The date for completion in building and engineering contracts and the discussions surrounding delays and the implications of such delays is invariably a hotly debated topic during negotiations.
Some may find this hard to believe but delays on a project may not always be the fault or responsibility of the contractor!
Occasionally, a delay may occur as a result of actions by the employer. Normally the delay will be provided for but sometimes because of the way the contract has been drafted no provision has been made for the delay that actually occurs. When this happens the original agreed date for completion falls away and time is put “at large”. This does not mean that the contractor has as long as it likes to complete the works, rather that the contractor must now complete the works within a reasonable time.
Time at large stems from the “prevention principle”, which provides that no party may require the other to comply with a contractual obligation in circumstances where that party has itself, prevented compliance. So if the employer prevents the contractor from carrying out the works on time (as agreed in the contract) and that delay is not dealt with in the contract, then it cannot insist that the contractor meets the original date for completion. From an employer’s perspective this would also serve to restrict its ability to claim for liquidated damages.
In the recent case of Jerram Falkus Construction Limited v Fenice Investments (2011), the court threw out a contractor’s attempt to rely upon the prevention principle to excuse the delay on a project.
Fenice (the employer) claimed liquidated damages for a delay in the works carried out by Falkus (the contractor) and the contractor alleged that employer’s conduct had prevented completion and that time was said to be “at large”. The provisions relating to extension of time had been deleted from the contract. Therefore a question arose for the court as to whether the contractor had been prevented by the employer from completing the works on time. If this was established then the employer would not be entitled to deduct damages.
The questions to be answered were:
- What caused the delays?
- Did the employer prevent the contractor from completing the contract works?
- If the employer did prevent completion, but the delay so caused was concurrent which were the contractor’s fault, was time set at large?
The contractor described two concurrent causes of delay: the first relating to works by two utilities companies and the second, a consequence of late instructions. These were the alleged acts of prevention asserted as estopping the employer claim. The employer denied that the works had been delayed by the utilities companies and wholly blamed the contractor. In the alternative, it submitted that, if these delays had been caused by the statutory undertakers, they could not be liable under the prevention principle since there had been concurrent delays for which the contractor was partly responsible.
Within his judgment, Coulson J referred to the case of Adyard Abu Dhabi v Marine Services (2011) and the judgment of Hamblen J. This confirmed that where a delay exists for which the contractor is responsible, covering the same period of delay caused by an act of prevention, it would be held that the employer had not prevented actual completion.
In the instant case, Coulson J concluded that the contractor’s reliance on the prevention principle failed as both a matter of fact and concurrency, thus the employer was entitled to liquidated damages.