211 / 482
GAZETTE
A
pril
1989
Summary judgment on foot of
an architect's certificate - a
conflict resolved?
A decision of Costello J. handed down on the 19th January, 1989,
on the issue of Summary Judgment on foot of an Architect's
Interim Certificate, is of considerable importance. At one time, it
was thought that an Architect's Interim Certificate was almost the
equivalent to a Bill of Exchange and had to be honoured on
presentation. An employer could not seek to set off against a claim
on foot of an Architect's Interim Certificate, a proposed counter-
claim in respect of defective workmanship. The situation was
similar to claims in respect of freight in Admiralty Law.
The landmark English decision on or any other contract." It was held
this matter was that of
Dawnays
Limited -v- F. G. Minter Limited
11971] 2 All E.R. 1389. That was
the case where Denning M. R. held
that the provisions of the Contract
which required Interim Certificates
to be paid within 14 days were
inconsistent with the right of set
off. He pointed out that the matters
which could be deducted from an
Interim Certificate were clearly set
out e.g. retention monies, monies
previously paid etc., and did not
include
coun t e r c l a ims
for
unliquidated damages for defective
wo r kmansh ip or delay. That
reasoning was followed in a
number of English cases. However,
in more recent times, that principle
was effectively reversed by two
House of Lords' decisions and one
decision of the Irish High Court.
The principal English case was that
of
Gilbert-Ash (Northern) Limited -
v- Modern Engineering
(Bristol)
Limited
[1973] 3 All E.R. 195. In
that case a clause permitting a
contractor to withhold sums from
a sub-contractor was in the
following terms:- " I f the sub-
contractor fails to comply with any
of the conditions of the sub-
contract, the contractor reserves
the right to suspend or withhold
payment . . . the contractor also
reserves the right to deduct from
any payment certified as due . . .
the amount of any bona fide contra
accounts and/or other claims which
he . . . may have against the sub-
contractor or contractor with this
t hat this en t i t l ed the main
contractor to deduct unliquidated
damages for breach of warranty.
(Clearly, the wording of this clause
is very different to the wording of
the 19777 R.I.A.I. Form of Agree-
ment.) However, three of the Lords
Justices took the opportunity to
disapprove of the earlier decision in
Dawnays
case. They held that a
counterclaim in respect of defective
workmanship could be the subject
matter of a set off against a claim
on foot of an Architect's Interim
Certificate. The second English
case was a case of
Aries Tanker
Corporation
-v- Total Transport
Limited [
1971] 1 All E.R. 398. This
was a shipping case which affirms
the rule of Common Law that a
claim in respect of cargo cannot be
deducted from freight. The House
of Lords stated
obiter
in that case,
that counterclaims in respect of
defective workmanship could be
set off against a claim on foot of an
Architect's Interim Certificate and
again, disapproved of the
Dawnays
decision. On the basis of these
decisions, the editors of Emden's
Building Contract and Practice, 8th
Edition (1980) page 98 conclude:-
"Accordingly, it is submitted that
the Law at present is that set offs
may be raised in actions on Certifi-
cates in the same way as in other
actions for work and materials, and
that the contrary view is not now
sustainable."
Irish case law
There is only one reported Irish
case and that is the case of
P. J.
Hegarty -v- Royal Liver Friendly
Society
[1985] I.R. 524. There had
been an earlier unreported decision
on the topic
John Sisk & Son Ltd.
-v- Lawter Products B.V.
(Finlay P.
15th November, 1976). In the
earlier decision, Finlay P. had
considered a claim for summary
judgment on foot of an Architect's
Certificate for the sum of
£168,537. In that case, Finlay P.
considered a contract which was in
the standard form of the R.I.A.I.
(1966 edition). He reviewed the
relevant clauses and in considering
the issue of whether or not a
counterclaim could be raised by
way of set off against an
Architect's Certificate, stated the
relevant principle of law as follows:-
" I believe the true test to be not
whether the common law right of
set off has, by the terms of the
Building Contract been unequivo-
cally excluded, but rather as to
whether all the relevant terms of
the Building Contract are in any
particular event inconsistent with
the exercise in that event of such
a right of set off." Finlay P.
concluded that the relevant terms
of the 1966 edition were incon-
sistent with the exercise of a right
of set off and granted summary
judgment for the amount claimed.
In the
P. J. Hegarty -v- Royal Liver
Friendly Society
case, Murphy J.
refused to grant judgment in
summary summons proceedings
on foot of an Architect's Certifi-
cate, pending the hearing of a
counterclaim, since he held that the
197