considered on its own terms, but procedural matters which might need to be completed prior to issuing of the final certificate include:

  • identification of defects and their making good by the contractor;
  • valuation of any abatement or counterclaim arising from a failure to make good the defects;
  • expiry of any defects liability period;
  • issuing of a certificate of making good defects or equivalent;
  • determination of any extension of time and the corresponding completion date;
  • operation of any contractual mechanism for the payment of liquidated damages;
  • finalisation of the adjusted contract sum, generally including the submission of accounts, including loss and expense, by the contractor;
  • calculation of VAT.

It must be remembered that during the certification process the architect/contract administrator and any other professionals called upon to value the works, are under a duty to act impartially and independently of either party (see Sutcliffe v Thakrah [1974] AC 727 and BR & EP Cantrell v Wright & Fuller Ltd [2003] BLR 412 at 434).