Extension of Time

Extensions of Time - Reconciling the Irreconcilable!

The matter of how Extensions of Time should be calculated, where there exists both delays caused by matters for which the Contractor is entitled to an Extension of Time (often termed 'relevant events') and matters for which he is not, has again become a subject of debate after the Scottish equivalent of the English Court of Appeal's Opinion in City Inn v Shepherd.

The purpose of an Extension of Time provision in a contract is to allow the Employer to recover from the Contractor a pre-agreed sum for damages for any inexcusable delay. We know these as Liquidated and Ascertained Damages or 'LAD's. If there is no facility in the Contract to adjust the required completion date and the Employer himself delays completion then the LAD provision no longer bites.

The problem with giving a catch-all formula for dealing with Extensions of Time is that not all contracts say the same. The Scottish case above was concerned with a Contract based upon JCT '80. Other judgements often referred to and relied upon were based upon Contracts using standard forms also long superseded and, in some cases, bespoke forms. However, remember that in order for the Extension of Time provisions to have the effect of preserving the Employer's right to deduct LAD's he must allow the completion date to be adjusted in his default. Accordingly, where rules are set, and often they are not, they tend to follow much the same practice, commonly that upon notice from the Contractor or independently the Employer's Architect/Project Manager/Engineer or in some cases the Employer himself must ascertain the effect of the matter in the notice upon the completion date and revise the date accordingly by giving an Extension of Time.

That sounds straightforward but delays to a project can be complex, caused by a combination of relevant events and the contractor' own problems all within a complex matrix. Rules should be set but most standard forms shy away from any such attempt. So, for the most part, we have to revert to the common law to decide how to deal with it.

The first case to consider is Fairweather v Wandsworth. This concerned a Contract using JCT '63 standard form but the principle should be of general application. From this we derive authority that when considering Extensions of Time, the first in-time test (rather than the dominant test) is to be used.

The second case to consider is Balfour Beatty v Chestermount Properties (on a contract using JCT '80 but again probably of general application). This set two principles. The first was that the contractor was not entitled to an Extension of Time for matters such as variations when he was already in delay and the variation did not cause further delay – an end to the entitlement approach. Secondly, a variation issued during contractor culpable delay would not cause an extension by reference to the actual date of issue of the instruction, which would have the effect of giving an extension for the preceding period of contractor culpable delay, but by 'dotting on' an appropriate period of extension onto the original or previously extended completion date.

The third case to consider is Henry Boot v Malmaison (again under JCT '80 but again probably of general application). There, Dyson J decided firstly that the Architect when arriving at his determination of the Extension of Time, arising from a relevant event, can also take into account other matters including the Contractor's own delays. If that was otherwise, then of course, this article would lose its relevance!

Secondly, it decided that where there are two concurrent delays, one a Relevant E vent and the other not, the Contractor should get his Extension.

That was further developed in Royal Brompton Hospital v Hammond, again a contract using the JCT '80 standard form. HHJ Thornton quite rightly observed that situations where two delays operate concurrently as hypothesised by Dyson J are rare. However, despite HHJ Thornton's judgement being described as exemplary in the Court of Appeal, there is some conflict within parts of his judgement. He firstly stated in very simple terms what is required to evaluate whether a relevant event requires the completion date to be extended: –

  1. that a Relevant Event has occurred; and
  2. that the 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, whether as a result of the original agreement between the contracting parties or as a result of the grant of a previous Extension of Time.

The particular point to note is that the assessment is to be made against the contractual completion date, not the anticipated actual completion. This goes against previous statements that a contractor's own delays are to be taken into account when assessing the effect of Relevant Events.

However, later he seems to correct this:

"It does not mean, in my judgement, a situation in which work already being delayed, let it be supposed, because the contractor has had difficulty in obtaining sufficient labour, an event occurs which is a Relevant Event and which, had the contractor not been delayed, would have caused him to be delayed, but which in fact, by reason of the existing delay, made no difference. In such a situation although there is a Relevant Event,

"The completion of the Works is (not) likely to be delayed thereby beyond the Completion Date".

The Relevant Event simply has no effect upon the Completion Date'.

So, what principles can be derived?

  1. The first- in-time principle applies to Extension of Time considerations. Therefore, when considering a number of delaying events their effect should be considered sequentially as they occurred. The approach of determining what is the dominant cause is not correct.
  2. Matters other than Relevant Events can be considered when considering the effect of Relevant Events upon the completion date.
  3. If the Relevant Event occurs on a contract already in delay, if the Relevant Event does not cause further delay then no Extension of Time is due.
  4. When there is true concurrency between delaying events, one of which is a Relevant Event, an Extension of Time is due.
  5. A Relevant Event occurring during a period of Contractor culpable delay does not cause an extension up to the date of the Relevant Event but a relevant additional per iod added to the contractual completion date.

So, what of the Scottish 1 decision in City Inn v Shepherd 2? By a majority, it was agreed that the position at 2 and 3 above was correct, but from the opinions expressed there does appear to be a completely different approach to the matter of causation.

'Concurrent causes' apparently does not necessarily mean just those operating concurrently but those that cooperate in producing delays, i.e. all delaying events. If the dominant cause or causes cannot be determined then apportionment is the correct approach. This appears somewhat in conflict with the English position at 1 and possibly 4 above.

So, is the natural desire to harmonise the approach possible or even desirable or should we just accept that different jurisdictions call for different analytical approaches?