Menolly v Cerep Sarl (2009)
On the true interpretation of a building contract the provision of "level access" to retail units was included in the works as defined, and a certificate of practical completion given on the basis that such provision was not within the works was invalid; it was not within the authority of the employer's representative to certify practical completion on the basis of his own view of the meaning of the building contract.
The claimant (M) sought declaratory relief against the first defendant (C) in relation to a number of certificates of practical completion, and C sought different declarations in relation to the same certificates. C and M had entered into a share sale agreement under which M was to purchase the shares in three companies, one of which owned a building in Cheapside, London. Completion of the share sale agreement was dependent on, among other matters, practical completion of certain building works in relation to the building and the issuing of an appropriate certificate under the relevant building contract, which was on the JCT Standard Form of Building Contract with Contractor's Design 1998 edition. The defined works included part demolition of an existing building and the stripping out of the rest of it; the construction of a new building and works of renovation to what remained of the existing building. The building contract envisaged sectional completion under which there could be separate certification of practical completion of section 1, consisting of retail units, and section 2, consisting of offices. A number of certificates of practical completion had been issued. M accepted that a valid certificate had been given in respect of section 2. M contended that the certificate in relation to section 1, on which C relied, was invalid for a number of reasons, chiefly that there had been a failure to provide "level access" to the retail units as required by the relevant disability legislation. C contended that the certificate was valid; alternatively, M was estopped from taking the point, or had waived the point, that the certificate was invalid having proceeded, and having allowed C to proceed, on the footing that section 1 was practically complete, with it being understood that any dispute concerning level access would be dealt with by financial compensation.
(1) As a matter of interpretation of the building contract the works necessary to provide level access were within the definition of the works. Accordingly the provision of level access did form part of the contractor's obligations. The absence of that provision meant that it was outside the scope of the authority of the employer's representative to certify that section 1 was practically complete. The employer's representative did not have the authority to determine the interpretation of the building contract and give a certificate of practical completion on that basis for the purposes of the share sale agreement, National Grid Co Plc v M25 Group Ltd (No1) (1999) 1 EGLR 65 CA (Civ Div) followed and Norwich Union Life Insurance Society v P&O Property Holdings Ltd (1993) 1 EGLR 164 CA (Civ Div) distinguished. The certifier took the view that level access was not a requirement of the building contract when he issued the relevant certificate. On the evidence it could not be said that he would have given the certificate if he had taken the correct view of the building contract. His certificate was accordingly invalid. (2) The share sale agreement required notice to be given to M of the employer's representative's intention to inspect the works for the purpose of establishing whether practical completion of a section had occurred, but the absence of such notice did not mean that the employer was unable, vis-a-vis the contractor, to give a written statement under the building contract which would amount to a certificate of practical completion for the purposes of the share sale agreement. Because of the failure to give notice it would not be final and binding in terms of the share sale agreement. On that basis, nothing turned on whether proper notice of the inspections leading to the certificate was given. On the facts, the only challenge to the certificate, apart from lack of notice, was the absence of level access. If that challenge were to fail, whether because level access was not included in the works or because M was estopped from relying on the level access point, then the absence of notice of the inspections would not prevent the certificate from taking effect according to its terms. On the evidence there was no effective challenge to the certificate on the ground of inadequate notice of inspection. (3) M was estopped from challenging the certificate on the level access point or had waived any defect surrounding its issue. The issue of level access had never been raised, until raised very late in the day in the instant proceedings, as a challenge to the practical completion of section 1. For a considerable period the parties had been anticipating practical completion of section 2 and M had conducted itself throughout that period on the basis that section 1 had achieved practical completion. It thereby represented to C that practical completion had in fact been achieved and that in particular the absence of level access did not prevent the issue of a valid certificate for section 1. The parties had conducted themselves on the basis of a common understanding or convention that practical completion had been achieved.
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