Hall & Anor v Van Der Heiden (No 2)

Under a construction contract, practical completion requires completion of the construction work, subject only to genuinely minor items capable of being disregarded. Patent defects and substantial incomplete work prevent practical completion.

An architect’s extension-of-time assessment may be reconsidered at trial or arbitration. The contractor is entitled to the reasonable extension proved by the evidence, even if the architect’s contemporaneous assessment was reasonable on the material then available.

A contractual right to suspend for non-payment arises only where the contractual conditions for suspension are satisfied. Liquidated damages continue until practical completion and do not cease merely because the employer has moved in or terminated the contractor’s employment.

The claimants engaged the defendant under a JCT Minor Works Building Contract (With Contractor’s Design) for refurbishment works. The works were defective and incomplete, and the defendant suspended performance in January 2008 after a dispute about the final account and payment. He did not return to site.

The claimants terminated his employment under the contract and engaged another contractor, who completed the works in May 2008. The claimants sought the reasonable cost of remedial and completion works, liquidated damages for delay, and general damages. The defendant counterclaimed for sums said to be due under the final account.

The issues included the proper extension of time, practical completion, the justification for suspension and termination, recovery of remedial costs, the continuing operation of liquidated damages, the final account and general damages.

1. Defects and incomplete work. The claimants established, on the contemporaneous documents, expert evidence, admissions and the joint expert statement under CPR 35.12, that the works were defective and incomplete.
2. Extension of time and delay. The six-week extension granted by the architect was reasonable and no further extension was proved. The court tentatively rejected the submission that a contractor must show Wednesbury unreasonableness before an extension could be increased. The proper extension is the period established by the evidence at the arbitration or trial. The defendant was therefore in culpable delay from 3 November 2007 until practical completion on 17 May 2008.
3. Practical completion. Applying Jarvis and Sons v Westminster Corp [1970] 1 WLR 637 and HW Nevill (Sunblest) v William Press (1981) 20 BLR 78, practical completion had not occurred while patent defects, incomplete work and undelivered joinery remained. Completion occurred only when the replacement contractor finished the works.
4. Suspension and termination. The defendant had no right to suspend. Clause 4.7 required an unpaid progress-payment certificate and the specified notice followed by seven days. Neither condition existed. The claimants were accordingly entitled to determine the defendant’s employment under clause 6.4.
5. Damages. The reasonable cost of reinstatement was the starting point where remedial work had been carried out. The actual costs were recoverable because no reason for departure from them was shown. The liquidated damages clause was a genuine pre-estimate assessed when the contract was made, not a penalty created by later events. Liability continued until practical completion and was unaffected by termination. The claimants recovered £56,891.27 for defective and incomplete work, £20,300 liquidated damages and £3,000 general damages. After crediting £21,063.39 due on the final account, the net balance was £59,127.88, with interest to be calculated.

First-instance decision in the High Court (Technology and Construction Court). The judgment records an earlier interim decision concerning continuation of the trial under section 252 of the Insolvency Act 1986: [2010] EWHC 537 (TCC) .