The High Court Considers The Final Certificate Conclusivity Provisions Of The JCT

It is accepted that "conclusivity" clauses in commercial contracts provide parties with certainty and limit the scope for disputes. Although the Courts have examined conclusivity clauses on several occasions, there has been no previous decision on the meaning and effect of clause 1.9 of the JCT Standard Form of Building Contract until the recent case of Marc Gilbard 2009 Settlement Trust (trustees of) v. OD Developments and Projects Ltd [2015] EWHC 70.

The most commonly used JCT contracts ensure that, following completion of the works, disputes between the parties are resolved quickly and definitively. One way in which the JCT seeks to achieve this is by the use of a Final Certificate which sets out the Contractor's final entitlement to payment. The claim brought by the Trustees of the Marc Gilbard 2009 Settlement Trust (the Trust) raises a short but important point on the effect of the Final Certificate.

Clause 1.9.1 provides that the Final Certificate is conclusive evidence on a number of matters in any proceedings arising out of the Contract. It is evidence that the terms of the Contract, which require an addition or deduction from the Contract Sum, have been properly given effect to, especially in relation to deductions for defects, entitlements to Changes, extensions of time and consequent loss or expense. Therefore, Final Certificates are regularly the subject of disputes between contracting parties.

Clause 1.9.3 states: "If any adjudication, arbitration or other proceedings are commenced by either Party within 28 days after the Final Certificate has been issued, the Final Certificate shall have effect as conclusive evidence as provided in clause 1.9.1 save only in respect of the matters to which those proceedings relate."

It is widely accepted that if an Employer's Agent issues a Final Certificate, then clause 1.9.3 provides the Contractor with 28 days in which to challenge it. If there is no challenge within the 28 days, the Final Certificate is conclusive. The question of whether a challenge made in 28 days in one forum allows a party to challenge in another forum where no step has been taken in 28 days was decided in Gilbard.

The Trust's position in Gilbard was simple. The Final Certificate was not conclusive evidence in any proceedings issued within 28 days of the Final Certificate (such as any litigation or adjudication begun within these 28 days). However, the Final Certificate is conclusive evidence in proceedings not issued...