England and Wales High Court (Technology and Construction Court) Decisions

B E T W E E N :

Plaintiff

- and -

Defendant

- and -

(formerly WIMPEY CONSTRUCTION LIMITED)

Third Party

Case Number: 1998 ORB 62

Date of Judgment: 13 January 1999

The plaintiff made a contract in 1989 with the third party incorporating the conditions of the 1980 edition of the JCT Standard Form of Building Contract with Quantities for the construction of a building in Mansfield Road, Oxford to house the Department of Pharmacology and the Anatomical Neurapharmacology Unit, the Contract Sum being £8,881,936. The architect named in the contract was the defendant. Defects were found and instructions were given to put them right. A Final Certificate was issued by the defendant under clause 30.9.1 of the JCT Conditions which constituted conclusive evidence that the work was in accordance with the contract. The plaintiff maintained that the defects had not been eradicated and sued the defendant for breach of contract. The defendant denied liability but claimed that the third party was liable to the plaintiff and under the Civil Liability (Contribution) Act 1978 was liable to make a contribution to any damage for which the defendant might be held liable. The third party defended the claim on the grounds, amongst others, that it was not in law liable under the Act as the issue of the Final Certificate prevented it being held liable to pay the plaintiff any damages. On the trial on certain preliminary issues as to whether the third party was right in this defence it was held that the third party could have no liability to the plaintiff and that it could not be liable to the defendant as claimed. The reasons appear from the judgment. The third party proceedings were dismissed with costs. Leave to appeal was granted.

The text of the judgment approved by His Honour Judge Humphrey LLoyd QC is as follows:

1. On 13 November 1998, I ordered that there should be a preliminary issue on certain questions of law raised by the defence of the third party (which I shall call Wimpey even though the company has now changed its name to Tarmac Construction (Contracts) Limited). The central point of law is both interesting and of potential general importance. It concerns the availability of the right of contribution from a contractor who has had the benefit of a Final Certificate issued under clause 30.9 of the 1980 edition of the JCT Standard Form of Building Contract. I first set out some of the background facts, as they are found in the pleadings, before turning to the issue and to the arguments.

2. The plaintiff, OUFA, entered into a contract with Wimpey dated 30 November 1989 for the construction of a building in Mansfield Road, Oxford to house the Department of Pharmacology and the Anatomical Neurapharmacology Unit, the Contract Sum being £8,881,936. The architect named in the contract was the first defendant, Architects Design Partnership (the Architects). The contract incorporated the Standard Form of Building Contract 1980 Edition, incorporating Amendments 1, 2, 4 and 5 (ie revised up until 1988), Private With Quantities. Clause 30 contained the following provisions:

30.9.1 Except as provided in clauses 30.9.2 and 30.9.3 (and save in respect of fraud), the Final Certificate shall have effect in any proceedings arising out of or in connection with this Contract (whether by arbitration under article 5 or otherwise) as

.1 .1 conclusive evidence that where and to the extent that the quality of materials or the standard of workmanship are to be to the reasonable satisfaction of the Architect the same are to such satisfaction, and

.1 .2 conclusive evidence that any necessary effect has been given to all the terms of this Contract which require that an amount is to be added to or deducted from the Contract Sum or an adjustment is to be made of the Contract Sum save where there had been any accidental inclusion or exclusion of any work, materials, good or figure in an computation or any arithmetical error in any computation, in which event the Final Certificate shall have effect as conclusive evidence as to all other computations, and

.1 .3 conclusive evidence that all and only such extensions of time, if any, as are due under clause 25 have been given, and

.1 .4 conclusive evidence that the reimbursement of direct loss and/or expense, if any, to the Contractor pursuant to clause 26.1 is in Final settlement of all and any claims which the Contractor has or may have arising out of and the occurrence of any of the matters referred to in clause 26.2 whether such claim be for breach of contract, duty of care, statutory duty or otherwise.

30.9 .2 If any arbitration or other proceedings have been commenced by either party before the Final Certificate has been issued the Final Certificate shall have effect as conclusive evidence as provided in clause 30.9.1 after either:

.2 .1 such proceedings have been concluded, whereupon the Final Certificate shall be subject to the terms of any award or judgment in or settlement of such proceedings, or

.2 .2 a period of 12 months during which neither party has taken any further step in such proceedings, whereupon the Final Certificate shall be subject to any terms agreed in partial settlement.

whichever shall be the earlier.

30.9 .3 If any arbitration or other proceedings have been commenced by either party within 28 days after the Final Certificate has been issued, the Final Certificate shall have effect as conclusive evidence as provided in clause 30.9.1 save only in respect of all matters to which those proceedings relate.

30.10 Save as aforesaid no certificate of the Architect shall of itself be conclusive evidence that any works, materials or goods to which it relates are in accordance with this Contract.

3. Partition walls of blockwork were constructed during 1990. OUFA allege that they were abnormally and unacceptably wet or were not protected from weather and kept dry so that when they dried out widespread cracking was caused, particularly to the plasterwork which had been applied to the blockwork. On 29 July 1991 the Architects certified that practical completion of the works had been achieved. On 16 August 1992 the Architects sent Wimpey lists of defects in the works which had to be made good before the Defects Liability Period ended. The list included cracking to the plaster. Wimpey carried out remedial work to repair the plaster cracking but evidently unsuccessfully for by 21 December 1992 the Architects issued a further list of defects which required attention. OUFA brought further areas of cracking to the Architects' attention about a year later in November 1993. Further remedial work was done by Wimpey in early 1994. On 7 June 1994 the Architects issued a certificate of the completion of making good defects. They followed up that certificate by issuing a Final Certificate under clause 30.9 of the building contract on 18 July 1994. It was in standard form: it certified the adjusted contract sum of £9,613,813.29 and the amount previously certified for payment and expressed the difference as a sum payable by OUFA to Wimpey.

4. OUFA issued the writ in these proceedings on 25 July 1997 claiming damages for negligence and breach of contractual duty of care owed by the architect to the plaintiff. (OUFA also joined another defendant but that claim has been withdrawn.) The grounds relied on by OUFA are set out in paragraph 27 of the amended statement of claim: failure to inspect the blockwork to see that it was not wet; failure to require Wimpey to rectify the blockwork; negligently certifying practical completion; failing to see that the remedial works were properly executed; failing to investigate the causes of the cracking; negligently issuing the certificates of making good defects and the Final Certificate; and failing to recommend enforcement of the contract. The damages claimed by OUFA are primarily the cost of rectifying the problem after the Final Certificate so its issue is the culmination of the complaints. But for its issue OUFA could have held Wimpey liable so in reality the claim against the Architects also boils down to one for loss of that opportunity.

5. The Architects denied liability and furthermore issued a third party notice against Wimpey in which they claimed that Wimpey was liable to OUFA as the defects in the building (which also included other defects to which I have not referred) arose out of breaches of clauses 2.1, 4.1 or 8.1 of the JCT Conditions (or of implied terms) and accordingly the Architects sought contribution and an indemnity pursuant to the Civil Liability (Contribution) Act 1978. The relevant sections of that Act are as follows:

15. In addition section 6(1) of the Act states:

17. Section 7(3) of the Act states:

6. The issue or issues which are to be decided stem from paragraphs 10 to 13 of the defence of Wimpey to the third party notice:

7. The issues agreed between the parties were therefore as follows:

40. I should make it clear that in answering issue (A) I have assumed that the defects in the block-work constitute damage which occurred prior to the issue of the Final Certificate. Paragraph 11 of Wimpey's defence would require an inquiry into the facts. I accept Mr Mauleverer's submission that it would not be desirable to do so. At the time when the preliminary issues were ordered I thought that it might have been possible to have made an assumption as to paragraph 11 so as to provide some guidance. Similarly the issue as to estoppel is not to be decided on this occasion.

8. In the present situation the commercial interests of a contractor and an architect appointed under the JCT form are diametrically opposed. A contractor in the position of Wimpey has entered into a form of contract incorporating model standard conditions which have been unanimously approved by bodies representing all sectors of the building industry, including the RIBA for architects and the former BEC for contractors. The conditions envisage that within a specific period from practical completion of the works finality should be achieved both as regards the final account and also as to the contractor's liability for the extent and quality of the work, material and services which it undertook to provide. On the issue of the Final Certificate the parties to the contract know where they stand and each has the same opportunity to challenge the finality of the certificate as to any matter in respect of which it is conclusive evidence within 28 days (assuming that an arbitration or other proceedings have not already been commenced). On the other hand the architect under the contract if accused of professional negligence for failing to hold the contractor to its contract naturally wishes that, if held liable, the party who is primarily responsible, namely the contractor, should be required to contribute to any damages which the architect may be obliged to pay to the common client for otherwise the architect would find itself responsible for the default of the contractor even though it was not physically in a position to have avoided the occurrence of the defects or to have secured their rectification. The contractor equally wishes to retain the benefit of the bargain made with the common employer and to preserve the exemption granted by the Final Certificate. One might have thought that such a conflict would already have been the subject of a number of decisions since, stripped to its essentials, it could arise in a variety of commercial situations. Perhaps the answer has long been self-evident to others although if that were the case then one might have expected it to have been clearly set out in the Civil Liability (Contribution) Act 1978, for in certain places that Act is reasonably clear.

9. The submissions made by Mr Mauleverer for the Architects were to the effect that the answer was indeed clear since, first, section 1 of the Act provides:

and, secondly, section 1(3) provides:

43. Although section 1(3) was intended to reverse the decision in Wimpey v BOAC [1955] AC 169 (according to Clerk and Lindsell on Torts, 17th ed. paragraph 4-61), the Court of Appeal held in Logan v Uttlesford District Council (1986) 136 New LJ 541, that for the purposes of section (1(3) a person does not cease to be liable by reason of the settlement of the claim against him but remains liable to a claim to contribution by another person liable in respect of the same damage. Auld LJ said much the same in Friends' Provident Life Office v Hillier Parker [1997] QB 85 at page 104A-B:

45. The subsection is apparently not confined to cases where liability ceases because the original claim would have been barred by limitation. I shall revert to Logan later.

10. Mr Marcus Taverner, for Wimpey, submitted that section 1(3) was irrelevant. In essence his submission was that there was no liability once the Final Certificate has been issued, and Wimpey was not a person liable within section 1 of the Act. There were a number of stages in his submissions. First, he contended that the effect of the Final Certificate is that it constituted conclusive evidence that the work was not defective at the time of its issue. The work was either never defective or, if it had once been defective, the defect had been put right. The certificate moreover granted retrospective "absolution" to the contractor so that it was as if there never had been any liability for defective work. Mr Taverner referred to P & M Kaye Limited v Hosier & Dickinson Limited [1972] 1 WLR 146, the decision in which led to a revision of clause 30(7) of the 1963 Edition of the RIBA/JCT Standard Form (which was the form used in that case) and to the policy now found in clause 30.9 of the 1980 Edition of the JCT Form. The facts of that well-known case are striking since the Final Certificate had been issued after litigation had started. The House of Lords held that it had the effect of extinguishing the rights the subject of the litigation although Lord Diplock dissented on the grounds that the language of the contract in question did not have the effect of making the certificate conclusive evidence that the work had never been defective. Lord Diplock's opinion was that which had been adopted by counsel in the course of argument. The majority held that it had been suggested to counsel too late for submission and consideration by the House. Mr Taverner however referred to Lord Pearson's speech at page 163B:

47. Mr Taverner relied particularly on the word "absolution".

11. I consider that this case merely provides the historical background to the contract used by OUFA. Whilst it is permissible when deciding what a standard form contract means to look at the supposed "mischief" that may have been corrected ultimately the decision has to be taken on the words actually used. Since clause 30.9 plainly only requires the architect to form an opinion about the state of the works at the time of the Final Certificate is to be issued it is not necessary to refer to Kaye especially since clause 30.9 deals now with the effects which were not the subject of a Final Certificate under pre-1980 editions or revisions. Mr Mauleverer in another context referred to Lord Bridge's observations in Mitsui v Attorney General of Hong Kong (1986) 33 BLR 1 at page 18:

12. The wording of clause 30.9 of the 1980 edition of the JCT form was however considered by the Court of Appeal in Crown Estate Commissioners v John Mowlem & Co Ltd (1994) 70 BLR 1. In that case the Court had to consider whether the employer, Crown Estate, could obtain leave under section 27 of the Arbitration Act 1950 for an order extending the time within which a notice of arbitration might be given. The Final Certificate had been issued in December 1992 but the application under section 27 was not made until April 1993. It was held that clause 30.9 did not in fact provide any time limit within which arbitration proceedings were to be commenced so that there was no jurisdiction to accede to the application as section 27 of the Act only applied where there was a provision for the contract for the time within which arbitration proceedings could be commenced. It held that clause 30.9 in referring to "conclusive evidence" permitted proceedings to be commenced at any time but the effect of the Final Certificate would lead to the dismissal of the proceedings. Stuart-Smith LJ said at page 11C:

52. He said later (at page 12G):

54. Sir John Megaw said at page 24B-C:

56. Mr Taverner therefore submitted that, for the purposes of, for example, section 1(3) there was no "cessation of liability" since the effect of the Final Certificate was that there was and had been no liability. He drew attention to the effect of a "conclusive evidence" certificate as it was considered in the House of Lords in Beaufort Developments (NI) Limited v Gilbert Ash (NI) Limited [1998] 2 WLR 860. Lord Hoffman said at page 868F:

59. Lord Hope said at page 877E:

61. Lord Hope later referred to Kaye at page 883A:

13. Mr Mauleverer accepted that Crown Estate might be a relevant authority but, mindful that it had been criticised by Mr I. N. Duncan Wallace QC (amongst others) (see (1995) 11 Con LJ 184 and (1997) 13 Con LJ 15) and no doubt also of the endorsement of the House of Lords in Beaufort Developments of the criticisms of that eminent commentator of another decision of the Court of Appeal, understandably reserved the right to contend that Crown Estate had been wrongly decided. Mr Mauleverer submitted that Crown Estate had held that the Final Certificate was conclusive evidence not merely as to whether or not materials and workmanship had been provided to the satisfaction of the Architect but also as to whether all the provisions of the contract relied upon by the plaintiff (eg 2.1, 4.1 and 8.1) had been correctly observed. Any failure by the contractor to comply with these provisions (including also any implied term, as relied on by OUFA) amounted to a breach of contract and liability to OUFA. It was not as if the Final Certificate related only to attaining the satisfaction of the architect. There was the customary dual obligation (see National Coal Board v Wm Neill & Son (St Helens) Ltd [1985] QB 300) - Wimpey might have done the works to the satisfaction of the Architects but had not done them otherwise in accordance with the contract. The effect of the Final Certificate was not that Wimpey had no liability but that Wimpey ceased to be liable. Mr Mauleverer also referred to Guinness Plc v CMD Property Development Limited (1995) 46 Con LR 48 in which His Honour Judge Havery QC had considered Kaye v Hosier & Dickinson and the 1978 Act. The facts of that case were similar to those of the present case. The architect had claimed contribution from the contractor in respect of defective work. The contractor did not have the benefit of a Final Certificate but relied upon a settlement agreement between himself and the employer. The contract had incorporated the 1963 Edition of the JCT Form, 1977 revision. Judge Havery concluded (at page 60):

14. Accordingly, Mr Mauleverer submitted that the effect of the Final Certificate was to bring to an end the contractor's liability to OUFA so that there was therefore a "cessation" for the purposes of section 1(3). Mr Mauleverer also submitted that although Kaye v Hosier & Dickinson had been concerned with a different contract even Lord Diplock had contemplated that at the time of the issue of the certificate there might not have been a liability by the contract to the employer (see for example, page 167D-E):

65. However this part of the speech formed part of Lord Diplock's dissenting reasoning.

15. In my judgment, the effect of the certificate is not that it leaves the contractor with no liability in law but that, as Stuart-Smith LJ said in Crown Estate Commissioners v John Mowlem & Co Ltd, it operates only as an evidential bar which would preclude an employer from being able to prove the facts necessary to establish such liability. As regards the obligations of the contractor it supposes that the employer claims damages for breach of contract. As Lord Diplock said in Photo Production Limited v Securicor Transport Limited [1980] AC 827 at page 849: "there is substituted by implication of law for the primary obligations of the party in default which remain unperformed a secondary obligation to pay money compensation to the other party for the loss sustained by him in consequence of their non-performance in the future". Judge Havery's decision in Guinness v CMD is also that liability exists until brought to an end. A settlement agreement extinguishes liability because by the agreement the secondary obligation is satisfied. According to Logan the Act requires it to be ignored if it was made after the damage occurred. I certainly accept that if Wimpey had broken the contract and had caused loss and damage to OUFA, apart from the direct cost of putting the work right, then Wimpey would have had some residual liability to OUFA and, indeed, possibly to third parties in respect of whose losses the employer might have a claim for an indemnity under clause 20.2 of the JCT Form. The issue of the Final Certificate would not dispose of those accrued rights since, as in Kaye v Hosier & Dickinson, the Final Certificate merely operates to express the state of affairs at the date of its issue and not to provide conclusive evidence that the works had always been "perfect". Accordingly, even though a Final Certificate had been issued an employer may claim from the contractor damages for a prior breach of contract which had not been made good either physically, eg by the contractor putting work right, or metaphysically, by the contractor paying damages for the breach. Of course once the damages are paid then the liability is discharged. I return later to the nature of the Final Certificate and to its effect.

16. Mr Taverner's next principal point was that in any event there still could be no liability to contribute under section 1(1) of the Act. In order for Wimpey to be liable to contribute pursuant to section 1(1) it had to be a "person liable in respect of the same damage". Section 1(6) stated that a reference "to a person's liability in respect of any damage" is a reference "to any such liability which has been or could be established in an action brought against him in England and Wales by or on behalf of the person who suffered the damage ...". Clearly no liability had been established in an action brought against Wimpey. Mr Taverner submitted that if OUFA had brought an action against Wimpey it would not have been able to establish liability since it would have defeated the claim by relying upon the Final Certificate so that, as Sir John Megaw said at page 25C in Crown Estates:

67. Mr Taverner relied also upon section 2 of the Act in which in subsection (3) there is to be a limit on the contribution recoverable from a person liable under section 1 where that person has the benefit of, for example, "any limit imposed ... by any agreement made before the damage occurred" (section 1(3)(a)). Mr Taverner's submissions therefore posed the following question. Suppose the contract between Wimpey and OUFA had contained a provision limiting the damage recoverable by OUFA for the breaches of contract now in issue to, say, £5. So long as there was no Final Certificate or if the Final Certificate did not affect liability then by virtue of section 2(3) the Architects could not recover a contribution exceeding £5 in any proceedings brought under section 1. If on the other hand there was a Final Certificate OUFA could recover nothing yet, if the Architects were right, Wimpeys would now be liable to make a contribution limited only by the proportion considered to be "just and equitable" under section 2(1). Mr Taverner submitted that such an anomaly and injustice would be avoided if section 1(6) were read as entitling a person to an exemption from liability under section 1(1) if they would be completely exonerated in an action brought against them.

17. In addition, Mr Taverner argued that even for the purposes of section 1(3) the cessation of liability that might have been achieved by a Final Certificate arose because under the JCT Contract the Architects were obliged to issue a Final Certificate within a given period. That therefore constituted a "period of limitation or prescription" which extinguished the right upon which a claim made by OUFA would have been based. Accordingly Wimpeys have the benefit of the proviso to section 1(3). In Nottingham Health Authority v Nottingham City Council [1988] 1 WLR 903 the Court of Appeal held that the effect of the proviso to section 1(3) was that a tortfeasor against whom contribution is claimed who has been sued to judgment and found not liable because of a successful plea of limitation is nevertheless liable to contribute since limitation barred the remedy and not the right: see Balcombe LJ at page 906F-H. Since the Final Certificate barred the right the proviso did not apply.

18. Mr Mauleverer submitted that the words of section 1(3) were clear and in effect dealt with the situation in which no liability could be established (as contemplated by section 1(6)) because of a cessation of liability and thus section 1(3) took effect, not withstanding section 1(6). He also submitted that section 2 was concerned only with the assessment of the amount of contribution and not with liability and that the arguments raised by Wimpey might be a factor to be taken into account by the Court in deciding the amount recoverable pursuant to section 2(1). The provisions of section 2 were otherwise irrelevant to the interpretation of section 1. Mr Mauleverer also submitted that Nottingham Health Authority v Nottingham City Council was concerned only with the reversal of Wimpey v BOAC and not with any contractual limitations.

19. In my judgment, in construing the 1978 Act it is necessary to bear in mind that the Act needs to be read in a sensible manner. In Birse Construction v Haiste Limited [1996] 1 WLR 674, Sir John May said at Page 680C:

...

70. In my judgment section 1(6) is concerned with defining liability for the purposes of every part of section 1. A person will not be "liable in respect of any damage" unless that liability "has been or could be established in an action brought against him in England and Wales by or on behalf of the person who suffered the damage". In other words, as Sir John May put it, is there an obligation or an existing liability? In section 1(1) contribution may be recovered from a person "liable in respect of the same damage" if and only if, in my judgment, that person has a liability which has been or could be established in respect of that damage. It does not apply if it has been decided that the person has no liability or if liability could not in fact or in law be established. In my view it would be absurd if the right to contribution depended on whether or not there had been an award or judgment that Wimpey had no liability because of the existence of the Final Certificate when clause 30.9 is so clear. In Crown Estate Sir John Megaw said that the claim would be dismissed which means that OUFA could not have established liability. Sub-section (2) is concerned with the position where there has been a cessation of liability by the person entitled to recover contribution. Sub-section (3) is concerned with the cessation of liability by the person who might be liable to make contribution. In both cases the sub-sections pre-suppose that liability has been or could have been established but for the cessation. In my judgment once the Final Certificate had been issued no liability could have been established by OUFA against Wimpey since a claim by OUFA in respect of the same damage for which the Architects seek contribution from Wimpey, ie the defects in the blockwork would have been defeated so that in any ordinary and natural meaning of the word liability could not have been established. The real nature of the Final Certificate can be seen from the recent case of Beaufort. To the extent that an existing dispute has not been made the subject of proceedings the parties to the JCT contract appoint the architect as their decision-maker to decide, amongst other things, whether the works have been carried out not merely to his satisfaction but also in accordance with the contract and whether the rights of the parties to adjustments to the contract sum have been correctly recognised. The parties each have 28 days to consider that decision. If either were thereafter to commence proceedings in which in effect that decision is challenged the parties further agree that it is to be binding as it will be conclusive evidence that the correct decision was made and accordingly the issue can no longer be determined by the court or arbitrator: see the extracts from the speeches set out above and Lord Hoffmann at page 865G:

72. Thus in clause 41.4 of the JCT conditions the arbitrator's power to open up, review and revise are expressly subject to clause 30.9 (amongst other conditions). The Final Certificate if not questioned within 28 days therefore operates as a decision by the person appointed by the parties that the work is then in accordance with the contract. The issue of the Final Certificate is thus tantamount to a decision discharging the liability of the contractor (which is not the same as a cessation of a liability). It is linked to the settlement of the final accounts and thus of the claims which each party might have had against the other and is equivalent to discharge by performance or by satisfaction.

20. A conclusion that a contractor might be liable to contribute would be wholly unacceptable. The facts and assumptions which I have to make include the supposition that the Architects have been held liable for negligence in not securing that Wimpey erected the blockwork properly or that Wimpey did not properly put right defects created by the damp blockwork but above all for issuing a Final Certificate when they knew or ought to have known the building was still defective as a result of which OUFA has had or will have to put right the defects at its own cost as in any proceedings OUFA would have been unable to establish that Wimpey was liable. The reason why OUFA would have failed is the issue of the Final Certificate by the Architects. Without going as far as section 1(5) I am unable to accept that the Act is to be read as to permit the person who by its own negligence to the common client procured that liability could not be established by that client can then claim to contribution as if that act had not occurred and as if the client could have done so. That is rank injustice. I do not consider that section 1(6) as applied to section 1 is to be read as to deprive Wimpey of the protection which it and its contract provides. Furthermore it seems inevitable on the facts and assumptions made for the preliminary issue that it will have been established that at the time when the Final Certificate was issued Wimpey was liable to OUFA (for otherwise the Architects could not be held liable to OUFA) but nevertheless that the Final Certificate constituted conclusive evidence in Wimpey's favour and precluded proof of those facts. Under section 1(5) these findings would also be conclusive in the contribution proceedings in Wimpey's favour. I do not consider that the Act is to be read as requiring a person in the position of Wimpey to be subjected to such a convoluted way of re-establishing its lack of liability when there is a better route available and particularly when the contract itself provided decision-making machinery designed to avoid further proceedings in which the outcome would be inevitable.

21. Mr Taverner's telling comparison of section 2 with section 1 provides another compelling reason for answering the issue in Wimpey's favour. It would be absurd if a contractor could be liable to contribute an indeterminate amount to an architect pursuant to section 1(1) notwithstanding the issue of a Final Certificate by which there was no further liability to the employer but would be technically liable to contribute a set amount where there was a contractual "cap" of a nominal figure by section 2(3). It would mean that the JCT and many other forms of contract ought therefore to have been written on the basis that the contractor was deemed to pay damages of a nominal amount for any breaches might have been established rather than providing for the "clean break" by means of a Final Certificate. That would be not only extremely cumbersome but quite unnecessary unless the Final Certificate did not have the effect which I consider that it has. I see nothing in the Act which supposes that it is intended to deprive a party of its rights under a contract (which is the purpose of the Architects' case); indeed section 2(3)(a) of the Act affirms that a person shall not be liable to make a contribution in circumstances where there would be no liability under the contract which is the source of that person's supposed liability and that policy is reflected in section 7(3).

22. Any other conclusion would also mean that, notwithstanding the issue of the Final Certificate an employer who found himself in the position of OUFA would be able to circumvent the practical effect of clause 30.9 by suing the architect who would in turn be able to claim contribution from the contractor. In commercial terms the contractor would then be vulnerable and would almost certainly offer to pay the architect so that in turn the architect (who might well be under-insured) would be better able to pay the employer more than might have obtained had the architect not been able to lean on the contractor. That therefore would drive the proverbial coach and horses through the structure of the JCT conditions which has been negotiated over many years and is thus to be taken as representing a fair balance between competing interests. In my judgment it would be wrong to read those conditions and the Act in a way which would negative such a policy so carefully set out in the conditions and, in my judgment, in the Act.

23. I am unable to accept that the Final Certificate constitutes a cessation of liability under section 1(3) but for reasons which in my judgment support Mr Taverner's case. The purpose of the sub-section was evidently to reverse the effect of Wimpey v BOAC, ie a person who has been sued to judgment and found not liable may still be required to contribute unless the right to require contribution is itself barred by limitation or prescription: see Nottingham Health Authority. Sub-section (3) is thus dealing solely with a technical point: a person cannot resist being called upon to contribute simply because liability has ceased. The person claiming contribution must nevertheless still establish that prior to the cessation the person was liable, as defined by section 1(6). If the liability is in contract the question will be whether a breach of contract can be established. All the facts and all the terms of the contract have to be examined. If the contract were to say that no action shall be brought in respect of a certain default which is otherwise recognised as a breach of contract then liability for that breach could not be established. It would be perverse to describe that situation as one where liability has ceased. I can see no material distinction between that situation and the present one. The contract contemplates that liability to the employer will depend on whether or not a Final Certificate has or has not been issued. If it has not been issued because the contractor has satisfactorily rectified a breach of contract then liability can be established; if it has not been issued because it has wrongly been withheld but otherwise the work is in accordance with contract liability will not be established; if it has been issued but the work is not in accordance with the contract then it is not that liability exists and has ceased it is that liability cannot be established.

24. However for the reasons that I have given I do not accept Mr Taverner's submission that in the proviso to section 1(3) "period of limitation" means anything other than a time-bar applicable to the proceedings brought by the person claiming contribution, see also Logan v Uttlesford DC. Logan may need to be reconsidered in the light of the decision of the House of Lords in Jameson v CEGB, 16 December 1998, unreported, as it concerned joint tortfeasors. In Jameson Lord Hope drew attention to the injustice of exposing a person who had settled to paying damages twice for the same harm (see pages 8 and 9 of the print of the speeches). The decision removes that injustice, and in terms of contribution proceedings may have the practical effect that a settlement agreement with one joint tortfeasor may be as good as an agreement entered into before the damage occurred (see section 2(3)(a)). It would be surprising if those liable in contract for the same damage were treated differently. However I have not had any submissions on the effect of Jameson since the decision was given after argument finished. In cases of contract there is in my view a material distinction between the JCT form and a settlement agreement which is reflected in section 2(3)(a). A settlement agreement is entered into after the damage has occurred and at a time when provision may be made to deal with the possibility of claims for contribution. It is by no means uncommon for a settlement agreement between an employer and a contractor to require the employer to indemnify the contractor should a third party make a claim against the contractor (such as the architect) the effect of which would be disturb the basis of the settlement but it is indeed good practice to seek to do so, just to avoid the possibility of liability for a claim such as the one currently being made being visited on a party who ought not to bear it. Given the complexity of the JCT form it could be said that it would have been easy to have amended the conditions to that effect, but it would not be necessary if the effect of the Final Certificate is that there is no such liability.

25. For these reasons my answer to the issue is: the Final Certificate affords a defence to Wimpey as contended in paragraphs 10 and 12 of its defence to the third party notice.

Orders: The answer to Preliminary Issue (A) is: the Final Certificate affords a defence to Wimpey as contended in paragraphs 10 and 12 of its defence to the third party notice. Third Party Proceedings dismissed with costs. Leave to appeal granted.