Steria Ltd v Sigma Wireless Communications Ltd

An extension-of-time notice clause may operate as a condition precedent even without an express warning that non-compliance will remove the entitlement to an extension. The notice must identify the relevant circumstances and state that they have caused delay, but need not quantify the delay or explain its mechanism. Ambiguity is construed in favour of preserving the contractor’s entitlement to extensions.

Concurrent causes of delay may each justify an extension where the contractual event has equal causative potency with other causes. A prevention argument does not generally allow a contractor to benefit from deliberately failing to comply with a notice condition. Liquidated damages provisions in commercial contracts are not penalties merely because they apply to sectional delay, particularly where the stipulated sums bear a reasonable relationship to possible loss and the clause is subject to a cap.

Steria supplied a computer-aided mobilisation and communications system to Sigma for the CAMP East project in Ireland. Sigma withheld the final 5% payment and counterclaimed liquidated and unliquidated damages, alleging delay in completing the subcontract works.

The principal issues were the construction and effect of the subcontract’s extension-of-time clause, the scope of Steria’s obligations concerning legacy data integration, the validity and certainty of the liquidated damages clause, the effect of concurrent delay, and the sums recoverable by Sigma.

1. Contractual obligations. The subcontract did not give the Engineer a general role in determining Steria’s performance. The Functional Design Specification was to be agreed and then formed part of the detailed specification. Steria undertook to load and integrate data using agreed rules and reasonable skill and care, but did not guarantee a particular matching result where the supplied legacy data materially differed from the contractual description. Sigma was contractually responsible for the completeness and accuracy of the supplied information.
2. Extension-of-time notices. Clause 6.1 required Steria to notify Sigma of the relevant circumstances and that they had caused delay. It did not require a quantified assessment, a detailed explanation, or an express statement that an extension was sought. The notice had to emanate from Steria, although a statement of case could in principle constitute notice if served within a reasonable period.
3. Condition precedent and prevention. The notice requirement was a condition precedent. The wording made the right to an extension conditional upon timely written notice, despite the absence of express boilerplate explaining the consequence of non-compliance. Following Multiplex Construction v Honeywell Control Systems [2007] EWHC 447 (TCC), the prevention principle did not set time at large where the contractor failed to comply with the notice condition.
4. Concurrent delay. An event within clause 6.1 could justify an extension where it was an effective cause with equal causative potency, even if another cause was also operative. The court adopted the approach discussed in Henry Boot Construction v Malmaison Hotel Manchester [1999] 70 Con LR 32.
5. Liquidated damages. Clause 7.1 and Schedule 6 were valid and sufficiently certain. The sectional sums were an agreed, commercially workable apportionment of the subcontract value. The provision was compensatory rather than deterrent, and its concluding words made liquidated damages Sigma’s exclusive remedy for delay.
6. Outcome. Steria was entitled to judgment for €153,786.89. Sigma established one week’s delay to SAT and recovered IR£6,055.08, equivalent to €7,688.37. Sigma’s claim for unliquidated damages failed. After set-off, Steria obtained a net judgment of €146,098.52.