According to Palles-Clarke (2006) in nine out of ten projects, both parties to a

contract work together to solve problems related to project delays as they arise.
Some projects however do not proceed as efficiently and consequently disputes
arise. In such cases, the parties will look to the contract.

The majority of standard form construction contracts enable the contract

administrator to grant extensions of time for completion of the work where delay
occurs due to certain specified causes. Such provision should be of benefit to both
parties to the contract.

Standard forms and bespoke construction contracts would contain extension of time
clauses setting out the criteria on how extensions of time will be awarded. The JCT
(Joint Contracts Tribunal) makes no reference to calculating an extension of time on
the basis of actual delay to completion however clause 25 of the JCT Standard Form
includes an extension of time provision which sets out a series of ‘relevant events’
that may give rise to an extension of time to the contractor if it is considered by the
architect to have delayed the works beyond the existing completion date. The
architect should ensure to make a fair and reasonable assessment of what this might
be as in the recent case City Inn Ltd v Shepherd Construction Ltd (2007). The effect of
the clause is to protect the employer’s right to liquidated damages for any remaining
(contractor) delays. It can therefore be said that the principal benefit of extension of
time clauses is to the employer. This is because the absence of extension of time
provisions can have the effect of preventing the employer’s entitlement to liquidated
damages in cases where the delay, or even a small part of it, is due to some
prevention or default of the employer or his or her agents, or any other matter for
which the employer would be responsible.

Provision of extension of time clauses in the contract is also beneficial to the

contractor. Where a contractor is not at fault or only partly to blame for the delay the
contractor will benefit because the effect of the provision, if operated, would be to
reduce or avoid liability to pay liquidated or unliquidated damages in the event of
the delay in question. This would be true in cases where the disputes concern
concurrent delays and when the completion date becomes ‘at large’.

Final accounts in dispute often feature resolving a contractor’s entitlement to an

extension of time especially when several events have influenced a delay. Inherent in
the mechanisms involved in clause 25 of the JCT is the consideration of whether any
notified relevant event is acting concurrently with delay resulting from other events.
A project overrun due to two or more effective causes of delay which have
approximately equal contributory influences is denoted by a concurrent delay. Each
concurrent cause of delay could have an equal delaying effect or alternatively could
have significantly unequal effects. If a contractor seeks to rely on late instructions as
entitlement for extension of time and at the same relevant time the contractor is also
delayed by events for which it is responsible, the architect or contract administrator
will need to satisfy himself that the delay caused by the late instruction was the
dominant delay in order to award an extension time.

Henry Boot Construction Ltd v Malmaison Hotel Ltd (1999) held that in assessing a
claim for an extension of time, the architect or contract administrator is entitled to
take into account matters which he considers to have delayed the works but are not
relevant events. He would be entitled to consider the contractor responsible for
concurrent delays when establishing whether or not a relevant event has in fact
caused a delay. The question for consideration by the architect or contract
administrator when there are competing causes of delay, where one of which is a
relevant event and the other is not, is which cause had been the dominant cause of
delay. The courts also commented that where those competing causes were of equal
causes then should the architect or contract administrator consider it fair and
reasonable to do so he would be required to grant an extension of time. Extension of
time clauses in the contract in this context therefore assures that the contractor
would not bear sole liability for delays which have been brought upon by himself and
the employer.

Another potential relief on the contractor’s part is that if, for reasons within the
employer’s control, the contractor is prevented from completing by the completion
date and there is no right to extend time for performance (or it has not been
properly extended) the employer can no longer insist upon the completion date as in
Peak Construction v McKinney Foundations (1970). It is then left without a firm date
from which liquidated damages might be calculated. Time is then said to be ‘at large’
as a result based on the following factors:

Rule of law. The broad notion of justice is that a man should not be allowed to
recover damages for what he himself has caused (Gaymark Investments v Walter
Construction (1999)) nor rely on his own faults (Manchester and District Housing
Association v Fearnley Construction Ltd and Another (2000)).

As an implied term, which on a matter of fairness or policy could be construed contra

proferentem as in Aqua Design and Play International Ltd and Fenlock Hansen
Limited v Kier Regional Ltd (2001).

The expression ‘time at large’ is therefore usually used to indicate that the claimant
believes that, for one reason or another, there is no enforceable date for completion
of the works. And because there would then be no date from which they can be
calculated, the employer’s right to liquidated damages should be overwhelmed. In
Wells v Army & Navy Co-operative Society (1992) it was held that if time has become
at large because of some act or default of the employer, there will be no date from
which the liquidated damages can run and therefore right to claim them will have
gone. If that argument succeeds, the contractor’s obligation would be then be to
complete within a reasonable time. If it does not then the employer may recover its
losses as general damages at common law. The only link contractually therefore is
the implied term as mentioned above; should there have been a specific clause on
how to deliberate an extension of time grant when time was at large then the
contractor would have had something direct and contractual to depend on, and not
just case laws. A recent case on the concept of ‘time at large’ is Multiplex
Constructions (UK) Ltd v Honeywell Control Systems Ltd (2007). Here Jackson J had
expressed disagreement with the Gaymark principle and in the end a settlement had
been agreed which then unfortunately had not had the effect of setting time at large
under subcontracts.

Extension of time clauses in a contract are then perceptibly usually interpreted

alongside case laws during disputes. Another contract provision related to extension
of time which had needed clarification from the courts was the establishment of the
revised completion date not always being the same as the date of practical
completion. In Balfour Beatty Building v Chestermount Properties (1993) it was held
that the revised completion date was to be established by reference to the aggregate
total number of working days, starting from the date of possession, within which the
contractor ought fairly and reasonably to have completed the works.

Assessment of Loss due to Delays

One of the primary purposes of extension of time clauses in contracts is to preserve
the effectiveness of the liquidated damages provisions for the benefit of the
employer. Liquidated damages are a reasonable pre-estimate of the losses the
employer is likely to incur if work is completed late. Such sums are enforceable if the
contractor completes late due to his own default.

The basic essence of liquidated damages is that they represent a genuine pre-
assessment of the likely loss that will flow from the breach of contract in question. Its
aim is to place the innocent party in the position he would have occupied had the
contract been performed without a breach. The primary purpose of damages is to
put the claimant, so far as money can do it, in the position he would have been in if
the contract had been performed, or performed properly as in Robinson v Harman
(1848). Both parties then enter into the contract in full awareness of their monetary
rights and liabilities in the event of a breach. When the breach occurs, the claimant
can then recover his loss from the defendant without time-consuming litigations.

Clause 24 of the JCT includes the liquidated damages provision which serves the
interest of both the contractor and the employer. Liquidated damages enable the
contractor to ascertain in advance his liability to the employer for late completion
and in doing so assist him to calculate whether, in commercial terms, it would be
worth making an extra effort to avoid late completion. The liquidated damages
provision would also provide the employer the security of receiving immediate
payment in the event of a delay owing to the contractor, and also serve as an
incentive to the contractor to finish in time.

It is also important to note in the application of Clause 26 of the JCT the realm of
global claims under the loss and expense provisions. In City Inn Ltd v Shepherd
Construction Ltd (2007) the judge defined a global claim as a claim that fails to show
cause and effect as between the events causing the delays and the loss and expense
as a consequence of those delays. It was also held in John Doyle Construction v Laing
Management (2002) that if a global claim fails, it fails in its entirety and there is no
apportionment available unless the contractor can extract a factor for loss for which
it can verify cause and effect. It would therefore appear that whereas apportionment
was allowed for concurrent delays, it was not to be endorsed for the costs associated
with those delays, where the contractor would have to strictly prove cause and effect.
A leading case recently is John Barker Construction Ltd v London Portman Hotel Ltd
(2004) where it was held that even if the global claim failed (because some of the
events were caused by the contractor rather than the employer), that did not mean
that no claim whatsoever could succeed as there may be sufficient evidence of cause
and effect to allow the court to find that certain losses are no longer to be classified
as part of a global claim.

Consideration of the parties’ rights to float may also be measured as related to

extension of time. The float should be neutral between the various defaulting parties
as in Ascon Contracting Ltd v Alfred McAlpine Construction Isle of Man Ltd (1999). If
the float is exceeded and a project is therefore delivered late, the defaulting parties
will all be responsible for the costs or damages associated with that delay.

Conclusion
The purpose of an extension of time clause in the contract is to preserve liquidated
damages and prevent the contract from being frustrated. The main beneficiary of the
extension of time clause is the employer. Therefore the liquidated damages provision
will cease to have effect if the delay, or even a part of it, is the result of some act or
default of the employer as liquidated damages and extension of time clauses in
printed forms of contract must be constructed strictly contra proferentem.

A successful claim for extension of time would not necessarily give way to a
successful claim for loss and expense. The provisions in clause 26 have been written
and presented separately and differently from that of clause 25 and should therefore
be considered and applied that way.

A contract that contains no provision relating to extension of time would therefore

have no mechanism for adjusting the completion date if delays affect completion
caused by the employer and the employer lose his right to deduct liquidated
damages in the event of further delay through the fault of the contractor. Inclusion
of such provisions however does not guarantee a straightforward deliberation on
when extensions of time are valid as the architect or contract administrator would
still need to determine what is fair and reasonable for such grants, and as with most
contract provisions some extension of time clauses are still open to interpretation,
therefore the importance of case laws to provide direction as in the crucial point of
clarification in Balfour Beatty Building v Chestermount Properties (1993).

ANSWER TO QUESTION 2a, 2b, 2c (Total number of words used: 678)

Before the architect or contract administrator can grant an extension of time under
JCT 05, he needs to be satisfied that not only that a relevant event has occurred but
also that it is likely to cause the completion of the works as a whole to be delayed
(The Royal Brompton Hospital v Frederick Alexander Hammond and others (2000)).

Project is on target programme when a relevant event causing 10

weeks of delay occurs.
Assuming that the contractor has reported to the employer his target programme of
68 weeks, the 10 weeks delay on the target programme of 68 weeks essentially
causes only 8 weeks delay on the actual contract period of 70 weeks. An extension of
time of 8 weeks should therefore be granted to the contractor as the cause of the
delay is a relevant event. The contractor would not be able to claim for the full 10
weeks as in Kitsons Sheet Metal Ltd v Matthew Hall Mechanical and Electrical
Engineers Ltd (1989) where it was held that where a contractor has been told of the
programme to which he is to work, an instruction changing that programme will not
generally constitute a variation. This is because the contractor is not entitled to work
to a programme and programmes are usually not to be regarded as contractual
documents.

Project is on target programme when a relevant event causing two

weeks of delay occurs at the same time as an error on the part of the
contractor which also causes two weeks’ delay.
With numerous approaches available in dealing with concurrent delays there seems
to be only one consistent rule which applies and that is in the event of a delay being
caused by the employer no deduction of liquidated damages is allowable irrespective
of what other cause is contributing to the overall delay. Such approaches are
apportionment, the ‘but for’ test, dominant cause approach and most recently the
Malmaison case, where the court’s guidance had proven to be more of a circular
argument rather than a clear acknowledgment. However further guidance had been
provided in The Royal Brompton Hospital v Frederick Alexander Hammond and
others (2000) where Judge Seymour noted that two conditions should be met before
an extension of time can be granted:
 1. that the relevant event has occurred
2. that that relevant event is likely to cause the completion of the works as a
whole to be delayed beyond the completion date then fixed under the
contract

In this case therefore, where the relevant event causing 2 weeks delay on the target
programme changes the completion period into 70 weeks which is the contract
period, no extension of time should be granted even if the delay is partly due to a
relevant event.

Project is scheduled to finish in Week 80 owing solely to the

contractor’s own errors. The project is in Week 73 when a relevant
event causing four weeks’ delay occurs.
In order to establish that an event has or will cause delay to the completion date it is
necessary to establish that the event was on or will be on the critical path of the work
as in Motherwell Bridge Construction Ltd v Micafil Vakuumtechnik (2002). In the case,
if the 4 weeks delay due to the relevant event did not fall in the critical path then the
dominant cause approach can be further applied where it will be a matter of
choosing the dominant or predominant delay where more than one delay is
responsible for late completion. In H Fairweather and Co Ltd v London Borough of
Wandsworth (1987) the use of the dominant cause approach had been rejected by
the court where they held that an architect ‘has the task of allocating where the facts
require it the extension of time to the various heads’. Recent cases however do not
seem to be influenced by this as proven by John Doyle Ltd v Laing Management
(Scotland) Ltd (2004) where the court stated that ‘it is frequently possible to say that
an item of loss has been caused by a particular event notwithstanding that other
events for which the employer is responsible can be described as the dominant cause
of an item of loss, that will be sufficient to establish liability notwithstanding the
existence of other causes that are to some degree at least concurrent’. An extension
of time therefore should not be granted to the contractor on the grounds that the 4
weeks delay due to the relevant event will not add to the already determined length
of dominant delay caused by the contractor.

However if the 4 weeks delay due to the relevant event fell in the critical path then
the programme would now be set to complete at week 84 and an extension of time
should be granted to the contractor for those 4 weeks as an application of clause 25
of the JCT, with a 10 week penalty for the contractor.

ANSWER TO QUESTION 2d (Total number of words used: 731)

Failure to comply with the obligations stipulated in a contract can include defects to
drawings or specifications along with any implied terms related to design, quality of
workmanship or performance. The employer can claim damages due to these defects
on the grounds of breach of contract.

Defects can be patent or latent, and can occur either during or shortly after
construction. Under most of the building contracts (including JCT) a defect liability
period begins when the Certificate of Practical Completion is issued and usually
comes to an end after 6-12 months when the Architect issues the Certificate of
Making Good Defects. During this period any defects due to the negligent work of
the contractor have to be corrected at the cost of the contractor as held in Pearce &
High v John P Baxter & Mrs A Baxter (1999). For latent defects an employer would be
able to sue the contractor within specified limitation periods. Within the limitation
period, an employer can sue in contract, in tort or both. Different limitation
considerations apply to claims in tort due to the involvement of statute law and
progression of case laws.

The Limitation Act 1980 provides that an action must be brought within six years of
the date on which the cause of action grew for actions founded on simple contract
and within twelve years for contracts by deed. The statutory limitation period runs
from the date of breach of contract which can be earlier than the date of issue of the
practical completion certificate. Limitation in tort (six years except for personal injury
claims) starts to run from the accrual of a cause of action, that is, when the damage is
suffered (CEM, 2010). In Pirelli General Cable Works Limited v Oscar Faber & Partners
(1983) the court decided that the limitation period ran from the date of the damage,
similar to Western Challenge Housing Association Limited v Percy Thomas
Partnership and Others (1995). In both cases the claimants were unaware of the
defective works until it was too late to claim.

Following these cases Section 14A of the Limitation Act 1980 has been modified, and
the claimant has three years to bring an action for damages “in respect of the
relevant defect, from the date when he had the knowledge required for bringing an
action”. Section 14A applies to claims in tort, which was applied in the cases Iron
Trades Mutual Insurance Company Limited v K Buckenham Limited (1990) and
Societe Commercial de Reassurance v ERAS (International) Limited (1992).

Section 32 of the Limitation Act 1980 states that for there to be intentional
concealment, there has to be the “deliberate commission of a breach of duty in
circumstances in which it is unlikely to be discovered for some time”. It also states
that where there has been fraud, concealment or mistake the limitation period can
be extended. In British Steel Plc v Wyvern Structures Limited (1996) it was found
insufficient to prove that incompetent work had been covered up. This application of
deliberate concealment had also been previously agreed by the courts in William Hill
Organisation v Bernard Sunley & Sons (1982). Another example of this approach is
Sheldon and Others v RHM Outhwaite Ltd and Others (1995) where it was held that
the limitation period does not start against the claimant until he has discovered the
concealment even when the concealment took place after the expiry of the limitation
period. In Cave v Robinson Jarvis & Rolf (2002) it was decided that a breach of duty
cannot push back the limitation period unless the party concerned is aware that what
he is doing is in breach of duty; postponement of the limitation period according to
Section 32 would therefore not apply.

As for when the limitation period commences, there is no common starting point in
construction cases. As observed in the development of case laws it can be when the
contract was breached, when the works were completed, when the damage occurred
or when the claimant discovered the damage. It would be also difficult to pinpoint
exactly when the designer may have fallen into an error, therefore the need for
considering practical completion as the date from which at least some of the time
limits start to run. This clarification on timeline can be observed in the cases of News
Islington and Hackney Housing Association v Pollard Thomas and Edwards (2001)
where an architect has to ensure that a project has indeed reached practical
completion, and Tesco Stores v Costain Construction (2003) where the judge found
that a simple contract started when the letter of intent had been signed by all parties.

It can be therefore concluded that the issuance of the final certificate from the
architect may mean the end of liability in contract, but liability in tort would still be
present. Claims in tort could only be for putting the work right and not for economic
loss. A designer is under a continuing duty to review the designs and to resolve any
known faults in the construction up to the date of the practical completion, and may
even be up to the date of actual date of completion as in University Court of
Glasgow v William Whitfield and John Laing Ltd (1988).

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