Thursday, 5 October 2017

North Midland Building Ltd v Cyden Homes Ltd

[2017] EWHC 2414 (TCC)

Here, the claimant, the contractor and the defendant, the employer, had agreed certain bespoke amendments to the JCT Design and Build Contract 2005, one of which concerned the way in which extensions of time would be dealt with in certain circumstances. Clause as amended read as follows:


1. any of the events which are stated to be a cause of delay is a Relevant Event; and

2. completion of the Works or of any Section has been or is likely to be delayed thereby beyond the relevant Completion Date,

3. and provided that

(a) the Contractor has made reasonable and proper efforts to mitigate such delay; and

(b) any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor is responsible shall not be taken into account

then, save where these Conditions expressly provide otherwise, the Employer shall give an extension of time by fixing such later date as the Completion Date for the Works or Section as he then estimates to be fair and reasonable.”

Sub-clause (3) was the part added by the parties to the standard clause. The clause as amended added into the extension of time machinery the proviso that, in assessing an extension of time, “any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor is responsible shall not be taken into account”.

The works were delayed and North Midland applied for an extension of time for a variety of reasons. As part of their reply, Cyden maintained that if there were two delaying events occurring at the same time and causing concurrent delay to completion of the works, with one event which otherwise entitled the claimant to an extension of time, and the other being “another delay for which the Contractor is responsible”, then the contractor would not be entitled to an extension of time in respect of those two delaying events. North Midland disagreed.

North Midland placed reliance upon the doctrine of prevention. Mr Justice Fraser explained that:

“Essentially the prevention principle is something that arises where something occurs, for which it is said the employer is responsible, that prevents the contractor from complying with his obligations, usually the obligation to complete the works by the completion date.”

The Judge further noted that in Multiplex Construction (UK) Ltd v Honeywell Control Systems Ltd [2007] BLR 195, Mr Justice Jackson (as he then was) had considered the relationship between the prevention principle and time at large, setting out that:

(i) Actions by the employer which are perfectly legitimate under a construction contract may still be characterised as prevention, if those actions cause delay beyond the contractual completion date.

(ii) Acts of prevention by an employer do not set time at large, if the contract provides for extension of time in respect of those events.

(iii) Insofar as the extension of time clause is ambiguous, it should be construed in favour of the contractor.

North Midland said that as a consequence of the first two propositions time was at large. Mr Justice Fraser explained that:

“the concept of ‘time at large’ does not mean that the contractor has an indefinite time to complete the works. If the completion date in the contract, and the mechanism for having that extended by means of awarding so many weeks to an originally agreed completion date, are inoperable or for some other reason no longer applicable, in general terms the contractor’s obligation becomes one to complete the works within a reasonable time. That is what the shorthand expression ‘time at large’ is usually understood to mean.”

North Midland said that dealing with concurrent delay in the way that the employer had dealt with it in response to the application for an extension of time was unfair and not in accordance with the terms of the contract. An extension of time ought to be granted without taking account of concurrent delays for which the claimant is responsible, and disallowing those latter periods. However, the Judge made it clear that he did not consider that the prevention principle arose at all.

In fact, Mr Justice Fraser was “crystal clear” that the parties had agreed that if the contractor were responsible for a delaying event which caused delay at the same time as, or during, that caused by a Relevant Event, then the delay caused by the Relevant Event “shall not be taken into account” when assessing the extension of time. That did not raise any issues of construction whatsoever. The parties were free to agree whatever they liked in terms of how the risk of concurrent delay should be allocated. There was no rule of law that prevented the parties from agreeing that concurrent delay be dealt with in any particular way.

At the end of his judgment, Mr Justice Fraser referred to a discussion about whether, where concurrent delay exists, the prevention principle is engaged at all, referring for example to the words of Mr Justice Coulson (as he then was) in the case of Jerram Falkus Construction Ltd v Fenice Investments Inc (No.4) [2011] EWHC 1935 (TCC):

“Accordingly, I conclude that, for the prevention principle to apply, the contractor must be able to demonstrate that the employer’s acts or omissions have prevented the contractor from achieving an earlier completion date and that, if that earlier completion date would not have been achieved anyway, because of concurrent delays caused by the contractor’s own default, the prevention principle will not apply.”

It was suggested that these words should not be followed. Mr Justice Fraser disagreed and advised parties where disputes occurred about this point to proceed on the basis that the prevention principle is not engaged where there is concurrent delay.

Decision upheld on appeal. See Issue 218.

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