Reasonably foreseeable uncertainty, Const. L.J.

2011, 27(5), 369-375

For educational use only

Reasonably foreseeable uncertainty
Nicholas A. Brown

Table of Contents

Introduction and scope

The requirement for "reasonable foreseeability"

The question confronting this requirement

The doctrine of prevention in Hong Kong

Are the MTR Conditions clear about this?

Conclusion

Journal Article

Construction Law Journal

Const. L.J. 2011, 27(5), 369-375

Subject
Construction law

Keywords
Conditions precedent; Construction contracts; Contractual liability; Delay; Express terms; Extensions of time; Foreseeability; Hong Kong;
Interpretation; Prevention principle

*Const. L.J. 369 Introduction and scope

One of the many ways in which MTR Corporation Limited's current Conditions of Contract for Civil Engineering and Building
Works Construction (the "MTR Conditions") differ from other conditions of contract for civil engineering works in Hong Kong
concerns the existence of an express qualification of the contractor's right to an extension of time ("EOT") for preventative
acts, or omissions of the employer, or the engineer, by reference to the reasonable foreseeability of the resulting delay (the
"unforeseeability wording").1

This article examines the approach of the MTR Conditions in this respect, in light of salient principles of Hong Kong law,
through a series of five points, which culminate with a prediction as to how an engineer might not approach the exercise of
his, or her power to extend the time for achieving the completion obligation, having regard to the uncertain efficacy of the
unforeseeability wording.

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Reasonably foreseeable uncertainty, Const. L.J. 2011, 27(5), 369-375

The requirement for "reasonable foreseeability"

Reasonable foreseeability is relevant to the 15 incidents of employer prevention which are scattered throughout the MTR
Conditions, and summarised at Appendix 1 hereto. It is relevant in this sense: if the relevant delay is "greater than that which
the Contractor could reasonably have foreseen at the date of the Letter of Clarification" then the engineer must "take such delay
into account in determining any extension of time to which the Contractor is entitled under Clause 68.1". Appendix 2 contains
an extract from cl.68.1.

Clause 79.2 (Ordered Variation of Change to be in writing) offers a convenient example of the way the unforeseeability wording
is being employed. It reads (so far as relevant):

*Const. L.J. 370 "to the extent that any Variation causes the Contractor to suffer delay greater than that which the Contractor
could reasonably have foreseen at the date of the Letter of Clarification the Engineer shall take such delay into account in
determining any extension of time to which the Contractor is entitled under Clause 68.1".

One may be forgiven for inferring from this wording, and from that of the other 14 similar provisions, that there can be no EOT
under cl.68.1 if (and not merely to the extent) "the Contractor could reasonably have foreseen" the relevant delay--although that
is less than clear. On the force of this language, could it really be construed as a condition precedent?

Whatever intention would be attributed to these provisions, the first concrete point that may be made about the unforeseeability
wording is that it is unusual. The notoriously elusive2 concept of reasonable foresight has for decades been a feature of EOT
provisions concerned with "adverse physical conditions",3 and the "forces of nature"4; however, outside Hong Kong, perhaps
for good reason, it remains an uncommon5 element in EOT clauses concerned with employer prevention. Rather, the criterion of
"reasonable foreseeability" is more commonly used in connection with a right to an adjustment of the contract price on account
of additional costs occasioned by certain "compensable events".

The question confronting this requirement

Secondly, if the intention to be imputed to these provisions really is to create a condition precedent to an EOT then this very
real question arises: Is the employer free to hold the contractor to the relevant completion obligation if an act or omission of
the employer (or engineer) has prevented the contractor from achieving that completion obligation, just because the delay was
reasonably foreseeable?

This is open to question because provisions imposing liquidated damages for delayed completion are susceptible to a doctrine
of law known (among other tags) as the "doctrine of prevention", the existence and operation of which has been *Const. L.J.
371 recognised in a handful of decisions of the Court of First Instance,6 and the awards of arbitral tribunals applying Hong
Kong law. More recently, the Court of Final Appeal in the Ying Ho Co Ltd v The Secretary for Justice case7 took the opportunity
to confirm the existence and scope of the doctrine.

The doctrine of prevention in Hong Kong

In the leading judgment of the court,8 Mr Justice Ribeiro P.J. defined this common law doctrine, insofar as it has a role in Hong
Kong, in the following terms:

"where a contract does not have a mechanism for certified extensions of time, the contract, construed contra proferentem against
the employer, cannot, in the absence of clear words, be taken to mean that the employer is entitled to charge the contractor with
liquidated damages accruing on a daily or periodic basis when it is the employer's own conduct which has resulted in part of
the relevant delay …" (Emphasis supplied.)

The reference in this passage to "a mechanism for certified extensions of time" leads to a third point, suggested in the above
quotation--namely, that employer's prevention will not disable a liquidated damages provision if the contract provides for an
EOT in respect of those events.9

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Reasonably foreseeable uncertainty, Const. L.J. 2011, 27(5), 369-375

Are the MTR Conditions clear about this?

Does the reference to delay in excess of what was reasonably foreseeable at the date of the letter of clarification--if it is indeed a
condition precedent--clearly evince a common intention--the "clear words" referred to in the above passage--that the employer
will be entitled to charge the contractor with liquidated damages notwithstanding that it is the employer's own conduct which
has resulted in at least part of the relevant delay?

In relation to the requirement of clarity in this very context, in the well-known decision of the English Court of Appeal in Dodd
v Churton, 10 Chitty L.J. observed that:

"It would require very clear language to show that a man had undertaken a responsibility which very few men would undertake
with their eyes open."

Beyond pronouncements of this sort, there is limited, if any, authoritative guidance as to the permissible forms which such "clear
words" may take. Arguably, the overseas cases that uphold the strict efficacy of other forms of express conditions *Const.
L.J. 372 precedent--i.e. notice provisions--in circumstances of employer prevention,11 are confined to a situation where the
contractor has failed to take a step necessary to activate the EOT mechanism. Moreover, these cases should be viewed in a wider
policy setting that increasingly views strict notice provisions as legitimate.

Fifthly, even as a matter of modern contractual interpretation, it may be hard to mount an argument that there is sufficient clarity
in the language of the MTR Conditions on this point to warrant a deprivation the right under cl.68.1 to an EOT nor of access
to the doctrine of prevention. This is particularly so given the existence of the engineer's power under cl.68.4 to finally review
all the relevant events which may have occurred and of which particulars shall have been given to him or her, upon the issue
of a certificate of completion, and to

"grant and certify to the Contractor such further extension of time (if any) for the achievement of the relevant Completion
Obligation or Obligations as in the opinion of the Engineer may be justified".

Arguably this "final determination power" is not touched by the unforeseeability wording.

Conclusion
Having regard to the foregoing remarks, it remains to be seen whether the wording of the unforeseeable condition satisfies the
traditional degree of clarity necessary to curtail the contractor's right to an EOT, or reasonable time for the achievement of the
completion obligation. As such, and in the meantime, it should perhaps come as no surprise if an engineer appointed under the
MTR Conditions feels a profound sense of reluctance to invoke the unforeseeability wording.

<HLE>Appendix 1--Relevant events of employer's prevention </HLE> <DPE3>i. An Engineer's instruction to resolve an
ambiguity and/or discrepancy in the documents forming the Contract, or requiring the Contractor to put forward proposals
for Approval whereby they may be resolved, which causes the Contractor to suffer delay (clause 6.2) [Engineer to Explain
Ambiguities].</DPE3> <DPE3>ii. A failure or inability of the Engineer to issue at a time reasonable in all the circumstances
drawings, specifications or instructions requested by the Contract and considered necessary by the Engineer in accordance with
clause 7.3 (and which it is not the responsibility of the Contractor to provide pursuant to clause 10), which causes the Contractor
to suffer delay (clause 7.4 [Delay in Information]).</DPE3> <DPE3>iii. An unreasonable delay in the Engineer's Approval or
in any other acts to be performed by the Engineer pursuant to the Design Approval Process (clause 9.7 [Delay in Approval
of Design Data]).</DPE3> <DPE3> *Const. L.J. 373 iv. An unreasonable delay in the Engineer's consent to the proposed
methods of manufacture, construction, or installation, in consequence of which the Contractor suffers delay (clause 16.4 [Late
Consent: Delay/Cost]).</DPE3> <DPE3>v. Requirements of the Engineer pursuant to clause 16.2 which could not reasonably
have been foreseen by the Contractor at the date of the Letter of Clarification, in consequence of which the Contractor suffers
delay (clause 16.4 [Late Consent: Delay/Cost]).</DPE3> <DPE3>vi. A withdrawal of consent to a method of construction or
installation to which consent has previously been given, followed by the taking of steps by the Contractor as may be necessary
to obtain the Engineer's consent to a changed method of construction or installation, in consequence of which the Contractor
suffers delay (clause 16.5 [Changes in Methods of Construction: Delay/Cost]).</DPE3> <DPE3>vii. A requirement of the
Engineer that the Contractor permit the use on Site of his Contractor's Equipment and labour by utility companies, Government
Departments and other contractors employed by the Employer and their respective workmen and the workmen of the Employer
who may be engaged in the execution on or near the Site of any work ancillary to the Works but not included in the Contract, as
a result of the compliance with which, the Contractor suffers delay (clause 37.2 [Use of Contractor's Equipment and Labour]).</

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Reasonably foreseeable uncertainty, Const. L.J. 2011, 27(5), 369-375

DPE3> <DPE3>viii. The activities of any Designated Contractor or Interfacing Contractor are such that the Contractor is unable
to proceed with the Execution of the Works with due dispatch in accordance with the Master Programme, the ABWF Programme
and/or the Co-ordinated Installation Programme, because of which the Contractor suffers delay (clause 46.7 [Designated and
Other Contractors: Delay]).</DPE3> <DPE3>ix. The Contractor's affording of all reasonable opportunities for carrying out
their work to utility companies, Government Departments, any other contractors employed by the Employer and their workmen,
any workmen of the Employer who may be engaged in the execution on or near the Site of any work ancillary to the Works
but not included in the Contract, in accordance with the requirements of the Engineer, which involves the Contractor in delay
(clause 46.7 [Designated and Other Contractors: Delay]).</DPE3> <DPE3>x. The Contractor's co-ordination of his own work
under the Contract with that of Designated Contractors and Interfacing Contractors under the respective contracts with the
Employer and with that of the Employer's own workmen at the times stated in the Specification or at such other times, in
accordance with the requirements of the Engineer, which involves the Contractor in delay (clause 46.7 [Designated and Other
Contractors: Delay]).</DPE3> <DPE3>xi. The Contractor's taking of reasonable steps to ensure that the Execution of the Works
is co-ordinated and integrated with the works of Designated and Interfacing Contractors, and compliance with any directions
which the Engineer has given for the integration and/or *Const. L.J. 374 co-ordination of the Execution of the works with
the execution of the works of any Designated or Interfacing Contractor, which involves the Contractor in delay (clause 46.7
[Designated and Other Contractors: Delay]).</DPE3> <DPE3>xii. A failure on the part of the Employer to give possession in
accordance with the terms of clause 65.1, as a result of which the Contractor suffers delay (clause 65.2 [Delay to Contractor]).</
DPE3> <DPE3>xiii. A written order of the Engineer to suspend the progress of the Works or any part or Section thereof which
is (a) not otherwise provided for in the Contract, (b) not necessary for the proper Execution of the Works or by reason of
weather conditions unavoidably affecting the safety or quality of the Works or by reason of some default on the part of the
Contractor, and (c) not necessary for the safety of the Works or any part thereof, and which causes the Contractor to suffer
delay (clause 72.2 [Suspension of Works]).</DPE3> <DPE3>xiv. A written requirement of the Engineer for the Contractor
to search for the cause of any defect, imperfection, or fault (for which the Contractor is not liable under the Contract) under
the direction of the Engineer, in the undertaking of which the Contractor suffers delay (clause 77.1 [Contractors to Search for
Defects]).</DPE3> <DPE3>xv. A Variation which causes the Contractor to suffer delay (clause 79.2 [Ordered Variation, or
Change to be in writing]).</DPE3> <HLE>Appendix 2--clause 68.1 [Alteration of time for completion] </HLE> <DPE1>If
the Contractor is, or is likely to be delayed in achieving a Completion Obligation by reason of:</DPE1> <DPE3>(a) delay
by the Employer, or the Engineer in providing information, or giving Approval at the times agreed under any programme
Approved pursuant to clause 15, or in providing the Contractor with parts of the Site in accordance with clause 65.1; or</
DPE3> <DPE3>(b) any Variation under clause 79; or</DPE3> <DPE3>(c) delay by the Engineer in providing drawings or
specifications or instructions pursuant to clause 7.4; or</DPE3> <DPE3>(d) delay by, or any unreasonable requirement of, the
Engineer in giving consent, or withdrawing consent previously given to the Contractor's proposed methods of manufacture,
construction, or installation as referred to in clause 16; or</DPE3> <DPE3>(e) delay resulting from any Excepted Risk, as
referred to in clause 22.6; or</DPE3> <DPE3>(f) encountering physical conditions, or artificial obstructions as provided in
clause 38.3; or</DPE3> <DPE3>(g) delay of a kind referred to in clauses 6.2, 9.7, 19.2, 37.2, 46.7, 46.8, 51.2, 57.12, 60.3, 65.2,
74.4, 74.6, 77.1 or 99.1; or</DPE3> <DPE3> *Const. L.J. 375 (h) any delay occasioned by a suspension ordered under clause
72 unless the suspension order was the result of a breach of Contract or other default of the Contractor or those for whom the
Contractor is responsible under the Contract; or</DPE3> <DPE3>(i) delay caused by the hoisting of a typhoon signal of number
8, or above but not for other weather conditions, or circumstances arising from weather conditions; or</DPE3> <DPE3>(j) any
disturbance to the progress of the Works for which the Employer or the Engineer is responsible other than disturbances of the
kinds mentioned in (a) to (i) above</DPE3> <DPEC1>And whether such delay occurs before or after the time or extended time
fixed for achieving such Completion Obligations then as soon as is reasonable after receipt by the Engineer of particulars in
accordance with clause 68.3, and subject to clause 68.4 and to the clause 69, either prospectively or retrospectively the time for
achieving such Completion Obligation shall be extended by such period as in the opinion of the Engineer may be justified and
the date set out in the Contract for achieving such Completion Obligation shall be amended accordingly by the Engineer who
shall notify the Contractor in writing of the amended date.</DPEC1>
Solicitor and Partner, Pinsent Masons.

Footnotes

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Reasonably foreseeable uncertainty, Const. L.J. 2011, 27(5), 369-375

1 The Government of the Hong

Kong Special Administrative
Region General Conditions of
Contract for Civil Engineering
Works (1999 edn) contains no
corresponding qualification.
The Kowloon-Canton Railway
Corporation's General
Conditions of Contract
referred to delay "which the
Contractor did not and had no
reason to anticipate".
2 Commenting on sub-clause
12(2) of the ICE Conditions
of Contract, published in
1955, the late Ian Duncan
Wallace, QC, remarked
that the expression "could
not have been reasonably
foreseen by an experienced
contractor" contained therein
"probably gives rise to the
most frequent disputes of
fact which come before
engineering arbitrators. The
word "reasonable' introduces
an element of degree but,
even apart from this, the
application of the words to
a given set of circumstances
can be extraordinarily
difficult." See Building and
Civil Engineering Standard
Forms (London: Sweet &
Maxwell, 1969), p.319. The
Institution of Civil Engineers
was undeterred by criticism of
this kind, and the formulation
has remained a feature of its
standard form conditions of
contract. In his commentary
on sub-clause 12(1) of the
ICE Form of Contract, 7th
edn, published in September
1999, Dr John Uff, CBE, QC,
BSc (Eng), PhD. expresses
the view that "Determining
whether a condition could
"reasonably' have been
foreseen habitually gives
rise to the greatest difficulty
of interpretation in civil
engineering arbitration. The
words of the sub-clause seem
to defy precise analysis and
it is thought that little is to
be gained from analysing the
words in terms of probability."
See Keating on Construction
Contracts, 8th edn (London:
Sweet & Maxwell, 2006), at
para.20-074.
3 I. Duncan Wallace, Building
and Civil Engineering
Standard Forms, 1969, p.319.
4 See for example para.
(h) of sub-clause 17.3
[Employer's Risks] of the
International Federation
of Consulting Engineer's
Conditions of Contract for

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Reasonably foreseeable uncertainty, Const. L.J. 2011, 27(5), 369-375

Construction. 1st edn (1999)

and Conditions of Contract
for Plant and Design-Build,
1st edn (1999), which, in
conjunction with sub-clause
17.4 [Consequences of
Employer's Risks] thereof,
establishes an entitlement to
and extension of time for delay
occasioned by the rectification
of loss or damage to the
works, goods or contractor's
documents resulting from
any operation of the forces
of nature which is (inter alia)
"unforeseeable".
5 But not absolutely unique,
see para.(d) of sub-clause
8.4 [Extension of Time
for Completion] of the
International Federation
of Consulting Engineer's
Conditions of Contract for
Construction, 1st edn (1999)
and Conditions of Contract
for Plant and Design-Build,
1st edn (1999), to the extent
that the employer is the
very government whose
actions have caused the
"unforeseeable shortages in
the availability of personnel or
Goods".
6 For example, Hong Kong
Institute of Education v Aoki
Corp [2004] HKCFI 33;
HCCT 109/2003 (Hon. Reyes
J.) at [62]; and Hsin Chong
Construction (Asia) Ltd v
Henble [2006] HKCFI 965 at
[21] (Hon. Reyes J.).
7 Ying Ho Co Ltd v The
Secretary for Justice [2004] 7
HKCFAR 333, Final Appeal
No.17 of 2003 (Civil) dated
September 23, 2004 (Ying Ho).
8 Ying Ho at [144], with whose
reasons on this point Justices
Bokhary P.J. and Chan P.J.,
and Sir Derek Con N.P.J.
agreed, at [4], [20] and [184]
respectively, and Sir Ivor
Richardson N.P.J. saw no
occasion to address.
9 In this regard, the reference
to a "contra proferentem"
interpretation must be treated
with care. There is no room
for such an interpretative
presumption where the
language of the EOT clause
is unambiguous; but where
there is a true ambiguity, an
interpretation that permits
the contractor to recover
appropriate extensions of time
in respect of events causing
delay will be commended.
See for example Multiplex
Constructions (UK) Ltd v
Honeywell Control Systems

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Reasonably foreseeable uncertainty, Const. L.J. 2011, 27(5), 369-375

[2007] EWHC 447 (TCC);

[2007] B.L.R. 195; 111
Con. L.R. 78 at 58-59 and
Steria Ltd v Sigma Wireless
Communications Ltd [2008]
B.L.R. 79; 118 Con. L.R. 177
QBD (TCC) at 86-89.
10 Dodd v Churton [1897] 1 Q.B.
562 CA.
11 Namely, Turner Corp Ltd (In
Liquidation) v Co-ordinated
Industries Pty Ltd (1994)
11 B.C.L. 202 (Australia);
Turner Corp Pty Ltd (Receiver
& Manager Appointed)
v Austotel Pty Ltd (1994)
13 B.C.L. 378 (Australia);
Peninsula Balmain Pty Ltd
v Abigroup Contractors Pty
Ltd [2002] NSWCA 211
(Australia); City Inn Ltd v
Shepherd Construction Ltd
2003 S.L.T. 885 ScotCS
(Scotland); Beckhaus v
Brewarrina No.2 [2004]
NSWSC 1160 (Australia).

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