A building contract clause said that, where there was a delay for which the contractor was responsible, concurrent with a delay for which the employer was responsible, the employer delay would not be taken into account in calculating any extension of time. But was the clause contrary to the ‘prevention principle’ and therefore ineffective, as the contractor claimed?
On appeal, the Court of Appeal confirmed that the clause was effective. It was unambiguous and clearly sought to allocate the risk of concurrent delay to the contractor. The prevention principle is not an overriding rule of public or legal policy but operates by way of implied terms; it was not applicable in the case and had no obvious connection with the separate issues that might arise from concurrent delay. The clause was designed to do no more than reverse the result in the Malmaison Hotel and Walter Lilly cases for this particular contract and, perhaps most important, it was an agreed term and there is no suggestion in the cases considered that the parties could not contract out of some, or all, of the effects of the prevention principle; in fact the contrary was the case. The contractor also claimed that, even if the clause was enforceable, there was an implied term that would prevent the employer from levying liquidated damages, because the damages did not flow from a delay for which the contractor was responsible. This argument also failed. There was a proper causal link between the delay and the liquidated damages, the extension of time provisions were inextricably linked to the liquidated damages provisions and any implied term which sought to take away the employer’s entitlement to liquidated damages for concurrent delay would be contrary to the express contract terms. A term cannot be implied if it contradicts express terms. Additionally, any such implied term would not go without saying and pass the ‘officious bystander’ test and would not be required to make the contract work, in accordance with the ‘business efficacy’ test. The result was not, in any way, uncommercial or unreal. A period of concurrent delay, properly so-called, arises because a delay has occurred for two separate reasons, one being the responsibility of the contractor and one the responsibility of the employer. Each can argue that it would be wrong for the other to benefit from a period of delay for which the other is equally responsible. Either result may be regarded as harsh on the other party but neither could be said to be uncommercial or unworkable.
An issue that the court did not decide was whether, where there is concurrent delay, it could, or could not, be said that the employer had actually delayed the contractor at all.