UK: Time For Completion: 2017 In A Nutshell

Last Updated: 31 January 2018
Article by Mark Walsh and Mark De La Haye

Few issues are more critical for the construction sector than time for completion. But the legal developments of the past 12 months haven't all been headline news. Do extensions of time always run contiguously? How should concurrent delay be dealt with? And as the year closed, a reminder of the dangers of ad-hoc amendments. Our short summary brings you up to date.

Contiguous extensions of time

Can extensions of time start from a date after the original completion date? As the Court of Appeal has recognised, "The question is of some importance for the construction industry", yet until recently the issue had never been tested in the English courts. Whilst normal practice is that extensions run from the original date for completion, i.e. contiguously, early last year the Court of Appeal was asked to depart from this approach on the grounds that it can lead to uncommercial results. The problem is that, although the precise timing of an extension period may not be significant where liability for delay is compensated in liquidated damages throughout a contractual chain, where different liability regimes apply to different parts of the chain (for example, where damages are liquidated under the main contract, but un-liquidated under one or more sub-contracts), and where sub-contractors have caused delay to the overall completion of the project, contiguous extensions can lead to uncommercial results. Despite such results, the Court of Appeal in Carillion Construction Ltd v (1) Emcor Engineering Services Limited (2) Emcor (UK) Ltd [2017] EWCA Civ 65 rejected the suggestion that an extension of time could start from a date after the original completion date. Rather, the Court held that time extensions running from the original completion date had always worked satisfactorily in practice, and that clear words to the contrary would be required to displace this well-established principle.

Concurrent delay

Towards the end of 2017, the FIDIC Yellow Book was updated and, in contrast to the 1999 Edition, took the opportunity to highlight the issue of concurrent delay and to require parties to adopt specific procedures to deal with that issue. So it was convenient that earlier in the year we saw the publication of the 2nd Edition of the SCL Delay and Disruption Protocol which, reflecting the Commercial Court's 2016 decision in Saga Cruises, came down in favour of a "first in time" approach to concurrent delay. Against that background, note that in October 2017 the Technology and Construction Court (TCC) had to consider a case (North Midland Building Ltd v Cyden Homes Ltd [2017] EWHC 2414 (TCC)) in which the parties had in fact chosen to provide expressly in the contract that the contractor could have no extension of time in cases of concurrent delay. The TCC upheld the clause, rejecting the contractor's argument that the clause was void because it offended the prevention principle (the general rule that no party can require another to comply with a contractual obligation if the first party is responsible for preventing such compliance). Permission to appeal has been granted, so we may see further developments in 2018.

The perils of ad-hoc amendments

As the year closed, the facts of one case will have resonated with all of those working at the coal face: it's hard not to empathise with the parties in HSM Offshore BV v Aker Offshore Partner Ltd [2017] EWHC 2979 (TCC). The factual background was a delayed project and efforts to save it, resulting in various ad-hoc amendments to the contract being quickly concluded. The employer, Aker, had engaged HSM Offshore to fabricate two offshore process modules. When it became apparent that the completion date would be missed, the parties entered into a memorandum of understanding (MOU) to accelerate the project. The MOU contained a promise by the contractor to use its "fullest endeavours" to achieve a new completion date, but that date was also missed. The employer counterclaimed liquidated damages for delay. The counterclaim was unsuccessful. In the Court's view, the contractor's strict LOGIC obligations had been entirely replaced by the much weaker promise in the MOU. The employer argued in vain that the MOU was additional to, and did not merely replace, the obligations in the LOGIC subcontract. The court disagreed. Intentionally or otherwise, the contractor's LOGIC obligation had "obviously been superseded" by the MOU. As long as the contractor used its "fullest endeavours" to achieve the new completion date, it could have no other liability for delay, regardless of when completion actually took place.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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