North Midland Building Limited v Cyden Homes Limited [2017] EWHC 2414 (TCC): Choose your extension of time provisions carefully
North Midland Building Limited v Cyden Homes confirms the primacy of the parties' contract in determining an extension of time. Specifically, in North Midland the High Court held that an amendment made to the construction contract meant that, in a situation of concurrent delay, North Midland Building Ltd (the Contractor) was not entitled to an extension of time from Cyden Homes Ltd (the Employer) and that the prevention principle, had it arisen, would not take precedence over the expressly agreed terms of the contract.
The Background:
The Contractor and the Employer agreed a bespoke amendment to the JCT Design and Building Contract 2005 at clause 2.25 which provided that "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" in relation to an extension of time.
The Contractor sought that the Court decide, in accordance with Multiplex Construction (UK) Limited v Honeywell Control Systems Limited [2007] BLR 195, that (i) the amendment at clause 2.25 set "time at large" in situations where there was a concurrent delay and; (ii) in the alternative, the prevention principle applied enabling the Contractor to complete the project within a reasonable time, voiding liability for LADs.
The common law doctrine of prevention provides that a party may not enforce contractual obligations where that party has prevented the obligation from being performed. In circumstances where a contractor has been delayed by an employer, the principle would allow a contractor to complete works within a reasonable time.
The Decision:
Fraser J was of the clear view that the prevention principle did not arise. Clause 2.26 of the contract expressly classified acts of prevention as Relevant Events clearly demonstrating how the parties intended extensions of time to be dealt with in relation to acts of prevention: an act of prevention was a Relevant Event.
Therefore, the only issue to be determined was the meaning of clause 2.25. Fraser J found that clause 2.25 was "crystal clear": "the contractor would not be entitled to any extension of time for Event X (for which he was not responsible) in so far as delay caused by that event was concurrent with delay caused by Event Y (for which he was)". It was noted, in perhaps unsurprisingly terse terms, that the parties can agree whatever terms they so choose provided they abide by the law and meet any necessary minimum requirements imposed by statute.
Comment:
An emergence of amendments such as clause 2.25 in North Midland (which, of course, now confirms the effectiveness of this specific drafting) will make it even more difficult for contractors to be granted extensions of time. If such clauses do emerge we will see the reverse of the traditional position, such as in Saga Cruises BDF Ltd and Anor v Fincantieri Spa [2016] EWHC 1875, of the contractor arguing that concurrency should be broadly defined and potentially much more debate about the meaning of concurrency itself.
This judgment highlights the trite but important point that parties are free to make amendments to the extension of time provisions in their construction contracts; the common law will not generally enable the parties to depart from their express intentions. In other words, provided that the required Relevant Events are present the Court will determine the precise effect of those Relevant Events in line with the contractual provisions agreed between the parties.
This case is therefore first and foremost a reminder to contractors to carefully consider extension of time provisions at the outset, as employers may seek to diminish or alter the extension of time that a contractor might otherwise expect to receive.
It is well established at common law in England and Wales that a contractor is entitled to a full extension of time, rather than an apportionment, in instances of concurrent delay. The parties may however, as in North Midland, expressly provide that Relevant Events do not apply where there is concurrent contractor delay, or alternatively they may agree to contractually apportion this concurrent delay. Relevant Events may also take effect either contiguously or non-contiguously (i.e. at the beginning of the Contractor's delay period or during the period in which the Relevant Event is actually felt) – this will be most relevant where LADs are graduated. The parties must therefore carefully consider how (or indeed if) these risks are to be apportioned.