Liquidated Damages And Termination

In the following case the court had to consider whether an employer's right to liquidated and ascertained damages ended upon termination of the employment of the contractor under the contract.

Hall & Shivers v Van der Heiden No 2 [2010] EWHC 586 (TCC)

The employer entered into a JCT Minor Works Building Contract (With Contractor's Design) for "internal refurbishment and remodelling" of a domestic flat in London. The contract commencement date was 21 May 2007 and completion was scheduled for 22 September 2007. Liquidated damages for delay were specified as £700 per week.

The scheduled date for completion was not achieved and disputes arose between the parties which included the claim by the employer for liquidated damages for delay in completion of the works.

In January 2008 the contractor requested an extension of time, further payment and suspended the works. The architect awarded a six week extension of time to November 2007 but did not issue any further certificates for payment. The employer had paid all the sums which had been certified by the architect. (The employer had in fact been making interim payments in advance of the contractor's applications for payment the effect of which was that until December 2007 the payments to the contractor were in fact higher than the sums to which the contractor was entitled.)

In March 2008 the employer terminated the contractor's employment under the contract. The works were eventually completed by a replacement contractor in May 2008.

Practical completion: the principles

One of the issues before the court was the date of practical completion, and whether or not the contractor ever achieved practical completion of his works before suspending them in January 2008.

The court considered the principles for determining whether practical completion had been achieved:

Practical completion meant the completion of all the construction work that had to be done (Jarvis and Sons v Westminster Corp [1970] I WLR 637). An architect had a discretion to certify practical completion where there were very minor items of work left incomplete on 'de minimis' principles: (HW Nevill (Sunblest) v William Press (1981) 20 BLR 78). A practical completion certificate could be issued where there were latent defects but not where there were patent defects. Practical completion: applying the principles

The court's view was that there was no doubt that the works were not practically complete in January 2008 because there were:

a...

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