EWHC 516 (Ch)
Menolly and Cerep had entered into a Share Sale Agreement under which Menolly would purchase sales in a company which owned a building at 107 Cheapside, London. However, completion of that agreement was dependent upon practical completion under the building contract. Before Mr Justice Warren, there was brief discussion about the meaning of the words "practical completion". Although the Judge agreed with the comment in Keating on Construction Contracts that "practical completion is perhaps easier to recognise than to define", there did appear to be a large measure of agreement between the parties that practical completion meant "complete for all practical purposes".
Menolly said that the practical completion certificate in relation to section 1 of the building was invalid because there had been a failure to provide level access to the retail units as required by the provisions of the disability discrimination legislation. The certifier had taken the view that level access was not a requirement of the building contract. However, in the view of the Judge, the works necessary to provide level access were part of the contractor's contractual obligations. As the certifier, under the terms of the contract was not able to make a binding decision, his view was open to challenge, as here, before the courts.
However, that was not an end to the matter as Cerep also claimed that Menolly was estopped from relying on the level access issue certificate. Cerep said that the issue of level access had never been raised until very late in the day in the Court proceedings. Menolly had in fact conducted itself throughout the period on the basis that the relevant section had achieved practical completion. It thereby represented to Cerep that practical completion had in fact been achieved and that the absence of level access did not prevent the issue of a valid certificate. The Judge agreed that the level access point only came to light late in the day. For example, there had been an inspection for the purposes of certifying practical completion. There was nothing to suggest that the question of level access was raised as an objection to the issuing of a certificate at that time. Accordingly, it appeared to the Judge that the certifier was entitled to proceed on the basis that the level access was not an impediment to the issue of a certificate. The parties had conducted on the basis of mutual understanding that practical completion had been achieved.
This was not enough for Cerep's argument to succeed as they also had to demonstrate that they had suffered prejudice through relying on Menolly's failure to raise the level access point. This they clearly did, as Cerep had proceeded on the basis that the first section was "done and dusted". As a consequence, as the building work continued, it was clearly prejudicial to Cerep that they had not had the opportunity to meet the level access point in good time, for example by actually providing the level access themselves or referring the dispute at an earlier stage to adjudication.
As a consequence, Menolly were under an obligation to complete the Share Sale Agreement.