In the context of a construction contract, practical completion usually marks the point where the contractor gives up possession of the site, the client becomes responsible for insurance and maintenance, liquidated damages can no longer been claimed, the first part of any retention money is released, and the defects liability period begins.

Despite the significant importance of practical completion, there is no standard definition. Parties can either attempt to define it within the contract or leave it to the professional judgment of the architect or contract administrator. As practical completion has numerous implications for parties in a construction contract, understanding when it occurs is very important.

The recent case of Mears Ltd v Costplan Services (South East) Ltd and others (2019) offered a useful review of the legal position, which can be summarised as follows:

1. In the absence of an express contractual definition, practical completion is easier to recognise than define. There are no hard and fast rules;

2. The existence of latent defects cannot prevent practical completion;

3. In relation to patent defects, there is no difference between an item of work that has yet to be completed and an item of defective work which requires to be remedied. Snagging lists can and will usually identify both types of item without distinction;

4. Practical completion will not be prevented where the works have been completed free from patent defects, other than ones to be ignored as trifling;

5. Whether or not an item is trifling is a matter of fact and degree, to be measured against the purpose of allowing the employer to take possession of the works and to use them as intended. However, this is not to say that if, for example, a house is capable of being inhabited, the works must be regarded as practically complete regardless of the nature and extent of the items of work which remain to be completed/remedied; and

6. Other than one previous case, there is no authority which addresses the interplay between the concept of completion and the irremediable nature of any outstanding item of work. Further, that case did not support the position that the mere fact that the defect was irremediable meant that the works were not practically complete.

In practical terms, this still does not offer a black and white definition of practical completion; each case will be a matter of fact and degree depending on the contract. Whether or not practical completion has been achieved will require consideration of what works were contracted, the quality of the contractor’s work and the purpose of the works.

But the judgment in Mears offers a timely reminder that achieving practical completion has a relatively high bar. Quite often parties’ attitudes towards practical completion is that if the work is largely finished and useable for what is intended, the certificate can be issued (subject to a long snagging list); this is not the position in law. If there are obvious defects which are more than trifling, practical completion has not occurred.

If you or your business have any queries on practical completion or other construction related issues, contact our construction specialist, Ian Seeley.

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