Home Information Cases Henry Boot Construction Ltd v Alstom Combined Cycles Ltd (2005)

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Henry Boot Construction Ltd v Alstom Combined Cycles Ltd (2005)

Summary

A contractor's right to payment under a building contract incorporating the Institution of Civil Engineers Standard Form (6th edition) arose when an engineer's certificate was issued, or ought to have been issued, under clause 60 and not when the work was done. The failure to include a sum in an interim certificate gave rise to a different cause of action from the failure to include a sum in a final certificate (even if it happened to be the same sum). The right to claim interest on a sum which should have been certified became statute-barred six years after that right accrued.

Facts

The appellant contractor (H) appealed against the decision of an arbitrator that H's claims under a building contract were statute-barred. H had been employed by the respondent (R) as contractor for the main civil works for the construction of a power station. The contract incorporated the Institution of Civil Engineers Standard Form (6th edition). The contract provided by clause 60(2) that within 28 days of the date of delivery to the engineer of H's monthly statement the engineer would give a certificate and R would pay to H the sum certified. Clause 60(4) provided for a final account, certificate and payment. Clause 60(7) provided for interest on overdue payments. Disputes arose after H had submitted its final account and the engineer had issued a final certificate. The arbitrator held as a preliminary issue that H's claims were statute-barred at the date of the final certificate because the cause of action in relation to interim payments accrued when the work was done and was not dependent on the issue of certificates. R submitted that (1) H's cause of action accrued on the doing of the work; (2) once H had a right to an interim payment in respect of an item of work or a claim, the cause of action in respect of that right to payment accrued; (3) any claim for interest was statute-barred in so far as it was based on amounts which should have been but had not been certified more than six years before the proceedings.

Held

(1) As a matter of construction, the contractor's right to payment arose when a certificate was issued, or ought to have been issued, under clause 60 and not when the work was done (although the doing of the work was itself a condition precedent to the right to a certificate), Lubenham Fidelities & Investment Co Ltd v South Pembrokeshire District Council Times, April 8, 1986 applied; Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd (1998) CILL 1386 considered. The wording of clause 60(1) was very wide and encompassed sums claimed in respect of acceleration measures pursuant to clause 46 as "estimated amounts in connection with matters for which provision was made under the contract". (2) The failure to include a sum in an interim certificate gave rise to a different cause of action from the failure to include a sum in a final certificate (even if it happened to be the same sum), Secretary of State for Transport v Birse-Farr Joint Venture~ 62 BLR 36 and Scottish Equitable Plc v Miller Construction Ltd 2002 83 Con LR 183 considered. (3) Certificates were the contractual mechanism for certification and payment of interest. The right to claim interest on a sum which should have been certified became statute-barred six years after that right accrued.

Appeal allowed in part.

Court of Appeal
Sir Andrew Morritt VC, Dyson LJ, Thomas LJ
Judgment date
4 July 2005
References

LTL 4/7/2005 : [2005] 1 WLR 3850 : [2005] 3 All ER 832 : [2005] 2 CLC 63 : [2005] BLR 437 : 101 Con LR 52 : (2005) 102(30) LSG 28 : [2005] EWCA Civ 814