East Ham Corporation v Bernard Sunley & Sons Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davies,Lord Justice Danckwerts |
| Judgment Date | 12 November 1964 |
| Judgment citation (vLex) | [1964] EWCA Civ J1112-1 |
| Court | Court of Appeal |
| Date | 12 November 1964 |
[1964] EWCA Civ J1112-1
Lord Justice Danckwerts
Lord Justice Davies and
Lord Justice Salmon
In the Matter of the Arbitration Act 1950
and
In the Matter of an Arbitration
In The Supreme Court of Judicature
Court of Appeal
(From: Mr. Justice Melford Stevenson)
Mr. Mark Littman, Q. C. and Mr. David Gardam (instructed by Messrs. E. P. Rugg & Co.) appeared on behalf of the Appellants (Respondents).
Mr. Stuart Daniel, Q. C. and Mr. I. N. D. Wallace (instructed by Messrs. Sharpe, Pritchard & Co., Agents for Mr. R. H. Buckley, Town Clerk, East Ham) appeared on behalf of the Respondents (Claimants).
This is an appeal from a judgment of Mr. Justice Melford Stevenson given on the 20th March, 1964. The appeal concerns a building contract dated the 20th May, 1952, under which Bernard Sunley & Sons, Ltd., were employed to build a school called the Plashet Grove Secondary Girls School in East Ham, and arises out of an arbitration pursuant to the provisions of the contract, in which the Arbitrator settled his award in the form of a Special Case for the decision of the High Court on points of law. The contract was in the form issued under the sanction of the Royal Institute of British Architects and the National Federation of Building Trades employers, as revised in 1950.
Owing to the form in which the Arbitrator made his award, the parties had to agree upon a statement of the relevant facts. The building was handed over to the Borough Council in May, 1954. The architect made his final certificate on the 19th July, 1957. In 1959 some of the stone panels, with which the exterior walls of the school were faced, fell off, when the building was already in use as a girls' school. The investigation which followed revealed widespread faults in the fixing of the stone panels. During 1960 and the first half of 1961, the Council removed a large proportion of the stone facings as being insecure and prefixed or replaced them in a secure manner. The Council claimed from the contractors in the arbitration the cost of these operations.
The questions for the court set out in the award were as follows:
1. Whether on the true construction of the contract the final certificate issued by the Architect is conclusive evidence as to the sufficiency of the works subject to the exceptions mentioned in Clause 24 (f) of the contract.
"2. If the answer to Question 1 is in the affirmative, whether in Clause 24 (f) the words 'a reasonable examination' mean as the Claimants" (that is, the Council) "contend anexamination by the Architect at the end of the defects liability period or as the Respondents" (that is, the Contractors) "contend reasonable examination by the Architect during such visits to the works as an Architect might fairly be expected to make for the purpose of inspection from the commencement of the works up to and including his final inspection before issuing a final certificate.
"3. In the event of the Claimants being entitled to damages whether damages should be assessed by reference to the cost of building works at or shortly after the date of the breaches of contract alleged (which for convenience the parties have agreed to take as May, 1954, when the building was handed over to the Claimants) or the cost of building works in 1960 and 1961 when the Claimants actually carried out the investigations and remedial works which they allege to have been necessary".
If the Council were entitled to recover damages, the Arbitrator in effect found that the amount by reference to 1954 was £16, 774. Os. lld., and the amount by reference to 1960-1961 was £21, 301. 3s. 7d.
The learned judge held, first, that the final certificate was not conclusive. He held that he was, therefore, not required to answer the second question. On the question of damages, he held that the proper scale was the cost of the works in 1960-1961
From this decision the building contractors appeal.
The questions in issue turn principally on the relations between clause 24 (f) and (g) and clause 27 (the arbitration clause) in the contract, but there are some other clauses which have some relevance.
Clause 1: "The Contractor shall carry out and complete the Works in accordance with this contract in every respect in accordance with the directions and to the reasonable satisfaction of the Architect. If the Contractor shall find any discrepancy in or divergence between the Contract Drawings and/or Bills of Quantities he shall immediately refer the same in writing to theArchitect and specifically apply in writing for any necessary instructions from the Architect in relation thereto. The Architect may in his absolute discretion and from time to time issue further drawings, details and/or written instructions, written directions and written explanations (all of which are in these Conditions collectively referred to as 'Architect's Instructions') in regard to: ….(d) The removal and/or re-execution of any works executed by the Contractor…. (h) The amending and making good of any defects under clause 12 of these Conditions".
Clause 5: "(a) All materials and workmanship shall so far as procurable be of the respective kinds described in the Bills of Quantities, but where a British Standard Specification is current at the date of the tender and is appropriate, the Contractor shall not by virtue of this condition be required (unless it has been explicitly so stated in the Bills of Quantities) to supply materials other than such at accord with that British Standard Specification".
Clause 7: "The Architect and his representatives shall at all reasonable times have access to the Works and/or to the workshops or other places of the Contractor where work is being prepared for the contract, and in so far as work in virtue of any sub-contract is to be so prepared in workshops or other places of a sub-contractor (whether or not a nominated Sub-Contractor as defined in clause 21 of these Conditions) the Contractor shall also by a term in the sub-contract so far as possible secure a similar right of access to those workshops or places for the Architect and his representatives and shall do all things reasonably necessary to make such right effective".
Clause 8: "The Employer shall be entitled to appoint a Clerk of Works whose duty shall be to act solely as inspector on behalf of the Employer under the directions of the Architect and the Contractor shall afford every facility for the performance of that duty".
Clause 12: "Any defects, shrinkage or other faults whichshall appear within the Defects Liability Period stated in the appendix to these Conditions and shall he due to materials or workmanship not in accordance with this contract or to frost occurring before completion of the Works, shall within a reasonable time after receipt of the Architect's written instructions in that behalf be made good by the Contractor and (unless the Architect shall otherwise direct) at his own cost; provided that the Contractor shall not be required to make good at his own cost any damage by frost which may appear after completion, unless the Architect shall decide that such damage is due to injury which took place before completion".
Clause 16: "On or before the Date for Possession stated in the appendix to these Conditions possession of the site shall be given to the Contractor who shall thereupon begin the Works forthwith and regularly and diligently proceed with the same and shall complete the same on or before the Date for Completion stated in the said appendix subject nevertheless to the provisions for extension of time contained in clause 18 of these Conditions".
Clause 24 (and now we are beginning to get to the real point: "(a) At the Period of Interim Certificates named in the appendix to these Conditions interim valuations shall be made whenever the Architect considers them necessary, and, subject to clause 21 of these Conditions, the Architect shall issue a certificate stating the among due to the Contract or from the Employer, and the Contractor shall be entitled to payment therefore within the period named in the appendix.
(b) The amount so due shall, subject to clause 21 (c) of these Conditions and to any agreement between the parties as to stage payments, be the total value of the work properly executed and of the materials and goods delivered upon the site for use in the Works up to and including a date not more than seven days before the date of the said certificate, less the amount to be retained by the Employer (as hereinafter provided) and less any instalments previously paid under this clause. Provided that such certificate shall only include the percentage named in theappendix to these Conditions of the value of the said materials and goods as and from such time as they are reasonably, properly and not prematurely brought upon the site and then only if adequately stored and/or protected against weather or other casualties.
(c) The amount which may be retained by the Employer in virtue of this clause shall be the percentage of the value of the work and materials aforesaid which is named in the appendix as Percentage of Certified Value Retained and up to the amount there named as Limit of Retention Fund (which in neither case shall exceed 10 per cent.) Provided that where the limit named in the appendix or the limit reduced in pursuance of clause 21 of these Conditions, as the case may be, has been reaches the full value of the work and materials shall be certified by the Architect.
(d) The amounts retained in virtue of this clause shall be dealt with in the following manner: On practical completion of the Works and, subject to clause 17 of these Conditions, the Architect shall issue a certificate for one...
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