Comment: STATUTORY ADJUDICATOR OR CONTRACTUAL CERTIFIER?

• Date: 01 December 2004
• Published date: 01 December 2004
• Author: I N Duncan WALLACE MA (Oxford), Barrister-at-Law (Middle Temple), Queen’s Counsel.

This article supports the system of “temporary finality” (ie, finality subject to definitive arbitration or litigation) accorded to interim payment disputes between owners and contractors as against the immediate enforcement by summary judgment of external adjudicators’ decisions overriding or disregarding project architects/engineers’ or owners’ defences, under the provisions of legislation based on the English Housing Grants, Construction & Regeneration Act 1996. “Temporary finality” is traditionally accorded by building contract standard forms, including the SIA Conditions of Contract 1980. Recent Singapore case law has followed English case law in readily disqualifying and disregarding interim certifications wherever there is any evidence or suspicion of improper owner-influence, leading to the consequence that contractors have benefited from the “temporary finality” certification system.

I. Introduction

1 This article supports, as a matter of justice as well as of the public interest in value for money and industrial efficiency, the traditional system of “temporary finality” (subject to final definitive arbitration or litigation) traditionally accorded by building contract standard forms (including the Singapore Institute of Architects (“SIA”) Conditions of Contract 1980) to interim payment disputes between owners and contractors, as against the immediate enforcement by summary judgment of external adjudicators’ decisions overriding or disregarding the defences of project architects/engineers (“A/Es”) and owners under the provisions of legislation based on the English 1996 Housing Grants, Construction and Regeneration (“HGCR”) Act (c 53). While a superficial approach to the problem can easily take the view that a client owner’s A/E is inherently likely to yield to improper client pressures or defences when certifying interim payment in disputed

cases, recent case law in Singapore1 shows that Singapore judges have, very rightly, been swift to follow the robust English case law which readily disqualifies and disregards interim certifications wherever there is any evidence or suspicion of improper owner-influence. In the Singapore cases this has led to the paradoxical consequence that contractors there have actually benefited from SIA Contract conditions, being able to enforce immediately earlier certifications freely arrived at in their favour as against suspect later amending certifications designed to favour the owner.

2 The unfairness of the English-style HGCR legislation lies in its encouragement of unjustified or speculative claims as the result of one-sided and impractical procedural time limits expressly imposed only on owners’defences, thus permitting “ambush” tactics by contractor claimants putting forward increasingly complex and unexpected composite claims at short notice. Moreover, the English legislation, lacking any arrangement for accreditation or accountability of adjudicators, has always seemed likely to develop a market of adjudicators readily available at short notice to set aside the disputed certificates of project A/Es.2 Moreover, its broad effect can also be seen as undesirable in reducing responsible professional control and supervision by a project’s A/E with his more intimate knowledge of the design and history of the project in the case of disputes such as defective work or poor progress. The present article does not perhaps sufficiently emphasise the robust English case law permitting disqualification of certificates where improper pressure by owners is suspected or apparent. This case law has been followed with alacrity in Singapore and indeed has been well served by the recent Singapore decisions. The carefully defined degree of temporary finality accorded to an architect’s certificates by the SIA contract was, of course, drafted with this potential for disqualification of certifications very much in mind. The unfairness of the English HGCR legislation lies very much in the procedural detail of the English statute and is not further developed in the present article.

II. First principles

3 It may be convenient to restate some matters of first principle:

(a) It is an inescapable feature of contracts for the sale of goods or services, in particular relatively long-term contracts with provisions for payment on account such as construction contracts, that the purchasing or paying party can always decide to withhold payment when otherwise due, more usually, of course, when dissatisfied with the other party’s performance.

(b) Where justified, that option is recognised and enforceable at once by deduction as a...