Introduction
This article examines some key issues encountered in a recent adjudication concerning alleged over-certification by an architect acting as a contract administrator, and the standard of care expected in this role.
Standard of care
The House of Lords in Sutcliffe v Thackrah [1974] AC 727 established that architects and contract administrators have a legal obligation to exercise reasonable skill and care towards their clients in all aspects of their duties, including contract administration and certification. This duty encompasses both interim and final certificates – see Merton LBC v Lowe [1981] 18 BLR 130.
Consistent with the test established in Bolam v Friern Hospital Management Committee [1957] 1 WLR 582, HL , this requires neither the highest expert skill nor perfection, but rather the ordinary skill of the ordinarily competent professional.
Contract administrators are not insurers of their clients’ decisions or a contractor’s performance. However, they must exercise appropriate professional judgment and cannot ignore obvious defects or fail to apply contractual provisions.
Valuing works
Contract administrators must apply the contractual tests for certification. Under the JCT MWD 2016, the test is “work properly executed” and “materials and goods reasonably and properly brought onto the site.” This requires more than mere assertion by a contractor – the work performed must not contain obvious defects that would be apparent to a reasonably competent contract administrator.
Where defects are apparent from site visits or photographic evidence, the contract administrator must either refuse to certify the defective work or bring the matter to the employer’s attention.
Where a contract does not expressly provide for payment of off-site materials, contract administrators cannot create such an entitlement through certification. This underscores the importance of contract administrators understanding the terms of the main contract and any variations to it.
Where an employer has made payment for materials on site subject to specific contractual conditions (such as requiring proof of payment through bank statements, invoices, or purchase orders), contract administrators cannot ignore these requirements when certifying payments.
If a contract administrator wishes to certify materials without the required proof, he should bring this to the employer’s attention and seek explicit waiver of the contractual requirements. This ensures transparency in the certification process and prevents contract administrators from making unilateral decisions that could prejudice the employer’s financial position.
Concurrent liability and double recovery
Keating on Construction Contracts (Sweet & Maxwell, 11th edition), paragraph 14-122, shows that an existing claim by an employer against a contractor does not fetter the employer’s entitlement to proceed against the contract administrator:
“Before suing the professional for negligence in supervision or certification, employers do not have to prove the contractor’s inability to pay. They can proceed, if they wish, solely against the professional.
“No doubt the builder is also liable. It is a case of concurrent breaches of contract producing the same damage. In my judgment the plaintiff has an action against both, although she cannot obtain damages twice over.”” – see Hutchinson v Harris (1978) 10 B.L.R. 19
This recognises that contract administrators have independent duties to their clients and that breaches of these duties give rise to separate causes of action.
Naturally, however, employers cannot obtain double recovery. While they may pursue claims against both the contractor and the contract administrator, they cannot recover the same loss twice. This would amount to unjust enrichment.
The existence of a court judgment against a contractor does not prevent an employer from pursuing a contract administrator. Distinct types of loss may arise from different breaches, so the employer does not have to choose between different defendants. The practical reality is that contract administrators are insured whereas some contractors lack sufficient funds.
Retention and contract sum application
Contract administrators must apply all contractual provisions, including retention percentages and price adjustments, unless explicitly waived by an employer. This ensures that the payment mechanism operates as intended and that employers receive the full benefit of their contractual protections.
Contract administrators cannot ignore contractual provisions simply because they believe them to be commercially inconvenient. Each certificate must be prepared in accordance with the contract.
Site visits and evidence gathering
Contract administrators must exercise reasonable diligence in gathering evidence to support their certifications. This includes taking photographs, making site notes, and seeking clarification where work appears defective or incomplete.
Contract administrators should not rely solely on contractor representations when certifying work. They must exercise independent professional judgment and cannot ignore obvious defects that would be apparent from reasonable site inspection.
Conclusion
Contract administration requires the exercise of independent professional judgment. While contract administrators are not insurers of their clients’ decisions, they must act with appropriate skill and care in all aspects of their role.
