The TCC has just resolved a longstanding conflict between two competing principles of construction law, deciding that the “prevention principle” doesn’t stop clients placing the whole risk of concurrent delay on their contractor. Emily Aldridge reports.
What is concurrent delay?
Concurrent delay is when there are two or more reasons for delays to construction works that happen simultaneously, one of which would usually give the contractor an extension of time (“a Relevant Event”) and the other that is a contractor risk. Previously it was not clear (because of the “prevention principle”) whether a client could exclude the contractor’s entitlement to an extension of time for the Relevant Event, even though the contractor would not have been able to achieve an earlier completion date due to the delay that is the contractor’s risk.
What is the Prevention Principle?
If the employer’s actions prevent the contractor from completing the works on time and the contract doesn’t give the contractor an extension of time, time is considered to be ‘at large’. Time ‘at large’ means that the completion dates under the contract no longer apply and the employer is not entitled to claim liquidated damages for delays; the contractor only has to complete the works within a reasonable time.
North Midland Building Ltd (“North Midland”) entered into a JCT Design and Build Contract 2005 (“the Contract”) with Cyden Homes Ltd (“Cyden Homes”) to build a large house described by North Midland as “the most important house to be constructed in the county for many years”. Due to delays with the works, North Midland applied for an extension of time relying on several different reasons for these delays – one being the weather (a Relevant Event). However, the main causes of delay were lighting to the main house and the asphalt roofing (both of which were caused by the contractor). Cyden Homes responded stating that the contractor delays meant that North Midland was not entitled to an extension of time.
The extension of time clause in the Contract was amended 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”
North Midland tried to use previous case law on the “prevention principle” to argue that an extension of time should be awarded. However, this was unsuccessful, and the Judge said that “the prevention principle simply does not arise”because the contractor delays meant that the Relevant Event did not actually “prevent” the contractor from finishing on time.
This is the first time that an English Court has considered the exclusion of concurrent delay under a construction contract, Employers seeking to rely on similar exclusion clauses can take comfort in the Court’s findings.
Schedules of amendments to JCT suite of contracts should be checked to see that they include a clause that is similar to the one set out in this article.