The Court of Appeal has confirmed in the recent case of Mears v Costplan the position that whether practical completion of a construction project can be properly certified is a matter of both fact and degree.
This is a relevant consideration for any entity undertaking capital or construction projects in the life sciences sector, as it highlights the importance of properly defining practical completion and not simply relying on the drafting of industry standard forms of building contract (such as the JCT and NEC suites) without amendment.
Furthermore, any project-specific requirements (such as a requirement for a contractor to achieve clinical cleanliness at a facility) should be clearly tied to and made a pre-condition of the certification of practical completion. Life sciences companies should also be mindful of the consequences of contractors not achieving these requirements under any third party agreements, such as agreements for lease affecting the site.
A recent decision in the Court of Appeal has highlighted the importance of defining the requirements for practical completion. This decision not only has implications for the drafting of building contracts, but also raises questions about the relationship between building contracts and other transaction documents such as agreements for lease and development funding agreements. It is notable because the issue of certifying practical completion has not been considered by the Court of Appeal for 50 years.