A TCC decision earlier this week has considered the enforceability of contractual provisions which seek to exclude a contractor’s entitlement to extensions of time in circumstances of concurrent delay. The decision confirms the ability of parties to exclude concurrent delay claims by the terms of their contract and also provides guidance as to the application of the prevention principle in concurrent delay cases.
North Midland Building Ltd v Cyden Homes Ltd
North Midland entered into a JCT Design and Build contract with Cyden for the construction of a large domestic residence. The contract amended the standard JCT extension of time wording to include a concurrent delay exclusion as follows: “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 extensions of time based on a variety of different Relevant Events. Cyden’s response accepted that the Relevant Events relied upon could in theory entitle North Midland to an extension of time, but rejected the majority of the extension applied for on the basis of the concurrent delay exclusion. Save for a small amount of delay attributable to weather, North Midland’s own delays were said to have consumed the delays arising from Relevant Events.
North Midland brought TCC proceedings for a declaration that the concurrent delay exclusion had resulted in time being set at large under the contract. North Midland argued that, by agreeing Relevant Events (including employer acts of prevention) were “not to be taken into account” where concurrent delays exist for which North Midland were responsible, the parties had not provided an adequate extension of time mechanism thereby engaging the prevention principle.
The prevention principle applies where parties to a construction contract have failed to provide an entitlement to extensions of time for acts of prevention by the employer. In such circumstances, employer acts of prevention can cause the contractual date for completion and any liquidated damages connected with it to be replaced with an obligation to complete within a reasonable period and an entitlement to unliquidated damages for delay.
The court rejected North Midland’s case, finding that the concurrent delay exclusion was effective to exclude North Midland’s entitlement to extensions of time whilst concurrent delays for which it was responsible were operative. The prevention principle applied only where the parties had failed to provide for extensions of time in respect of acts of prevention. It had no application where such extensions had been expressly excluded by the parties.
The court also noted that the prevention principle did not, in any event, apply in circumstances of concurrent delay. Adopting the reasoning of Mr Justice Coulson (soon to be Lord Justice) in Jerram Falkus Construction Ltd v Fenice Investments Inc (No.4), the court found that the prevention principle would not apply where the contractor had not actually been prevented by an employer’s actions because an earlier completion date would not have been achieved in any event due to the contractor’s own concurrent delay.
Conclusions and implications
This decision appears to be the first time an English court has considered the effect of a concurrent delay exclusion in a construction contract. The court’s findings will provide comfort to employers looking to rely on such exclusions that they are effective and will not risk setting time at large or jeopardising rights to liquidated damages.
The Jerram Falkus decision referred to by the court has been the subject of criticism by a number of respected writers (including John Marrin QC). The court’s support for that decision is likely to encourage further debate as to the scope of the prevention principle and its impact on the law as to concurrent delay claims generally.