Introduction

The Technology and Construction Court recently considered the relationship between the prevention principle and concurrent delay in North Midland Building Limited v Cyden Homes Limited [2017] EWHC (TCC) issued on 2 October 2017.

Prevention Principle and Extensions of Time

The prevention principle exists so that one contracting party may not enforce a contractual obligation against the other party where it has prevented the other party from performing that obligation. In a construction context, this is very important when dealing with dates for completion and extensions of time.

If a contract contains a specified completion date but no extension of time provisions, the prevention principle prevents the Employer from enforcing the date for completion where it has caused the delay to that completion date (for instance, issuing a variation, or suspending works).

If this occurs, and the original date for completion having passed, the contractor will only be obliged to complete within a “reasonable time”.

Given the relative uncertainties of determining what a “reasonable time” may be, the extension can be maintained for an undefined period, regardless of whether the Employer causes delay.

The relationship between the prevention principle and time at large was considered by Jackson J in Multiplex Construction (UK) Limited v Honeywell Control Systems Limited [2007] BLR 195. He listed three propositions of wide application:

  • 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;
  • 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; and
  • Insofar as the extension of time clause is ambiguous, it should be construed in favour of the contractor.

Concurrency and the Prevention Principle

Concurrent delay is where those two types of delay happen at the same time, and their effects are experienced at the same time.

The generally accepted approach in the UK is set out in Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd 70 Con LR 32 where the court provided the following example for concurrent delay:

“…no work is possible on a site for a week not only because of exceptionally inclement weather (a relevant event), but also because the contractor has a shortage of labour (not a relevant event).”

This approach is also recorded in the recently updated Society of Construction Law Delay Protocol (February 2017, 2nd edition) (SCL Protocol) at sections 10.12 – 10.16.

Relevantly, section 10.16 of the SCL Protocol states that it is influenced by the English law ‘prevention principle’ and the concept that:

“…an Employer cannot take advantage of the non-fulfilment of a condition…the performance of which the Employer has hindered.”

North Midland v Cyden Homes

Background

The parties contracted under an amended JCT Design and Build 2005 form. The works related to construction of a sizeable house in the Midlands, with substantial outbuildings such as barns and associated works. The court commented that the house is exceptionally large, and was to be exceptionally expensive to construct. However, the case did not hinge on the grandeur of the premises. The claimant applied for an extension of time for a variety of reasons stemming from relevant events causing delays relating to lighting, asphalt roofing, and weather.

In responding to the claimant’s requests for extension of time, the defendant said that due to clause 2.25.1.3(b) (set out below), the delay events of lighting and asphalt roofing had been consumed by culpable delays that were attributable to the claimant. Therefore no EoT was due in respect of those delays, and the only EoT granted (i.e. not consumed by culpable delays attributable to defendant) was for weather delays, being a period of 9 days.

The relevant clause relating to extensions of time stated:

2.25.

  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.”

NMB sought to argue that applying the propositions of Multiplex and the effect of the “prevention principle” meant that 2.25.1.3(b) was ineffective and that in such circumstances, time became “at large”, and the extension of time mechanism under the contract and thus Cyden Homes’ ability to levy liquidated damages, all fell away. NMB said it was entitled to an extension of time, as the actions of Cyden Homes was such that NMB was prevented from completing by the original completion date and therefore should be entitled to an extension of time.

Decision

Fraser J rejected NMB’s analysis in its entirety. He clearly stated that the relevant clause was “crystal clear” as to the intentions of the parties where concurrent delay occurs and the “prevention principle” could not be used to avoid those express clear intentions.

Indeed, Fraser J pointed out that under those listed events entitling NMB to an extension of time, one of those events was prevention by the employer (“any impediment, prevention or default, whether by act or omission by the Employer…”). Therefore the parties had expressly decided what would happen in the event of “prevention” by the Employer, namely an extension of time preventing time from becoming “at large”.

Having made his findings on the specific case, Fraser J went on to expressly affirm the requirements the contractor must satisfy before the prevention principle will come into effect, as set out in Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm), Walter Lily v Mackay [2012] EWHC 1773(TCC) and affirming the comments of Coulson J (as he then was) on Adyard in the case of Jerram Falkus Construction Ltd v Fenice Investments In (No. 4) [2011] EWHC 1935 (TCC) where the court considered the principle of prevention and causation and found that:

“Hamblen J's analysis indicated 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."

This case is of interest to all sides of construction projects for a number of reasons.

Firstly, the “traditional” held view following the High Court’s Decision in Walter Lily that the contractor is entitled to an extension of time in the event of concurrent delay may no longer be the “norm” and that parties are free to agree which party takes the risk of concurrent delay.

Secondly, it is our experience that apportionment of risk for concurrent delays are often discussed and negotiated at contract stage with similar wording to that used in the NMB often being proposed. The High Court has expressly confirmed that these types of clauses are enforceable and in effect has given judicial approval of effective wording for these types of clauses.

Ultimately, whether such clauses become ever more popular and find themselves into more and more construction contracts will ultimately be a test for the relative negotiating positions of the parties.