O'Rourke Construction Ltd v Healthcare Support (Newcastle) Ltd & Ors

Where a contract makes practical completion depend on specified completion criteria, the certifier must apply those criteria. A technical or minor departure from the specification does not automatically prevent certification. The relevant question is whether the departure has, or is likely to have, a material adverse impact on the intended enjoyment and use of the facility. The certifier must decide that issue independently, after considering the parties’ representations. An existing dispute does not itself form part of the completion criteria or justify withholding certification. Any resulting non-conformity may instead be addressed through a claim for damages.

The claimant contractor sought declarations concerning the proper approach to certification of practical completion under construction and project agreements for a hospital redevelopment. The dispute concerned Phase 8, comprising clinical office blocks and associated works. The claimant and first defendant contended that the Independent Tester was confined to the Completion Criteria in Schedule 12, Part 2. The second defendant argued that any proven non-conformity with the contractual specification or Trust’s Construction Requirements required certification to be withheld. The court also considered whether several further declarations should be made in Part 8 proceedings.

1. Contractual test. Clause 22.5 of the Project Agreement was the operative provision. The Independent Tester had to issue a Phase Certificate of Practical Completion when satisfied that completion had occurred in accordance with the Completion Criteria. Those criteria were the Completion Tests in Part 2 of Schedule 12. Part 1 set out the Completion Process.
2. The definition of Outline Commissioning Programme referred only to Part 1 of Schedule 12. The Final Commissioning Programme did not therefore replace or subsume Part 2. The Completion Criteria included matters of inspection, checking and counting as well as commissioning.
3. Materiality. The phrases “available and ready for use by the Trust” referred to the anticipated contractual use of the offices. A material departure from the specification or the Trust’s Construction Requirements might adversely affect amenity or functional utility. However, if the Independent Tester reasonably considered that a departure had not had and would not have any material adverse impact on the Trust’s ability to enjoy and use the buildings for their intended purposes, the Completion Criteria could still be satisfied. The issue was one of fact and degree.
4. The Independent Tester had to reach that judgment independently. The existence of a dispute between the parties about the existence or effect of a non-conformity was irrelevant. The Tester could consider the parties’ representations but had to decide whether the accepted non-conformity materially affected the intended use. If not, certification could issue, leaving the Trust to pursue damages.
5. The claimant was entitled to a declaration substantially in those terms. Declarations concerning hypothetical third-party certification arrangements and matters requiring factual findings or matters of fact and degree were refused as inappropriate for Part 8 proceedings. Costs and the precise form of relief were reserved.

This was a first-instance decision. No prior appellate decision was stated in the judgment.