CourtRoyal Court
Judge(Ereaut, Deputy Bailiff and Jurats de Faye and Hamilton):
Judgment Date18 February 1972
Date18 February 1972
(Ereaut, Deputy Bailiff and Jurats de Faye and Hamilton):

A. Clyde-Smith for the plaintiffs;

M.M.G. Voisin for the defendants.

Construction Industry—payment—interim payment—under standard RIBA contract deduction may be made from payment due under interim certificate only if liquidated and undisputed—unliquidated or disputed counterclaims not deductible

EREAUT, DEPUTY BAILIFF: This action arises in connexion with the recent construction of the swimming pool at Fort Regent, St. Helier, for the Fort Regent Development Committee of the States of Jersey. The defendants were the main contractors for the Works. The plaintiffs were the nominated sub-contractors for the steelwork. The plaintiffs claim the sum of £2,336, being the amount certified to be due to them by an interim Certificate issued by the Architect, Mr. W.H. Davies, of Messrs. Breakwell and Davies, employed for the purpose of the Works.

In our consideration of this case, we are concerned with two building contracts.

First, the main contract which was made on 12th June, 1970, between the employer, the Fort Regent Development Committee, and the main contractors, the defendants. That contract was made in conformity with and subject to the Articles of Agreement set out in standard form (1963 Edition) by the Royal Institute of British Architects and entitled "Agreement and Schedule of Conditions of Building Contract". We will refer to that contract as "the Agreement".

Secondly, the sub-contract which was made between the defendants as the main contractors, and the plaintiffs, who were nominated as the sub-contractors for the "design, fabrication and erection of the structural steel framework" of the swimming pool. The sub-contract, to which we will refer as such, was in the standard form used where the sub-contractor is nominated under the 1963 edition of the R.I.B.A. form of main contract, as in this case. It was in fact never executed by either party, but it was agreed that we should treat it as if it had been.

The two following provisions of the Agreement relating to the issue of interim certificates are relevant:

Clause 30(1) reads:

"At the period of Interim Certificates named in the appendix to these Conditions the Architect/Supervising Officer shall issue a certificate stating the amount due to the Contractor from the Employer, and the Contractor shall be entitled to payment therefor within 14 days from the issue of that certificate. Interim valuations shall be made whenever the Architect/ Supervising Officer considers them to be necessary for the purpose of ascertaining the amount to be stated as due in an Interim Certificate."

Clause 27(b) reads:

"The Architect/Supervising Officer shall direct the Contractor as to the total value of the work, materials or goods executed or supplied by a nominated sub-contractor included in the calculation of the amount stated as due in any certificate issued under clause 30 of these Conditions and shall forthwith inform the nominated sub-contractor in writing of the amount of the said total value. The sum representing such total value shall be paid by the Contractor to the nominated sub-contractor within 14 days of receiving from the Architect/Supervising Officer the duplicate copy of the certificate less only (i) any retention money which the Contractor may be entitled to deduct under the terms of the sub-contract, (ii) any sum to which the Contractor may be entitled in respect of delay in the completion of the sub-contract Works or any section thereof, and (iii) a discount for cash of 2½ per cent."

Clause 11(b) of the sub-contract is also relevant and reads:

"Within fourteen days of the receipt by the Contractor of any certificate or duplicate copy thereof from the Architect the Contractor shall notify and pay to the Sub-Contractor the total value certified therein in respect of the Sub-Contract Works and in respect of any authorised variations thereof and in respect of any fluctuations or amounts ascertained under clause 8(c) hereof less:—

(i) Retention Money, that is to say the proportion attributable to the Sub-Contract Works of the amount retained by the Employer in accordance with the Main Contract;

(ii) A cash discount of 2½% if payment is made within fourteen days, on the difference between the said total value and the said Retention Money; and

(iii) The amounts previously paid."

In accordance with the provisions of the Agreement referred to above, the Architect, by a Notification dated 5th October, 1971, notified the plaintiffs that he had issued a certificate for presentation to the employer, and that he had directed the defendants that the certificate included an amount due to the plaintiffs in the sum of £2,336.

The plaintiffs now action for the recovery of that sum in accordance with the terms of clause 11 (b) of the sub-contract, there being, at the date when payment was due, namely, 19th October, 1971, no deductions falling within that sub-clause which the defendants were entitled to make.

The defendants do not dispute that the sum claimed is due to the plaintiffs, it being agreed that there are no deductions falling within clause 11(b) of the sub-contract to be made. However, whilst accepting that the plaintiffs are therefore entitled to judgment, the defendants contend that the execution of that judgment should be stayed, because the defendants have a counterclaim in respect of additional costs which they have incurred by reason of delay on the part of the plaintiffs in completing the steel work for which they were responsible.

In accordance with the judgment delivered by this Court, as at present constituted, in Jersey Steel Co. Ltd. v. Regal Construction Co. Ltd. (1971 J.J. 1965), we accept that, in the appropriate circumstances, we have the power, in the exercise of our discretion, to grant a judgment with a stay of execution.

The facts of the case for the defendants are these.

By clause 21 of the Agreement and the Appendix thereto the defendants were required under penalty to complete the Works by 28th February, 1971, subject to such extension of time as might be granted by the Architect in accordance with the terms of the Agreement. By clause 8 of the sub-contract and Part I of the Appendix thereto, the plaintiffs were required under penalty to complete the erection of the steel work by 4th April, 1970, subject also to such extension of time as might be granted.

By July 1970 it appeared to the defendants that the plaintiffs were, or would be, some twelve weeks late in completing the erection of the steelwork, and that this would cause delay in the completion of other works on the site. At the request of the defendants, therefore, the Architect wrote to the defendants on 10th July, 1970, of which the following is an extract (a copy of the letter being forwarded to the plaintiffs...

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