Issue of the Final Certificate under the JCT Intermediate Building Contract 2011

The Problem

Back in 2014, the building company I work for entered into a JCT Intermediate Building Contract 2011 to construct a large extension to a health and fitness centre for a well-known company.

Soon after work was started on site, it became obvious that the person, who had been nominated by the external building consultants as the contract administrator, was well out of her depth.  Fortunately, we took the initiative and ‘powered’ our way through the project, meeting the original date for completion.

The end of the defects period arrived in mid-2016, and having received the list of defects from the same contract administrator, we were pleased to receive the certificate of making good and the final certificate shortly after attending to the defects.  The final certificate had even agreed our final account and released the retention.  However, we have since hit a brick wall with the client, insofar that it is refusing to make payment against the final certificate on the basis that it not only disagrees with the level of the final amount certified, but is also claiming that the contract administrator should never had issued a certificate of making good defects because defects still exist with our works, which the contract administrator failed to note on her initial list of defects.

The monies that are owed were certified towards the back end of 2016, but the client has not issued a pay less notice.  Can you give any advice on how to proceed?

Jake, Stapleford.

Michael’s Response

In spite of what must have been a difficult project due to a ‘below-par’ contract administrator, your company deserves credit for achieving its obligations as to time, and no doubt your client, at least at the time of completion, must also have been pleased to have use of its new facilities on time.

Although you have mentioned that your client has not issued a pay less notice against the final certificate, which I would normally observe that in the absence of a timeous pay less notice, the amount certificate must be paid and then argued later, your overall situation is different with the contract administrator having issued the final certificate.

Under your form of contract, where the final certificate has been issued, this becomes conclusive evidence on matters such as the standard of workmanship and the quality of the materials are as described in the contract documents, or the adjusted contract sum is in accordance with the terms, unless challenged by some form of proceedings no later than 28 days after the final certificate has been issued.

I therefore recommend that you instigate [adjudication] proceedings, for the monies certified in the final certificate based on the absence of a timeous pay less notice.  Any proceedings that your client may instigate in relation to the recovery of [what it may see as] any over-payment, and / or alleged defects, notwithstanding latent defects, you have the evidence of the final certificate in defence to this.  If there were indeed defects outstanding at the time that the contract administrator issued the final certificate (even if the defects were simply missed by the contract administrator), you will not be liable to make good those defects and the only recourse for your client would be to bring a claim against the building consultant who employed the contract administrator.

The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.

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