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27/07/18 – Tips and Traps with Issuing Certificates

Certificates may come in many forms and do not necessarily need to be labelled as a “Certificate”. Increasingly, consultants are being asked to issue certificates to third parties not necessarily aligning with the services they have been engaged to provide.

For example, at the request of your client’s financier, you write a letter to the client and the financier confirming that the building work complies with all codes and standards and contains no defects, even though you as the consultant have not undertaken these services or visited the site to inspect or check compliance. It is later discovered that the building was poorly constructed, and would cost a substantial amount of money to rectify the defects. The client and the financier stand a good chance of being able to sue you for that amount, based on the letter you had provided.

If your client insists on such certificates, then you should exercise caution and aim to reduce the risk in providing certificates.

Tips to reduce risk exposure from the provision of certificates

  • Only provide a certificate if you have a contractual obligation to do so;
  • Ask yourself – Can I honesty make the statement that I am being asked to make? If the answer is “No”, then the statement should not be made;
  • Only provide certificates addressed to and in favour of your client, and do not provide copies of certificates to third parties;
  • Include a disclaimer in the certificate stating that you accept no liability to any third party who may rely on the certificate;
  • Only allow senior staff to provide certificates; and
  • Agree the wording of the certificates before you start work. (See suggested wording below).

If your contract requires you to certify, then you should make sure that the form of certification uses acceptable language. If you cannot promise something with absolute certainty, it is important that your certification be appropriately qualified. Using protective / qualifying language makes it less likely that the certificate would be inaccurate and lead to claims against you. It also makes it less likely that the certificate would be construed as a warranty or guarantee, which could give you liability that your professional indemnity insurance would not cover. Avoid using “warrant”, “guarantee”, “completely free from defects”, “in full compliance with all Australian and international laws, codes and standards” in your certificates.

Suggested Words:

  • Insert “in my professional opinion”, or “to the best of my knowledge, information and belief”, at the commencement of your certificates;
  • Preface an otherwise absolute statement by reference to limitations on your assessment, such as “based on my periodic observations at the site”;
  • State at most that the building work is “substantially” or “generally” compliant as there will always be construction details that are beyond your ability to observe; and
  • If you must certify that any work complies with a specific document, make sure it is a document that is known to you, such as your own contract documents, rather than a vague or unknown standard such as “the client’s requirements” or “the requirements of the Head Contract”.

Cordilia Thomas

Risk Manager

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