The NSW Supreme Court case of Parkview Constructions Pty Ltd (Parkview) v Futuroscop Enterprises Pty Ltd [2023] NSWSC 178, contains a number of useful statements by Rees J on issuing certificates of practical completion on staged sections in a project, as compared to separable portions in a project.
Parkview entered into an AS4902 – 2000 Design & Construct Contract for a hotel and carpark. The contract did not specify, and there was no direction, that there were separable portions for the hotel and the carpark, but rather, it was accepted that the different works were part of a staged construction process.
The superintendent issued a conditional notice of practical completion for the hotel, which retrospectively certified the date for practical completion as 12 September 2017. The notice expressly stated that it was not a certificate of practical completion for the car park. The superintendent then issued a conditional notice of practical completion for the car park, which retrospectively certified practical completion as 25 September 2017.
The contractor demanded release of security and the principal applied liquidated damages for the delayed completion. After hearing extensive evidence, Rees J held:
- Conditional certificates of practical completion were invalid because:
- The contract did not specify that there were separable portions for the hotel and the carpark – meaning that there could only be a certificate of practical completion for the whole of the works.
- Two conditional certificates of practical completion could not be construed together to form a certificate of practical completion for the whole of the works, where they provided different dates of practical completion.
- The superintendent has two options: issue a certificate of practical completion or give notice for not doing so.
- As a result, the superintendent’s assessment of liquidated damages was ruled invalid. A certificate of practical completion should not be back dated, as it would give rise to commercial uncertainty.
- Where a contractor substitutes the form of security from cash retention to bank guarantee, the principal is not entitled to retain GST on the cash retention, until the guarantee is returned.
- A contractor is not obliged to construct works to enable a principal to use a building in a manner not then approved by the local authority.
- The Court can determine the date for practical completion where the superintendent contends it is yet to be achieved.
- The Court can determine the amount of liquidated damages is different to that certified by the superintendent.
- The parties can by, clear words in the contract, exclude the right to common law damages, where a final certificate is stated in the contract to be “conclusive evidence” regarding defects.
Parkview Constructions Pty Ltd (Parkview) v Futuroscop Enterprises Pty Ltd [2023] NSWSC 178
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