Practical Completion, ‘PC’ for short, refers to when a building is finished aside from some minor defects such as a squeaky tap or paint that needs to be repaired. Although the lawful definition of PC is not that an employer can take beneficial occupation, it is generally accepted that a resident can take beneficial occupation from the PC date. It has been stated that when an employer ‘issues a certificate of practical completion’ or the building is ‘fully used,’ the building is, therefore, ‘complete.’
The date of PC is important to note as it means the contractor is no longer obliged to insure the building, and they are no longer responsible for health and safety due to the end of the agreed contract. It also means that the employer must pay a percentage (usually 50%) of any retention monies to the contractor. The defects liability period commences, and other consequences may be triggered if provided under the contract.
For employers, it is always worth checking the building contract and whether practical completion has occurred or deemed to have occurred as well as keeping paper documents highlighting the acceptance of possession, partial possession or agreement of early access. They should also be more stringent to protect themselves better, ensuring a contractor completes the project to their satisfaction.
As stated by Project Manager Tom Gillett, reaching Practical Completion is “a key milestone” as well as “key terminology” often used by local authorities to determine that an employer has discharged their planning condition. He also says that the contract administrator has the opportunity to identify what needs to be done two weeks before issuing Practical Completion. In these instances, they are often put under pressure by the builder to issue the PC; but, the administrator will allow them to go through what works have been completed to specification. If there are significant works that need doing or minor jobs to complete, conditions may be made.
If and when they are satisfied that the requirements have been met, a final notice can be issued. This usually states that the contractor is happy with the works and that the builder can be completely discharged of their obligations. It is also not to be confused with the improvement notice approved by the improvement inspector. They will issue a statement which states that the building is structurally safe – and not whether it has been appropriately decorated.
In the case of Mears Limited v Costplan Services (South East) Limited and Others [2019] EWCA Civ 502, Practical Completion was judged to be ‘easier to recognise than to define’. This was the first time in 50 years that PC was considered in the Court of Appeal, the last being the 1969 case of Jarvis & Sons Ltd v Westminster Corporation. Back then, judge Salmon LJ suggested PC meant “…completion for all practical purposes, that is to say, for the purpose of allowing the employers to take possession of the works and use them as intended.” Although there has been a revisit of PC since then, contentious disputes will be reviewed on a case-by-case basis.
For more information, be sure to head to Nicholas Wallwork’s YouTube channel and watch Nicholas’ Project Manager, Tom Gillett, offer his expertise on all you need to know about practical completion.