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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> North Midland Building Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744 (30 July 2018) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2018/1744.html Cite as: [2018] EWCA Civ 1744, [2018] BLR 565, 180 Con LR 1 |
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ON APPEAL FROM Queen's Bench Division
Technology and Construction Court
Mr Justice Fraser
HT2017000135
Strand, London, WC2A 2LL |
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B e f o r e :
(Sir Terence Etherton)
THE SENIOR PRESIDENT OF TRIBUNALS
(Sir Ernest Ryder)
and
LORD JUSTICE COULSON
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North Midland Building ![]() | Appellant |
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- and - |
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![]() ![]() ![]() ![]() ![]() | Respondent |
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Mr Sean Brannigan QC & Mr Matthew Thorne (instructed by Pinsent Masons LLP) for the Respondent
Hearing date: Thursday 12th July 2018
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Crown Copyright ©
Lord Justice Coulson :
1. Introduction
2. The Contract
"2.25.1 If on receiving a notice and particulars under clause 2.24:
.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 as to be fair and reasonable."
"2.26 The following are the Relevant Events referred to in clause 2.24 and 2.25 (but only to the extent that such events are not in any way consequent upon or necessitated by any negligence, omission, default, breach of contract or breach of statutory duty of the Contractor, his servants or agents or any sub-contractor, consultant or supplier of their respective servants or agents):
.1 Changes and any other matters or instructions which under these Conditions are to be treated as, or as requiring, a Change;
.2 instructions of the Employer:
.1 under any of clauses:
- 3.10 (Instructions to postpone any work);
- 3.11 (Instructions to expend any Provisional Sums) to the extent that the Employer's Requirements provided insufficient information to enable the Contractor to make a sufficient allowance prior to the issue of such instructions for the effects on programme of those instructions;
- 3.16 (Instructions on antiquities); or
.2 For the opening up for inspection or testing of any work, materials or goods (including making good) under clause 3.12, unless the inspection or test shows that the work, materials or goods are not in accordance with this Contract; or under clause 3.13, if it is agreed by the Parties or determined by an adjudicator that an extension of time should be awarded in respect of such instruction given under clause 3.13;
.3 deferment of the giving of possession of the site or any Section under clause 2.4;
.4 suspension by the Contractor under clause 4.11 of the performance of his obligations under this Contract;
.5 Any impediment, prevention or default, whether by act or omission, by the Employer or any of the Employer's Persons, except to the extent caused or contributed to by any default, whether by act or omission, of the Contractor or of any of the Contractor's persons or, in the case of any impediment or prevention, save to the extent that the same is in consequence of the reasonable exercise of the rights of the Employer under this Contract…"
3. The Legal Background
"…where one party to a contract is prevented from performing it by the act of the other, he is not liable in law for that default; and accordingly a well-recognised rule has been established in cases of this kind, beginning with Holme v Guppy, to the effect that, if the building owner has ordered extra work beyond that specified by the original contract which has necessarily increased the time requisite for finishing the work, he is thereby disentitled to claim the penalties for non-completion provided by the contract."
"(i) Actions by the employer which are perfectly legitimate under a construction contract may still be characterised as prevention, if those actions cause the delay beyond the contractual completion date.
(ii) Acts of prevention by an employer do not set time at large, if the contract provides for an extension of time in respect of those events.
(iii) Insofar as the extension of time clause is ambiguous, it should be construed in favour of the contractor."
"A useful working definition of concurrent delay in this context is 'a period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency' – see the article Concurrent Delay by John Marrin QC (2002) 18(6) Const. L.J. 436."
Like other judges dealing with concurrency, I gratefully adopt that definition.
"However, where there are concurrent causes of delay (one the contractor's responsibility and the other the employer's) the prevention principle would not be triggered because the delay would have occurred anyway absent the employer delay event."
Two more first instance decisions are cited in support of that proposition: Adyard and Jerram Falkus Construction Limited
v Fenice Investments Incorporated (No. 4) [2011] EWHC 1935 (TCC). In Adyard, Hamblen J said, at paragraph 279, that "there is only concurrency if both events in fact cause delay to the progress of the works and the delaying effect of the two events is felt at the same time".
4. The Judgment
"18. The defendant submits that the amendment could be said, understandably, to be crystal clear in terms of the meaning of the words. If there is any realistic doubt about that, I am happy to confirm that in my judgment it is crystal clear. The parties agreed that, in the scenario I have outlined above, if the contractor were responsible for a delaying event which caused delay at the same time as, or during, that caused by a Relevant Event, then the delay caused by the Relevant Event "shall not be taken into account" when assessing the extension of time. I fail to see how that raises any issues of construction whatsoever. The dicta of Jackson J in Multiplex does not have any effect upon that conclusion at all, in my judgment. It is a clear agreement dealing with the proper approach to consideration of the appropriate extension of time in situations of concurrent delay, when one cause would otherwise entitle the contractor to such an extension (absent the concurrent event) but the other cause would not. The contractor is not entitled to an extension of time in that situation.
19. When this point was explored during oral submissions, the argument that was advanced by the claimant was that such an interpretation (if interpretation it is) was "not permitted". That phrase was expressly used. This approach is more akin to a Civil Code view of contracts, than one under the common law. Parties are free to agree whatever terms they wish to agree, with the obvious exceptions such as illegality. There is a statutory restriction within the field of construction contracts so far as dispute resolution and payment terms are concerned, as certain minimum requirements are imposed by statutes such as the Housing Grants Construction and Regeneration Act 1996 and the later statutes that govern the same areas. Parties cannot freely agree not to include certain required provisions, or if they do, Parliament has decided that those terms will be imposed upon them. But there is no rule of law of which I am aware that prevents the parties from agreeing that concurrent delay be dealt with in any particular way, and Mr Lofthouse QC could not direct me to any. Multiplex and the doctrine of prevention are so far off the point, with respect, as to be dealing with something else entirely."
"Although the Part 8 claim was brought on the basis of contested construction of a contractual provision for the calculation of an extension of time, in reality there was no point of construction as the Claimant accepted during the hearing – the meaning of the words of the provision are clear and agreed by the parties. It was rather the effect of the agreed provision that was in dispute, in the sense that the claimant contractor did not consider it fair for the provision to be applied in accordance with its terms."
5. Ground 1: Clause 2.25.1.3 and the Prevention Principle
5.1 Is the Clause Clear and Unambiguous?
5.2 Other Contract Terms
5.3 The Prevention Principle
"In my judgment, however, the plaintiffs are not entitled to anything at all under this head, because they were not liable to pay any liquidated damages for delay to the corporation. A clause giving the employer liquidated damages at so much a week or month which elapses between the date fixed for completion and the actual date of completion is usually coupled, as in the present case, with an extension of time clause. The liquidated damages clause contemplates a failure to complete on time due to the fault of the contractor. It is inserted by the employer for his own protection; for it enables him to recover a fixed sum as compensation for delay instead of facing the difficulty and expense of proving the actual damage which the delay may have caused him. If the failure to complete on time is due to the fault of both the employer and the contractor, in my view, the clause does not bite. I cannot see how, in the ordinary course, the employer can insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled: Wells v Army & Navy Co-operative Society Ltd; Amalgamated Building Contractors v Waltham Urban District Council; and Holme v Guppy. I consider that unless the contract expresses a contrary intention, the employer, in the circumstances postulated, is left to his ordinary remedy; that is to say, to recover such damages as he can prove flow from the contractor's breach. No doubt if the extension of time clause provided for a postponement of the completion date on account of delay caused by some breach or fault on the part of the employer, the position would be different. This would mean that the parties had intended that the employer could recover liquidated damages notwithstanding that he was partly to blame for the failure to achieve the completion date. In such a case the architect would extend the date for completion, and the contractor would then be liable to pay liquidated damages for delay as from the extended completion date." (Emphasis added)
"In any event, I am clearly of the view that, where there is an extension of time clause such as that agreed upon in this case and where delay is caused by two or more effective causes, one of which entitles the contractor to an extension of time as being a relevant event, the contractor is entitled to a full extension of time. Part of the logic of this is that many of the relevant events would otherwise amount to acts of prevention and that it would be wrong in principle to construe cl.25 on the basis that the contractor should be denied a full extension of time in those circumstances. More importantly however, there is a straight contractual interpretation of cl.25 which points very strongly in favour of the view that, provided that the relevant events can be shown to have delayed the Works, the contractor is entitled to an extension of time for the whole period of delay caused by the relevant events in question. There is nothing in the wording of cl.25 which expressly suggests that there is any sort of proviso to the effect that an extension should be reduced if the causation criterion is established. The fact that the architect has to award a "fair and reasonable" extension does not imply that there should be some apportionment in the case of concurrent delays. The test is primarily a causation one. It therefore follows that, although of persuasive weight, the City Inn case is inapplicable within this jurisdiction." (Emphasis supplied)
This paragraph stressed that the result turned on "a straight contractual interpretation" of the clause in that case, and that it would have been open to the parties to draft "a proviso to the effect that an extension of time should be reduced if the causation criterion is established", thereby allowing for a different allocation of risk. That is what the parties in the present case chose to do.
5.4 Summary
6. Ground 2: Liquidated Damages
Ground 3: The Precise Ambit of Concurrent Delay
Senior President of Tribunals:
Master of the Rolls: