The S.S. for Transport -v- Birse Farr J V (1994) CA   © Daniel Atkinson 1999

In The Secretary of State for Transport -v- Birse Farr Joint Venture (1994) CA the contract was the ICE 5th Edition. The contractor claimed interest on the sum awarded by the arbitrator under clause 60(6), plus interest in respect of under-certification on other matters which were resolved without the need to refer them to arbitration. Mr Justice Hobhouse in the Commercial Court referred with approval to the views expressed by Mr Justice Buckley in the case of Farr -v- Ministry of Transport (1960) and the distinction between the issue of a certificate which bona fide assesses the value of the work done at a lower figure than that claimed by the contractor and a certificate which, because it adopts some mistaken principle or some errors of law, presumably in relation to the correct understanding of the contract between the parties produces an under-certification.

It was held that interest under clause 60(6) would only be due where the Engineer undercertifies due to some mistaken principle or some error of law. A certificate which bona fide assesses the value of the work done at a lower figure than is due to the contractor which does not involve a contractual error or misconduct of the Engineer will not rank for interest under clause 60(6). It was recognised that the Engineer did not only act as the agent of the Employer. On some matters which required professional skill the Engineer was required to form and act on his own opinion. In sub-Clause 60(2) and (3) the Engineer was required to form an opinion or to decide what he considered was proper. Under Clause 60(2) this requirement was to form an opinion as to the amount to certify. Under Clause 60(3) the Engineer was to form an opinion on the amount finally due to be stated in the final certificate. The expression "failure to make payment" therefore had a "qualitative content" in the same way as the phrase "withholding a certificate" has under Clause 66(2) as found in Farr -v- Ministry of Transport (1960). The question whether the Engineer has failed to certify must therefore be answered by reference to whether he has failed to form an opinion.

It was held that the opinion which the Engineer is required to form and express in his certificate is a contractual opinion. It must be a bona fide opinion arrived at in accordance with the proper discharge of his professional functions under the Contract. If it therefore should be the case that the Engineer`s opinion is based upon a wrong view of the contract then it can be said that he has failed to issue a certificate in accordance with the provisions of the contract. A contractor who is asserting that there has been a failure to certify must demonstrate some misapplication or misunderstanding of the contract by the Engineer. It does not suffice that the contractor should merely point to a later certification by the Engineer of a sum which had been earlier claimed and not then certified.

The words "failure of the engineer" therefore referred only to a failure by the Engineer which could be identified as a failure by the Engineer to respect and give effect to the provisions of the contract. The words did not refer to an under-certification which did not involve any contractual error or misconduct of the Engineer.