North Midland Building Ltd v Cyden Homes Ltd

Parties may agree how concurrent delay is to affect extensions of time, subject to statutory restrictions that do not apply to the agreed allocation of delay risk. A clear clause providing that delay caused by a Relevant Event is not to be taken into account when concurrent with contractor-responsible delay must be given effect. In that situation the contractor is not entitled to an extension of time for the concurrent period, and time does not become at large where the contract provides an operative extension-of-time mechanism. A liquidated damages clause does not become ineffective merely because the contract contains provisions dealing with prevention or concurrent delay.

The contractor sought declarations concerning an amended JCT Design and Build Contract 2005. The amendment provided that delay caused by a Relevant Event concurrent with delay for which the contractor was responsible was not to be taken into account when assessing an extension of time.

The contractor argued that the clause engaged the prevention principle, made time at large, and rendered liquidated damages ineffective. The employer contended that the clause was clear and excluded an extension of time for the concurrent period. The central issues were the proper construction and effect of the amended clause and the continuing operation of the liquidated damages provisions.

1. Construction of the amended clause. The words of clause 2.25.1.3(b) were clear. Where a Relevant Event and a contractor-responsible delay caused concurrent delay, the Relevant Event delay was not to be taken into account in assessing an extension of time. The contractor was therefore not entitled to an extension for that concurrent period.
2. Freedom of contract. Parties were free to agree how concurrent delay should be treated, subject to statutory restrictions concerning matters such as payment and dispute resolution under the Housing Grants Construction and Regeneration Act 1996 and later legislation. No rule of law prevented the parties from adopting this allocation of risk.
3. Prevention and time at large. The prevention principle did not arise because the dispute concerned the agreed construction of the bespoke clause. In any event, clause 2.26.5 expressly treated impediment, prevention or default as Relevant Events. The contract therefore provided a mechanism for dealing with such events, and time was not at large.
4. Liquidated damages. The contractor’s alternative argument failed. The contractual liquidated damages clause remained operable. The inclusion of acts of prevention within the definition of Relevant Events did not justify differentiating those events from other Relevant Events for the purpose of liability for liquidated damages. Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111 did not establish the contrary proposition.
5. Obiter guidance on causation. Although unnecessary to determine the claim, the judge considered the reasoning in Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm) and Jerram Falkus Construction Ltd v Fenice Investments In (No.4) [2011] EWHC 1935 (TCC) persuasive and correct. The prevention principle requires causation in fact. It does not apply where contractor-responsible concurrent delay means that the employer’s act did not prevent earlier completion.
6. The declarations sought were refused and the claim was dismissed.