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Penultimate Certificate & Final Certificate
Transcript of Penultimate Certificate & Final Certificate
Dictionary – refer to an event which is the one before the last one.
Construction in-use – refers to payment certificate (interim payment) before the final certificate.
1) To release monies due to NSCs or NSs before Final Cert to MC. (If there is no NSC there will be no Penultimate Certificate)
2) To release the second moiety of the retention sums for all NSCs and/or NSs
PURPOSE OF PENULTIMATE CERTIFICATE
Clause 30.13 -
Architect is to issue a penultimate certificate for the release of retention sums and any other outstanding sums for all NSCs and/or NSs not later than fourteen (14) Days after the Certificate of Making Good Defects has been issued.
The issue of such payment is up to the discretion of the Architect.
When to issue Penultimate Certificate?
Penultimate Certificate & Final Certificate
LEE SUI HUI 0312579
TAN CHEN EI 0312784
Timing of Release of Penultimate Certificate
There are two time-period for the Architect to release the certificate.
Clause 30.14 (a) - if Penultimate Certificate is issued under Clause 30.13, Final Certificate should be issued within 21 Days after the period of honoring certificate of payment for Penultimate Certificate.
Clause 30.14 (b) - if NO Penultimate Certificate is issued under Clause 30.13, Final Certificate should be issued within 28 Days after the CMGD has been issued.
Issuance of Final Certificate
The timing release of Penultimate Certificate is in between the release of Certificate of Making Good Defects and Final Certificate which make little sense in light of closeness.
The earlier release of the Penultimate Certificate is to ensure that Contractors pays the NSCs and NSs; otherwise the Employer may choose to pay directly.
However, in an event that the contractor fails to pay the NSC, there is still the final opportunity to pay NSC in the Final Certificate by direct payment.
If MC fails to honor his payment obligations, NSC could complain to the Employer. Employer therefore can (but not obliged to) apply direct payments to them.
The issuance and receipt of the Final Certificate
Article 7 (ac) - as the final certificate issued by the Architect under Clause 30.14 and 30.15.
- implies as the last of the certificate to be issued by Architect or better known as Final Payment.
Final Certificate to be issue to employer with a copy to the Contractor.
- should check for its accuracy, compliance with the formalities and to its validity.
- Formally acknowledge receipt, be kept in safe custody
- For at least the applicable statutory period of limitation (6 years).
- Date of issue of Final Certificate by the Architect to be the official date for the purpose of contract. (not the receipt of the certificate)
Significance of the Final Certificate
- issued only upon the expiry of the contract
- the last certificates issued by the Architect.
- signifies the satisfactory discharge of the contract by Contractor through his performance.
- cease Architect's role as contract administrator and authority.
- effect of final Certificate is that it is conclusive only on the final value of works.
- nevertheless, it emphasize that Final Certificate
shall not be conclusive
evidence that any works, materials and goods to which it relates.
- designs executed by the contractor and NSC are in accordance with the Contract according to Clause 30.16
Statement of Account
- indicate the balance due to the Contractor if there is no over payment by the QS.
If there is an
, balance will indicate a
by the Contractor.
In either cases, both Employer and Contractor shall effect payment during period of honoring certificate stated in the Appendix.
Once paid, the Contract is said to
Employer will be in
if he fails to effect payment to the Contractor and vice versa.
Upon conclusion of the Contract, parties involved must prepare the closing off documentation such as:
i) Contract Completion Report
ii) Contractor's Performance Report
iii) The As-Built Drawings and Abstract
What is the difference between the release of Penultimate Certificate and Certificate of Making Good Defections in terms of retention sums?
Ocean Diners (Pty) Ltd v Golden Hill Construction cc 1993 (3) SA 331 the courts were called upon to determine issues relating to an architect's final certificate.
The employer and the contractor entered into a written agreement for the construction of a restaurant complex at Beach Road, Gordon's Bay.
Provision was made in the contract for the
appointment of an architect and a quantity surveyor
to represent the employer in all matters concerning the works and their completion.
The final certificate contained an acknowledgment of the employer's indebtedness to the contractor and included a promise to pay such amount within seven days.
The employer sought to challenge the status of this certificate, and questioned before the court, whether or not the certificate by the architect was a final certificate in terms of the contract.
In deciding the matter the court held that:-
This final certificate constitutes (in the absence of a valid defense) conclusive evidence of the value of the works and the amount due to the contractor.
The certificate embodies a binding obligation on the part of the employer to pay that amount.
The failure of the employer to pay within the time stipulated entitles the contractor to sue on the certificate.
A final certificate is not open to attack because it was based on erroneous reports by the agent of an employer or the negligence of his architect.
The failure of the employer's quantity surveyor properly to scrutinize the claims put forward by the contractor, and his failure to rectify any errors, and the possible negligence of the architect in failing to satisfy himself as to the correctness of the claims and valuations before issuing the certificate, will accordingly not provide a defense to an action on the certificate, nor will it allow the architect to cancel or withdraw the certificate.
The court found that it was not necessary, by reason of the facts in the present case, to decide whether the negligent or innocent misrepresentations did constitute a defense to an action on a final certificate.
Hence, this appeal was dismissed with cost.
In this case, we learned that the
Final Certificate did not resolve all disputes between the parties.
What is resolved is only in relation to the amount due under the Final Certificate.
What if the main contractor fails to pay the NSC during Penultimate Certificate period and state which clause to support your answer above?
Penultimate Certificate is the release of retention fund to the NSCs or NSs whereas Certificate of Making Good Defects is the release of retention fund to the main contractor
If MC fails to honor his payment obligations, NSC could complain to the Employer. Employer therefore can (but not obliged to) apply direct payments to them according to Clause 27.6