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When is a building project completed?
It sounds like a relatively simple question to answer. However, from a legal perspective, while in other industries working out when something has been finished is much more black and white, when it comes to building works, the construction industry has long allowed a more subjective and therefore variable interpretation.
This is partially due to the fact that the industry has operated on the premise that achieving total completion of a building project could end up being a never-ending exercise, beyond the time acceptable to a client keen to take possession of what has been contracted for. So, standard form building contracts recognise what is called ‘practical completion’ as being all that the contractor has to achieve.
The courts interpret ‘practical completion’ to mean completion for all practical purposes, to allow the employer to take possession of the works and use them as intended. Applying this criterion means that there will usually be an amount of work to finish off to achieve total completion, but just how much is involved in each case will vary depending on the facts involved.
In the case of Mears v Costplan (2019),
for the first time in 50 years the Court of Appeal considered what practical completion means.
The building project in question involved student accommodation in Plymouth. A dispute arose between the developer, the landlord and the prospective tenant of the accommodation as to whether some of the rooms were more than three per cent smaller than had been specified. The tenant argued that there was a material breach of the Agreement for Lease which therefore prevented practical completion being certified.
It was agreed that had any of the rooms been built smaller than specified, that not only were these rooms in breach of the Agreement for Lease but they were also irremediable breaches since there was no prospect of the accommodation blocks being demolished and re-built. It was found by the court that 56 of the rooms were smaller than required.
The Court of Appeal determined that the departures from specification could fall into the category of being ‘trifling’ defects.
So where does this leave us? The court was quite clear that the question of whether or not practical completion had been achieved should remain a question for the contract administrator to determine based on the facts of each case.
Otherwise, a defect which falls either side of the contract specification will not prevent practical completion being certified, where considered to be trifling. This is not to give free rein however, given that even if a building is habitable for its intended purpose a defect could mean that the certifier is right not to sign off completion where the defect is more than trifling.
The question as to whether or not the defect is or is not capable of repair is a matter which goes to the measure of loss for a breach, not as to practical completion.
This article was originally posted in Business Weekly on the 12th September 2019.