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Balfour loses damages dispute over 'practical completion'

Balfour Beatty has lost a dispute with the University of Warwick over the interpretation of ‘practical completion’.

The Technology and Construction Court ruled that “business common sense” supported the university’s position in the dispute over liquidated damages, which related to the design and build of the National Automotive Innovation Centre at the university.

Balfour was appointed to build the L-shaped four-storey building in March 2015 under an £80m deal.

In the contract, the university set out its requirements in four sections: a main equipment and sub equipment room; a dynamometer build and test area; a café area; and all other works.

It defined ‘practical completion’ as including being able to allow the property to be occupied or used.

The university was entitled to claim liquidated damages – of between £5,000 and £65,000 per week – if practical completion had not been reached by a relevant date.

However, Balfour argued that it was not possible to achieve completion of some sections of the works before the entire work was completed.

An adjudication in May found in favour of the contractor, stating that the National Automotive Innovation Centre could only be properly used when all sections had been completed.

However, the Technology and Construction Court’s Judge McKenna took a different view in a ruling last week.

He said the parties had signed a contract which outlined different completion dates for different sections with different rates of liquidated damages stated.

Judge McKenna said: “It goes without saying that […] there would be no purpose in treating the sections separately if practical completion of each could only be achieved when the works as a whole were complete,” adding that “business common sense” supported the university’s position.

The judge said the parties should come to an agreement over the outstanding finances involved.

A spokesman for the university welcomed the judgement, adding that users had started to move into the centre – though it had not officially been opened.

A Balfour Beatty spokeswoman said: “We recognise the court’s decision on the matter of practical completion for the University of Warwick’s National Automotive Innovation Centre.

“As commercial discussions are ongoing, we are unable to comment further.”

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