| Date | 9 July 1997 |
|
|
| Judgment | Emson Eastern Limited -v- EME Developments Limited (1991) QBD 55 BLR 114 |
|
|
| The Issue | Defining practical or substantial completion under the Standard Forms. |
|
|
| Implication |
Whilst practical or substantial completion is generally determined according to the discretion of the contract administrator, the courts have nonetheless indicated that completion is not 100% fault free construction. |
printThere is an almost universally accepted procedure adopted for both building and civil engineering projects surrounding completion of the works. This generally entails the contractor offering up the works, perhaps accompanied by the contractor's own list of uncompleted works where outstanding information or employer's direct works are preventing completion of a specific element of the work. Either in advance of this contractor's notice or prompted by it, the client's representative will prepare a list of defects and outstanding works. This may or may not have been prepared during a joint inspection with the contractor. The contractor will then endeavour to reduce the length of the snag list but here is where the disputes will start. Many points will be argued by the contractor to be unreasonable quality demands or work constituting a variation. The management of this process is often painfully poor with the architect and engineer producing a new list each time he or she visits the site. Confusion and distrust is often generated. Eventually a point will be reached where completion can be certified in the opinion of the architect, engineer or contract administrator. Inevitably, the client often strongly influences this certification process, despite the contract demanding otherwise. Accordingly, it is quite common that completion is certified at a point where considerable snagging remains outstanding. This is where many of the standard forms strictly speaking fail the industry, since they do not cater for such qualified practical or substantial completion. Nonetheless, the industry at large takes a fairly cavalier approach to this, with completion certificates endorsed or annotated with reference to outstanding defects being commonplace. In the main, rectification of the defects or outstanding works after the certificate of completion is done on trust. Rarely is a separate agreement entered into identifying specific works and the manner and time in which they are to be corrected. Little of the foregoing is however reflected in the approaches adopted to certification of completion in the standard forms of contract used in the UK construction industry. The JCT 1980 Form of Contract for example makes no reference to the contractor 'offering up', and makes no reference to the management of snagging works. Indeed, a defect is defined for the purpose of the contract under Clause 17.2 as a defect which "shall appear within the defects liability period". Clearly this does not envisage outstanding or unfinished works at the date of practical completion. The architect's sole jurisdiction over this matter is often sorely tested. The civil engineering contracts fare slightly better. Clause 48 of the ICE 6th edition provides for the contractor to offer up the works and for the engineer to either certify completion or to give the contractor instructions in writing specifying the work which remains to be done. None of this of course seems to reduce the incidence of disputes concerning the extent of outstanding works permitted at this stage. The Government forms of contract fare no better than JCT in that they require completion to be to the satisfaction of the project manager without any guidance as to the standards which may have to be achieved to obtain that satisfaction. Of all the standard forms, perhaps the ICE Minor Works gets closest to how the courts interpret completion in that it defines completion against the readiness of the works to be used by the employer. Clause 4.5 states "practical completion of the whole of the works shall occur when the works reach a state when notwithstanding any defect or outstanding items therein they are fit to be taken into use or possession by an employer". Against this background, the courts have had a difficult time resolving disputes over practical completion. In 1970, the House of Lords threw everyone into a state of confusion when they held in the case of Westminster Corporation -v- Jarvis & Sons that practical completion under a JCT form meant fault free construction: "the defects liability period is provided in order to enable objects not apparent at the date of practical completion to be remedied. If they had been apparent, no such certificate would have been issued." It took a further 12 years before any clear guidance was given to contradict this suggestion and in the case of Neville Limited vs. William Press in 1982, the courts came up with the "de minimis" rule. "I think the word "practically" …... gave the architect a discretion to certify that the contractor had fulfilled its obligation under the contract where very minor de minimis work had not been carried out". This theme was developed further in a more recent case dealing with these matters in 1991 between Emson Eastern Limited and EME Developments Limited. Judge John Newey said "because a building can seldom if ever be built precisely as required by drawings and specification, the contract realistically refers to 'practical completion' and not 'completion'. If contrary to my view, completion is something which occurs only after all defects, shrinkages and other faults have been remedied … it would make the liquidated damages provisions unworkable and in practice would require the defects liability period to be added to the time initially negotiated by the parties for the carrying out of the works".
CJ-9725
|
|||
|
© Brewer Consulting |
|||
 |
|||