University of Warwick v Balfour Beatty Group Ltd

[2018] EWHC 3230 (TCC)

The University engaged BB, under an amended JCT 2011 D&B Form, to design and build the National Automotive Innovation Centre. A dispute arose as to whether the entire Works had to be complete before a single Section could be certified as complete. The Date for Possession for each Section was 20 April 2015 whilst the Date for Completion for Sections 1-3 was 10 April 2017 and for Section 4 was 5 July 2017. Different liquidated damages figures were to apply for each Section. Clause 1.1 set out a lengthy definition of Practical Completion:

“ “Practical Completion”: a stage of completeness of the Works or a Section which allows the Property to be occupied or used and in which:

(a) there are no apparent deficiencies or defects and no incomplete items of work which would or could:

(i) compromise the health and safety of persons entering and/or occupying the Property;

(ii) given their cumulative number and/or nature, have more than a trivial impact on the beneficial occupation and use of the Property for the intended purpose, by reason of their rectification or completion; and/or

(iii) in relation to the work necessary to remedy them will cause interference or disruption to the beneficial use or occupation of the Property;

(b) the Site has been substantially cleared of all temporary buildings, builders’ plant and equipment, unused materials and rubbish and cleaned;

(c) any other stipulations or requirements which the Contract Documents indicate are to be complied with before Practical Completion have been complied with to the reasonable satisfaction of the Employer.

(d) the relevant Statutory Requirements have been complied with and any necessary consents or approvals obtained;

(e) all parts of the Works or services in a Section are fully functioning, and safe access to the Section (and associated plant areas required to operate the Section) through or around any other uncompleted sections can be secured on behalf of the Employer or any Tenant (including their contractors, sub-contractors, consultants, sub-consultants, suppliers and agents) in accordance with the access provisions set out in the relevant section of the Employer’s Requirements;

(f) full testing and commissioning of the services installations has been completed satisfactorily and/or such testing or commissioning...”

Clause 2.27.1 (as amended) provided as follows: 

“2.27 When Practical Completion of the Works or a Section is achieved and the Contractor has sufficiently complied with clause 2.37 and 3.16.5, then:

1. in the case of the Works, the Employer shall forthwith issue a statement to that effect (‘the Practical Completion Statement’) and the Employer shall from such date be entitled to enter and take possession of the completed Works with effect from such date;

2. in the case of a Section, he shall forthwith issue a statement of Practical Completion of that Section (a ‘Section Completion Statement’);

and Practical Completion of the Works of the Section shall be deemed for all the purposes of this Contract to have taken place on the date stated in that statement.”

BB said that on a proper construction of the relevant provisions of the Contract, it was not possible to achieve completion of one Section of the Works prior to completion of the whole of the Works, and as a result, the liquidated damages provisions of the Contract were inoperable. HHJ McKenna noted that the Court was concerned to identify the intention of the parties by reference to what a reasonable person, having all the background knowledge which would have been available to the parties, would have understood them to be using the language in the Contract to mean. It does so by focusing on the meaning of the relevant words, that is to say, what the parties are taken to mean by using the words in question. That is, what the parties have agreed and not what the Court thinks that they should have agreed. Where the parties have used unambiguous language the Court must apply it and not ignore the words used or import words not used so as to achieve what the Court considers the parties’ real intentions to be. 

Here, the Judge noted that the Contract Particulars provided for different Completion Dates for Sections 1-3 and Section 4 respectively and there were different rates of liquidated damages for each one. This suggested that there was a clear intention to permit completion of one or more Sections before completion of the Works as a whole. There would be no purpose in treating the Sections separately if Practical Completion of each could only be achieved when the Works as a whole were complete. The ordinary meaning of the words used in clause 2.27 when considered both in isolation and in the context of the Contract as a whole was that a Section attains Practical Completion if it was sufficiently complete such that it would permit or allow the use and occupation of the Property and sub paragraphs (a) to (f) of the definition were satisfied in so far as they are related to or impact upon the Works connected with the particular Section under consideration, and it was not necessary for the Works as a whole to be complete or the Property as a whole to be ready for occupation. The use of the word “allows” strongly suggested that the relevant stage of completeness to achieve completion of the given Section need not be the complete Works but something less which permitted or enabled a final stage of completion to be achieved in due course. In addition, the use of the words “the Works or a Section” in clause 2.27 and in the definition of Practical Completion suggested that they were alternatives and not intrinsically linked.

Further, business common sense supported this construction since otherwise there would have been no point in providing for the Sectional Completion regime at all. 

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