Crane Construction Incorporated v Fort Dignity Ltd
| Jurisdiction | Barbados |
| Judge | Moore JA |
| Judgment Date | 29 January 2016 |
| Neutral Citation | BB 2016 CA 2 |
| Docket Number | Civil Appeal No 12 of 2006 |
| Court | Court of Appeal (Barbados) |
| Date | 29 January 2016 |
Court of Appeal
Gibson, C.J.; Moore, J.A.; Mason, J.A.
Civil Appeal No 12 of 2006
Mr. Alair P. Shepherd, Q.C., and Mr. Philip A. McWatt for the applicant
Mr. Andrew V. Thornhill and Miss Diana Doughlin for the respondent
Civil practice and procedure - Application arising out of liberty to apply reserved in the order of the court — Application to work out the order previously made — Ambit and scope of liberty to apply — Whether the balance of accounts lay in favour of the appellant or respondent.
This application has arisen out of liberty to apply reserved in the order of this Court made on 17 February 2009 in the substantive appeal.
The facts are more particularly set out in the judgment of this Court given on 17 February 2009. Briefly, the appellant, a construction company, was employed by the respondent to restore a derelict building. The respondent, dissatisfied with the work done by the appellant, terminated the contract. The appellant sued the respondent and the respondent counterclaimed.
The matter was tried by Blackman J. Mr. Ian Rollitt was the sole witness for the plaintiff. The defendant called three witnesses. There were submissions from both counsel concerning the nature of a certificate for interim/progress payment. The following paragraphs from the decision of Blackman J are relevant for the purposes of the present application:
“[8] … Mr. Rollitt asserted that in most cases, Crane was paid a lower amount than what it claimed was in fact due to it. He further stated that Crane was never in agreement with the valuations but that the normal practice was that when a “project is finished you gather all the information on the project, you sit down with the QS and sort out all the crystallized disputes.”
[32] Mr. David Senior, a Chartered Architect and principal of RWA, the Architects on the contract, also gave evidence for Fort. … On the issue as to the view to be taken of interim valuation certificates, it was his position that the valuations contained in the interim certificates are not conclusive as to the amount finally due to the contractor.
[36] Mr. Alair Shepherd QC attorney for Crane submitted that his client had entered into a “Cost Plus Contract” or “Prime Cost Contract.” These terms are terms of art in the construction industry and were known and understood by both parties. Under the terms of such a contract, Fort was required to pay to Crane all the costs of the material, labour costs and the cost of plant, transport of plant and equipment which were incurred by Crane. In addition to those costs, the defendant would also pay 50% on the net labour costs, 25% on the net costs of materials and 25% on the costs of plant and equipment.
[37] … It was Crane's contention that this model was agreed to between the parties as the procedure for payment for the work in progress, notwithstanding the oral nature of the contract. This contention is not disputed by Fort; what is in dispute is whether the QS's valuation were conclusive, final and determinative.
[38] Mr. Shepherd further contended that an implied term of the method of payment was that the total sums valued during the period of the contract would be the basis for a review and settlement of the final account between Crane and Fort and it was on the basis of this understanding that work commenced on Coral House in or around the month of October 2001.
[39] … Mr. Rollitt in his evidence had contended that the interim certificate was inconclusive in that it had no bearing on the final certificate. In the premises, a final certificate was never issued.
[45] In response, Mr. Andrew Thornhill, Counsel for Fort submitted that the ability of a party to attack or challenge a certificate of interim/progress payment depended not only on the intention of the parties, to be derived from the contract, but on their conduct and that of the architect (see Keating on Building Contracts, 7th Edition, para. 5 – 31A et seq). It was his contention that Crane could only impugn the valuation of the Quantity Surveyor if there is fraud, collusion or negligence on the part of the QS (Keating, supra at para 5–38).
[46] Mr. Thornhill further submitted that Crane accepted each interim certificate and never challenged any of them at the time of their issuance or subsequent thereto and that these certificates were now not open to challenge by Crane. It was further contended that the certificates were binding and a condition precedent to payment. In addition it is submitted that the court is bound to interpret the words “pursuant to the certificates” as making each and every one of them a condition precedent to payment by the defendant to the plaintiff.
[49] On a consideration of the evidence in this case and the authorities which have been cited, I am of the view that the interim certificates were not binding and determinative of Crane's claim for payment under the contract. In the circumstance that the arrangements between Crane and Fort were grounded on an oral contract, the observation by Lord Hoffmann in Beaufort Developments cited above, that:
“ I think that today one should require very clear words (emphasis added) before construing a contract as giving an architect such powers.”
is supportive of the conclusion, a fortiori, that in the case of an oral contract similar care would need to be taken before concluding that interim certificates are conclusive.
On 6 June 2006 Blackman J made the following order:
“[68] In light of the conclusions which I have reached, Crane's action is dismissed, and judgment is given in favour of Fort on its counter-claim. During the course of the trial, Fort modified its claim of $370,013.27 to remedy the defective work to $290,595.74. No evidence was led by Crane to contradict Fort's claim and I accordingly accept the modified figure. From that sum should be deducted, by way of set off the outstanding 12th Certificate of $83,584.01 and VAT of $12,537.60. Accordingly, there is judgment for Fort on its counterclaim in the sum of $194,474.13. Interest shall run on that amount at the rate of 4% from the 14th day of January 2002 (the date on which the Defence and Counter-claim was filed) to June 5th, 2006 and thereafter at the rate of 8% until payment.
[69] A great deal of energy and time was expended by Mr. Thornhill counsel for Fort in seeking to establish the binding nature of an interim certificate, an issue on which he was unsuccessful. In the circumstances, I award to Fort two-thirds of its costs certified fit for two counsel, to be taxed or agreed. In addition, in the circumstance that for a variety of reasons the trial was spread over eleven (11) days, including adjournments for documentation to be retrieved and/or collated and that some trial “days” were less than or three hours duration, I adopt the approach of Douglas CJ in Barrow v. Caribbean Publishing Co. Limited et al [1971] 6 Barb. L.R. 74 at page 85 and certify that costs are to be calculated on the basis of 8 trial days”.
The appellant, dissatisfied with the outcome of the action, appealed to this Court. On the appeal, this Court recognized that the absence of final accounts posed a difficulty for the justice of the case and gave some consideration thereto at paragraphs 23 to 29 of its decision:
“[23] However, there is merit in the appellant's third contention that the judge did not deal with the retention money and it is unclear from the documents how this was treated. Certificate number 12 stated a figure for retention of $83,351.44. It was not clear that the retention money had been properly taken into account. Further, no account was taken in the judgment of the work done after certificate number 12 was issued covering the uncertified period from 12 to 19 October. The plaintiff would have been entitled to a review of the invoices and a valuation of the work up to the date of termination as the valuations contained in the interim certificates were not final.
[24] The defendant acknowledged its liability to the plaintiff in its termination letter dated 19 October 2001, as follows:
“Messrs. Cooper Kauffman and Robertson Ward Associates have been instructed to carry out an immediate detailed inspection and produce a valuation of works to date. Any payment due to Crane Construction or claims against Crane Construction will be made in accordance with that valuation and report.” (Emphasis added.)
On 21 October 2001, the defendant responded to the plaintiff's letter as follows:
“It is our intention to fully co-operate with yourself and your Consultants Robertson Ward Associates and Cooper Kauffman. Please prepare a further valuation for work up to 19/10/2001 … We are also insisting on release of all retention monies at this time.”
In a further letter dated 22 October 2001, the defendant stated that Cooper Kauffman Ltd:
“will prepare, within the next few days, a detailed report on the works to date and will prepare a final valuation as at 19th October.”
[25] Based on the evidence from the exchange between Mr. Colin Cooper (“CC”) and Mr. Andrew Thornhill (“AT”) at 2:264 it is clear that a final valuation was never done:
“AT: Was a final valuation ever performed by Cooper Kauffman.
CC: No, it wasn't.
AT: Would you be so kind as to tell the Court why?
CC: The purpose of an interim valuation is for payment on account, and to use the words generically the agreement of the final account which will result in a final agreement of course, once agreed and during that agreement any points of disagreement are normally worked out, negotiated and agreed, and then a final account would be issued together with a final valuation of the architect.
AT: Was that process carried through in this particular instance?
CC: The process was...
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