After weeks of great TV (according to my teenage son and his friends) Dani and Jack were crowned the winners of Love Island and walked away with £50,000 in prize money. I assume there have been or will be other financially beneficial deals coming their way soon. Well done to them both.
Of course, the end of this current series of Love Island reminded me of my advice to any prospective purchaser of the "gorgeous Majorcan villa" as the The Telegraph travel experts describe it. I refer back to my article of 29 June.
Early possession and its potential consequences
More recently, the notion of taking possession of the Love Island villa reminded me of the issues that can arise when clients take possession of their properties before a certificate of practical completion has been issued. This is not an uncommon occurrence in building projects especially when the project is in delay and the client is seeking to mitigate its loss. Yes, liquidated damages should cover such client loss but this is not always true.
The most common forms of building contract still in use today (for our domestic market) are the ones published by the Joint Contracts Tribunal or 'JCT'. These certainly do provide for the issue of a certificate of practical completion although the meaning of 'practical completion' is less than perfect (see clause 2.21 of the D&B 2016 form as an example). This is why many clients prefer to define what it is meant by practical completion so that it is clear to all concerned. This is because (to make use of a JCT term) one person's 'sufficiency' is another's 'insufficiency' insofar as compliance with the contract is concerned.
Partial possession of the 'whole' of the works?
The JCT contracts also allow for what is known as 'partial possession' (clause 2.25 of the D&B 2016 form). This implies, one would assume, that possession is taken of part only of the works and not the whole of the works. A reasonable assumption to make but one that would not be entirely correct. The courts have made it clear that possession of the whole of the works can fall within the scope of this provision of the JCT contracts. This is, perhaps, a sensible approach to take but it is one that is not reflected on the face of the JCT contracts which refer to "any part or parts" of the works unless by "parts" one means the "whole" of the works. But if that is what is intended then why not say it?
Partial possession is 'deemed PC'
It can also, for the unwary client, give rise to potential problems in terms of the parties' respective rights under the JCT contracts. This is because partial possession triggers the start of the rectification or defects period (typically 6 or 12 months long) and an entitlement on the contractor's part to receive one-half of the retention monies. It can also pass the insurance risk to the client. In simple, terms partial possession gives rise to practical completion of the part (or whole) of the works taken over. No certificate of practical completion is needed.
The problem such provisions can give rise to is where, for example, a client needs to take temporary possession of the whole (or part) of a works prior to practical completion being certified. In this situation the contractor would be entitled to say that this is the same as partial possession giving rise to deemed practical completion. This would indeed seem to be correct save where the parties actually set out what has been agreed in terms of temporary possession. For example, that the works taken over for a particular, temporary purpose are to be handed back to the contractor and practical completion shall not be deemed to have arisen, i.e. the contractor then has to finish any outstanding work before practical completion is certified.
The above situation is different to 'early use' of the works which is dealt with separately by the JCT forms (clause 2.6 of the D&B 2016 form).
Practical steps to take
The key to avoiding being caught out is to look ahead and ask yourself (or your client), will I (you) need to make use, even on a temporary basis, of part or the whole of the works before practical completion? If the answer to this is 'yes' then make express provision for it in the building contract. It can be an option that may never be used but at least it will be one you can take safe in the knowledge that practical completion will not be deemed to have occurred.
Of course, the contractor will price for this possible disruption to its works. It may also want an extension of time but this may be far more acceptable to you as the client than the impact of the JCT standard partial possession provisions.
Love Island's relevance?
Just like Love Island, a reality TV saga of "romance and inevitable heartbreak" (according to The Telegraph, not me), the taking of partial possession of the works prior to practical completion being certified can result in unforeseen heartbreak for the client (albeit more financial than romantic). Indeed, what seemed like a good idea at the time could give rise to unexpected surprises.
I am now looking forward to Love Island 2019 and what the successors to Dani and Jack can tell us about the importance of planning ahead by making sure your building contracts are drafted correctly.
Inside the Love Island 2018 villa: The Majorcan location where this year's romantic couplings unfolded