Extensions of Time Claims

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Extensions of Time Claims
Nicholas Longley Consultant JSM 852 2843
2599 nicholas.longley_at_mayerbrownjsm.com
17 November 2008
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• Mayer Brown is a global legal services
  organisation comprising legal practices that are
  separate entities ("Mayer Brown Practices"). The
  Mayer Brown Practices are Mayer Brown LLP, a
  limited liability partnership established in the
  United States Mayer Brown International LLP, a
  limited liability partnership incorporated in
  England and Wales and JSM, a Hong Kong
  partnership, and its associated entities in
  Asia. The Mayer Brown Practices are known as
  Mayer Brown JSM in Asia.

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Introduction

• Uncertainty with
• What can be claimed?
• How to claim?
• When to claim?
• Two Central Themes
• Clear drafting
• Clear thinking Do not overly restrict EoT
  grounds

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What is Completion?

• Practical or Substantial Completion
• Mariner International Hotels v Atlas (2007)
• Watts v McLeay (1911)
• Balfour Beatty v Chestermount (1993)

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Prevention Principle

• Essentially it is that a party to the contract
  has been prevented from fulfilling its
  contractual obligations by virtue of conduct of
  the other party
• Turner Corp v Co-ordinated Industries

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Peak v McKinney

• Facts
• A Fault in the Perimeter Piles
• The Employer had to appoint an expert but there
  were delays in doing so
• The works were suspended for 58 weeks
• The Contract contained an extension of time
  clause but it did not allow the Employer to
  extend time for its own delays

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Peak v McKinney

• Decision
• There was no date from when liquidated damages
  could run
• If a failure to complete on time is due to the
  fault of both the employer and the contractorthe
  clause does not bite. I cannot see howthe
  employer can insist on compliance with a
  condition if it is partly his own fault that it
  cannot be fulfilled.

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Hong Kong Government Building Contract

• Clause 50 (1) (a) Grounds for a EoT claim
• Inclement weather and/or its consequences
  adversely affecting the progress of the Works
• Variations under Clause 60
• A substantial increase in the quantity of any
  item of work
• Late possession or being deprived of possession
  of the Site at a later date
• Disturbance to the progress of the Works
• Any special circumstance of any kind whatsoever

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HKIA/RICS Building Contract

• Clause 23 Grounds for an EoT Claim
• Force majeure
• Inclement weather or the subsequent effects of
  such inclement weather which is expressly
  defined
• Civil commotion, local combination of workmen,
  strikes and lockouts affecting any of the trades
  employed upon the Works
• Variations under the contract
• Delays by the Architect in providing
  instructions, drawings, details or levels
• Delays by artists, tradesmen or others engaged by
  the Employer

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HKIA/RICS Building Contract

• by reason of the Main Contractor not having
  received in due time, necessary, instructions,
  drawings, details or levels from the Architect

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HKIS/HKIA Building Contract (2005)

• Clause 25.1 - Grounds for an EOT Claim
• Excepted risks
• Act of prevention, a breach of contract or other
  default by the Employer
• Late issue of drawings, details, descriptive
  schedules or other similar documents

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When to Claim?

• Notification Clauses
• RICS the Main Contractor shall forthwith give
  written notice of the cause of the delay
• HK Government the Contractor shall forthwith
  give notice in writing to the ArchitectSuch
  notice shall not in any event be given later than
  28 days after the Architect has issued the
  relevant order or instruction
• KCRC cl 45.11 it shall be a condition
  precedent to the Contractor being granted
  extensions of time that he complies strictly with
  the notification requirements

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The Gaymark Decision

• The Facts
• The Contractor failed to complete by the Date of
  Completion because of Employers Delays
• The Contractor had an obligation to comply with
  strict time limits which the Contractor did not
  do
• The Employer claimed liquidated damages for delay
• The Contractor argued that the Prevention
  Principle applied. The Employers acts prevented
  the Contractor from completing on time

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The Gaymark Decision

• The Decision
• The Prevention Principle applies
• The contract between the parties fails to
  provide for a situation where the Employer
  caused actual delays to the Contractor
  achieving practical completion coupled with the
  failure by the Contractor to comply with the
  notice provisions.

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City Inn v Shephard Construction

• The Facts
• The Contract included a condition precedent
  requiring the Contractor to notify the architect
  if any instruction was likely to delay the Works
  within 14 days
• The Contractor argued that there was an
  architects instruction which entitled it to an
  extension of time
• The Contractor did not comply with this clause
  and completed late

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City Inn v Shephard Construction

• The Contractors Argument
• That the condition precedent acted as a penalty
  as the failure to comply results in liquidated
  damages
• The Decision
• The liability for liquidated damages stems from
  the failure to complete late not from the failure
  to comply with the notification clause

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How to Claim

• Causation
• Leyland Shipping v Norwich Union - competing
  causes
• The torpedoes
• Hitting the side of the dock
• The decision of the harbour master to have the
  ship towed out of the harbour
• The effect of two days of hitting the ground
• The storm

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Causation and Concurrency

• Main Test proximate or dominant cause (Leyland
  Shipping v Norwich Union)
• Laing v Doyle (2004) usual rules of causation
  apply to construction contracts
• Henry Boot v Malmaison importance of critical
  path
• Royal Brompton Hospital concurrent claims

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Global Claims

• Origins Crosby v Portland
• A lump sum award is proper, provided that there
  is no duplication
• Wharf v Eric Cumine
• The fact that there are evidential problems is
  not a sufficient reason to strike out the claim
• However a delay of seven years in detailing a
  claim meant that the claim was embarrassing and
  should be struck out

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Global Claims Laing v Doyle

• Common Sense Approach
• Generally the Contractor must show a causal link
• If the Contractor can show that all of the loss
  stems from delays which are all the
  responsibility of the Employer, a causal link is
  unnecessary
• A global claim cannot succeed where any of the
  causes is the responsibility of the Contractor
• If the global claim fails, the Contractor might
  still be able to use the dominent cause approach
  to claim for some losses

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Conclusion

• When drafting the contract take great care.
  Keep the Prevention Principle in mind. Small
  mistakes can be costly
• When making claims, ensure that you can show
  cause and effect
• Ultimately many claims are won or lost not on the
  law but on the evidence. Ensure that you keep
  good records and if you want to claim, get an
  expert at an early stage