The Gazette 1989

A pril 1989

GAZETTE

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

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

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

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