East Ham Corporation v Bernard Sunley & Sons Ltd
| Jurisdiction | England & Wales |
| Judge | Viscount Dilhorne,Lord Cohen,Lord Guest,Lord Upjohn,Lord Pearson |
| Judgment Date | 27 October 1965 |
| Judgment citation (vLex) | [1965] UKHL J1027-1 |
| Date | 27 October 1965 |
| Court | House of Lords |
[1965] UKHL J1027-1
Viscount Dilhorne
Lord Cohen
Lord Guest
Lord Upjohn
Lord Pearson
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Mayor etc. of the County Borough of East Ham against Bernard Sunley and Sons Limited, that the Committee had heard Counsel, as well on Thursday the 24th, Monday the 28th and Wednesday the 30th, days of June last, as on Thursday the 1st and Monday the 5th, days of July last, upon the Petition and Appeal of the Mayor, Aldermen and Burgesses of the County Borough of East Ham, of the Town Hall, East Ham, in the County of Essex, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 12th of November 1964, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Bernard Sunley and Sons Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal, in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 12th day of November 1964, complained of in the said Appeal, be, and the same is hereby, Set Aside except so far as it answered the First Question in the Special Case in the Affirmative:
And it is further Ordered, That the Second Question in the Special Case be answered by declaring, That in clause 24( f) of the contract the words "a reasonable examination" mean a reasonable examination by the architect at the end of the defects liability period:
And it is further Ordered, That the Third Question in the Special Case be answered by declaring, That damages should be assessed by reference to the cost of building works in 1960 and 1961 when the Appellants actually carried out the investigations and remedial works which they alleged to have been necessary:
And it is also further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned costs to be certified by the Clerk of the Parliaments.
My Lords,
On the 30th May, 1952, the Appellants, the Mayor Aldermen and Burgesses of the County Borough of East Ham, entered into a contract for the building of a school with the Respondents, Bernard Sunley and Sons, Ltd. In so far as the exterior walls were not to consist of glass, they were to be covered with panels of Portland stone.
The building was handed over by the Respondents to the Appellants in May, 1954. On the 19th July, 1957, the architect issued his final certificate as required by clause 24( f) of the contract. Two years later, when the school was in use as a girls school, some of the panels of Portland stone fell. Investigation revealed that these panels and a considerable number of other panels had not been properly secured to the walls. In 1960 and 1961 the Appellants spent £21,301 3s. 7d. in fixing the panels securely.
They sought to recover this sum from the Respondents and, the building contract containing an arbitration clause, they went to arbitration.
The Arbitrator was asked to settle his Award in the form of a Special Case for the decision of the High Court on certain points of law and to state alternative findings, each depending on the Court's decision on the points of law and, in addition, his Award in accordance with his own interpretation of the points of law which should become final and binding if within six weeks the case was not set down for hearing.
The questions for the Court were formulated by the Arbitrator 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 contend an examination by the Architect at the end of the defects liability period or as the Respondents contend a 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."
The Award went on to state that if the answer to the first question was in the negative (in which case the second question did not arise) or if the answer to the second question was in favour of the Claimants the Arbitrator found and awarded to the Claimants £16,774 0s. 11d. if the damages were to be calculated with reference to the cost of building works at May, 1954, and £21,301 3s. 7d. if they were to be calculated with reference to the cost of the works in 1960 and 1961. His Award, on his own interpretation of the points of law, was that the Claimants had no valid claim against the Respondents.
The case was heard by Melford Stevenson J. who answered the first question in the negative and, in answer to the third, held that the Appellants were entitled to the cost of the works in 1960 and 1961, i.e., £21,301 3s. 7d.
The Respondents appealed to the Court of Appeal (Danckwerts L.J., Davies L.J., and Salmon L.J.) That Court held that the answer to the first question was in the affirmative and to the second in favour of the Respondents. From this decision the Appellants now appeal. Clause 24( f) of the contract reads as follows: —
"Upon expiration of the Defects Liability Period stated in the Appendix to these Conditions or upon completion of making good defects under Clause 12 … whichever is the later the Architect shall issue a final certificate of the value of the Works executed by the Contractor and such final certificate, save in cases of fraud, dishonesty or fraudulent concealment relating to the Works or materials or to any matter dealt with in the certificate and save as regards all defects and insufficiencies in the Works or materials which a reasonable examination would not have disclosed, shall be conclusive evidence as to the sufficiency of the said Works and materials."
The Defects Liability Period was stated in the Appendix to be six months from the practical completion of the Works.
With Clause 24( f) must be read Clause 24( g) which is in the following terms: —
"Save as aforesaid no certificate of the Architect shall of itself be conclusive evidence that any Works or materials to which it relates are in accordance with this Contract."
The answer to the first question depends on the meaning to be given to the words "conclusive evidence as to the sufficiency of the said Works and materials": the answer to the second on the meaning to be attached to the words "reasonable examination".
Clause 24 ( f), it is to be noted, requires the Architect to issue a final certificate of the value of the Works at the end of the Defects Liability Period or upon completion of making good defects under Clause 12. That Clause reads as follows: —
"Any defects, shrinkage or other faults which shall appear within the Defects Liability Period stated in the appendix to these Conditions" [six months] "and shall be 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 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 24 ( f) gives the Architect no discretion.
It is his duty to issue his final certificate when the stipulated time arrives. The certificate is a certificate of value but, unless one of the exceptions apply, is also to be conclusive evidence as to the sufficiency of the works and materials and, in view of Clause 24 (g), that is to be interpreted as meaning that they are in accordance with the contract.
The certificate is not to be conclusive evidence of the value of the works. It was argued for the Appellants that it is impossible in many instances to treat questions of value as distinct from questions of sufficiency, but, whatever difficulties may arise in treating questions of value as distinct from questions of sufficiency, Clause 24 ( f) clearly provides that the certificate is to be conclusive evidence of sufficiency and if this clause stood alone it would, in my opinion, unless one of the exceptions applied, effectually prevent the employer from subsequently recovering damages, whether in litigation or arbitration, for defective work.
The difficulty with regard to the first question arises from the apparent conflict between Clause 24 ( ...
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