727

A.C. Modern Engineering v. Gilbert-Ash (H.L.(E.)) Lord Salmon

rule ensure a steady cash flow in normal conditions, which is what I think
"■ they are designed to do. When, however, a bona fide dispute arises, I do
not think the contract is designed to put the plaintiff contractors or sub­
contractors in a fundamentally better position than any ordinary plaintiffs
nor the defendants in any worse position than any ordinary defendants.
I can find nothing in any of the standard forms which support the view
that the defendants are deprived of their ordinary rights of set off. Indeed,
B the arbitration clause in the main contract form and in what is called the
" green form " of sub-contract respectively allow the building owners and
the contractors to attack an architect's interim certificate during the currency
of the work on the ground that it is not in accordance with the contractual
conditions and then have the dispute referred to arbitration. This strongly
supports the view that the right to hold up payment pending a decision
still remains and that the ordinary rights of set off have not been eroded.
C My Lords, for these reasons I feel driven to the conclusion that
Dawnays' case [1971] 1 W.L.R. 1205 and those which followed it were
wrongly decided. I would accordingly allow this appeal.

Appeal allowed.

r\ Solicitors: Masons; Hyman Isaacs, Lewis & Mills.

J. A. G.

[HOUSE OF LORDS]

SUTCLIFFE APPELLANT
AND
THACKRAH AND OTHERS RESPONDENTS

1973 Dec. 11, 12, 13; Lord Reid, Lord Morris of Borth-y-Gest,
1974 Feb. 12 Lord Hodson, Viscount Dilhorne and Lord Salmon
Architect—Negligence—Building contract—RIB.A. form—Interim
certificates—Architects over-certifying sums due to builders—
Whether liable in negligence—Whether acting in arbitral
capacity
The plaintiff employed the defendants, a firm of architects,
to design a house for him. Subsequently, he entered into a
contract with a firm of builders to build the house. The con­
tract was in the R.I.B.A. standard form. The defendants were
appointed architects and quantity surveyors. During the carry­
ing out of the works they issued interim certificates to the
builders. Before the builders had completed the works the
plaintiff turned them off the site, and another firm completed
the works at higher cost. The original builders subsequently
went into liquidation. The plaintiff brought an action against
the defendants for damages for negligence and breach of duty
in supervising the building of the house and in certifying for
 Sutcliffe v. Thackrah (H.L.(E.)) [1974]
work not done or improperly done by the builders. The
official referee held that the plaintiff had been justified in A
turning the builders off the site and that the defendants had
negligently over-certified sums due to them. He awarded the
plaintiff damages. The Court of Appeal reversed his decision
on the ground that the defendants were acting in an arbitral
capacity and were accordingly absolved from liability for
negligence.
On the plaintiff's appeal: —
Held, allowing the appeal, that in issuing interim certificates B
an architect did not, apart from specific agreement, act as an
arbitrator between the parties, and that he was under a duty
to act fairly in making his valuation and was liable to an
action in negligence at the suit of the building owner.
Chambers v. Goldthorpe [1901] 1 K.B. 624, C.A. overruled.
Dictum of Lord Radcliffe in R. B. Burden Ltd. v. Swansea
Corporation [1957] 1 W.L.R. 1167, 1172, H.L.(E.) considered. c
Decision of the Court of Appeal [1973] 1 W.L.R. 888;
[1973] 2 All E.R. 1047 reversed.
The following cases are referred to in their Lordships' opinions:
Arenson v. Arenson [1973] Ch. 346; [1973] 2 W.L.R. 553; [1973] 2
All E.R. 235, C.A.
Burden (R. B.) Ltd. v. Swansea Corporation [1957] 1 W.L.R. 1167;
D
[1957] 3 All E.R. 243, H.L.(E.).
Chambers v. Goldthorpe; Restell v. Nye [1901] 1 K.B. 624, C.A.
Finnegan v. Allen [1943] K.B. 425; [1943] 1 All E.R. 493, C.A.
Henderson v. Broomhead (1859) 4 H. & N. 569.
Hickman & Co. v. Roberts [1913] A.C. 229; Hudson on Building Con­
tracts, 4th ed. (1914), vol. 2, p. 426, H.L.(E.).
Hopper, In re (1867) L.R. 2 Q.B. 367, D.C.
Jenkins v. Betham (1855) 15 C.B. 168. E
Marrinan v. Vibart [1963] 1 Q.B. 528; [1962] 3 W.L.R. 912; [1962]
3 All E.R. 380, C.A.
Pappa v. Rose (1871) L.R. 7 C.P. 32; (1872) L.R. 7 C.P. 525.
Rex v. Skinner (1772) Lofft 55.
Rogers v. James (1891) Hudson on Building Contracts, 4th ed. (1914), vol.
2, p. 172.C.A.
Rondel v. Worsley [1969] 1 A.C. 191; [1967] 3 W.L.R. 1666; [1967] F
3 All E.R. 993, HJL.(E.).
Stevenson v. Watson (1879) 4 C.P.D. 148, D.C.
Swinfen v. Lord Chelmsford (1860) 5 H. & N. 890.
Tharsis Sulphur and Copper Co. Ltd. v. Loftus (1872) L.R. 8 C.P. 1.
Turner v. Goulden (1873) L.R. 9 C.P. 57, D.C.
Wadsworth v. Smith (1871) L.R. 6 Q.B. 332, D.C.
G
The following additional cases were cited in argument:
Armstrong v. Jones (1869) Hudson on Building Contracts, 4th ed. (1914),
vol. 2, p. 6.
Badgley v. Dickson (1886) 13 A.R. 494 (Ontario).
Cotton v. Wallis [1955] 1 W.L.R. 1168; [1955] 3 All E.R. 373, C.A.
Dean v. Prince [1954] Ch. 409; [1954] 2 W.L.R. 538; [1954] 1 All E.R.
749, C.A. H
Hatrick {A. C.) [N2) Ltd. v. Nelson Carlton Construction Co. Ltd.
[1964] N.Z.L.R. 72.
Hoffman v. Meyer, 1956 <2) S.A. 752.
 729
A.C. Sutcliffe v. Thackrah (H.L.(E.) )
Hosier & Dickinson Ltd. v. P. & M. Kaye Ltd. [1970] 1 W.L.R. 1611;
A [1971] 1 All E.R. 301, C.A.; [1972] 1 W.L.R. 146; [1972] 1 All
E.R. 121, H.L.(E.). ■
Irving v. Morrison (1877) 27 C.A. 242.
Kennedy (William) Ltd. v. Barrow-in-Furness Corporation (1909) Hudson
on Building Contracts, 4th ed. (1914), vol. 2, p. 411, C.A.
Minster Trust Ltd. v. Traps Tractors Ltd. [1954] 1 W.L.R. 963; [1954]
3 All E.R. 136.
B Modern Engineering (Bristol) Ltd. v. Gilbert-Ash (Northern) Ltd., ante,
p. 689; [1973] 3 W.L.R. 421; [1973] 3 AH E.R. 195, H.L.(E.).
Panamena Europea Navigacion (Compania Limitada) v. Frederick Leyland
& Co. Ltd. (J. Russell & Co.) [1947] A.C. 428, H.L.(E.).
Ranger V. Great Western Railway Co. (1854) 5 H.L.Cas. 72, H.L.(E.).
Saunders and Collard v. Broadstairs Local Board (1890) Hudson on
Building Contracts, 4th ed. (1914), vol. 2, p. 164.
c
APPEAL from the Court of Appeal.
The appellant, Joseph Dermod Sutcliffe, the building owner, who was
the plaintiff at first instance, claimed damages for negligence and breach of
duty against the respondents (the defendants) Ronald Thackrah, Arthur
Simpson and T. Richard Collick (carrying on business as Chippindale
-^ & Edmondson). They were appointed by the building owner as the
architect and also as the quantity surveyor for the purposes of a build­
ing contract dated October 1, 1963, and made between the building
owner and David A. Walbank (Builders) Ltd., the contractor, for the
erection of a dwelling house at a price of £22,368 and subject to the con­
ditions therein appearing. Before the work was completed the building
owner justifiably turned the contractors off the site and engaged others to
E complete the work. The building owner alleged negligence and breach of
duty by the respondents as architects in supervising the building and in
certifying for work not done or improperly done by the contractor.
By order dated March 7, 1972, made pursuant to the judgment of Judge
William Stabb Q.C., Official Referee, given on January 11, .1972, it was
ordered that judgment be entered for the building owner against the respon-
P dents Thackrah and Simpson for £588 and that judgment be entered for
the respondent Collick (who was not a partner in the respondents' firm
at the material time) against the building owner. The Court of Appeal
(Edmund Davies and Megaw L.JJ. and Sir Seymour Karminski) on April
13, 1973, unanimously allowed the appeal of the respondents Thackrah and
Simpson against that judgment and order and granted leave to appeal to
the House of Lords. The Court of Appeal made no order on the building
G owner's cross-appeal as to damages which, subject to liability, had been
agreed on the occasion of the hearing of the appeal at £2,000.
The issue arising in this appeal was whether an architect appointed as
such for the purposes of a building contract in the Standard Royal Institute
of British Architects Form of Contract (1963 edition, 1963 issue) was
exempt from liability at the suit of the building owner in respect of loss
TT caused by his negligent over-certification in interim certificates for payment
under clause 30 (1) of the conditions of contract.
The facts, stated by Lord Reid, were as follows: The appellant in 1961
wished to have a high class dwelling house built on a site which he had
730
Sutcliffe v. Thackrah (H.L.(E.) ) [1974]
acquired; He got in touch with the respondents who were a firm of archi­
tects. There were long and detailed discussions. Ultimately in 1963 the "
architects prepared the necessary documents for the invitation of tenders
by contractors. The lowest tender, £22,368, was by a company David A.
Walbank (Builders) Ltd. and it was accepted, the R.I.B.A. form of contract
being used. There did not appear to have been, any formal contract between
the appellant and the architect but it was not disputed that they were aware
that the R.I.B.A. form was to be used and that they undertook to carry JJ
out the duties of an architect under that form of contract.
The house ought to have been completed early in 1964 but progress was
slow and the architect had occasion to make a number of complaints to the
contractors. A number of interim certificates were issued to the con­
tractors by the architects. The present case arose out of the issue of two
certificates, No. 9 on May 25, 1964, for £2,620 and No. 10 on July 1, 1964,
for £1,837. These sums were duly paid by the appellant. G
A short time thereafter it was decided to terminate Walbank's contract.
It was not disputed that the appellant had adequate grounds for taking this
step. Then Walbank became insolvent.
Later it was discovered that these interim certificates covered much
defective work. The cost of remedying the defects could not be recovered
from Walbank, so in 1968 the appellant sued the architects for the loss j)
caused to him by negligence of the architects in issuing these certificates.
After prolonged proceedings the official referee held in 1972 that the
architects had been guilty of negligence and awarded damages to the
appellant. What appeared to have happened was that one of the architects
was well aware of these defects before the certificates were made up but
that he failed to pass this information to the quantity surveyor who assumed
that all the work was satisfactory. - E

Donald Keating Q.C. and M. R. Hickman for the appellant. One must
primarily look at the building contract because such contracts are infinitely
various and the architect's functions of certifying arise under the contract.
It is accepted that the architect is liable for breach of duty in respect
of supervision, but not in respect of certification. But the duties of super- p
vision and certification are all part of one duty which the architect owes.
No valid distinction can be drawn between the two. Many of the duties
of an architect have aspects both of supervision and certification. Out
of 35 clauses in this contract 31 refer expressly to the architect.
His functions arise under several heads: (a) issuing instructions as to
discrepancies, by-laws, errors in setting out, opening up, removal of work
or materials, dismissal of employees, variations, prime cost and provisional G
sums, defects, postponement of works, nominated sub-contractors, nomi­
nated suppliers, war; (b) serving notices as to complying with instructions,
defaults, removal of works; (c) granting or withholding consents and ap­
provals in respect of removal of goods, sub-letting, insurers, extension of
time, nominating sub-contractors; (d) reaching decisions or opinions in
respect of specifying provisions of the contract to a contractor, confirming JJ
oral instructions, confirming executed oral instructions, confirming the clerk
of the works' instructions, sanctioning unauthorised variations, questions
whether there has been loss of expense, ascertainment of the amount, the
 731
A.C. Sutcliffe v. Thackrah (H.L.(E.) )
requirement of an insurance certificate, delay in completion, extension of
A
time, requirement to proceed, assignment of special terms of sub-contract,
amount for nominated sub-contractors, early release of retention to nomi­
nated sub-contractors, expense.for special parking, special terms of sub­
contract, questions whether valuation necessary; (e) issuing certificates as
to practical completion, defects made good, frost, sectional completion,
insurance monies, date for completion, expenses on determination, payment
B of nominated sub-contractors, date for completion by nominated sub­
contractors, amounts due to contractors (on interim certificates), the moiety
of the amount retained, the residue of the amount retained, the contract
sum adjusted with the terms of the conditions (final certificates); (f) other
functions: custody of documents, furnishing documents or information to
the contractor, receiving notices, requests for vouchers, access to works,
directions to clerk of works, removal of plant.
C If the decision of the majority of the Court of Appeal in Chambers v.
Goldthorpe [1901] 1 K.B. 624 stands the employer will be without remedy
against the architect in respect of the negligent performance of most of the
architect's functions under the building contract summarised in (b), (c), (d)
and (e). He might also be without remedy against the quantity surveyor
in respect of negligent valuations and in other contracts against his neg-
j) ligent engineer or building surveyor.
It is wrong to say that the architect owes no duty to the contractor save
when certifying. Few of his duties do not involve a duty to the contractor
but it is no more than to act fairly and professionally. Performance of that
duty does not attract judicial immunity and it is not said that it gives the
contractor a cause of action against the architect. Throughout the per­
formance of his functions summarised earlier the architect acts as the
E employer's agent and owes a duty of care to him.
It is not contested that there is a class of persons who are not arbitra­
tors but who perform a sufficiently judicial function to be entitled to
immunity from suit, but an architect's position under such a contract as
this does not attract that immunity.
There are very few situations in which an architect must forward the
p interests of his employer without regard to those of the contractors. He
must have the work carried out in accordance with the contract but he is
not entitled to demand that the contractors go outside the terms of the
contract. He has a function to perform under and in accordance with the
terms of the contract. If he permits work not in accordance with the con­
tract, he is in breach of his duty to his employer but he has no right to
demand of the contractor work which is not under the contract. See in
G particular his duties under this contract as to levels and setting out of his
works (clause 5); materials, goods and workmanship to conform to descrip­
tion, testing and inspection (clause 6); variations, provisional and prime
cost sums (clause 11); certificates and payments (clause 30).
Ranger v. Great Western Railway Co. (1854) 5 H.L.Cas. 72, 86-88,
115-117 is the first case in which the special position of an architect or an
II engineer and his duty to be fair to the contractor was considered. It is
the origin of the doctrine that an architect is not liable for over certification
of a final certificate. Brunei's position was similar to that of the architect
in the present case. He was to act fairly and to some extent judicially.
732
Sutcliffe v. Thackrah (H.L.(E.)) [1974]
One starts from the position that the architect is an agent, but one of a
special kind in that he has these duties.
Jenkins v. Betham (1855) 15 C.B. 168, 187-188 is relevant as showing
that a man may make a decision as a matter of professional judgment
affecting other people and yet not be liable.
Armstrong V. Jones (1869) Hudson on Building Contracts, 4th ed. (1914),
vol. 2, pp. 6, 7 was a case where it was held that an architect would be
liable if he was negligent in giving certificates. B
In Pappa V. Rose (1871) L.R. 7 C.P. 32, 42; (1872) L.R. 7 C.P. 525 the
position of the broker was very different from that of an architect under a
building contract. The principle there laid down is accepted as correct.
This case and Tharsis Sulphur and Copper Co. Ltd. V. Lojtus (1872) L.R.
8 C.P. 1, 5 (plaintiffs' argument), 7 (Keating J.) are leading cases on judicial
immunity. In Irving v. Morrison (1877) 27 C.A. 242 (Canada) the point
of j udicial immunity was not raised. ^*
The House is invited not to follow Stevenson v. Watson (1879) 4 C.P.D.
148, 156-157, 159, 160-161. There is no criticism of what was said there
as to the definition of those entitled to judicial immunity, but it is challenged
that the architect there was so entitled. See Badgley V. Dickson (1886) 13
A.R. 494 (Ontario) and Saunders and Collard v. Broadstairs Local Board
(1890) Hudson on Building Contracts, 4th ed., vol. 2, p. 164. JJ
Rogers v. James (1891) Hudson on Building Contracts, 4th ed., vol. 2,
p. 172 is an authority in the appellant's favour and for all practical purposes
the facts are identical with those of the present case. It provides the correct
test.
In Chambers v. Goldthorpe [1901] 1 K.B. 624 the view of Romer L.J.,
dissenting should be preferred to that of the majority. In that case Ranger
v. Great Western Railway Co., 5 H.L.Cas. 72, was not cited. If Chambers E
is applied to the present case the building owner will for practical purposes
have no remedy against the architect for faulty supervision. The architect
is an agent throughout, though he has to act fairly to the contractor. It is
not his duty to pay the contractor as little as possible for his work.
See also William Kennedy Ltd. v. Barrow-in-Furness Corporation
(1909) Hudson on Building Contracts, 4th ed., vol. 2, pp. 411, 416, 417- ,p
418; Hickman & Co. V. Roberts [1913] A.C. 229, 234; Panamena Europea
Navigacion (Compania Limitada) v. Frederick Leyland & Co. Ltd. (J.
Russell & Co.) [1947] A.C. 428, 437 and Minster Trust Ltd. v.
Traps Tractors Ltd. [1954] 1 W.L.R. 963.
In Cotton v. Wallis [1955] 1 W.L.R. 1168, 1180 an architect was
alleged to have been negligent in his supervision. Negligent certification
was not pleaded. Chambers V. Goldthorpe [1901] 1 K.B. 624 was cited. G
The majority of the Court of Appeal held that the architect had not been
negligent, although he had issued a final certificate without requiring the
builder to relay a faulty floor. No one took the point that an action did
not lie. The court did not say that the architect would not be able to
perform his functions if he were liable to be sued. See also Hoffman v.
Meyer, 1956 (2) S.A. 752, 755-758. In R. B. Burden Ltd. v. Swansea H
Corporation [1957] 1 W.L.R. 1167 what Lord Radcliffe said at p. 1172
was not necessary to the decision of the case. A professional man should
be liable in negligence unless there are compelling reasons of public policy
 733
A.C. Sutcliffe v. Thackrah (H.L.(E.))
to the contrary: Rondel v. Worsley [1969] 1 A.C. 191. See also Hosier
A
& Dickinson Ltd. v. P. & M. Kaye Ltd. [1970] 1 W.L.R. 1611,1616; [1972]
1 W.L.R. 146, 157, 162. In Arenson V. Arenson [1973] Ch. 346 the facts
were a long way from the present case.
These matters are dealt with as a matter of contract and an architect
is not in a special position such as to take his certificates out of the ordinary
principles relating to contracts: see Modern Engineering (Bristol) Ltd. v.
B Gilbert-Ash (Northern) Ltd., ante, p. 689.
No one should be entitled to judicial immunity who cannot show that
the agreement under which he acted indicated an intention that there should
be at least the following qualities of a judicial proceeding: (a) a submission
to him of a formulated dispute or of a matter where there must necessarily
be assumed to be a difference; (b) a decision binding on the parties. Each
of these qualities is absent in the instant case. See the express terms of
*-" the building contract. It is always necessary to look at the particular clause
under which the person seeking immunity was acting.
If the architect refuses to issue certificates the contractor can always
sue. He must accept that the architect cannot be wholly without bias, since
he is paid by the building owner and is liable to him.
Brian Neill Q.C. and John Previte for the respondents. An architect
D has two types of function under an R.I.B.A. contract, (1) as the building
owner's agent and (2) as a quasi arbitrator. This was recognised in Hick­
man's case [1913] A.C. 229, the Panamena case [1947] A.C. 428 and by Lord
Radcliffe in Burden's case [1957] 1 W.L.R. 1167, 1172. The certification
for payment falls under (2) and the person carrying out that function is not
liable to be sued by the person who appointed him.
Assuming that there was a breach of duty towards the building owner,
what would be the remedy? In considering the remedy a distinction must
be drawn between breach of duty to supervise and breach of duty to certify,
which are different functions.
If there was a failure of the duty to supervise, e.g., allowing the builder
to put up a wall without proper foundations or without a damp course,
the architect would be liable for the cost of putting this thing right, which
F would involve calling in another builder.
But in the case of a breach of duty to certify carefully or of a negligent
over-certification, e.g., in applying a wrong principle or in not making a
detailed check, the position is different. That is within the field left to the
architect's individual judgment.
If the negligence consists only in the final certification the architect is
acting in a different role from that of supervising. First he supervises.
® Then he values later. Perhaps he makes a special visit to the site for the
purpose of his valuation. On the basis of what he has seen he writes his
certificate. There is no duty of care in relation to his function as certifier.
A building owner engages an architect on the terms of the R.I.B.A.
form, which shows what the parties to it contemplate. They contemplated
that in exercising his function of certification the architect was not exercising
H any special duty to the building owner. They intended to leave it to his
independent judgment. It was not a case of the building owner's agent
saying: " This is what you ought to pay."
Hickman's case [1913] A.C. 229 is only consistent with the recog-
A.C. 1974—27
734
Sutcliffe v. Thackrah (H.L.(E.) ) [1974]
nition by the House of Lords that there were two functions and one of
them was judicial. The Court of Appeal judgments appear in Hudson on "■
Building Contracts, 4th ed., vol. 2, p. 447 (Vaughan Williams L.J.), p. 448
(Farwell L.J.). In certifying an architect, though he has a duty to act fairly,
is not liable to anyone. At the supervision stage he owes a duty only to his
employer. At the certification stage he owes a duty both to his employer
and to the contractor. When the duty or obligation to act fairly to both
parties is equal there is no liability to either of them: see Hickman [1913] JJ
A.C. 229,233,234,235,236,238, 239.
Reliance is placed on the Panamena case [1947] A.C. 428, 432-433,
437, 444, when a question arose as to the nature of the duty which the
certifier was performing. He must act independently and was in quite a
different position from one acting as an agent or employee. At an earlier
stage an architect's primary duty is to his employer but, being a professional
man, he must act fairly towards the contractor. If one employed two C
different people, one to supervise and the other to certify, it would be at
once apparent that the latter would be in the position of a true arbitrator:
see Arenson v. Arenson [1973] Ch. 346,* 368. Between supervision and
certification there is a considerable grey area on the facts but there is a
clear distinction in principle.
In the case of an interim certificate the architect is trying to form a JJ
judgment, which may be a quick one, of what one party owes to the other.
Whenever his decision is one which must be impartial the architect is in an
arbitral position.
In the case of a valuation, if there is a duality of function and the
architect is an arbitrator he is immune: Finnegan v. Allen [1943] K.B.
425, 430-431. A man who has to make this sort of decision as to the
amount of money to be paid ought not to be in the position that one of E
the parties can sue him on the ground that he has over-certified. The
principle suggested in that case is that someone in an arbitral position is
immune from action. See also Dean v. Prince [1954] Ch. 409 and
Arenson v. Arenson [1973] Ch. 346, 362, 364-365.
In the Modern Engineering case [1973] 3 W.L.R. 421 it was said that
the fact that an interim certificate has been given does not prevent the p
building owner going to arbitration. It does not take the matter much
further. See also A. C. Hatrick (N.Z.) Ltd. v. Nelson Carlton Construction
Co. Ltd. [1964] N.Z.L.R. 72, 76, 77. If the certifier is acting as the agent
of one of the parties it would be odd if that party, after his certification,
could take the matter to arbitration. That would seem to indicate that the
certifier is independent so that either side can take the matter to arbitration.
In summary: (1) An architect has two types of function, (a) as the G
building owner's agent and (b) as an " independent arbitrator." (2) In
preparing and issuing certificates he is performing function (b); this has
been recognised by the courts for many years: Hickman's case [1913]
A.C. 229 and the Panamena case [1947] A.C. 428. (3) It is a long standing
principle that a person to whom a dispute is referred is immune from an
action for negligence, including a certifier under a building contract. (4) JJ
The basis for the rule is that public policy requires that a person in that
position should be free to give an honest opinion between the parties, free
from a risk of action: the House of Lords should be slow to overturn
 735
A.C. Sutcliffe v. Thackrah (H.L.(E.))
that principle. (5) Whatever the limitations on the general principle, it is
A
important in a building contract that an architect who has to make the
decision as to what money is due should be free from the risk of an action
for negligence or breach of contract by a party dissatisfied with his award.
The contract provides remedies in the form of an arbitration clause as a
long stop. The contractor might otherwise feel that he needed independent
advice. The practice of an architect occupying an arbitral position has
B worked for years.
No reply on behalf of the appellant was called for.
February 12, 1974. LORD REID stated the facts and continued. My
Lords, the case for the respondents (the architects) is that there is a rule of
law, which absolves architects from liability for negligence in issuing certifi­
cates. It is said that the architect's duty is only to act honestly, and it is not
C disputed that the respondents did act honestly. But it is said that in issuing
certificates, an architect owes no duty to his client to exercise care or pro­
fessional skill. There is authority for this rather startling proposition and
the Court of Appeal with obvious reluctance felt bound to follow it. But
your Lordships are free to reconsider the whole matter. If it is held that
the architects did owe a duty to their client to exercise care and skill, then
JJ it is not now disputed that the respondents failed in that duty and- it is
agreed that damages should be assessed at £2,000.
The argument for the respondents starts from the undoubted rule, based
on public policy, that a judge is not liable in damages for negligence in
performing his judicial duties. The next step is that those employed to
perform duties of a judicial character are not liable to their employers for
negligence. This rule has been applied to arbitrators for a very long time.
E It is firmly established and could not now be questioned by your Lord­
ships. It must be founded on public policy but I am not aware of any
authoritative statement of the reason for it. I think it is right but it is
hardly self-evident. There is a general rule that a person employed to
perform duties of a professional character is liable in damages if he causes
loss to his employer by failure to take due care or to exercise reasonable
p professional skill in carrying out his duties. So why should he not be
liable if the duties which he is employed to perform are of a judicial
character?
• The reason must, I think, be derived at least in part from the peculiar
nature of duties of a judicial character. In this country judicial duties do
not involve investigation. They do not arise until there is a dispute. The
parties to a dispute agree to submit the dispute for decision. Each party
G to it submits his evidence and contention in one form or another. It is
then the function of the arbitrator to form a judgment and reach a decision.
In other forms of professional activity the professional man is generally
left to make his own investigation. In the end he must make a decision
but it is a different kind of decision. He is not determining a dispute: he
is deciding what to do in all the circumstances. He may go wrong
JJ because he has at some stage failed to take due care and that may not be
difficult to prove. But coming to a wrong but honest decision on material
submitted for adjudication is-rarely due to negligence or lack of care, and
it is seldom due to such gross failure to exercise professional skill as would
736
Lord Reid Sutcliffe v. Tbackrah (H.L.(E.)) [1974]
amount to negligence. It is in the vast majority of cases due to error of
A
judgment and there is so much room for differences of opinion in reaching
a decision of a judicial character that even the most skilled and experienced
arbitrator or other person acting in a judicial capacity may not infrequently
reach a decision which others think is plainly wrong,
But a party against whom a decision has been given that is generally
thought to be wrong may often think that it has been given negligently, and
I think that the immunity of arbitrators from liability for negligence must B
be based on the belief—probably well founded—that without such immunity
arbitrators would be harassed by actions which would have very little
chance of success. And it may also have been thought that an arbitrator
might be influenced by the thought that he was more likely to be sued if his
decision went one way than if it went the other way, or that in some way
the immunity put him in a more independent position to reach the deci- „
sion which he thought right.
But whatever be the grounds of public policy which have given rise
to this immunity of persons acting in a judicial capacity, I do not think that
they have anything like the same force when applied to professional men
when they are not fulfilling a judicial function.
The point can perhaps be most clearly illustrated by considering the
case of a skilled man engaged to value some property or object. The D
circumstances may vary very much. The owner may wish to sell or
insure the property and want to know its market value. No one doubts
that in that case the valuer may be sued for negligence if his negligent
valuation has caused loss to the owner. Or the owner may have reason
to believe that a particular person A would buy the property from him
and would accept a valuation by a skilled man. Or he may have agreed £
with A to sell at a price to be fixed by a skilled valuer, or by this particular
valuer. And he may or may not have told the valuer about this when
engaging him.
There is modern authority to the effect that if the valuer knows that
his valuation will affect or bind another person besides his client, the owner,
then he can claim an arbitrator's immunity. But why should that be? The
valuer is in each case engaged by only one party and he has exactly the same F
task to perform in all these cases. He must, to the best of his ability,
estimate the market price of the property. I do not believe that a profes­
sional man would approach his task in any different spirit or be influenced
in any significant way because he knew that the interests of some other
person besides his employer would be affected by the conclusion which he
reached. Q
On the other hand, the valuer could be engaged by both parties as an
arbitrator if there is a dispute about the value of certain property. The
dispute would be submitted to him for decision and the parties would put
their contentions before him. Then he would have to judge between them
and have an arbitrator's immunity.
Now I can come to the position of an architect. He is employed by the n
building owner but has no contract with the contractor. We do not in this
case have occasion to consider whether nevertheless he may have some duty
to the contractor: I do not think that a consideration of that matter would
 737
A.C. Sutcliffe v. Thackrah (H.L.(E.) ) Lord Reid
help in the present case, The R.I.B.A. form of contract sets out the archi-
A
tect's functions in great detail. It has often been said, I think rightly,
that the architect has two different types of function to perform. In many
matters he is bound to act on his client's instructions, whether he agrees
with them or not; but in many other matters requiring professional skill he
must form and act on his own opinion.
Many matters may arise in the course of the execution of a building
B contract where a decision has to be made which will affect the amount of
money which the contractor gets. Under the R.I.B.A. contract many such
decisions have to be made by the architect and the parties agree to accept
his decisions. For example, he decides whether the contractor should be
reimbursed for loss under clause 11 (variation), clause 24 (disturbance) or
clause 34 (antiquities); whether he should be allowed extra time (clause 23);
or when work ought reasonably to have been completed (clause 22). And,
^ perhaps most important, he has to decide whether work is defective. These
decisions will be reflected in the amounts contained in certificates issued
by the architect.
The building owner and the contractor make their contract on the under­
standing that in all such matters the architect will act in a fair and unbiased
manner and it must therefore be implicit in the owner's contract with the
D architect that he shall not only exercise due care and skill but also reach
such decisions fairly, holding the balance between his client and the
contractor.
For some reason not clear to me a theory has developed and is reflected
in many decided cases to the effect that where the architect has agreed or
is required to act fairly he becomes what has often been called a quasi-
arbitrator. And then it is said that he is entitled to an arbitrator's immunity
from actions for negligence, Others of your Lordships have dealt with the
older authorities and I shall not say more about them than that they are
difficult to reconcile and often unconvincing. They are not confined by
any means to cases involving architects and one view of them has recently,
in Arenson v. Arenson [1973] Ch. 346, 370, been succinctly expressed by
Buckley L.J.:
F " In my judgment, these authorities establish in a manner binding upon
us in this court that, where a third party undertakes the role of deciding
as between two other parties a question, the determination of which
requires the third party to hold the scales fairly between the opposing
interests of the two parties, the third party is immune from an action
for negligence in respect of anything done in that role."
G I can see no good grounds for this view. If there is any validity in my
' conjecture as to the reason of public policy giving rise to the immunity of
arbitrators, those reasons do not apply to this situation. Persons who
undertake to act fairly have often been called " quasi-arbitrators." One
might almost suppose that to be based on the completely illogical argument
—all persons carrying out judicial functions must act fairly, therefore all
JJ persons who must act fairly are carrying out judicial functions. There is
nothing judicial about an architect's function in determining whether certain
work is defective. There is no dispute. He is not jointly engaged by the
parties. They do not submit evidence as contentious to him. He makes
738
Lord Reid Sutcliffe v. Thackrah (H.L.(E.) ) [1974]
his own investigations and comes to a decision. It would be taking a very
low view to suppose that without his being put in a special position his A
employer would wish him to act unfairly or that a professional man would
be willing to depart from the ordinary honourable standard of professional
conduct.
The leading authority on which the respondents rely is Chambers v.
Goldthorpe [ 1901 ] 1 K.B. 624, where it was held by a majority of the Court
of Appeal that an architect was not liable for negligence in ascertaining B
the amount due to the contractor under a building contract, A. L. Smith
M.R. said that the question was whether the architect acted solely as the
agent for the building owner to protect his interests as against the builder,
or as an arbitrator between the building owner and the builder. Then he
continued, at p. 634:
" I cannot think, as suggested by the defendant's counsel, that the Q
plaintiff's duty was only to protect the interests of the building owner,
in other words to cause the building owner to pay to the builder as little
as possible for his work."
If that was the argument for the owner I am not surprised that it failed.
Then he dealt with some of the authorities but he never examined the
difference of function between that of an arbitrator and that of an architect, jy
Collins L.J. too appears to have thought (pp. 638-639) that the crucial
question was:
" Can he address himself to his duty in the matter of giving that
certificate free from any obligation towards that other party, or is he
placed in a position in which it is his duty to exercise his judgment
impartially as between the parties to the contract? " JJ
This appears to mean that he had undertaken a duty to the contractor.
But the architect had no contract with the contractor and in those days
duty in this chapter of the law depended on contract.
I need not deal with the dissenting judgment of Romer L.J. because I
have already adopted a good deal of his reasoning.
There was nothing very new in the views of the majority. The p
importance of the Chambers case is that it is virtually indistinguishable on
its facts from the present case. So if this appeal is allowed it must be
overruled. I have the less hesitation in doing that because here and in
other parts of the Commonwealth a number of judges have expressed
doubts or disapproval of it.
With regard to the earlier cases I do not think that it is practicable to
examine them and determine to what extent they are affected by the views *-*
of this House in this case. Many, probably most, of the decisions can be
justified on their facts. And there are borderline cases where it is far from
easy to determine whether there was a sufficient judicial element to require
an arbitrator's immunity to attach. If that immunity is claimed, then it is
for the person claiming it to show that the functions in the performance of
which he was negligent were sufficiently judicial in character. JJ
I would allow this appeal.
LORD MORRIS OF BORTH-Y-GEST. My Lords, the question which is
 739
A.C. Sutcliffe v. Thackrah (H.L.(E.) ) .. Lord Morris
x
* ' ' of Borth-y-GesI
raised in this appeal is whether an architect who is appointed as such for
A
the purposes of a building contract in the Standard Royal Institute of
British Architects Form of Contract (1963 ed., 1963 issue) is liable in
damages to his employer, the building owner, for loss which he causes to
his employer by negligent over-certification in interim certificates for
payment issued under clause 30 (1) of the conditions of contract.
As the statement of the question demonstrates, there were two separate
B and distinct contracts. There was a contract between the building owner
and the architect. There was a contract between the building owner and
the contractor. Under the former contract the architect was employed by
the owner and was to be paid by the owner to perform certain duties both
preliminary to and in connection with the second contract, i,e., that made
between the owner and the contractor. Prima facie, but subject to some
exceptions, a person who is employed to perform certain duties will be
C liable to pay damages if he causes loss as a result of negligence in the
performance of those duties. Brett J. in Turner v. Goulden (1873) L.R. 9
C.P. 57, 60-61 said that where
" a person undertakes to carry on a business for reward, he is bound
to bring to the exercise of it an ordinary degree of skill, and to act
with reasonable care and diligence. For a default in either respect,
D an action will lie against him."
If in a building contract an owner makes a promise to a contractor as
follows, " I will pay you whatever sum my architect certifies as being
payable to you," then the owner will be obliged to pay the certified sum
to the contractor. But if the architect has, by negligence, overstated the
sum payable and if loss results to the owner, is there any reason why the
E architect should not be liable to his employer, the owner?
Is the position any different if the owner agrees with the contractor that a
certificate of the architect is to be treated as conclusive evidence that work
has been duly completed? If the architect has negligently given a certificate
which must so be treated—is there any reason why he should not be liable
to his employer for any loss that he may have caused? What is said
p is that an architect may by certain contractual provisions be placed in the
position of an arbitrator and will enjoy the immunities of an arbitrator in
respect of what he does when in that position. Though an architect may
have many duties to perform for and in the interests of his employer (such,
for example, as the duty of supervision) it is said there may come a stage
when he is, so to speak, translated to a position where he is the neutral
impartial judge adjudicating between the disputant contentions of the owner
G and the contractor and that in such position (unless there be fraud or
dishonesty or collusion or the like) he is secure from assailment.
In the present case the Court of Appeal, being bound by authority, came,
with regret, to the conclusion that when the respondents issued two interim
certificates they were functioning in an arbitral capacity and were not liable
to the owner even though (as was held) they had been negligent.
JJ Before examining certain authorities the facts leading to the present
appeal can be briefly stated. Since it is always open to parties to a building
contract to make special arrangements it is necessary to ascertain the terms
of the agreement in any particular case. The appellant had for some time
740
Lord Morris Sutcliffe v. Thackrah (H.L.(E.)) [1974]
x
of Bortb-y-Gest
been thinking of building a house. He found a site in 1961, He got in
touch with a representative of the respondent firm and the firm agreed "■
to act as architects in the design and construction of the house to be built.
The house was to be of high quality and the design was to be in accordance
with the owner's specific requirements: he was to be advised as to the
employment of contractors: the firm was to supervise the construction.
Tenders were sought and some were received. On October 1, 1963, the
owner entered into a building contract with contractors. The contract JJ
was in the standard R.I.B.A. form (1963 ed., 1963 issue). The house
was to be built for £22,368. The respondents were named in the contract
both as " the architect" and also as " the quantity surveyor." The con­
tractors undertook to carry out and complete the building of the house
upon and subject to the conditions of the contract. The date for completion
was January 31, 1964, Though work had been begun before October 1,
1963 (i.e., in July 1963), progress was slow and the appellant made C
complaints as to the quality of the work. In June 1964 the appellant,
for reasons held by the learned official referee to have been sufficient,
turned the contractors off the site. Other contractors were employed to
finish the building.
By writ dated March 26, 1968, the appellant claimed damages from
the respondents for negligence and breach of duty (a) in the course of TJ
supervising the building and (b) in certifying for work not done or
improperly done by the contractors. As regards (b) the complaint related
to interim certificates numbers 9 and 10 dated May 25, 1964, and July 1,
1964. There had been no document recording expressly the terms of the
agreement between the appellant and the respondents but in the statement
of claim certain implied terms were pleaded. One was that the respondents
would use reasonable care in issuing certificates in respect of work per- E
formed by the contractors. This implied term was at first admitted but
in a re-amended defence the respondents denied that they were under any
duty to the appellant to use reasonable care in issuing certificates.
The finding of the learned official referee was that negligence in super­
vision had not been proved but that negligence in issuing the interim
certificates dated May 25 and July 1, 1964, had been proved. The original p
contractors had obtained judgment against the appellant on their claim
under the two certificates. As a consequence the appellant had been obliged
to pay too much to the contractors who later went into liquidation. The
appellant had therefore suffered loss. Furthermore, he was unable to
recover the cost that he incurred in remedying defective work. The official
referee gave judgment in the appellant's favour. If the appellant is entitled
to have the judgment in his favour restored the amount of it is by G
agreement to be re-adjusted.
The question now arising is whether the respondents were functioning
in an arbitral role when they issued the two interim certificates dated
May 25 and July 1, 1964. It was with the object of so asserting that
by the re-amended defence the pleader denied that the respondents owed
any duty to the appellant to use reasonable care in issuing certificates, JJ
If this were right the position would be strangely anomalous and illogical.
An examination of the R.I.B.A. contract shows how manifold are the
duties of the architect. Being employed by and paid by the owner he
 741
A.C. Sutcliffe v. Thackrah (H.L.(E.) ) . L°»« Morris
v
* '' of Borth-y-Gest
unquestionably has in diverse ways to look after the interests of the owner.
In doing so he must be fair and he must be honest. He is not employed
by the owner to be unfair to the contractor. If work to a certain specifica­
tion is to be done under the contract there is neither unfairness nor
partisanship in ensuring that the work is properly carried out. It would
be unfair to the owner to permit work that is inferior to the contract terms:
it would be unfair to a contractor to require work that is superior to the
B contract terms. So a proper and reasonable discharge of his duties by
an architect demands supervision on his part. If by reason of negligent
supervision on the part of an architect loss or damage results for an
owner it could hardly be contended, and indeed it is not contended, that
the architect could escape liability to the owner for such negligent super­
vision. 'If this is so—why should he be immune if the interim certificates
which he issues incorporate and set out the results of his faulty supervision?
^ The certificates will merely be the expression of and will result from his
preceding negligence. If, as I think is agreed, an architect is not acting
as an arbitrator when he supervises the work being done neither should he
be regarded as an arbitrator if what he does is to certify more than he
would have certified had his supervision been careful rather than careless.
The same result should follow in a case where the negligent issuing of
D interim certificates is not the consequence of any negligence in supervision.
In the present case the learned official referee found that there was not
negligence in supervision. The respondents' architect knew that there
was defective work. What apparently happened was that there was a
breakdown in communication within the respondents' organisation and in
particular as between the representative who acted as architect and the
representative who acted as quantity surveyor. The finding of the learned
E official referee was as follows:
" I am driven to the conclusion that in the steps that they took or
rather failed to take, the defendants were at fault in the preparation
of interim certificates 9 and 10, but more particularly No. 10. They
failed in my view in that respect to act as any reasonably competent
architect would have acted. They knew, or ought to have known at
F the time, that the plaintiff had ordered the contractors to leave, they
had written to the contractors on June 26 confirming that they were to
leave, and stating that a list of defects and outstanding work would be
produced. They must have known at least of the possibility that these
contractors would not be recalled to remedy those defects. They
knew that the contract had been nearing completion. In these circum-
G stances, I consider that it was their plain duty to be particularly
accurate in their valuation of the work properly executed, to that date.
Unfortunately, as I find, they failed in this respect. They failed to
keep Mr. Robinson, their quantity surveyor immediately concerned,
informed as to the state of the work. They, knew of defects which had
come to light, certainly in the course of May and June which they
TT either had not required, or had failed to get, the contractors to put
right, and they failed to bring these to his attention, and therefore to
exclude that defective work from those certificates. By so doing they
overstated the value of the work not by miscalculation, but by ignoring
742
Lord Morrfa Sutcliffe v. Thackrah (H.L.(E.) ) [1974]
of Borth-y-Gest v \ / / 1 J
the existence of the defects, for the purpose of that certificate. They
were therefore responsible for the plaintiff having to pay the contractors
for work which they had not properly executed, and in the result he
has suffered damage."
In deciding whether on those findings the respondents are entitled to the
immunity from liability for negligence which an arbitrator enjoys it is
necessary to consider the terms of the contract between the appellant and fl
the original contractors. Unless under its terms the respondents were
placed in the position of an arbitrator it is not suggested that there was
any other agreement under which they were appointed to arbitrate. It is
suggested, however, that even though they were not at any time formally
appointed to act in an arbitral capacity they nevertheless enjoyed immunity
for the reason that they were required to act in an arbitral capacity with
the result that they enjoyed the status of what has been called a " quasi- C
arbitrator" and were entitled to the like immunity as that enjoyed by
an arbitrator.
Condition 30 (1) of the contract is as follows:
" At the period of interim certificates named in the appendix to these
conditions the architect shall issue a certificate stating the amount due
to the contractor from the employer, and the contractor shall, on pre- JJ
senting any such certificate to the employer, be entitled to payment
therefore within the period for honouring certificates named in the
appendix to these conditions. Interim valuations shall be made
whenever the architect considers them to be necessary for the purpose
of ascertaining the amount to be stated as due in an interim certificate."
Under the contract the period for honouring of certificates was 14 days, E
Condition 30 (2) provides as follows:
" The amount stated as due in an interim certificate shall, subject to
any agreement between the parties as to stage payments, be the total
value of the work properly executed and of the materials and goods
delivered to or adjacent to the works for use thereon up to and in­
cluding a date not more than seven days before the date of the said p
certificate less any amount which may be retained by the employer
(as provided in sub-clause (3) of this condition) and less any instal­
ments previously paid under this condition. Provided that such
certificate shall only include the value of the said materials and goods
as and from such time as they are reasonably, properly and not
prematurely brought to or placed adjacent to the works and then only
if adequately protected against weather or other casualties." G
Condition 30 (6) deals with the issue of final certificates and condition
30 (7) provides as follows:
" Unless a written request to concur in the appointment of an arbitrator
shall have been given under clause 35 of these conditions by either
party before the final certificate has been issued or by the contractor JJ
within 14 days after such issue, the said certificate shall be conclusive
evidence in any proceedings arising out of this contract (whether by
arbitration under clause 35 of these conditions or otherwise) that the
 743
A.C. Sutcliffe v. Thackrah (H.L.(E.) ) , Lord Morris
v
of Borth-J-Gcsl
works have been properly carried out and completed in accordance
with the terms of this contract and that any necessary effect has been
given to all the terms of this contract which require an adjustment
to be made to the contract sum, except and in so far as any sum
mentioned in the said certificate is erroneous by reason of (a) fraud,
dishonesty or fraudulent concealment relating to the works, or
any part thereof, or to any matter dealt with in the said certificate;
B or (b) any defect (including any omission) in the works, or any part
thereof which reasonable inspection or examination at any reasonable
time during the carrying out of the works or before the issue of
the said certificate would not have disclosed; or (c) any accidental
inclusion or exclusion of any work, materials, goods or figure in any
computation or any arithmetical error in any computation."
C Condition 30 (8) provides as follows:
" 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."
Condition 35 (1) provides for arbitration as follows:
D " Provided always that in case any dispute or difference shall arise
between the employer or the architect on his behalf and the con­
tractor, either during the progress or after the completion or abandon­
ment of the works, as to the construction of this contract or as to any
matter or thing of whatsoever nature arising thereunder or in connec­
tion therewith (including any matter or thing left by this contract to
the discretion of the architect or the withholding by the architect of
any certificate to which the contractor may claim to be entitled or the
measurement and valuation mentioned in clause 30 (5) (a) of these
conditions or the rights and liabilities of the parties under clauses 25,
26, 32 or 33 of these conditions), then such dispute or difference shall
be and is hereby referred to the arbitration and final decision of a
person to be agreed between the parties, or, failing agreement within
F 14 days after either party has given to the other a written request to
concur in the appointment of an arbitrator, a person to be appointed
on the request of either party by the president or a vice-president for
the time being of the Royal Institute of British Architects."
Condition 35 (2) provides as follows:
Q "Such reference, except on article 3 or article 4 of the articles of
agreement, or on the questions whether or not the issue of an instruc­
tion is empowered by these conditions, whether or not a certificate
has been improperly withheld or is not in accordance with these
conditions, or on any dispute or difference under clauses 32 and 33 of
these conditions, shall not be opened until after practical completion
„ or alleged practical completion of the works or termination or alleged
termination of the contractor's employment under this contract, or
abandonment of the works, unless with the written consent of the
employer or-the-architect on his behalf and the contractor."
744
Lord Morris Sutcliffe v. Thackrah (H.L.(E.)) [1974]
of Borth-y-Gest
From a consideration of these conditions it would appear that in the case
of a final certificate unless either party requested arbitration before it was
issued or unless the contractor requested arbitration within 14 days after it
was issued, the final certificate was " conclusive evidence " that the works
had been properly carried out and completed. In the case of interim
certificates the contractor, subject to the arbitration provisions, would be
entitled to be paid by the employer (the building owner) within 14 days
of presenting the certificate. The amount to be recorded in an interim B
certificate as being due was " the total value of the work properly executed
and of the materials and goods delivered. . . ."
As in the contract there was an express provision for arbitration in the
terms set out in condition 35 (1) there would seem to be a strong indication
that the named architect in the contract was not an arbitrator. But though
there was provision in the contract for arbitration, does the fact that the _,
architect had to issue interim certificates upon which the contractor would
be entitled to receive and the employer be bound to pay and which would
record the total value of the work "properly executed," place him (the
architect) in the position at least of being a " quasi-arbitrator "? If the
reasoning of the majority in Chambers v. Goldthorpe [1901] 1 K.B. 624
points to such a conclusion, should that case be followed?
I think that it must now be accepted that an action will not lie against D
an arbitrator for want of skill or for negligence in making his award. The
reason for this may be that the public interest does not make it necessary
for the courts to exercise greater powers over arbitrators than those which
they possess, such as the power of removing for misconduct or of correcting
errors of law which appear on the face of an award.
Furthermore, as a matter of public policy it has been thought to be g
undesirable to allow an action against an arbitrator (for lack of care or
skill) for the reason that his functions are of a judicial nature.
If there is no arbitration to which the provisions of the Arbitration Act
apply but if two or more people informally agree to refer a disputed matter
to the decision of some person of their own selection they may place him in
the position of a quasi-arbitrator and the common understanding of them
all may be that the chosen person in accepting the charge does not expressly F
or implicitly undertake to do more than to give his honest opinion. Were
the respondents in the present case in that position?
They were employed and paid by the appellant. The duties involved
that the architect would act fairly: he was to act fairly in ensuring that the
provisions of the building contract were faithfully carried out. He was to
exercise his care and skill in so ensuring. But his function differed from G
that of one who had to decide disputes between a building owner and a
contractor. When interim certificates were issued it was necessary to have
regard to the contract terms and to exercise care and skill in certifying the
Value of work done. If the contractor thought that the sum certified was
too littie the contractor could call for arbitration. If the employer paid the
amount certified and later found that there was over-certification as a result „
of the architect's negligence I can see no reason why, if loss resulted to him,
he should not sue his architect.
As parties to a building contract or to a contract of sale are in general
 745
A.C. Sutcliffe v. Thackrah (H.L.(E.)) . Lord Morris
v v
" of Borth-y-Gest
free to introduce whatever terms they wish into their contract it follows
that it is quite possible for them to arrange that someone who at one stage
is the agent of one party may at another stage become an arbitrator as
between the parties. But this must be a definite arrangement. The mere
fact that an architect must act fairly as between a building owner and a
contractor does not of itself involve that the architect is discharging arbitral
functions.
B One of the features of an arbitration is that there is a dispute between
two or more persons who agree that they will refer their dispute to the
adjudication of some selected person whose decision upon the matter they
agree to accept. As an example, the dispute may involve an issue as to
what a particular article is worth or as to the value of work that has been
done. It follows that the task of an arbitrator may in some cases be the
c task of arriving at a valuation. In some circumstances, therefore, someone
might be regarded both as a valuer and an arbitrator. But it by no means
follows that everyone who has a duty of valuing, a duty which obviously
must be fairly and honestly discharged, is an arbitrator. A valuer may
not be exercising any judicial function.
There may be a situation in which two people wish to know the value
of some property with a view possibly to their making some contract in
D regard to it. They may have no dispute because neither has any precise
idea as to the value. Suppose that they both agree to employ a valuer or
surveyor to make a valuation. His carefully and honestly formed opinion
would not make him liable to an action merely because in the opinion of
some other honest and careful valuer it was thought to be wrong. But
suppose it was proved that he had clearly been negligent and so had given
c a wrong figure—I see no reason why there should not then be liability at
the suit of either party who could prove that loss had resulted.
In Jenkins v. Betham (1855) 15 C.B. 168 a question arose as to the
sum which an incoming rector was entitled to receive from his predecessor
in respect of dilapidations. Each party appointed a valuer. There was a
provision that if the two valuers disagreed then there was to be reference
to an umpire. The parties had agreed that any valuation was to be final
F and conclusive. The two valuers did agree and the amount of the dilapi­
dations was paid to the plaintiff on the agreed basis which the plaintiff
said was incorrectly fixed at too low a figure. It was held that if the plain­
tiff's valuer had failed in the performance of his duty he could be held liable
to the plaintiff for loss which resulted.
A similar result was reached in Turner v. Goulden, L.R. 9 C.P. 57
Q where there was a contemplated purchase of a business by the plaintiff.
Each party employed a valuer. There was a provision that if the two
valuers differed an umpire would be appointed. But they did agree. In
an action brought by the plaintiff against his valuer for failing to exercise
due skill and care a question arose whether interrogatories should be
allowed. Lord Coleridge C.J. said that if the defendant had been acting
„ as an arbitrator or as a quasi-arbitrator no action as brought would lie
against him and consequently the plaintiff would not need interrogatories.
The interrogatories were allowed.
It is quite possible for parties to a contract to agree that someone who
746
Lord Morris Sutcliffe v. Thackrah (H.L.(E.) ) [1974]
of Borth-y-Gest \ v / /
at one stage is acting for one party should in the event of a dispute be an
arbitrator between the two parties. This was well illustrated in the case of
Pappa v. Rose (1.871) L.R. 7 C.P. 32. The plaintiff employed the
defendant for reward as selling broker to sell raisins. The sale note
recorded various terms which had to be construed by the court. One term
provided as follows: " fair average quality in opinion of selling broker."
The plaintiff claimed that the defendant had been negligent and showed
lack of skill when he had declared his opinion that the raisins tendered B
were not of fair average quality. The case proceeded on the basis that
what was in issue was whether an arbitrator was liable for lack of skill.
The plaintiff was nonsuited and a rule nisi for a new trial was discharged.
The nonsuit was on the ground that the defendant was in the position of
a quasi-arbitrator who by agreement between the parties was finally to
decide a matter in dispute between them. Keating J. held that an examina-
tion of the raisins was not something to be done by the defendant in his
ordinary capacity as a broker (p. 38):
" It is true that he was a broker, and that he made the contract. But
he was only to decide upon the quality of the raisins, in the event of
a dispute arising between the parties. It might have been that the
buyer was satisfied with the fruit tendered, and in that case the
functions of arbitrator would not have come into operation at all. D
If, on the other hand, the fruit tendered was rejected as not complying
with the contract, the opinion of the referee either way would be a
binding decision on the matter; and for any mistake which he might
make he clearly would not be liable."
Brett J. agreed with the ruling made at the trial (pp. 39-40):
" The ruling upon that was, not that the defendant was in the strict
sense of the term an arbitrator, but that he was a person filling a position
which brought him within an exception well known to the law of
England, viz. that a person who is appointed and is acting as an arbi­
trator to determine a matter in difference between two or more persons
does not enter into an implied promise to bring to the performance of
the duty entrusted to him a due and reasonable amount of skill and F
knowledge. The question is merely one of implied undertaking; and
the law says there is none such. Was, then, the defendant within
that exception? I apprehend that every person falls within it who
has taken upon himself to determine a disputed matter between two
, persons who have agreed to be concluded by his opinion. The parties
had so agreed here: and that opinion could not be called for until G
the fact was in dispute."
Bovill CJ. before whom the cause had been tried said (p. 42):
" It by no means follows that, when two persons submit a matter in
difference to the arbitration of a third, they agree to take a person of
the greatest amount of skill or intelligence. No matter what may be
the degree of skill he possesses, the decision of the person selected g
is final and conclusive; and he is not liable to an action if he makes a
mistake. Here, it is want of skill only that is suggested. The defen­
dant was in the nature of an arbitrator chosen by the parties, whose
 747
A.C. Sutcliffe v. Thackrah (H.L.(E.) ) . Lord Moms
y
'' of Borth-y-Gest
decision is final. Upon general principles, no action lies against him.
There is no implied contract on his part, except that he will act
honestly and bona fide."
The decision of the court was upheld in the Exchequer Chamber (1872)
L.R. 7 C.P. 525.
I do not find it necessary to express any opinion as to whether the case
g was rightly decided. But the case showed that if, on a proper construction
of the contract, the parties had agreed that a disputed matter was to be
referred to the decision of the broker and had agreed that they would abide
by his decision, then in those circumstances the broker would have the
immunity which an arbitrator enjoys.
The present case is quite different. In Pappa v. Rose the defendant
could have been liable to the plaintiff if as a broker he had been negligent
C but the complaint against him was in reference to the decision which he
made in the capacity of an arbitrator; as a matter of construction of the
contract between seller and buyer the court held that they had both agreed
to refer any dispute to the decision of the broker. In the present case the
giving of an interim certificate was not the decision of a dispute between
owner and contractor: there was no reference of any dispute to the archi-
j-) tect: there was no agreement to abide by the decision of the architect as to
the value of work done: the contractor if dissatisfied could have requested
an arbitration before an independent person: the building contract made
provision for this: the architect owed a duty to his employer, the owner, to
exercise care and skill in the giving of certificates: the fact that the owner
became obliged under the building contract to pay the amount that his
architect certified did not make the architect an arbitrator: nor was he made
E an arbitrator merely by reason of the circumstance that he could only
properly perform his duties if he was fair as between his employer (the
owner) and the contractor.
It is manifest that each case must depend upon its circumstances and
upon the contents of the particular contract in the case. In Tharsis Sulphur
and Copper Co. Ltd. v. Lojtus (1872) L.R. 8 C.P. 1 it was held that an
p average adjuster appointed by agreement between parties who were to
accept his decision was in the position of an arbitrator and was not liable
to be sued for want of care. It was pointed out in the judgments that Pappa
v. Rose, L.R. 7 C.P. 32 had related to a claim for lack of skill against
someone found to have been an arbitrator but it was held that there was
equal immunity from a claim for lack of care; Bovill C.J. said that there
was no precedent to support a contention that a person called upon to act
G as an arbitrator to settle disputes or to adjust accounts between parties was
liable to an action for negligence. If parties agree to be bound by the de­
cision of a third party they take him, as Keating J. put it (p. 8), " for better
or worse " and " if he discharges his duty faithfully and honestly they must
be satisfied.". It was argued for the plaintiffs that in order that there may be
a quasi-arbitrator it is necessary that disputes should have arisen between
U the parties and that it did not appear that any disputes had arisen. Bovill
C.J. interposed to say that the nature of the agreement set out assumed that
the amount was in question between the parties. Keating J., in his judg­
ment, said, at p. 7:
748
of0rBorth0.rr-GeSt Sutcliffe v. Thackrah (H.L.(E.)) J1974]
" Now, without deciding what is the proper definition of an arbitrator,
A
it appears to me clear that the defendant is in the position of an
arbitrator for the present purpose, inasmuch as he was a person by
whose decision two parties having a difference agreed to be bound."
Brett J. said, at p. 9, that
" if an arbitrator in the strict sense of the word is not liable for want
of care, it follows that a person who has undertaken to decide a g
dispute between two parties is also not liable."
I think, therefore, that the case can be regarded as one in which the
appointment was by parties who had a difference or dispute. I express no
opinion as to whether on the facts of that case the average adjuster ought
or ought not to have been regarded as an arbitrator. The case merely
shows that if it were assumed or if it was properly found that he was then Q
he would be entitled to immunity.
In Stevenson V. Watson (1879) 4 C.P.D. 148 the defendant was the
architect of the building owner under a contract made between the owner
and the plaintiff who was the contractor. The plaintiff and the defendant
were therefore not in direct contractual relationship. Under the building
contract the architect could order additions or deductions and the amount
of such additions to or deductions from the contract were to be ascertained D
by the architect in the same manner as the quantities had been measured.
A clause provided as follows:
" The contractor and the directors will be bound to leave all questions
or matters of dispute which may arise during the progress of the works
or in the settlement of the account to the architect, whose decisions
shall be final and binding upon all parties." E
The contractor, who was to be paid on the certificate of the architect, com­
plained of under-certification whereby he had suffered loss and in his action
alleged that the defendant had not used due care and skill. The defendant
demurred on the ground that the statement of claim showed him to have
been an arbitrator and, there being no allegation of fraud or mala fides,
that there was no cause of action. The demurrer was allowed. Lord F
Coleridge C.J. drew a distinction between duties which he called, at p. 158,
" merely ministerial and clerkly " and those which required the exercise
of considerable skill and judgment. Lord Coleridge CJ. was prepared to
say (this, be it noted, being in 1879) that though the defendant was no party
to the building contract, yet, having undertaken to perform certain work
under it, he might have been liable to the plaintiff under some circum-
stances: he might have been liable if the true view of the case had been that ®
the contract
" imposed on him the duty of doing certain work requiring no judg­
ment, no opinion, and requiring only the exercise of what I may call
ordinary arithmetical powers, and the performance of his duty under
that contract was necessary to the plaintiff's right to recover, yet the
defendant had refused that.duty,. .." (p. 156). H
But as it was the defendant's duties were clearly not merely ministerial or
clerkly. As Denman J. said, they were very analogous to those of an
 749
A.C. Sutcliffe v. Tbackrah (H.L.(E.) ) „ £ ord M ° r r i s
v
' ' of Borth-y-Gest
arbitrator. Though there was no actual dispute between the building owner
and the contractor the architect occupied the position of an arbitrator.
Though parties to a building contract may agree that as to some matters
the architect of the building owner will be the person to whom disputes
will be referred and agree to accept his decision with the result that if and
when he (the architect) is acting as arbitrator he will have the immunity
which has been recognised by the courts, it does not follow that he will
B have any immunity if he is negligent while carrying out the duties for
which he is employed by the building owner. In the present case the
respondents were not, in my view, made arbitrators. If there was to be an
arbitration, condition 35 prescribed who was to be arbitrator. When certi­
fying, or when valuing, the respondents were, in my view, not exercising
arbitral functions. But this view calls in question the decisions of the
_, Court of Appeal in 1901 in Chambers v. Goldthorpe; Restell v. Nye [1901]
C
1 K.B. 624.
In those cases it was recognised in the Court of Appeal that if the
architects were in the position of arbitrators then they could not be sued
for negligence. It will suffice to consider the first case. A building owner
employed an architect to prepare drawing plans and specifications for
certain houses and to supervise the work of building. There were various
D clauses in the contract between the building owner and the contractor in
reference to the powers of the architect in regard to such matters as varia­
tions and the re-execution of work which the architect considered defective
and the issuing of certificates. One clause, clause 20, provided as follows:
" A certificate of the architect, or an award of the referee hereinafter
referred to, as the case may be, showing the final balance due or pay-
£ able to the contractor, is to be conclusive evidence of the works having
been duly completed, and that the contractor is entitled to receive
payment of the final balance, but without prejudice to the liability of
the contractor under the provisions of clause No. 12."
The mention of a referee resulted from there being an arbitration clause,
clause 22. Many matters of dispute or difference could be referred to
p arbitration. One of the matters that could be so referred was whether the
works had been duly completed. The building owner claimed damages
against his architect for negligence alleging that the architect had negli­
gently measured work and had certified accounts which included sums to
which the contractor was not entitled. It was held by the majority of the
court that in giving his certificate under clause 20 the architect was acting
f»
as an arbitrator. A. L. Smith M.R. said, at p. 634:
" I think that the effect of his agreeing to act under clause 20 of the
contract was that he undertook the duty towards both parties of
holding the scales even and deciding between them impartially as to
the amount payable by the one to the other."
He considered also that unless there was a dispute and a reference under
JJ clause 22 before the architect certified, the certificate of the architect (with
regard to the amount which the building owner had to pay) was final.
Collins L.J. agreed with A. L. Smith M.R. He distinguished at p. 640
between a formulated dispute and
750
L
,ord Morris Sutcliffe v. Thackrah (H.L.(E.)) [1974]
of Borlh-y-Gest \ \ / / i. J
" that sort of possible difference which underlies an agreement by two
A
parties that what one is to pay and the other has a right to be paid
in respect of a certain matter shall be ascertained by a third person."
So his view was that no formulated dispute is necessary before such
" third person " has both the duties and also the immunities of a quasi-
arbitrator. He had that status because he was " clothed with the duty of
exercising an impartial judgment" (p. 641). With every respect I prefer R
the minority view of Romer L.J. who considered that the architect had
not, in certifying under clause 20, been acting in the capacity of an
arbitrator. I agree with his clear reasoning when he said, at p. 642:
" Suppose a person undertakes for reward to value or estimate for
another work about to be done for his principal by a third person;
in my opinion, he does not, so far as his principal is concerned,
become in the position of an arbitrator in regard to his valuation or
estimate, merely because he knows that his principal and the third
person have by contract between them agreed that, in default of dispute
previously arising with regard to the matter, his valuation or estimate
is to be taken as conclusive, and as determining the price to be paid
by his principal for the work to be done by the third person."
He further said, at p. 643 :
" that [the architect] by the terms of his employment. . . undertook to
measure up from time to time the work to be done for his principal
by the contractor, and to certify the amount in money the work
represented, and in particular on completion of the work to certify
the balance payable. For this work he was to be paid by his principal, -
and it is in respect of it that he is suing. It would follow that, if in
doing that work, for which he was to be paid by his principal, he was
guilty of negligence from which damage ensued to his principal, he
would be prima facie liable. To enable him to escape from that
liability, the onus would lie on him to shew that, by the terms of the
contract between his principal and the contractor, he was freed from
that prima facie liability. No doubt he might do so, if he could show F
that by those terms he was undoubtedly placed in the position of an
arbitrator with regard to his certificates, and that the principal's
complaint against him in regard to the certificates was for something
done in his capacity of arbitrator. But he would not, in my opinion,
succeed in showing this merely by reason of the fact that his principal
and the contractor had by the contract agreed that, if no prior dispute G
arose in reference thereto, his certificates should be treated as con­
clusive between them."
He referred with approval to Wadsworth v. Smith (18711) L.R. 6 Q.B. 332,
and also to Rogers v. James (1891) Hudson on Building Contracts, 4th ed.
(1914), vol. 2, p. 172.
In the present case the words in condition 30 (2) of the contract are less JJ
emphatic than those contained in clause 20 in Chambers v. Goldthorpe
[1901] 1 K.B. 624 where the certificate was to be conclusive evidence of the
works having been duly completed. All that condition 30 (2) provides is
 751
A.C. Sutcliffe v. Thackrah (H.L.(E.)) . Lord Morris
v v
'' of Borth-y-Gest
that the amount stated as due in an interim certificate is to be the total value
"■ of the work properly executed and of the materials and goods delivered.
Even if, contrary to my view, it was thought that the language of clause 20
in Chambers v. Goldthorpe gave an approximate description of what might
be regarded as an award the same cannot be said of condition 30 (2).
A situation where a building owner agrees with his contractor that he
will pay on a certificate of his architect, which certificate he agrees is to be
B taken as certifying the total value of work done and as certifying that it
has been properly done, is precisely the situation where, because he has
so agreed, he may be involved in loss if his architect has negligently given
the certificate. The fact that a building owner and contractor agree that
they will treat the certificates of the owner's architect as conclusive evidence
that work has been duly completed does not of itself establish that the
_ architect was an arbitrator between them. Neither does the circumstance
that by its very nature the architect's function involves that he will act
impartially and fairly. He must certainly so act because, there being a
contract for work to be done according to the terms of the contract, his
function is to see that the contract is carried out. But that does not
without more make him ah arbitrator. His duty is to act fairly when
exercising his professional skill in considering whether work done satisfied
D the contract requirements as to work to be done: if that circumstance
constituted him an arbitrator then at almost every stage he would be an
arbitrator. His duty to act fairly does not at all conflict with, but rather
is a part of, his duty to safeguard and look after the interests of the
building owner who has employed him.
The decision in Chambers v. Goldthorpe has not hitherto come directly
c before this House for consideration. In Hickman & Co. v. Roberts [1913]
A.C. 229 there are passages in the speeches which indicate that when the
architect (pursuant to the clauses of the contract in that case) gave his
certificate he was in a quasi-judicial position of an arbitrator, and in
R. B. Burden Ltd. v. Swansea Corporation [1957] 1 W.L.R. 1167 Lord
Radcliffe, referring to the decision in Chambers v. Goldthorpe, said that
it was an established principle of law that in granting a final certificate
F under a building contract the architect acts in an arbitral capacity. But
in neither of those two cases was the authority of Chambers v. Goldthorpe
directly challenged. Now that it is I consider for the reasons which I
have set out that it should be overruled.
It is one part of the duty of an architect, a duty particularly arising
before giving an interim certificate, to make an estimate of the value of
G work done. But to call him a valuer does not at all resolve the question
whether he is or is to be regarded as an arbitrator. In some circumstances
a valuer may be an arbitrator just as in some circumstances an architect
may be. It must depend upon the contract or arrangement which is
made. The case of Finnegan v. Allen [1943] K.B. 425 was somewhat
special. Finnegan agreed to sell some shares to Gleeson. They agreed
TT to have the shares valued by Allen whose decision was to be final and
binding on them both. They were to pay his costs and expenses in equal
shares. There was an agreement between Finnegan and Allen which
contained many clauses laying-down the method which was to be applied
752
Lord Morris Sutcliffe v. Thackrah (H.L.(E.)) [1974J
v
of Borth-y-Gest
in arriving at the value of the shares. That agreement was sent to Allen.
Later Finnegan and Allen were told that the award was ready. Finnegan ■
considered that the valuation had not been made according to the method
to be applied and was a considerable under-valuation. He sued Allen
for the half share of Allen's costs and expenses which he (Finnegan) had
paid: he pleaded a breach of warranty. A summons to strike out the
statement of claim failed before the master and before the judge but
succeeded on appeal to the Court of Appeal. There was argument on a B
point as to whether a warranty arose when a letter was sent to say that
the award was ready. But the case proceeded on the basis admitted by
counsel in argument that no action would lie for want of care and skill in
making the valuation. Lord Greene M.R. said, at p. 431:
" It is, of course, well known that, if an expert is employed to conduct
a valuation, what he does is not an arbitration within the meaning Q
of the Arbitration Act, but that does not touch the present question
whether a person who is brought in by agreement between the parties
to fix a term in their contract on which they cannot agree is liable,
in the absence of bad faith, to be sued for damages. There are a
number of decisions which, in my opinion, make it clear that he
cannot."
D
He then referred to Pappa v. Rose, L.R. 7 C.P. 32, Tharsis Sulphur and
Copper Co. Ltd. v. Loftus, L.R. 8 C.P. 1 and Stevenson V. Watson, 4 C.P.D.
148. The words of Lord Greene together with the admission of counsel
show that the case was one in which there was a formulated point of differ­
ence which was specially referred to a person chosen by both parties who
agreed that his decision was to be final and binding. The valuer (Allen) was
therefore fully in the position of an arbitrator. The case was really one in E
which a way was being sought to circumvent the rule that immunity is
enjoyed by someone acting as an arbitrator. Goddard LJ. said that
it is not possible to give a precise definition of a quasi-arbitrator but that
some valuers are given the protection given to an arbitrator [1943] K.B.
425, 436-437: "The underlying principle is that, in accepting the task
submitted to him, the valuer or arbitrator merely undertakes to give an p
honest decision between the parties."
Having set out my views as to the principles which are applicable, I do
not find it necessary to consider how they should be applied in reference
to the particular facts and circumstances which gave rise to the case of
Arenson v. Arenson [1973] Ch. 346.
In summarising my conclusions I must preface them by the observa­
tion that each case will depend upon its own facts and circumstances and ^
upon the particular provisions of the relevant contract. But in general any
architect or surveyor or valuer will be liable to the person who employs him
if he causes loss by reason of his negligence. There will be an exception
to this and judicial immunity will be accorded if the architect or surveyor
or valuer has by agreement been appointed to act as an arbitrator. There
may be circumstances in which what is in effect an arbitration is not one JJ
that is within the provisions of the Arbitration Act. The expression " quasi-
arbitrator " should only be used in that connection. A person will only be
an arbitrator or quasi-arbitrator if there is a submission to him either of a
 753
A.C. Sutdiffe v. Thackrah (H.L.(E.)) „ Lord Morris
v v
'' of Borth-y-Cest
specific dispute or of present points of difference or of defined differences
that may in the future arise and if there is agreement that his decision will
be binding. The circumstance that an architect in valuing work must act
fairly and impartially does not constitute him either an arbitrator or a
quasi-arbitrator. The circumstance that a building owner and contractor
agree between themselves that a certificate of an architect showing a balance
due is to be conclusive evidence of the works having been duly completed
B and that the contractor is entitled to receive payment does not of itself
involve that the architect is an arbitrator or quasi-arbitrator in giving his
certificate. Chambers v. Goldthorpe [1901] 1 K.B. 624 was wrongly
decided. The fact that in the present case the architect had (in an interim
certificate as to the amount due) to record the total value of work properly
executed and of materials and goods delivered did not constitute him an
arbitrator. He incurred liability for his negligence in over-certifying.
^ For the reasons that I have given I would allow the appeal and, subject
to the agreed revision as to amount, I would restore the judgment of the
learned official referee.
LORD HODSON. My Lords, I am in full agreement with the opinion of
my noble and learned friend, Lord Reid, that the appeal should be allowed.
D
VISCOUNT DILHORNE. My Lords, the sole question for determination
in this appeal is whether the respondents, who are architects, can be held
liable for negligence in certifying that amounts were payable to building
contractors by the appellant in excess of the amounts for which but for
their negligence certificates would have been given.
The respondents were employed as architects by the appellant who on
E October 1, 1963, entered into a contract in the current R.I.B.A. form for
the building of a house in Yorkshire. The contract between the appellant
and the respondents was not in writing but it must have been a term of the
contract that the respondents would discharge the duties imposed on the
architect by the contract between the appellant and the builders.
Under clause 30 of that agreement it was the duty of the architect at
p monthly intervals to issue interim certificates stating the amount due to the
builders from the appellant, being " the total value of the work properly
executed and of the materials and goods delivered " less retention money
and money paid under earlier certificates.
After they had issued a certificate of practical completion the respon­
dents had to issue a final certificate which stated the total paid under the
interim certificates, and the amount of the retention fund and also the con-
G tract sum adjusted in accordance with the terms and conditions of the
contract, and which certified the difference between the two as due from
the appellant to the builders or vice versa.
It was the appellant's obligation to pay to the builders the amount
certified by the respondents as due from him to the builders.
Clause 30 (7) provided that unless a written request for the appointment
JJ of an arbitrator was given before the final certificate was issued or by the
builders within 14 days of its issue, the final certificate was to be " conclu­
sive evidence in any proceedings " that the works had been carried out and
that any necessary effect had been given to the terms of the contract which
754
Viscount Dilhorne Sutcliffe v. Thackrah (H.L.(E.)) [1974]
required an adjustment of the contract sum. The certificate was to be
conclusive evidence except in so far as any sum mentioned in it was
erroneous by reason (a) of fraud, dishonesty or fraudulent concealment,
(b) any defect which would not have been disclosed on reasonable exam­
ination before the issue of the certificate, and (c) any accidental inclusion
or exclusion of any work, materials, goods or figure in any computation or
any arithmetical error in any computation.
Qause 30 (8) reads as follows: B
" 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."
It was not disputed that many of the functions the respondents were
required by the contract between the appellant and the builders to dis­
charge were functions to be discharged on behalf of the appellant. Qause C
1 (1) provided that upon and subject to the conditions of the contract the
builders would carry out and complete the work "to the reasonable
satisfaction " of the respondents. Under a number of clauses the respon­
dents were empowered to give instructions to the builders. They could
require the builders to open up any work for inspection. In giving such
instructions and in deciding whether or not work had been done to their p
reasonable satisfaction they were acting on behalf of the appellant and
employed to use their professional skill and knowledge in so acting. It was
not disputed that if when so acting, as a result of their negligence, damage
was suffered by the appellant they would be liable.
It was not disputed that owing to negligence on their part they had
issued two interim certificates certifying amounts due from the appellant
to the builders in excess of the sums properly due from him in respect of E
the value of work properly executed and that the appellant had in conse­
quence suffered loss, but it was contended that the respondents were not
liable as in issuing interim certificates and the final certificate the respon­
dents were required to act in an arbitral capacity and not solely on behalf
of the appellant, and that when acting in an arbitral capacity they were
not liable for negligence in the discharge of their arbitral functions. p
That persons who are appointed as arbitrators, or as it has been called
quasi-arbitrators, to resolve a dispute which has arisen or which may arise
cannot be sued for negligence in respect of their decisions is, I think, clear
law.
In some cases the terms of the contract between two parties will reveal
that they have agreed that a third party shall discharge certain functions
and be required to arbitrate between them on some issues. In Pappa v. ®
Rose, L.R. 7 C.P. 32, the defendant as a broker made a contract for the
plaintiff for the sale of raisins. The contract note stated that they were to
be " fair average quality in opinion of selling broker." It was held in the
Court of Common Pleas that the broker was employed as a kind of arbi­
trator to determine between the parties any difference which might arise
as to the quality of the raisins tendered in fulfilment of the contract, and JJ,
that consequently he was not liable to an action for failing to exercise care
and skill in coming to his decision that the raisins were not of fair average
quality. In Tharsis Sulphur and Copper Co. Ltd. v. Loftus, L.R. 8
 755
A.C. Sutcliffe v. Thackrah (H.L.(E.)) Viscount Dilhorae
C.P. 1, a shipowner and the owners of cargo agreed to refer to an average
adjuster the question what part of general average losses should be borne
by each of them and agreed to be bound by his decision. It was held that
the average adjuster was in the position of an arbitrator " inasmuch as he
was a person by whose decision two parties having a difference agreed to be
bound " {per Keating J. at p. 7) and so could not be sued for negligence
in the discharge of his functions.
B In Stevenson v. Watson, 4 C.P.D. 148, a building contract case, the
contract between a company, the employers and the builder contained the
following clause:
" The contractor and the directors will be bound to leave all questions
or matters of dispute which may arise during the progress of the works
or in the settlement of the account to the architect, whose decisions
Q shall be final and binding upon all parties."
The contractor sued the architect, alleging negligence on his part in
failing to issue a certificate for the amount the contractor claimed was due
to him. Denman J., at p. 161, said that he thought that the architect's
duties under the contract were " very analogous to the duties of an
arbitrator," a conclusion which it is not possible to question in view of
D the terms of the clause set out above. In an effort to get round this diffi­
culty it was argued that all the architect was required to do was not to
decide questions " requiring exercise of discretion, skill, or, in one sense,
judgment at all" but that the architect " was a kind of appraiser or valuer,
to look at certain work, cast up certain figures, and do rather clerkly than
judicial work, or the work of an arbitrator, which requires the exercise of
skill and judgment" (per Denman J. at p. 161); but this argument was
rejected by the court.
It does not follow that if an architect is employed by a person who
wants to have something built, whose employment necessarily involves the
exercise by him of professional skill and knowledge, he is ipso facto
placed in the position of an arbitrator or quasi-arbitrator between his
employer and the builder. In every case regard must be had to the terms
F of the contract between the employer and the builders and under the
contract in Stevenson v. Watson it is clear that the architect was to act in
an arbitral capacity.
The terms of the building contract in Chambers v. Goldthorpe [1901]
1 K.B. 624 were very different. It contained no clause similar to that set
out above in the contract in Stevenson v. Watson. It provided for the
G issue of interim certificates and for the issue of a final certificate which
was to be conclusive evidence that the works had been duly completed and
that the contractor was entitled to payment of the final balance. It also
contained an extensive arbitration clause which began with the words:
"Provided always that, in case any question, dispute, or difference shall
arise between the proprietor, or the architect on his behalf, and the con-
„ tractor . . . " The employer of the architect alleged that the architect had
through negligence incorrectly measured the work done, had improperly
allowed certain items and had consequently certified for a larger amount
in his final certificate than he should have done, and claimed damages.
756
Viscount Dilhorne Sutcliffe v. Thackrah (H.L.(E.)) [1974]
The Court of Appeal by a majority (A. L. Smith M.R. and Collins L.J.,
Romer L.J. dissenting) held that in ascertaining the amount due and certi-
fying the same the architect occupied the position of an arbitrator and so
could not be sued for negligence in the exercise of those functions.
As the Court of Appeal in this case pointed out, that decision has been
much criticised. I agree with the Court of Appeal in the present case that,
if it be the law that in giving his final certificate an architect is acting as an
arbitrator, there is no valid distinction to be drawn between giving a final B
and an interim certificate and he must also be held, if the decision in
Chambers v. Goldthorpe is right, to be acting as an arbitrator in relation
to interim certificates where the contract between the employer and the
contractor is similar to that in Chambers v. Goldthorpe and to that in
this case.
In Chambers v. Goldthorpe [1901] 1 K.B. 624, 634, A. L. Smith M.R. c
came to the conclusion that, the employer and contractor having agreed to
be bound by the final certificate of the architect, the architect in relation
to the issue of the certificate was " to act impartially towards the building
owner and the contractor, and this was his duty to both." He held that it
was not the architect's sole duty to protect the interests of the building
owner against the builder. Collins L.J. was of the same opinion, holding
that the architect was bound to exercise his judgment impartially between D
the parties and so that his position was that of a quasi-arbitrator.
Romer L.J., dissenting, began his judgment by stating his view of the
principle to be applied. He said, at pp. 642-643:
" Suppose a person undertakes for reward to value or estimate for
another work about to be done for his principal by a third person; in
my opinion, he does not, so far as his principal is concerned, become E
in the position of an arbitrator in regard to his valuation or estimate,
merely because he knows that his principal and the third person have
by contract between them agreed that, in default of dispute previously
arising with regard to the matter, his valuation or estimate is to be
taken as conclusive, and as determining the price to be paid by his
principal for the work to be done by the third person. In such a p
case, in giving his valuation or estimate, he would still be acting for
his principal, and, so long as he acted without fraud, he would be
under no obligation or liability to the third person, and, acting as he
would do for his principal, if he was guilty of negligence, causing
damage, would be liable to his principal in an action."
In my opinion, the principle enunciated by Romer L.J. is the correct G
one. It should have been applied in Chambers v. Goldthorpe and the deci­
sion of the majority in that case should be regarded as wrong. It should
be applied in this case. Here the architect is required to issue interim
certificates for the " total value of the work properly executed " and in
valuing that work he has to use his professional skill and knowledge. He
is not employed to be unfair to the builder. He is not required to deter- H
mine a dispute between his employer and the builder. As I see it, there
is no question of his having to act impartially between them. He must, if
he exercises his professional skill and knowledge as it should be exercised,
 757
A.C. Sutcliffe v. Thackrah (H.L.(E.)) Viscount Dilhorne
assess the total value of the works properly executed at what he honestly
"• believes to be its true value. If he does that, he is acting fairly.
The contract in this case contained an arbitration clause similar in all
material respects to that in the contract in Chambers v. Goldthorpe. It
began with the words " Provided always that, in case any question, dispute,
or difference shall arise between the proprietor, or the architect on his be­
half, and the contractor." That, to my mind, shows that the parties to the
B contract recognised that the architect in performing his duties under the
contract would be acting on behalf of the employer. The inclusion of this
arbitration clause of itself makes it highly improbable that the parties to the
contract agreed that the architect should act as an arbitrator between them
for then there might be an arbitration upon an arbitration.
In every case whether a person, who is to fulfil functions in relation to
a contract between two other people, has to act as an arbitrator or quasi-
arbitrator depends on the terms of the contract, and the decisions in Pappa
v. Rose, L.R. 7 C.P. 32 in the Court of Common Pleas and in Tharsis
Sulphur and Copper Co. Ltd. v. Loftus, L.R. 8 C.P. 1 were only correct if,
on a true view of the contract, the broker in the former case and the
average adjuster in the latter were appointed to act as arbitrators to resolve
disputes between the parties to the contract which might arise or had
D arisen. In my opinion the contract in this case did not require the respon­
dents so to act, and, that being so, they are, in my opinion, liable to
the appellant for negligence in the discharge of the duties they undertook.
For these reasons in my opinion this appeal should be allowed.

LORD SALMON. My Lords, I will not weary your Lordships by repeat-

E ing the facts nor the relevant sections of the R.I.B.A. form of contract
which have already been fully recited by my noble and learned friend,
Lord Morris of Borth-y-Gest.
This appeal raises the immediate question as to whether or not an
immunity against being sued for negligence extends to an architect who,
because of his negligence, has caused damage to his client, the building
owner, by wrongly issuing an interim certificate. This question cannot,
however, be satisfactorily answered without considering a wider issue,
namely, the limits of the immunity which the law affords against claims in
respect of negligence in general.
It is well settled that judges, barristers, solicitors, jurors and witnesses
enjoy an absolute immunity from any form of civil action being brought
against them in respect of anything they say or do in court during the
G course of a trial. This is not because the law regards any of these with
special tenderness but because the law recognises that, on balance of
convenience, public policy demands that they shall all have such an
immunity. It is of great public importance that they shall all perform
their respective functions free from fear that disgruntled and possibly
impecunious persons who have lost their cause or been convicted may
rr subsequently harass them with litigation: Rex v. Skinner, per Lord
Mansfield CJ. (1772) Lofft. 55, 56; Henderson v. Broomhead (1859) 4
H. & N. 569; Swinfen v. Lord Chelmsford (1860) 5 H. & N. 890, 921;
Marrinan v. Vibart [1963] 1 Q.B. 528 and Rondel v. Worsley [1969] 1
758
Lord Salmon Sutcliffe v. Thackrah (H.L.(E.)) [1974]
A.C. 191. This does not mean that the law fails to recognise the obliga­
A
tion of judges, barristers, solicitors, jurors and witnesses to exercise care.
The law takes the risk of their being negligent and confers upon them
the privilege from inquiry in an action as to whether or not they have
been so. The immunity which they enjoy is vital to the efficient and speedy
administration of justice.
Since arbitrators are in much the same position as judges, in that they
carry out more or less the same functions, the law has for generations B
recognised that public policy requires mat they too shall be accorded the
immunity to which I have referred. The question is—does this immunity
extend beyond arbitrators properly so called, and if so, what are its limits?
It is well established that, in general, persons such as doctors,
accountants, barristers (acting in an advisory capacity), valuers and archi­
tects owe their clients a duty to exercise reasonable care and skill in Q
rendering the services for which they are engaged. If they commit a
breach of this duty which causes their client damage, then they are liable
to compensate him for the loss which their negligence has caused him.
This is obviously just. The heresy (as it seems to me) has, however,
grown up that if a person engaged to act for a client ought to act fairly
and impartially towards the person with whom his client is dealing,
then he is immune from being sued by bis client—however negligent he D
may have been. In short, liability to compensate your client for the
damage you have caused him solely by your own negligence is excluded
because of your obligations to act fairly and impartially towards someone
else.
May I give your Lordships some examples of the astonishing results
to which this heresy leads? g
A well-known dealer in 18th century English paintings is brought an
L8th century English painting to value for a handsome fee. He is not
told why his client requires the valuation. It may be because he intends to
sell it or insure it, or perhaps just out of curiosity. The dealer values the
picture (entirely honestly but wrongly) at £500. Relying on this valuation,
the client asks £500 for the picture, and sells it for that sum. It is sub­
F
sequently established that the picture was worth £50,000 and that this
should have been obvious to anyone in the dealer's position who had
exercised reasonable care and the skill which he professed. In such
circumstances, the client would have an unanswerable claim against the
dealer in negligence. Now suppose exactly the same facts, save that when
the client brought the picture to the dealer he told him that the valuation
was wanted because he was going to sell the picture to a friend, and the G
friend had agreed to buy the picture for the value which the dealer put
upon it, providing he could afford to do so. It would appear on the
authority of certain cases, to which I will refer later, that the dealer
would then be immune from being sued by his client because of his
additional duty to act impartially and fairly towards his client's friend.
It is said that this factor, of itself, puts the dealer in the same position as „
if he were performing the functions of a judge or arbitrator; and accord­
ingly, so the argument runs, public policy requires that he should have
complete immunity in respect of his undoubted negligence, which had
 759
A.C. SutcliSe v. Thackrah (H.L.(E.)) Lord Salmon
admittedly caused his client a loss. I am afraid that I can find no sensible
basis for such an astonishing proposition.
Take another example, an architect who has been engaged by a
building owner to look after his interests in relation to the construction
of a building is (as in the present case) the architect nominated in an
R.I.B.A. form of contract entered into between the building owner and
the contractor. Under that contract to which the architect is not a party,
B but of which he, of course, has knowledge, the parties agree, amongst
other things, that the architect shall issue interim certificates stating the
amount due to the contractor in respect of work properly executed, and
that, within a specified period after the date of each certificate, the building
owner shall pay the amount therein certified (clause 30). In the event of a
dispute arising in relation to any such certificate, the contract provides that
_, the parties may at any time submit the dispute to arbitration (clause 35).
No one denies that the architect owes a duty to his client to use proper
care and skill in supervising the work and in protecting his client's interests.
That, indeed, is what he is paid to do. Nevertheless, it is suggested that
because, in issuing the certificates, he must act fairly and impartially as
between his client and the contractor, he is immune from being sued by
his client if, owing to his negligent supervision or (as in the present case)
D other negligent conduct, he issues a certificate for far more than the proper
amount, and thereby causes his client a serious loss.
As in the case of the valuer, it is said that the architect is performing
much the same functions and must, therefore, be regarded as being in the
same position as a judge or arbitrator and must accordingly be accorded
the same immunity. I confess that I can see no more reason for regarding
£ the architect as being in the same position as a judge or arbitrator than
there is for so regarding the valuer. No reason has ever been suggested.
I suspect that this is because none exists. The descriptions " quasi-
arbitrator " and " quasi-judicial functions " have been invoked but never
defined. They cannot mean more than in much the same position as an
arbitrator or judge. In reality, however, there are the most striking
differences between the roles of the valuer and architect in the circumstances
F to which I have referred and the role of a judge or arbitrator. Judges
and arbitrators have disputes submitted to them for decision. The evi­
dence and the contentions of the parties are put before them for their
examination and consideration. They. then give their decision.. None
of this is true about the valuer or the architect who were merely carrying
out their ordinary business activities. Indeed, their functions do not seem
Q to me even remotely to resemble those of a judge or arbitrator. More­
over, in the case of the architect, the contract provided that the certificate
was not binding and that, in the event of any dispute arising in relation
to it, that dispute could be submitted to arbitration for decision. Like my
noble and learned friend, Lord Reid, I suspect that the heresy that such
valuers and architects are to be regarded as being in the same position as
H judges and arbitrators rests on the fallacy that since all judges and
arbitrators must be impartial and fair, anyone who has to be impartial and
fair must be treated as a judge or an arbitrator.
Finnegan v. Allen [1943] K.B. 425 (recently followed in Arenson v.
760
Lord Salmon Sutclilfe v. Thackrah (H.L.(E.)) [1974]
Arenson [1973] Ch. 346) is the case upon which the suggested immunity
of the valuer rests. Suppose that Mr. Allen, the chartered accountant in ^
that case, had been called in to value the shares in M. J. Gleeson Ltd. as
between a willing seller and a willing buyer without being told the purpose
for which his valuation was required, there can be no doubt that had he
made his valuation negligently and any client for whom he had made it
had thereby suffered loss, he would have been liable in damages. I do not
understand how he could be immune from such liability merely because g
he was in fact sent a copy of a sales agreement which showed that the
prospective seller and buyer of the shares had agreed to accept: his valua­
tion as the purchase price and that he was engaged by both to value the
shares. In either case Mr. Allen would have carried out only what is the
normal professional work of a chartered accountant. I cannot imagine
how his knowledge of the agreement for sale could have affected the work
which he did, his manner of doing it or his approach to it. I suppose that C
a cynic might say that in the postulated case he would have used all his
care and skill lest he might be sued in negligence, whereas in the actual
case—always supposing that he was familiar with the surprising view of
the law which then prevailed—he would have taken much less care because
he would have realised that he could not be touched except for fraud.
I hardly think that public policy, even at its most unruly, could require j)
immunity for a professional man in circumstances such as these.
My Lords, I desire to make it plain that all I am discussing is whether
an action for negligence will lie on the assumption that negligence can be
established. Everyone knows that there is no topic about which greater
differences of informed opinion may sometimes exist than the value of
shares in a private company unless it be the authenticity and value of
certain pictures. It by no means follows that a professional valuation or E
opinion was negligently given because it turns out to have been wholly
wrong. Nor does the fact that an architect's certificate was given for the
wrong amount of itself prove negligence against the architect. Whether
or not there has been negligence is, of course, a pure question of fact
depending upon the particular circumstances of each case. I also recognise
that in a particular case the facts may be such and the contract may be in p
such a form as to put an architect or a valuer in the same position as a
judge or arbitrator. In which event he would enjoy the same immunity.
The supposed general immunity of an architect against a claim by his
client in respect of a loss suffered by reason of the architect wrongly and
negligently certifying a sum as due to the contractor is based on the
majority judgment in Chambers v. Goldthorpe [1901] 1 K.B. 624, in which
the building contract was similar to the R.I.B.A. contract in the present G
case. The Court of Appeal rightly held that there was no material distinc­
tion between that case and the present and concluded, accordingly, that they
were bound to find for the defendants. They reached that conclusion with
marked reluctance since they clearly preferred the dissenting judgment of
Romer L.J. So do I—for the reasons which I have already indicated.
Both in Chambers v. Goldthorpe and Finnegan v. Allen the Court of JJ
Appeal relied strongly upon a trilogy of cases which I do not find con­
vincing and which indeed seem to conflict with other authorities to which
I shall presently refer. The first of the trilogy was Pappa v. Rose, L.R.
 761
A.C. Sutcliffe v. Thackrah (H.L.(E.)) Lord Salmon
7 C.P. 32; L.R. 7 C.P. 525. The defendant signed a contract as selling
" broker in the following terms: " Sold by order and for account of Mr. D.
Pappa, to my principals, Messrs. S. Hanson & Son, to arrive, 500 tons
Black Smyrna raisins—1869 growth—fair average quality in opinion of
selling broker . . ."
As appears from p. 34 of the report:
" There was no evidence to show that there was any recognised
B standard by which to estimate the fair average quality of Black
Smyrna raisins generally, or the average of any given number of
years,—they being an article of very limited demand in the London
market,..."
Nor is there anything to suggest that the defendant received any fee
beyond his ordinary broker's commission. The defendant refused to pass
C the first two consignments on the ground that they were not fair average
quality of 1869 growth. At the trial before Bovill CJ. there was conflict­
ing evidence as to the quality of the raisins. The Chief Justice ruled that,
on any view of the evidence or the contract, an action would not lie against
the defendant because he had acted as judge or arbitrator in deciding the
quality of the raisins. Accordingly he nonsuited the plaintiff.
D The Court of Common Pleas upheld the nonsuit upon the grounds on
which Bovill C.J. relied. No authority was referred to in any of the
judgments save Jenkins v. Betham (1854) 15 C.B. 168 which the learned
judges sought to distinguish.
The headnote in the report of the case in the Exchequer Chamber,
L.R. 7 C.P. 525, is misleading, for all the members of that court dismissed
the appeal on the ground that the defendant had never held himself out as
E having any particular degree of skill in the valuation of Black Smyrna
raisins. Blackburn J. said, at pp. 528-529:
" I do not stop to inquire whether the defendant stood in the position
of an arbitrator or not. . . . The case of Jenkins v. Betham does
not affect this question. There, the defendants declared themselves
to be persons possessed of proper skill in valuations."
F
In my view, this case, as it emerged from the Exchequer Chamber, in
reality only decided, no doubt rightly, that a man who did not hold him­
self out as possessing any particular degree of skill in assessing the quality
of certain goods, could not be taken to have warranted that he did possess
such skill. Accordingly, if he was appointed to assess the quality of such
goods (incidentally without a fee) and, owing to lack of skill, made an
G honest mistake in his assessment, no action would lie against him on that
account.
The second case of the trilogy was Tharsis Sulphur and Copper Co.
Ltd. v. Lojtus, L.R. 8 C.P. 1. This was decided by Denman J. and the
same three distinguished judges who had in the previous year decided Pappa
v. Rose in the Court of Common Pleas. The plaintiffs were the owners of
JJ a cargo being carried by sea. The ship and cargo were damaged in a
storm and incurred certain general average and other losses. The defen­
dant was an average adjuster. The plaintiffs and the shipowners jointly
employed the defendant for reward
762
Lord Salmon Sutcliffe v. Thackrah (H.L.(E.)) [1974]
" to investigate and examine the vouchers and accounts of the . . .
A
losses, . . . and to . . . prepare a statement showing the proportion of
the . . . losses, . . . to be contributed and borne by the . . . ship, . . .
and . . . cargo respectively, according to the usage and custom of
Lloyd's; . . ." (see p. 2).
The plaintiffs and the shipowners agreed to abide by the defendant's
apportionment. By their pleading the plaintiffs alleged that the defen-
dant had acted with gross carelessness as a result of which they had
paid the shipowners a sum far in excess of the amount due. They
claimed this excess from the defendant as damages for negligence. The
case came before the court upon demurrer and judgment was given for the
defendant. The court, following its own decision in Pappa v. Rose, held
that the defendant was immune from action because he was acting as an
arbitrator or quasi-arbitrator. It was said that the only distinction between C
the two cases was that the first concerned lack of skill, and the second,
chiefly lack of care, and that this distinction was irrelevant—as no doubt
it was. I find the decision in the Tharsis Sulphur and Copper Co. Ltd.
case difficult to accept. Contrary to what Bovill C.J. suggested during
argument, there does not seem to me to have been any dispute between the
parties. They both knew that a loss had been suffered which had to be
apportioned between them, but there is nothing to show that they had any
idea, let alone conflicting ideas, of what the correct apportionment should
be. Each of them might have engaged a separate average adjuster to
advise him; had these not agreed, a dispute could have arisen between the
parties which they might have submitted to arbitration—a somewhat
unusual course in business of this kind. Instead, they sensibly decided to
avoid disputes and differences by jointly employing one average adjuster E
to advise them upon how the loss should be apportioned and agreed to
accept and act upon his advice. I do not agree that he was employed
solely to give his honest opinion. It was undoubtedly, in my view, an
implied term of his contract that he would use the care and skill to be
expected of a reasonably experienced and competent average adjuster: see
In re Hopper (1867) L.R. 2 Q.B. 367, 373. He may well have done so—but
that is beside the point. He was engaged upon the ordinary business of "
an average adjuster in making his appraisal. I do not understand how
public policy could in these circumstances possibly demand that he should
be invested with an immunity against a claim for damages for a breach
of the implied term in his contract. Moreover, the doctrine laid down by
the Court of Common Pleas in Pappa v. Rose, L,R. 7 C.P. 32 and the
Tharsis Sulphur and Copper Co. Ltd.'s case, L.R. 8 C.P. 1 is very difficult G
to reconcile with Jenkins v. Betham, 15 C.B. 168 and Turner V. Goulden,
L.R. 9 C.P. 57, In each of those cases there was a sum admittedly due
from A to B. The only question was as to the amount of that sum. A
and B each appointed a valuer on the basis that if the valuers agreed a
sum, then that was the sum which should be paid but that, if the valuers
failed to agree, an umpire should be appointed. Both valuers knew that „
if they agreed a value, then their valuation would be final and conclusive as
between A or B. In each case the valuers did agree and the sum agreed
was paid. Then one of the parties sued the valuer he had employed for
 763
A.C. Sutcliffe v. Thackrah (H.L.(E.)) Lord Salmon
negligently agreeing that sum and thereby causing him to suffer a loss. In
" both cases it was decided that the action would lie. In Turner v. Goulden,
L.R. 9 C.P. 57, 59, Lord Coleridge C.J. cited with approval what Cockburn
C.J. had said in In re Hopper, L.R. 2 Q.B. 367, 372-373:
" The authorities . . . no doubt establish the proposition that, where
the matter to be determined by the referee is merely one of value,
that is not, strictly speaking, an arbitration. I am not at all disposed
B to quarrel with the cases . . . but I think they must not be taken to
comprehend every case of compensation or value; as where, in
ascertaining the value of the property or amount of compensation to
be paid, the matter assumes the character of a judicial inquiry, to be
conducted upon the ordinary principles upon which judicial inquiries
are conducted, by hearing the parties and the evidence of their
Q witnesses. If it be the intention of the parties that their respective
cases shall be heard, and a decision arrived at upon the evidence which
they have adduced before the arbitrator, it would be taking too narrow
a view of the subject to say that, because the object to be arrived at
was the ascertaining of the value of property or the amount of
compensation to be paid, the matter was not properly to be considered
as one of arbitration."
D
Lord Coleridge C.J. then said, L.R. 9 C.P. 57, 60, and I would echo his
words in the present case: " There is nothing of that sort here," Nor was
there in Pappa v. Rose, nor in the Tharsis Sulphur and Copper Co. Ltd.'s
case.
In In re Hopper Cockburn C.J., with whom Blackburn and Lush JJ.
agreed, was in effect saying that the question as to whether anyone was to
E be treated as an arbitrator depended upon whether the role which he
performed was invested with the characteristic attributes of the judicial
role. If an expert were employed to certify, make a valuation or appraisal
or settle compensation as between opposing interests, this did not, of itself,
put him in the position of an arbitrator, He might, e.g., do no more than
examine goods or work or accounts and make a decision accordingly. On
p the other hand, he might, as in In re Hopper, hear the evidence and sub­
missions of the parties, in which case he would clearly be regarded as an
arbitrator. Everything would depend upon the facts of the particular case.
I entirely agree with this view of the law.
The third case of the trilogy was Stevenson v. Watson, 4 C.P.D. 148,
in which the plaintiff, a builder, sued the architect appointed under a
building contract for negligently failing to certify sums alleged to be due
G to the builder by the building owners. The court in allowing a demurrer
and giving judgment for the defendant relied upon what had been said
by the Court of Common Pleas in the first and second case of the trilogy.
I think that the decision in the third case was probably right, but not
because of anything said in the first two cases. Under the very special
terms of the contract in Stevenson v. Watson " all questions or matters in
j j dispute which [might] arise during the progress of the work or in settle­
ment of the account" had to be left to the architect " whose decision [was
to be] final and binding upon all parties." It seems to me that this
architect may well have been put in the position of an arbitrator under the
764
Lord Salmon Sutcliffe v. Thackrah (H.L.(E.)) [1974]
exceptional terms of the contract. Moreover, since there was no contractual
A
relationship between the architect and the builder, it is difficult to see how
any action based on a duty of care could be got up on its feet against
him; in those days the law of negligence was in a very early stage of its
development.
In Stevenson v. Watson Lord Coleridge C.J. drew a distinction between
a professional duty and a clerkly duty. He concluded that the liability of a
professional man to be sued for negligently giving a certificate or making a B
valuation or appraisal which he knew would be binding as between two
others depended upon whether he was called on to use skill and judgment
or only to exercise an administrative or clerkly function. In the first case
he could not be sued; in the second he could. Lord Denning M.R. made
short work of that proposition in his dissenting judgment in Arenson v.
Arenson [1973] Ch. 347, 365-366. I respectfully agree with and adopt
every word he said on that topic. ^
For the reasons I have indicated I have come to the conclusion that the
trilogy of cases which were so strongly relied upon in Chambers v. Gold-
thorpe [1901] 1 K.B. 624 and Finnegan v. Allen [1943] K.B. 425 afford
only a tenuous, if indeed any, support for the decision reached in those
two cases.
I recognise that for many years the doctrine which those cases enunciated D
has been generally accepted. As my noble and learned friend, Lord Reid,
has said, it is succinctly expressed by Buckley L.J. in Arenson v. Arenson
[1973] Ch. 347, 370
" . . . where a third party undertakes the role of deciding as between
two other parties a question, the determination of which requires the
third party to hold the scales fairly between the opposing interests of B
the two parties, the third party is immune from an action for negligence
in respect of anything done in that role."
My noble and learned friend, Lord Morris of Borth-y-Gest, has cited
passages from speeches in your Lordships' House from which it seems that
the doctrine, being then unchallenged, was perhaps acceptable even here.
This appeal is, however, the first occasion upon which your Lordships' F
House has had an opportunity of deciding whether or not the doctrine is
good law. Clearly it is not a doctrine to be lightly overthrown, however
fragile its foundations. Nevertheless I am convinced that, for the reasons
I have given, it is contrary alike to principle, sound authority, reason and
justice and that therefore we are obliged to overthrow it.
My Lords, I would accordingly overrule Chambers v. Goldthorpe and
allow the appeal.
Appeal allowed.

Solicitors: Parker, Garrett & Co.; Grobel, Willey, Hargrave & Co.
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