Charles Edwards MSt(Cantab) MSc(Lond) FCInstCES Barrister
Charles Edwards, construction barrister and head of chambers at Gray’s Inn Construction Chambers, reviews the key case of North Midland Building Ltd v Cyden Homes Ltd [2017] EWHC 2414 (TCC) on concurrency and extensions of time. The judgment in the Technology and Construction Court was upheld by the Court of Appeal in North Midland Building Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744, with Coulson LJ giving the leading judgment in the Court of Appeal.
Technology and Construction Court (“TCC” or “Court”)
The Part 8 proceedings in the Technology and Construction Court (“TCC”) involved an issue of contractual interpretation of an amended Clause in an amended JCT Design and Build Contract 2005 with respect to a claim for an extension of time during a period of concurrency and whether the Contractor was entitled to an extension of time.
The Claimant in this matter was North Midland Building Ltd (“the Contractor”) v Cyden Homes Ltd (“the Employer”). The parties entered into an amended JCT Design and Build Contract 2005 with bespoke amendments executed on 21 September 2009. The Employer engaged the Contractor to build a house together with substantial outbuildings, barns and associated works in Lincolnshire. The house was for the Dyson family. The house was said by the Contractor to be the most important private house to be constructed in this country for many years, although the Employer did not admit that.
A dispute arose between the parties with regard to one of the Clauses in the contract concerning the way in which extensions of time would be dealt with in certain circumstances where there was concurrent delay. The Clause in question was Clause 2.25.1.3(b) of the JCT Design and Building Contract 2005, as amended by the Special Conditions in the contract executed between the parties. The Clause read as follows:
“…The clause as amended reads as follows, dealing with delay and the circumstances where:
“2.25…
- any of the events which are stated to be a cause of delay is a Relevant Event; and
- completion of the Works or of any Section has been or is likely to be delayed thereby beyond the relevant Completion Date,
- 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….”
Clause 2.25 from the JCT Design and Build Contract had been amended with the addition of Sub-Clause 2.25.1.3(b) which the Parties had added to the standard clause. The effect of this amendment therefore added into the extension of time mechanisms the proviso that in assessing an extension of time pursuant to the contract, any delay caused by a Relevant Event which was concurrent with another delay for which the Contractor was responsible shall not be taken into account:
“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”
It was in respect of this amended Clause 2.25.1.3(b) which the Claimant sought declarations.
The declarations sought from the TCC are as follows:
“…(i) that the effect of Clause 2.25.1.3(b) is to make time at large where the claimant has a claim to an extension of time for a delay caused by a Relevant Event where that delay is concurrent with another delay for which the claimant is responsible; and
(ii) in such circumstances, the claimant must complete within a reasonable time and liquidated damages are void….”
The dispute between the parties concerned the delay of the works and the concept of concurrent delay.
The Contractor applied for an extension of time pursuant to the amended JCT Design and Build Contract 2005, which was followed by other notices of delay which relied upon other causes and/or Relevant Events. This application included a claim by the Contractor for loss and expense pursuant to the Contract. The Response to the Contractor’s application for an extension of time considered the various causes of delay which in theory entitled the Contractor to an extension of time. These were delays in connection with the lighting to the main house (Delay Event 1) and asphalt roofing (Delay Event 9) which had caused substantial delays of 163 and 26 days respectively. A further 9 Days in the assessment was considered to be caused by the weather.
The Employer’s response to the Contractor relied upon the amended Clause 2.25.1.3(b) of the amended JCT Design and Build Contract. The only delay which had not been “consumed by culpable delays attributable to” the Contractor was in connection with the weather which entitled the Contractor to an extension of time of 9 Days. The Employer stated amongst others things that:
“Whilst no consideration has been made with regards to ‘reasonable and proper efforts to mitigate such delay’, the delays resulting from Delay Events 1 and 9 have been consumed by culpable delays attributable to North Midland Building [ie the claimant], thus reducing entitlement to an award of an Extension of Time.”
The Employer’s interpretation of Clause 2.25.1.3(b) and position with regard to the concurrent delays and the Contractor’s application for an extension of time can be summarised as follows:
“if there are two delaying events, to which I shall refer for these purposes as Event X and Event Y, occurring at the same time and causing concurrent delay to completion of the works, with Event X otherwise entitling the claimant to an extension of time, and Event Y being “another delay for which the Contractor is responsible”, then the claimant would not be entitled to an extension of time in respect of those two delaying events”.
The Contractor in summary disagreed with the Employer’s interpretation of Clause 2.25.1.3(b) and placed reliance upon the doctrine of prevention, the principle of concurrent delay and the case of Multiplex Construction (UK) Limited v Honeywell Control Systems Limited [2007] BLR 195.
At paragraphs 16 of the judgment, the Court stated that the prevention principle simply does not arise and that this case was concerned with the correct construction of the amended Clause incorporated in the Contract by the Parties. In construing the Clause in question, the Court referred to the decision of the Supreme Court in Wood v Capita Insurance Services Ltd [2017] 2 WLR 1095 which followed the case of Arnold v Britton [2015] 2 WLR 1593.
The Court stated that “the starting point is the language itself; the words the parties have themselves chosen”.
The Employer submitted that the meaning of the words in Clause 2.25.1.3(b) were crystal clear. The Court confirmed that if there was any realistic doubt about that then it was happy to confirm that it was crystal clear.
The Court held that in the circumstances the Contractor was not entitled to an extension of time based on what the parties had agreed. The Court stated amongst other things that:
“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…”
The TCC stated at paragraph 20 of the judgment that the final nail in the coffin in respect of the Contractor’s submissions with regard to reliance upon Multiplex Construction (UK) Limited v Honeywell Control Systems Limited [2007] BLR 195, if there were anything left to bury of them at all, is that clause 2.26 of the contract in this case contains the contractual definition of Relevant Events. Clause 2.26.5 includes as Relevant Events the following which specifically classifies acts of prevention as Relevant Events:
“any impediment, prevention or default, whether by act or omission…”
This sub-clause specifically classified acts of prevention as Relevant Events. Therefore, it was clear how acts of prevention were to be dealt with and as stated by the Court, rather than supporting the Claimant’s case, this was directly contrary to it.
At paragraph 25, the TCC stated: “The very same point was considered by Coulson J (as he then was, imminently to become Coulson LJ) in Jerram Falkus Construction Ltd v Fenice Investments In (No.4) [2011] EWHC 1935 (TCC). Having considered the passages to which I have referred in Adyard, he said at [50] 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.”
Court of Appeal
The Court of Appeal in North Midland Building Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744 upheld the judgment of the Technology and Construction Court dismissing the Contractor’s appeal. Cousin LJ in the Court of Appeal gave the leading judgment. The Court of Appeal in dismissing the Contractor’s appeal stated amongst other things that:
“…Ground 1: Clause 2.25.1.3 and the Prevention Principle
Is the Clause Clear and unambiguous?
23. The consequence of this clear provision is that the parties have agreed that, where a delay is due to the appellant, even if there is an equally effective cause of that delay which is the responsibility of the respondent, liability for the concurrent delay rests with the appellant, so that it will not be taken into account in the calculation of any extension of time.
24. In the light of that conclusion, the only remaining issue is whether there is any reason in law why effect should not should be given to that clear provision. This is not a case to which the Unfair Contract Terms Act (or any other statutory provision) applies. So the only way in which the appellant can avoid the effect of the clause is to identify either another term of the contract, or some overarching principle of law or legal policy, which would render the clause inoperable...
“38. This touches on another submission made…to the effect that it made no difference whether the contract was silent as to whether or not a particular act of prevention entitled a contractor to an extension of time, or whether there was an express clause purporting to allocate responsibility for such an event. I fundamentally disagree with that proposition: it is contrary to the passages in Peak v McKinney and Walter Lilly to which I have just referred. It is also contrary to general principle. A building contract is a detailed allocation of risk and reward. If parties do not stipulate that a particular act of prevention triggers an entitlement to an extension of time, then there will be no implied term to assist the employer and the application of the prevention principle would mean that, on the happening of an that event, time was set at large. But it is completely different thing if the parties negotiate and agree an express provision which states that, on the happening of a particular type of prevention (on this hypothesis, one that causes current delay), the risk and the responsibility rest with the contractor.”
Conclusion
The issue of Concurrent Delay and Extensions of Time can be quite a contentious matter in connection with construction contracts. This judgment from the Technology and Construction Court considered Concurrent Delay in the context of an amended JCT Design and Build Contract and found that the Contractor was not entitled to an extension of time with regard to concurrent delays. The TCC upheld the express clause agreed by the Contractor and the Employer which disallowed any entitlement for an extension of time in circumstances of concurrent delay. This judgment from the Technology and Construction Court was upheld in the Court of Appeal, dismissing the Contractor’s appeal.
It is essential that Employers, Architects, Contract Administrators, Contractors and Subcontractors are aware of amendments or terms within their construction contract dealing with Concurrent Delay and how the Extension of Time mechanisms are to be administered when there is concurrent delay.
It is arguable that Employers are likely to include similar amendments within their standard forms of construction contracts to expressly deal with the consequences of Concurrent Delay and apportion the risk on the Contractor and likewise Contractors are also likely to do the same with their Subcontractors, whereby the risk will be placed upon the Subcontractor. The High Court judgment was upheld by the Court of Appeal.
The above is for general information only and to encourage discussion and does not constitute legal advice. The author does not assume any responsibility for the accuracy of any statements made and appropriate legal advice should be taken and relied upon before taking or omitting to take any action in respect of any specific matter. If the facts and matters referred to above are relevant to you or your organisation, then please do not hesitate to contact me in chambers to see how I can assist you or your organisation.
Charles Edwin Edwards MSt(Cantab) MSc(Lond) FCInstCES Barrister
(Head of Chambers)
Gray’s Inn Construction Chambers
60 Gray’s Inn Road
London
WC1X 8AQ
