Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm)

Here, AAD, had agreed to build two ships for SD. AAD did not deliver the ships on time, SMS sought to rescind the contract. AAD claimed that because of the extra work entailed by variations and because of SD’s failure to obtain agreement as to the consequences of the variations, the prevention principle applied which would mean that SD could not insist on strict adherence to the original time limits. Hamblen J held that the extension of time provision in the contract did cover the delay caused by the alleged variations, which meant that AAD could not rely on prevention. However, the Judge still took the opportunity to comment on what AAD would have had to have done to make out their case. The judgment is interesting for a number of reasons not least because his conclusions were followed by Mr Justice Coulson in the Fenice case. Hamblen J noted that:

“The conduct therefore has to render it “impossible or impracticable for the other party to do the work within the stipulated time” The act relied on must actually prevent the contractor from carrying out the works within the contract period or, ..., must cause some actual delay”.

Hamblen J also noted that if there were two concurrent causes of delay, one which was the contractor’s responsibility, and one which was said to trigger the prevention principle, the principle would not in fact be triggered because the contractor could not show that the employer’s conduct made it impossible for him to complete within the stipulated time. The existence of a delay for which the contractor is responsible, covering the same period of delay which was caused by an act of prevention, would mean that the employer had not prevented actual completion. Throughout his analysis, Hamblen J stressed the importance of the contractor proving delay to the actual progress of the work as a result of the alleged act of prevention. For the prevention principle to apply, a contractor must be able to demonstrate that the employer’s acts or omissions have prevented him 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. The Judge took a similar approach to AAD’s alternative claim for an extension of time. AAD had relied on the comments of Lord Carloway in the City inn case (see Issue 122), who said that:

“… delay caused by the contractor … is irrelevant so far as the contractual exercise is concerned. That exercise does not involve an analysis of competing causes. It involves a prediction of a Completion Date, taking into account that originally stated in the contract and adding the extra time which a Relevant Event would have instructed, all things being equal”

Therefore AAD said that here the eff ect of SD’s risk event had to be measured against the contractual completion date and that this did not require any analysis of competing causes of delay for which it might be responsible. The Judge disagreed noting that the English authorities in relation to extensions of were clear that it must be established that the relevant event is at least a concurrent cause of actual delay to progress. Further, the majority in the City Inn case accepted that the issue of whether a relevant event causes delay is to be assessed by reference to the progress of the works as a whole, thus clearly recognising the need to consider and establish causation. In fact Lord Osbourne had said:

“…before any claim for an extension of time can succeed, it must plainly be shown that a relevant event is a cause of delay and that the completion of the works is likely to be ...or has in fact been delayed ... the decision ...is an issue of fact ...to be resolved, not by the application of philosophical principles of causation, but rather by the application of principles of common-sense.

To succeed here, AAD had to show that the variations caused actual delay to the progress of the works. They could not. Finally, the Judge noted that even if AAD’s had been able to prove delay, the claim would have failed because they had failed to comply with the notice provisions of the contract.