| Date | 2 February 2000 |
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| Judgment | Henry Boot Construction (UK) Limited -v- Malmaison Hotel (Manchester) Ltd TCC 18 October 1999. |
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| The Issue | Determining entitlement to extension of time and jurisdiction of arbitrators and adjudicators. |
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| Implication |
In assessing a claim for an extension of time an architect is entitled to take into account matters which he considers delayed the works but which are not Relevant Events. |
printResolving a contractor's entitlement to an extension of time is often at the heart of a disputed final account. It is no easy matter. Clause 25.3.1 of JCT 80 is concerned with the mechanisms for granting extension of time prior to completion of the works. The first triggering event is a notice from the contractor of the circumstances that are material to an actual or likely delay to the progress of the works. The notice should identify whether the matter causing delay is one of the Relevant Events listed in clause 25. In respect of each such Relevant Event, the contractor is required to give full particulars of the expected effects upon regular progress and estimate the extent, if any, of the resultant expected delay in the completion of the works. Inherent in this latter exercise is a consideration of whether the notified Relevant Event is acting concurrently with delay resulting from other relevant events. Where the architect is of the opinion that the event is a Relevant Event, and that completion of the works is likely to be delayed, he is required to give an extension of time by fixing the revised completion date which he considers to be fair and reasonable. A crucial point of clarification was given in the 1993 case of Balfour Beatty Building -v- Chestermount Properties where it was confirmed that the revised completion date was not necessarily the date by which the contractor ought to have achieved practical completion. Instead the revised completion date was to be established by reference to the aggregate total number of working days, starting from the date of possession, within which the contractor ought fairly and reasonably to have completed the works. These matters were examined in the recent case between Henry Boot Construction and Malmaison Hotel (Manchester) Ltd. It was argued by the contractor that in determining whether an event is likely to cause delay the architect would not be permitted by clause 25 to consider the effect of other events, such as events for which the contractor was liable. In considering this point it was firstly agreed between the parties that if there were two concurrent causes of delay, one of which was a Relevant Event and the other not, then the contractor would be entitled to an extension of time for a period of delay caused by the Relevant Event notwithstanding the concurrent effect of the other event. To illustrate this, if no work was possible on a site for a week not only because of exceptional inclement weather (a Relevant Event) but also because the contractor had a shortage of labour (not a Relevant Event), and if that failure to progress work caused a delay of one week in completion, then the architect would be required to grant an extension of time of one week, if he considered it fair and reasonable to do so. The architect cannot refuse to do so on the grounds that the delay would have occurred in any event by reason of the shortage of labour. Despite this agreement, the parties remained in dispute as to whether a list of criticisms of the contractor's performance during the course of the contract ought properly to be taken into account. On behalf of the employer it was argued that an employer would have both a 'negative' and a 'positive' defence to an extension of time claim. The 'negative' defence amounted to demonstrating that the Relevant Events relied upon by the contractor did not cause delay because the activities affected were not on the critical path. The 'positive' defence was to argue that the true cause of delay was other matters which were not Relevant Events and for which the contractor was responsible. To an extent the positive case, if it can be made out, will support and fortify the denial in the negative defence. His Honour Mr Justice Dyson QC held that this view was correct. Whilst it was impossible to lay down hard and fast rules, in his judgment it was incorrect to say that as a matter of the application of clause 25, the architect was not entitled to consider the impact on progress and completion of other events such as the contractor's own failings. Justice Dyson was careful however to distinguish the situation where the employer's allegations of delay by the contractor were not simply a matter of defence to the claim for extension of time, but instead ought properly to be regarded as supporting a free-standing counterclaim. This distinction was made clear in his example. Suppose a contractor refers to arbitration a claim for an extension of time of two weeks on grounds that it was denied access to the site during the first two weeks of the contract period. It would be open to the employer to defend such a claim by disputing that access was denied, or by contending that the contractor could and should have been getting on with work off-site during these first two weeks. It would not however be open to an employer in such a case to rely on poor progress by the contractor generally throughout the contract, as a defence to a claim for an extension of time for these first two weeks of delay. This is an important distinction in the context of adjudication where the jurisdiction of the adjudicator has been shown to be a crucial factor to take into account. An adjudicator would have to be careful to take into account only matters which, as in the above example constituted a proper defence to the issues raised in the adjudication notice. It would be improper to take into account such matters which could only be relied upon in support of a separate counterclaim, which did not form part of the reference to adjudication.
CJ-0004
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