Landmark construction projects have a habit of generating interesting and, possibly landmark, court judgments. The recent extensive redevelopment of Battersea Power Station is an example of this rule in practice.

The case of Battersea Project Phase 2 Development Company Limited -v- QFS Scaffolding Limited [2024] involves a familiar, and arguably somewhat draconian, provision of most JCT contracts, namely clauses (usually found in Section 1 of a JCT contract) which provide that the Final Certificate (sometimes otherwise called the “Final Statement” or “Final Payment Notice”) is conclusive evidence as to many matters in respect of the contract works to which the contract relates, including issues such as whether materials, goods and workmanship meet the contractually required standard; that all appropriate adjustments to the contract sum have been carried out; that all relevant extensions of time have been given; and that all appropriate loss and expense has been reimbursed.  Broadly speaking, these conclusive evidence provisions provide that the Final Certificate is conclusive evidence in respect of those matters unless adjudication, arbitration or other proceedings are commenced within a specified time of the Final Certificate being issued (usually only 28 days); and even after that, only as amended by the relevant conclusions reached in those proceedings.

The reasoning behind conclusive evidence clauses is to provide certainty, which can benefit both Contractor and Employer alike.  However, the breadth of issues which become conclusive if a Final Certificate is not challenged in a timely manner is such that the recipient of a Final Certificate can find it very difficult to commence well-reasoned and fully evidenced proceedings within the timescales prescribed in a JCT contract before the conclusivity provision takes effect.  In the heat of the moment, mistakes can occur, which might lead to decisions being issued that are, in practice, unenforceable. In that scenario, to what extent might the issues covered by the Final Certificate be amended by an unenforceable decision that nonetheless would alter the Final Certificate position were it enforceable?

These issues were considered in the Battersea Power Station decision.  The background is complex and lengthy, but can be summarised as follows:-

  1. The contract which was the subject of the dispute was, in fact, a sub-contract in respect of scaffolding supplied to the Battersea Power Station Project. Battersea Project Phase 2 Development Company Limited (“BPP2”) had engaged QFS Scaffolding Limited (“QFS”) to provide scaffolding services.  The sub-contract sum was originally intended to be £6.1m but, by the time the Final Payment Notice (i.e. the Final Certificate) was issued, the final sub-contract sum was certified to be in excess of £30m.
  2. The sub-contract was governed by a JCT 2011 Design & Build Sub-Contract Agreement and Conditions, with some bespoke amendments. Those amendments did not affect the conclusive evidence provisions set out in clause 1.8, which contained the various conclusivity effects outlined above,  including that, unless the Final Payment Notice was challenged by the commencement of proceedings within 10 days from the date of receipt of it, it would be conclusive as to the relevant issues; and if challenged within that timeframe, the Final Payment Notice would be subject only to the terms of any decision, award or judgment in, or settlement of, such proceedings.
  3. After the Final Payment Notice had been issued by BPP2 an adjudicator, determining a true value adjudication in respect of the final sub-contract sum commenced by QFS, concluded that QFS was entitled to a further £3.2m from BPP2 because the final sub-contract sum was more than had been set out in the Final Payment Notice. BPP2 did not pay this additional sum because it argued that the adjudicator did not have jurisdiction to determine the dispute referred to him because of an unauthorised delay by QFS in serving its Referral Notice.  On that basis, BPP2 argued, the Final Payment Notice did not fall to be considered “subject to the terms of any decision…in [the adjudication] proceedings”, because the decision in those proceedings was unenforceable.

In the subsequent Court proceedings, BPP2 sought a declaration that the adjudicator’s decision was unenforceable and, as a consequence, its Final Payment Notice was conclusive as to all matters set out in it (including the final sub-contract sum); and QFS sought summary judgment in respect of the monetary consequence of the adjudicator’s decision on the true value of the final sub-contract sum (ie: an order that BPP2 owed it a further £3.2m).

On the facts, the Technology & Construction Court concluded that QFS had not served its Referral Notice in a timely manner and that, as a consequence, the adjudication had become a nullity.  However, in an interesting twist, the Court concluded that the nullification of the adjudication proceedings had no bearing on whether the test set out in clause 1.8 (namely that the adjudication proceedings had reached a conclusion) had been made out.  The Court concluded that the adjudication proceedings had reached a conclusion and that, accordingly, the provisions of clause 1.8.2 were made out and the Final Payment Notice was to be interpreted subject to the terms of that conclusion.  This meant that QFS’s claim for summary judgment for an additional £3.2m succeeded.

This judgment provides a significant degree of comfort to a party that, in good faith, properly attempts to commence an adjudication within the requisite timescale in response to a Final Certificate but makes a mistake in the process, effectively rendering the subsequent decision unenforceable.  In such circumstances, and subject to the precise wording of the conclusivity provision in the relevant contract being adjudicated, the Battersea Power Station case is authority for the proposition that an adjudicating party has still taken effective and enforceable steps to challenge the findings set out in the Final Certificate.

If you would like to discuss this case, or the effects of Final Certificates more generally, further, please feel free to contact our Construction Team.