Severfield (UK) Ltd v Duro Felguera UK Ltd (No. 2)

Where a construction contract contains a sufficiently broad extension-of-time mechanism, delay caused by prevention, late possession and variations should ordinarily be addressed through that mechanism. Time is not thereby made at large merely because several unexpected delaying events occur. The court should uphold the parties’ contractual allocation of risk wherever the clause captures the relevant events. Extensions may be coextensive with actual delay where the evidence establishes that the works could not reasonably have been completed sooner. A claim for liquidated damages fails to the extent the employer is responsible for the relevant delay.

The claimant subcontractor sought its final account for structural steelwork at a power station. The defendant did not appear at trial. The claim included measured works, variations, delay-related loss and expense, and associated financial claims. The defendant maintained a liquidated damages claim and disputed aspects of the final account.

The central legal issue was whether the claimant’s completion obligations had been displaced because time was at large, or whether the contractual extension-of-time clause applied to the delaying events. The court also assessed the resulting delay compensation and liquidated damages.

1. Final account. Judgment was given for the claimant in the sum of £2,774,077.91. The court accepted the quantity surveyor’s assessments, with adjustments to disputed variations. The appropriate valuation for the twelve largest variations was the fair and reasonable rates approach, rather than the claimant’s primary methodology or reliance solely on actual cost records.
2. Extension of time. The failure to provide design information, late possession of the site and variations fell within clause 13.3. They constituted acts of prevention or default, deferment of possession, or modifications to the scope. The claimant was therefore entitled to extensions for each of the twelve units.
3. The extensions were coextensive with the actual delay. The programming evidence established that the claimant could not reasonably have completed the steelwork earlier, taking account of access restrictions, increased scope, changed site logistics and variation work.
4. Time at large. The court rejected the alternative argument that time was at large. Thorn v London Corporation was concerned with additional work so different from the contracted work that it was not properly a contractual variation. Sir Lindsay Parkinson & Co v Commissioners of His Majesty’s Work and Public Buildings and Blue Circle Industries PLC v Holland Dredging Company (UK) Limited were fact-specific and concerned money. Those authorities did not establish that time became at large through multiple unexpected delaying events. The American doctrines of cardinal change and cumulative change had not been applied in English law. McDermott International Inc v McAlpine Humberoak Limited supported upholding the contractual mechanism wherever possible.
5. The claimant recovered £209,464.79 for on-site preliminaries and £147,138.69 for off-site preliminaries. The defendant was responsible for the relevant delays and could levy no liquidated damages. The court also rejected the parking and back-charge claims.
6. The sum outstanding at 31 December 2014 was £1,760,480.27. Interest on the judgment sum was ordered at 4% over base, with 31 December 2014 proposed as the relevant mid-point date.

The judgment was a first-instance decision in the High Court Technology and Construction Court. The judgment refers to an earlier enforcement decision in the same litigation, [2015] EWHC 3352 (TCC), but the present proceedings were a fresh final-account claim.