Unfortunately, there is no standard definition of practical completion (“PC“).
However, it could be described as the point at which a building is complete, except for minor defects that can be rectified with minimal interference or disturbance to the occupier.
Alternatively, practical completion can refer to the point at which an architect or contract administrator (“A/CA”) confirms that the contractor has achieved PC under the contract. Usually this is via the A/CA issuing a certificate to this effect. However, most standard form contracts do not actually define PC, instead leaving this to the professional judgment of the A/CA.
Practical completion usually signifies a turning point in a project, in that it should (1) trigger the return of any retention monies and (2) the final account stage. PC is also usually the end point for the calculation of any liquid ascertained damages (“LADs”) which may be due from the contractor to the employer. It is for these reasons, amongst others, that contractors are generally keen for PC to be agreed as having been achieved and for this to happen sooner rather than later.
Conversely, employers are reluctant to take possession of a building which they consider containing defects. They may resist practical completion, to put pressure on a contractor by withholding sums that would otherwise be due.
The effects of PC, coupled with the lack of an agreed definition within standard form contracts, means that the question of whether or not practical completion has been achieved is a common cause of disputes. It is also an issue which, somewhat surprisingly, does not come before the higher courts very often. With the current authoritative cases being spread out between 1969 and the present day.
However, in 2019, the issue of practical completion did come before the Court of Appeal for the first time in 50 years via Mears Ltd v Costplan Services South East & Ors  EWCA Civ 502. In its judgment, the court set out guidance regarding PC whereby Lord Justice Coulson reviewed the existing case law and authorities with regards to practical completion and summarised the current position to be as follows:
As with many areas of the law, disputes concerning practical completion are likely to remain common.
However, the court’s judgment in Mears at least offers a starting point for any parties to a dispute concerning the issue of whether or not PC has been achieved.
If you need further advice on practical completion, please get in touch with the Construction Law experts here.
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