Know Your Position: An Overview of the Role of the Certifier

Certifiers hold a key role in construction contracts. Certificates, statements and decisions issued by certifiers - whose titles include Contract Administrator, Employer's Agent, Project Manager, Engineer and Architect to name a few - can have a huge impact on cash flow. Their actions can also provide a recipe for disputes where the certifier is viewed as, or is, one-sided or biased. In this Insight we review the basic laws governing certification and what can be done when something goes wrong in the process.

What is a certificate? Hudson's Building and Engineering Contracts defines a certificate as:

"the expression in a definite form of the exercise of the opinion of the certifier in relation to some matter provided for by the terms of the contract".1

Essentially it is a formal decision or approval which determines an entitlement to payment or relief of some sort.2 Certificate in the context of this article includes decisions and notices (which may not be called certificates) which have a contractual effect in determining rights and obligations under a construction contract.3

A wide variety of certificates4 are found in construction contracts. Key types include:

Interim certificates which determine what is payable as the contract progresses. These effectively include judgments as to the progress of the works, quality as well as the value of the works as a whole; Sectional and practical completion certificates confirming that an element or the works as a whole are complete; Extension of time certificates if a contractor or subcontractor has been delayed; Certificates of non-completion where a completion date has been missed which may result in liquidated damages being levied; Final certificates confirming that defects found within the defects liability period have been rectified and that the retention can be released; Who can certify? The construction contract will lay down who has a certifying role within the contract. Across different types of construction contracts the certifier may have different names. In the NEC forms the role sits with the Project Manager whilst in FIDIC forms it is the Engineer who occupies the role. The JCT Design and Build forms have an Employer's Agent whilst their Standard Building Contract has a Contract Administrator.

One question that comes up occasionally, is whether the Employer can substitute himself (or an employee) into a certifying role if he gets rid of the certifier or for some reason they become unavailable. In the recent case of Imperial Chemical Industries v Merit Merrell Technology Limited5 the Employer had tried to substitute their own employee as the Project Manager. The original Project Manager had quit following the Employer's decision to limit some of their powers.

Mr Justice Fraser rejected the notion that an employee of the Employer could be used to fulfil the Project Manager's role. He held:

"134. It is contrary to the whole way in which the contractual mechanism is structured, and intended to work, to have the employer seek to appoint itself (or one of its employees, or an employee of its parent) as the decision maker. As Scheldebouw makes clear, 'the whole structure of the . . . contract is built upon the premise' that the employer and the decision maker are separate entities, and 'endless anomalies arise if the employer and the [decision maker] become one and the same'. It can be seen that, so far as the alternative argument put forward by the employer concerning contractual termination is concerned, the giving of notices under the termination procedures in clause 91 of the contract are required to be given by the Project Manager, not by the employer. If the employer and the Project Manager are the same entity, then notices would be coming from the employer in reality, but dressed...

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