Civil Engineering Reference
In-Depth Information
damages if occupation of the Works has been
taken?
Architects and contractors alike often labour under the mistaken impression that once the
employer occupies the Works no further liquidated damages can be levied. Indeed, occupa-
tion is often wrongly equated with practical completion. An examination of the definitions
of practical completion given by the courts shows that the criteria are whether the Works,
except for minor items, are complete and whether there are any visible defects. Whether the
employer is or is not in occupation is not a factor.
ance. The contract was the JCT Standard Form of Contract with Contractor's Design 1998.
Disputes arose and the parties made no fewer than three separate variations to the contract
terms.Inparticular,theliquidateddamagesamountwasdoubledandthedateforcompletion
was amended three times. Significantly, it was agreed that the employer (Cola) could have
access to the hotel in order for it to be fully operational.
The contract finished late, and Cola claimed liquidated damages of £1.2 million. Impresa
challenged that amount, arguingthat Cola hadtaken partial possession and,therefore, the li-
quidateddamagesshouldbeconsiderablyreduced.Significantly,thecourtdecidedthatthere
wasnothingtosuggestthatpartialpossessionhadoccurred.Itwouldhavebeenquitesimple
to have referred to 'partial possession' in any of the three agreements, if that is what had
been intended, and the situation would have been different (see question 199), but there was
no such reference. Instead, the court concluded that clause 23.3.2 (which was virtually the
same as clause 2.5 of the current DB and clause 2.6 of SBC) had been operated, which al-
lowed the employer to use and occupy the Works with the contractor's consent. The court
decided that occupation is a lesser form of physical presence on the site than possession.
Therefore, the full amount of liquidated damages was recoverable by Cola.
Sometimesthereisnoagreementatall,buttheemployer,perhapsfrustratedatcontinuing
delays, simply decides to move in. The courts have held that such occupation did not pre-
clude the deduction of liquidated damages.
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