Beaufort Developments (NI) Ltd v. Gilbert-Ash NI Ltd and Others

The House of Lords held that, under the JCT standard form used in this case, interim certificates and other opinions of the architect (unlike the final certificate under clause 30.9) were not, of themselves, conclusive and that the ordinary jurisdiction of the court to determine contractual rights remained available unless the contract contained clear and unequivocal words to oust it. Clause 41.4 (power given to an arbitrator to "open up, review and revise" certificates) did not, by implication, deprive the court of its ordinary power to review interim certificates. The decision in Northern Regional Health Authority v. Derek Crouch Construction Co. Ltd. [1984] 1 Q.B. 644 was wrongly decided and was overruled.

The court applied principles that (i) a final certificate expressly made conclusive by clause 30.9 is to be treated differently from interim certificates; (ii) the parties must use clear words to exclude ordinary common law remedies and court jurisdiction; and (iii) an arbitration clause confers powers on an arbitrator but does not, absent clear language, curtail the court’s power to enforce the contract.

The appellant employer (Beaufort Developments) contracted with the respondent contractor (Gilbert-Ash) under the JCT Standard Form (1980 edition) for building works; the firm Parker & Scott acted as architects. Disputes arose about defective work, responsibility for delay and sums certified by the architect. The contractor sued to recover sums under six interim architect's certificates; the employer counterclaimed and joined the architects. The contractor invoked the arbitration clause and applied for a stay of the employer's High Court action under section 4 of the Arbitration Act (Northern Ireland) 1937.

The courts below (Master, Pringle J., and the Court of Appeal in Northern Ireland) granted or affirmed a stay, relying upon the Court of Appeal’s decision in Crouch which was understood to give an arbitrator an exclusive power to "open up, review and revise" architect's certificates such that the court could not revise them except for bad faith or excess of power.

The issues were (i) whether interim architect's certificates were conclusive in litigation or were open to full judicial inquiry; (ii) whether clause 41.4’s grant to the arbitrator of power to "open up, review and revise" certificates impliedly excluded the court’s ordinary jurisdiction; and (iii) whether the Crouch decision should be followed.

The House of Lords examined the contract provisions (in particular clauses 30.9 and 30.10 and clause 41.4), the practical function of architect's certificates, and authority including Robins v. Goddard and Modern Engineering. The Lords concluded that clause 30.9 made the final certificate conclusive but clause 30.10 showed that other certificates were not to be treated as conclusive. Clause 41.4 was construed as defining the arbitrator’s powers (including powers which a court already possesses to give effect to the contract) rather than as creating a novel exclusive power to modify the contract and oust the court. Accordingly, the House overruled Crouch, held that courts retain their ordinary jurisdiction to review interim certificates unless the contract clearly provides otherwise, and allowed the appeal, refusing the stay. The Lords noted legislative developments (for example Arbitration Act 1996 s.9(4)) but based the decision on contract construction and earlier authority.

Appeal allowed. The House of Lords overruled the Court of Appeal decision in Northern Regional Health Authority v. Derek Crouch Construction Co. Ltd.; it held that, except for a final certificate made conclusive by clause 30.9, architect's interim certificates were not of themselves conclusive and the courts retained their ordinary jurisdiction to determine disputes under the contract. Clause 41.4’s grant of powers to an arbitrator did not, absent clear words, imply exclusion of the court's jurisdiction; therefore the stay should not have been granted.

The contractor sought a stay of the employer's action under section 4 of the Arbitration Act (Northern Ireland) 1937. Master Wilson granted the stay; Pringle J. affirmed that decision. The Court of Appeal in Northern Ireland affirmed the stay, applying the Court of Appeal decision in Northern Regional Health Authority v. Derek Crouch Construction Co. Ltd. [1984] 1 Q.B. 644. The matter was appealed to the House of Lords, which allowed the appeal and refused the stay.