Oct 27, 2017 - delays for which the contractor was responsible. (that is, concurrent delays) were not to be taken into a
CONSTRUCTION LAW CASE UPDATE 27 October 2017
CONTRACTING OUT OF PREVENTION PRINCIPLE IN CONCURRENT DELAY SCENARIOS
One of these amendments concerned Clause 2.25 of the JCT 2005 form in relation to extensions of time. Specifically, Clause 2.25.1.3(b) was amended to provide that delays caused by Relevant Events 2 which were concurrent with other delays for which the contractor was responsible (that is, concurrent delays) were not to be taken into account in assessing extensions of time. As amended, Clause 2.25.1.3(b) read as follows: “2.25. 1. any of the events which are stated to b e a cause of delay is a Relevant Event; and
North Midland Building Ltd v Cyden Homes Ltd [2017] EWHC 2414 (TCC)
2. completion of the Works or of any Section has b een or is likely to b e delayed thereb y b eyond the relevant Completion Date,
SUMMARY In North Midland Building Ltd v Cyden Homes Ltd [2017] EWHC 2414 (TCC), the English High Court was asked to consider whether a clause in a construction contract which specifically excluded the contractor’s entitlement to extensions of time for concurrent delays had the effect of setting time “at large”.
3. and provided that (a) the Contractor has made reasonab le and proper efforts to mitigate such delay; and (b ) any delay caused b y a Relevant Event which is concurrent with another delay for which the Contractor is responsib le shall not b e taken into account
This decision is of interest to consultants, contract administrators and parties in the construction industry generally, as it relates to an area which has yet to receive detailed scrutiny in the Singapore courts. It is likely that this decision will be persuasive in Singapore.
then, save where these Conditions expressly provide otherwise, the Employer shall give an extension of time b y fixing such later date as the Completion Date for the Works or Section as he then estimates to b e fair and reasonab le.”
BACKGROUND The defendant employer, Cyden Homes Ltd (“Cyden”), had engaged the claimant contractor, North Midland Building (“North Midland”), to construct a private house called South Farm, Ashby-cum-Fenby, Lincolnshire and substantial outbuildings, barns and associated works. The construction contract for the project was based on the Joint Contracts Tribunal Design and Building Contract 2005 (“JCT 2005”) standard form 1 and incorporated certain bespoke amendments to the form agreed between the parties.
North Midland applied to Cyden for an extension of time on the basis of numerous delay events; North Midland was responsible for some of these events but not for others. Cyden agreed in principle that there were two delay events amounting to 189 days in total which would entitle North Midland to an extension of time. However, Cyden relied on Clause 2.25.1.3(b) and discounted thes e delays, taking the position that the delays from these delay events had been 2
1
A w ell-known standard form prevalent in the UK
The JCT 2005 contractual term for causes of delay entitling an extension of time, w hich included delays for w hich the employer w as responsible
consumed by other delays attributable to North Midland. North Midland disagreed and applied to the English High Court in Part 8 proceedings 3 for certain declarations on the effect of Clause 2.25.1.3(b). Among other things, North Midland argued that the prevention principle rendered time at large because Clause 2.25.1.3(b) did not provide for an extension of time for acts of prevention by the employer.
DECISION OF THE ENGLISH HIGH COURT Mr Justice Fraser of the English High Court held that the prevention principle simply did not arise and that the case purely concerned the interpretation of Clause 2.25.1.3(b), a clause which had been specifically agreed and incorporated by a bespoke amendment. Mr Justice Fraser held that the meaning of Clause 2.25.1.3(b) was “crystal clear”; it was a clear agreement between the parties addressing the proper approach to assessing extensions of time for concurrent delays, that is, to exclude the contractor’s entitlement to an extension of time. As the parties had specifically agreed on how extensions of time were to be dealt with in concurrent delay scenarios, the clause was valid and time was therefore not set at large. By way of ob iter dicta, while commenting that it was not necessary to dispose of the issue and that the point was not open to him for decision, Mr Justice Fraser endorsed the approaches taken in Adyard Ab u Dhab i v. SD Marine Services [2011] EWHC 848 (Comm) and Jerram Falkus Construction Ltd v. Fenice Investments Inc (No.4) [2011] EWHC 1935 (TCC). In particular, Mr Justice Fraser quoted a section from Jerram Falkus where it was held that the prevention principle could not apply in cases of concurrent delay as it could not be proven that the employer had prevented actual completion of the works.
T HE PREVENTION PRINCIPLE The prevention principle is a long-standing principle of construction law which applies where a contractor is delayed from completing the contract works by reason of acts of prevention committed by the employer or his agent. An act of prevention is one which operates to prevent, impede or otherwise make it more difficult for a contractor to complete the works by contractual completion date, and is not restricted to breaches of contract. In such circumstances, where the contract in question either does not provide for an extension of time to cover the act of prevention or it so provides but extension is improperly withheld, the time for completion will be set at large. This means that the contractual time for completion ceases to apply and the contractor is only obliged to complete within a reasonable time, with the usual consequence that the employer’s entitlement to liquidated damages falls away.
COMMENT The English High Court’s decision recognises that the common law “prevention principle” can be contracted out of or modified by parties. Hence, if parties have agreed to a clause which excludes the contractor’s entitlement to an extension of time for situations of concurrent delay, the employer can recover delay damages even for periods of concurrent delay. Whilst UK cases are not binding in Singapore, it is likely that this case will be of persuasive value in the Singapore courts. However, the ob iter dicta on the relationship between causation and the prevention principle appears to run contrary to prior English case law of notable authority, such as the Walter Lily & Co Ltd v Mackay and another (No 2) [2012] 143 ConLR 79 and Adyard Ab u Dhab i itself, which had been relied upon in Jerram Falkus. Mr Justice Fraser’s position also contradicts the guidelines laid down in the Society of Construction
3
Similar to the originating summons procedure in Singapore 2
Law’s Delay and Disruption Protocol (2 nd Edition, 2017).
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It remains to be seen how this apparent contradiction will be resolved in future English and Singapore cases, if at all. ________________________________________ The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances. Copyright in this publication is owned by Drew & Napier LLC. This publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval.
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