22-02-2021
Conclusivity provisions associated with the Final Certificate are a commonplace feature in many construction contracts and serve to ensure that after a specified point in time, certain matters are concluded and no longer open to challenge. However, despite being common, the implications of such provisions are often overlooked until it is too late.
This article looks at one such example, being the conclusivity provisions in respect of the Final Certificate issued under the majority of the JCT suite of construction contracts1.
What is the Final Certificate under the JCT contract?
The Final Certificate is a document that states the Contract Sum as adjusted, the amount of prior interim payments, and thus the final payment to be made; and is issued under the JCT contract after the later of:
- the end of the rectification period,
- the issuing of the Certificate of Making Good Defects, and
- the issuing of the statement of final adjustment to the Contract Sum.
The Final Certificate has the effect of triggering the final payment mechanism. However, in addition, the Final Certificate also triggers a conclusivity provision contained within clause 1.92 of most JCT forms. This clause provides that the Final Certificate will become conclusive evidence that:
- particular materials, goods and workmanship are to the reasonable satisfaction of the Architect/Contract Administrator,
- there are no further adjustments to be made to the Contract Sum,
- all such extensions of time have been given, and
- all direct loss and/or expense has been reimbursed.
These are not trivial matters. The provision essentially confirms there are no further adjustments to be made in respect of time or money.
What should you do if you dispute the Final Certificate?
Clause 1.9.2 provides the parties with up to 28 days from the date of the issue of the Final Certificate to dispute any of the foregoing matters by commencing adjudication, arbitration or other proceedings.
If a party takes such action, the Final Certificate is then only conclusive in relation to the above listed matters that are not in dispute and the conclusiveness is suspended in respect of those that are disputed (pending conclusion of the proceedings). Thereafter, the Final Certificate is subject to the findings of those proceedings.
If the parties fail to instigate such proceedings in the 28-day period, then the Final Certificate is conclusive in respect of the aforenoted matters. The effect of the conclusivity clause and the need for formal dispute resolution proceedings within the stated time has been considered in the Courts on several occasions, for example:
- University of Brighton v Dovehouse Interiors Ltd [2014] EWHC 940 (TCC), where the Court held that the service of a valid notice of adjudication (as opposed to a referral notice) commenced adjudication proceedings for the purposes of clause 1.9 and this had the effect of triggering the saving proviso relating to the Final Certificate. The Court also confirmed that if a referring party then abandons adjudication proceedings by simply not pursuing them, the saving proviso would fall away.
- Marc Gilbard 2009 Settlement Trust v OD Development and Projects Ltd [2015] EWHC 70 (TCC), where the claimant had commenced litigation within the 28-day period but due to slow progress they later attempted to refer the dispute to adjudication. The Court confirmed that the right to adjudicate on these matters had been lost as the adjudication itself was not commenced within the 28-day period.
The aforenoted case of Marc Gilbard 2009 Settlement Trust v OD Development and Projects Ltd [2015] EWHC 70 (TCC) also upheld the validity of the JCT’s conclusivity clause in light of the Construction Act’s statutory right to adjudicate “at any time”, the Judgment states:
“…there is nothing to prevent either party from commencing adjudication proceedings tomorrow. The defendant is not fettered or prohibited from commencing adjudication proceedings. Of course, because such proceedings were not commenced within 28 days of the Final Certificate, the Final Certificate would be conclusive evidence on the subjects identified under clause 1.9. But nothing is preventing the defendant from issuing adjudication proceedings, so there is no fetter.”3
Summary
If a party agrees in contract that certain matters become conclusive if not challenged within the 28-day period elapses and fails to act in that time, then the Final Certificate would be conclusive evidence of the matters being agreed, thus are no longer in dispute.
As is clear from the cited clauses and case law, parties should pay close attention to conclusivity clauses in a construction contract as there can be significant risk and commercial implications arising from a failure to comply.
Take a look at our recent case study Adjudication for R.J Winnicott Ltd where a Main Contractor fell into dispute with the Building Employer following the Final Certificate being issued.
Received a Final Certificate?
Simply refuting the Final Certificate is not enough to protect yourself against the JCT’s conclusivity provisions when you dispute the matters that would otherwise become conclusive through the Final Certificate. This is a common devastating tactic used by those who seek to underpay.
If you have received a Final Certificate, act urgently if you do not agree, you need to speak to professionals such as Arbicon, who can commence formal dispute resolution proceedings within the specified contract period, otherwise it may become conclusive and it will be difficult to do anything further. Get in touch with our expert team on advice@arbicon.co.uk or call 01733 233 737.
1 The conclusivity provision is not contained within the
JCT Minor Works suite or JCT Home Owner Contracts. Whereas the JCT Design and
Build Contract provides for a “Final Statement” which is issued earlier than as
described in this Article
2 Or clause 1.8 in the JCT Design and Build suite
3 [2015] EWHC 70 (TCC) at para. 37
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