Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (No. 2)

Legitimate contractual instructions may amount to acts of prevention if they delay completion beyond the contractual date. They do not set time at large where the contract provides an effective mechanism for granting extensions of time. An extension-of-time clause should, where ambiguous, be construed to permit appropriate extensions for employer-caused delay.

A notice condition precedent requires the contractor or sub-contractor to do its best as soon as reasonably possible. It does not impose an absolute obligation to provide information that is unavailable. Failure to comply with such a condition does not necessarily set time at large, particularly where it does not automatically impose liability for liquidated damages.

Multiplex, the main contractor for Wembley Stadium, sought declarations that Honeywell’s sub-contract retained an operative completion-date mechanism and that time had not been set at large. Honeywell relied on directions and revised programmes issued under clause 4.2, alleged failures in programming and operation of the extension-of-time machinery, non-compliance with clause 11.1.3, the reasoning in Gaymark Investments Pty Ltd v Walter Construction Group Ltd, and a settlement between Multiplex and the employer.

The dispute followed an adjudicator’s decision that time had been set at large because clause 11 did not accommodate delay caused by clause 4.2 directions. The central issues were whether clause 11 provided a sufficient extension mechanism, whether that mechanism had broken down, and whether the settlement affected Honeywell’s rights.

1. Construction point. The prevention principle prevents a party from insisting on a contractual completion date where its act or omission has caused delay. However, an extension-of-time clause prevents time from being set at large if it accommodates the relevant delay. Applying Holme v Guppy, Dodd v Churton, Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd and Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board, a direction under clause 4.2 which constituted a delaying variation was an act of prevention within clause 11.10.7, or alternatively a postponement instruction under clause 46 and clause 11.10.5.1. The programmes therefore entitled Honeywell to any appropriate extension of time and did not set time at large.
2. Operational point. The word “necessary” in clause 11.1.3 directed attention to clause 11.2. The notice and information requirements were qualified by what had become apparent, what the sub-contractor was able to identify, and what was practicable or possible. The “red words” did not impose an absolute obligation. Honeywell’s evidence demonstrated that the machinery remained operable and was being operated.
3. Gaymark point. The court expressed considerable doubt that Gaymark Investments Pty Ltd v Walter Construction Group Ltd represented English law, noting the valuable purpose of prompt-notice provisions. The case was distinguishable because non-compliance with clause 11.1.3 did not automatically make Honeywell liable for delay damages under clause 12. Failure to comply, if established, would not itself set time at large.
4. Settlement agreement. Multiplex could not rely on a settlement waiving or replacing its main-contract extension rights to deprive Honeywell of extensions otherwise due. The settlement therefore did not set time at large.
5. Multiplex was entitled to declarations on the construction point. Honeywell’s counterclaim on the other issues was dismissed. Permission to appeal was refused, subject to any application to the Court of Appeal.

First-instance decision. The judgment states that an appeal lay to the Court of Appeal, but permission to appeal was refused by the High Court.