The case of University of Warwick v Balfour Beatty Group Ltd  EWHC 3230 (TCC) offers insight as to how the courts may interpret Practical Completion.
Practical Completion has traditionally been poorly described and lacked clarity in JCT Contracts. In this case the University of Warwick employed Balfour Beatty utilising an amended JCT Design and Build 2011 Contract to design and build a new R&D facility on their campus.
The contract allowed for four Sectional Completion dates with their own Liquidated and Ascertained Damages. Practical Completion was defined within the contract as ‘a stage of completeness of the Works or a Section which allows the Property to be occupied or used’ the Practical Completion statement was to be issued when completion of the works or section was achieved.
The dispute arose over whether Practical Completion could be awarded for a Section before the entire Works were complete and whether the Liquidated Damages Clause was enforceable for a Section if it were not possible to achieve Practical Completion for a Section until the whole Works had been completed.
The case was originally adjudicated with the adjudicator finding on behalf of Balfour Beatty when he confirmed ‘the ordinary and natural meaning of the words used in the definition of Practical Completion means that it is not possible to achieve Practical Completion of any Section in isolation from the other sections’
The basis for the Adjudicator’s decision was the definition of the word Property which it took to mean the entire Works. The adjudication therefore found that Sectional Completion could not occur if the entire property could not be occupied or used.
On appeal to the Technology and Construction Court (TCC) the Court overturned the decision of the Adjudicator. The Court held that the Adjudicators decision had placed too much emphasis on the word Property and had not taken into the account the wider context of the word and the intent and spirt on which the Clause wording had been drafted which clearly identified that both parties had intended for their to be Sectional Completion before Practical Completion. The Judge noted that would be no reason to write a clause identifying and treating Sections separately if ‘Practical Completion of each could only be achieved when Works as a whole were complete’.
This case highlights the difficulties that can occur if important contractual milestones are not properly described in Contract. Prior to entering into Contract both parties should ensure that these milestones and protocols are properly described and defined in unambiguous language.
Urban Project Services are highly experienced at reviewing, identifying and remedying shortfalls in Contract Terms and Conditions. Prior to entering into Contract let Urban Project Services review the Terms and Conditions to ensure the drafting meets the requirements of the project.
This article contains information of general interest about current legal issues and does not provide legal advice. It is prepared for the general information purposes only. This article should not be relied upon in any specific situation without appropriate legal advice.