In our last edition, we reviewed the decision of the Court in W W Gear Construction Ltd -v- McGee Group Ltd. The court decided that the standard notice provisions relating to loss and expense in the JCT Trade Contract terms contained conditions precedent. In other words the giving of timely notice is essential if one wants to recover loss and expense under that form and other JCT forms that use the same wording.
In this edition we move on to consider the equivalent provisions relating to extensions of time. When one looks at the extension of time provisions in the JCT forms, the similarity of approach to that used for loss and expense is immediately apparent. Taking the Design and Build form as our sample text, clause 2.24 contains the requirement to give notice in the following mandatory terms: 'the Contractor shall forthwith give written notice'.
The Employer's obligation is expressed in similar terms to those considered in the Gear case: 'If on receiving a notice and particulars under clause 2.24'. I see no reason why a court should view this any differently to the way they viewed the wording in Gear. If you want an extension of time under this clause, you have to ask for it.
What is less clear is whether the condition is satisfied by giving notice or whether it is only satisfied by giving notice forthwith as clause 2.24 requires. It is at least arguable that giving late notice is not fatal.
Even if the notice requirement under clauses 2.24 and 2.25.1 do create conditions precedent, the position with regards to extension of time is markedly different to that for loss and expense as discussed in Gear. This is because of clause 2.25.5 requires the employer to review extensions of time no later than 12 weeks after practical completion, and grant any extension of time that is merited regardless of whether the relevant delaying events have been notified under clause 2.24. In the end therefore, failure to give notice is not fatal to the contractor's entitlement to an extension of time.
Some other forms of contract are stricter and do make the giving of timely notice a condition precedent to entitlement to an extension of time. Such provisions raise an interesting legal issue. As readers will appreciate, one of the several reasons why contracts contain extension of time provisions is for the benefit of the employer. If the employer causes delay and the contract does not provide a means to alter the completion date to reflect such delay, the employer cannot insist on completion by the completion date and cannot recover liquidated damages (time and damages will be 'at large'). This is often referred to as the prevention principle.
The interesting legal issue is this: if the employer causes delay and an extension of time cannot be granted because of a mere procedural matter (late notice or absence of notice) in the prevention principle contravened, thus putting time and damages at large?
The Australian case of Gaymark Investments PTY Ltd -v- Walter Construction Group Ltd (1999) held that the principle was infringed by making delay notices a condition precedent. What do the English courts have to say about this? The short answer is that we still await a binding decision. Indications were given in Multiplex Constructions Ltd -v- Honeywell Control Systems Ltd (TCC 2007) and in Astea (UK) Ltd -v- Time Group Ltd (Court of Appeal 2007). In neither case did the court ultimately have to decide this issue but in both the judges doubted the law of England and Wales aligned with the position set out in Gaymark. So, it is likely that the time and liquidated damages provisions in contracts in England and Wales are likely to survive notwithstanding even if notice of delay is made a condition precedent but until a binding decision is made in the courts, they may still give rise to a little uneasiness.
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