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Chapter LIQUIDATED DAMAGES AND EXTENSIONS OF TIME 14.

1 Most construction contracts contain clauses entitling the employer to an agreed sum described as liquidated damages (or liquidated and ascertained damages) for each day or week of delay beyond a specified completion date. In more complex projects there may be provisions for sectional completion with the employer having an entitlement to recover liquidated damages for delay to parts or sections of the work. 14.2 Whilst clauses imposing an agreed liability for delay to a project are those most commonly found, similar provisions are sometimes included to provide for agreed damages in respect of failure to achieve performance targets in a contract; for example, a contract for the design and construction of a power station may contain a clause that required the contractor to pay specified damages should the power station fail to deliver a defined power output. Such provisions are often required by bankers financing such a project in order to ensure that if the power station does not achieve the design output upon which the financial model for the project was based, there will be funds available (from the contractor) to enable payments of interest and repayments of capital to be made to the bank. 14.3 Liquidated damages clauses serve useful purposes most obviously such a clause enables the employer who has suffered loss as a result of a contractor's breach of contract to recover damages without having to go through what may sometimes be a laborious, expensive, difficult and lengthy process of proving the precise amount of that loss. The inclusion of such a clause also avoids difficulties arising out of the Rule in Hadley v Baxendale (see Chapter 8 above) the contractor cannot argue that a particular type of loss was not in the contemplation of the parties if a liquidated damages clause expressly contemplates the payment of compensation for such a loss. For his part, the contractor has the advantage of knowing in advance the liability to which he is exposed in the event of delay. 14.4 Historically the courts were suspicious of such clauses, sensing that they could be instruments of oppression hence clauses that were regarded as penalty clauses were held to be unenforceable.1 A particular problem which troubled the courts, and still troubles the courts, is a situation in which a liquidated damages clause would entitle an employer under a construction contract to recover liquidated damages for delay where that delay was partly the employer's responsibility this has led to the development of what is sometimes described as the prevention principle. UNENFORCEABILITY OF PENALTY CLAUSES 14.5 One might expect that in the context of major construction contracts between large and sophisticated parties, the law would leave the parties at liberty to include whatever provisions they thought commercially acceptable as to what is to happen in the event of breach of contract (the position of consumer contracts would give rise to different considerations). However that is not the law as Jackson J said in Alfred McAlpine Capital Projects Ltd v Tilebox Ltd2 it is an anomalous feature of the law of contract that the court will strike down penalty clauses. 14.6 Two speeches of Lord Dunedin are usually cited as summarising the principles that the courts apply in determining whether a clause is unenforceable as being a penalty clause. The first was in Commissioner of Public Works v Hills:3 The general principle to be deduced from that judgment seems to be this, that the criterion of whether a sum be it called penalty or damages is truly liquidated damages, and as such not to be interfered with by the Court, or is truly a penalty which covers the damage if proved, but does not assess it, is to be found in whether the sum stipulated for can or can not be

regarded as a &genuine pre-estimate of the creditor's probable or possible interest in the due performance of the principal obligation'. The indicia of this question will vary according to circumstances. Enormous disparity of the sum to any conceivable loss will point one way, while the fact of the payment being in terms proportionate to the loss will point the other. But the circumstances must be taken as a whole, and must be viewed as at the time the bargain was made. 14.7 The second was in Dunlop Pneumatic Tyre Company Limited v New Garage and Motor Company Limited:4 1. Though the parties to a contract who use the words &penalty' or &liquidated damages' may prima facie be supposed to mean what they say, yet the expression used is not conclusive. The Court must find out whether the payment stipulated is in truth a penalty or liquidated damages. This doctrine may be said to be found passim in nearly every case. 2. The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage (Clydebank Engineering and Shipbuilding Co v Don Jose Ramos Yzquierdo y Castaneda5). 3. The question whether a sum stipulated is a penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach (Public Works Commissioner v Hills6 and Webster v Bosanquet7). 4. To assist this task of construction various tests have been suggested, which if applicable to the case under consideration may prove helpful, or even conclusive. Such are: (a) It will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach. (Illustration given by Lord Halsbury in the Clydebank case8). (b) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid (Kemble v

Farren9). This, though one of the most ancient instances, is truly a corollary to the last test. Whether it had its historical origin in the doctrine of the common law that when A. promised to pay B. a sum of money on a certain day and did not do so, B. could only recover the sum with, in certain cases, interest, but could never recover further damages for nontimeous payment, or whether it was a survival of the time when equity reformed unconscionable bargains merely because they were unconscionable, a subject which much exercised Jessel MR in Wallis v Smith10 is probably more interesting than material. (c) There is a presumption (but no more) that it is a penalty when a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage (Lord Watson in Lord Elphinstone v Monkland Iron and Coal Co11). On the other hand: (d) It is no obstacle to the sum stipulated being a genuine pre-estimate of damage, that the consequences of the breach are such as to make precise pre-estimation almost an impossibility. On the contrary, that is just the situation when it is probable that preestimated damage was the true bargain between the parties (Clydebank Case, Lord Halsbury; Webster v Bosanquet, Lord Mersey). 14.8 In Philips v The Attorney General of Hong Kong12 Lord Woolf said: Except possibly in the case of situations where one of the parties to the contract is able to dominate the other as to the choice of the terms of a contract, it will normally be insufficient to establish that a provision is objectionably penal to identify situations where the application of the provision could result in a larger sum being recovered by the injured party than his actual loss. Even in such situations so long as the sum payable in the event of non-compliance with the contract is not extravagant, having regard to the range of losses that it could reasonably be anticipated it would have to cover at the time that the contract was made, it can still be a genuine pre-estimate of the loss that would be suffered and so a perfectly valid liquidated damages provision. The use in argument of unlikely illustrations should therefore not assist a

party to defeat a provision as to liquidated damages. As the Law Commission stated in Working Paper No 61 (page 30): The fact that in certain circumstances a party to a contract might derive a benefit in excess of his loss does not outweigh the very definite practical advantages of the present rule upholding a genuine estimate, formed at the time the contract was made of the probable loss. 14.9 In Alfred McAlpine Capital Projects Ltd v Tilebox Ltd,13 to which reference has already been made, Jackson J reviewed the authorities and made the following observations: 1. There appear to be two strands in the authorities. In some cases judges consider whether there is an unconscionable or extravagant disproportion between the damages stipulated in the contract and the true amount of the damages likely to be suffered. In other cases the courts consider whether the level of damages stipulated was reasonable. Mr. Darling submits, and I accept, that these two strands can be reconciled. In my view, a pre-estimate of damages does not have to be right to be reasonable. There must be a substantial discrepancy between the level of damages stipulated in the contract and the level of damages which is likely to be suffered before it can be said that the agreed pre-estimate is unreasonable. 2. Although many authorities use or echo the phrase &genuine pre-estimate', the test does not turn upon the genuineness or honesty of the party or parties who made the pre-estimate. The test is primarily an objective one, even though the court has some regard to the thought processes of the parties at the time of contracting. 3. Because the rule about penalties is an anomaly within the law of contract, the courts are predisposed, where possible, to uphold contractual terms which fix the level of damages for breach. This predisposition is even stronger in the case of commercial contracts freely entered into between parties of comparable bargaining power. 4. Looking at the bundle of authorities provided in this case, I note only four cases where the relevant clause has been struck down as a penalty. These are Commissioner of Public Works v Hills,14Bridge v Campbell Discount Co Limited,15Workers Trust and Merchant Bank Limited v Dojap Investments Limited16 and Ariston SRL v Charly Records.17 In each of

these four cases there was, in fact, a very wide gulf between (a), the level of damages likely to be suffered, and (b), the level of damages stipulated in the contract. 14.10 The predisposition of the courts to uphold such clauses is reflected in a number of cases since the Alfred McAlpine decision.18 A rare exception was a case concerning late redelivery of a ship let on a charterparty: Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon).19 In that case although the ship was redelivered just under 7 days late the delay payment amounted to the equivalent of 30 days' hire. This was held to be a penalty. 14.11 In recent years there have been very few recorded cases of a provision for the payment of liquidated damages by reason of late completion of a project being held to be unenforceable as being a penalty.20 14.12 A possibly open question is whether an employer seeking to claim unliquidated damages for delay where a liquidated damages clause has been held to be unenforceable as a penalty clause can recover more than the sum stipulated in the contract by way of unliquidated damages in other words, does the amount stipulated in the unenforceable clause act as a cap on recoverable damages?21 We say a possibly open question because in the commentaries cited at footnote 21 below, the editors of Keating and Professor Jones treat the matter as being open on the authorities, whilst Mr McGregor disagrees. We would tend to support Mr McGregor's view that the authorities hold that the employer is not restricted in this situation to the sums stipulated.22 THE PREVENTION PRINCIPLE 14.13 The existence of liquidated damages clauses gives rise to an important legal principle, often referred to as the prevention principle. This comes into play where an employer under a construction project causes additional delay to a project also delayed by a contractor's default for example if the contractor's performance has already resulted in a delay to completion of six months but the employer then causes a further delay of three months by issuing a variation requiring extra work. If the liquidated damages clause simply required the contractor to pay 1,000 for each month of delay, then at first sight the employer would be entitled to 9,000 even though one third of that delay was his contractual responsibility. Relying on the principle that the employer ought not to be compensated for delays caused by his own act of prevention, in that case the court would refuse to enforce the liquidated damages clause. 14.14 The approach of the courts was explained by Salmon LJ in Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd:23 A clause giving the employer liquidated damages at so much a week or month which elapses between the date fixed for completion and the actual date for completion is usually coupled, as in the present case, with an extension of time clause. The liquidated damages clause contemplates a failure to complete on time due to the fault of the contractor. It is inserted by the employer for his own protection; for it enables him to recover a fixed sum as compensation for delay instead of facing the difficulty and expense of proving the actual damage which the delay may have caused him. If the failure to complete on time is due to the fault of both the employer and the contractor, in my view the clause does not bite. I cannot see how, in the ordinary course, the employer can insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled I consider that unless the contract expresses a contrary intention the employer, in the circumstances postulated, is left to his ordinary remedy; that is to say, to recover such damages as he can prove flow from the contractor's breach. No doubt if the extension of time clause provided for the postponement of the completion date on account of

delay caused by some breach or fault on the part of the employer, the position would be different. This would mean that the parties had intended the employer could recover liquidated damages notwithstanding that he was partly to blame for the failure to achieve the completion date. In such a case the architect would extend the date for completion, and the contractor would then be liable to pay liquidated damages as from the extended completion date. The liquidated damages and extension of time clauses in printed forms of contract must be construed contra proferentem. If the employer wishes to recover liquidated damages for a failure by the contractors to complete on time in spite of the fact that some of the delay is due to the employer's own fault or breach of contract, any extension of time clause should provide, expressly or by necessary inference, for an extension on account of such fault or breach on the part of the employer. For a useful discussion of the prevention principle, see the Australian decision of Brooking J in SMK Cabinets v Hili Modern Electrics Pty Limited.24 14.15 If the prevention principle applies, it has the effect of rendering the liquidated damages provision inoperable, since there is now no set date from which those damages can accrue. Time is often said in that situation to be at large,25 the contractor now being under an obligation to complete the works within a reasonable time rather than by the date specified in the contract. In Shawton Engineering Ltd v DGP International Ltd,26 the Court of Appeal held that what is a reasonable time has to be judged at the time when the question arises, in the light of all relevant circumstances. 14.16 As the Court of Appeal held in Peak27 and also in Rapid Building Group Limited v Ealing Family Housing Association,28 the prevention principle will apply even where the employer's delays form only part of the causes of the overall delay and even if the contractor would have been unable to complete on time in the absence of delay on the part of the employer.29 14.17 The prevention principle is only applicable where delay is caused by a breach of contract by the employer or where delay is caused by something for which the employer is contractually responsible (an example of the latter is delay caused by the exercise by the employer of a right to instruct variations30). If the delay occurs by reason of an event which is not the contractor's fault but also not the contractual responsibility of the employer, the prevention principle does not apply and the contractor will as a result be under a liability to pay liquidated damages.31 EXTENSION OF TIME CLAUSES 14.18 In order to enable the employer to perpetrate acts of prevention yet still maintain a fixed completion date and with it an entitlement to deduct liquidated damages, the employer may extend time for completion for specified events for which the employer would otherwise be liable. Accordingly, the inclusion in a well-drafted contract of an extension of time clause is important in order to protect the employer's entitlement to levy liquidated damages, since in most cases the contractor can argue that some part of the delay is attributable to matters for which the employer is contractually responsible. 14.19 The terms of such clauses vary, but all have in common the intent of making the liquidated damages regime workable.32 A number of problems arise on a recurrent basis. 14.20 Typically the extension of time clause will place the power to grant an extension of time in the hands of a supervising officer, usually the architect or the engineer named in the contract. In this form of contract the contract specifies a representative of the employer (for example the architect in the JCT Standard Form of Building Contract or the engineer in the ICE Standard Conditions of Contract) who is to grant extensions of time. It was held that under a predecessor of the current JCT Form of Contract in granting an extension of time the architect acted quasiarbitrally, and had a duty to act fairly, lawfully, rationally and logically.33 Under clause 2(8) of

the ICE Conditions the engineer is required to act impartially. In a case concerning the role of a construction manager, Jackson J held that the construction manager had a duty to act in a manner that was independent, impartial, fair and honest.34 Such a duty is probably also imposed upon the project manager under the NEC forms of contract.35 14.21 Each extension of time clause falls to be construed on its own terms: such clauses may be construed as only empowering the grant of an extension of time before completion of the project in accordance with the original contract date or an extended completion date which had been fixed previously.36 However most standard form contracts will permit an extension of time to be granted retrospectively.37 Commenting upon an argument that the true construction of the then current JCT Standard Form of Contract did not permit an architect to grant an extension of time retrospectively, Colman J said:38 It was common ground that if the contract failed to provide for power to grant an extension of time on account of delays caused by an act of prevention, the effect of the act of prevention was to prevent the employer relying on the completion date/liquidated damages provisions in the contract. The obligation to complete the works was to be performed within a reasonable time, there could be no extensions on account of relevant events and the employer's only hope of compensation would be to recover unliquidated damages for delay: see Peak Construction (Liverpool) LtdvMcKinney Foundations Ltd The remarkable consequences of the application of this principle could therefore be that if, as in the present case, the contractor fell well behind the clock and overshot the completion date and was unlikely to achieve practical completion until far into the future, if the architect then gave an instruction for the most trivial variation, representing perhaps only a day's extra work, the employer would thereby lose all right to liquidated damages for the entire delay right up to practical completion or, at best, on the respondents' submission, the employer's right to liquidated damages would be confined to the period up to the act of prevention. For the rest of the delay he would have to establish unliquidated damages. What might be a trivial variation instruction would on this argument destroy the whole liquidated damages regime for all subsequent purposes.39 So extreme a consequence for the future operation of the contract would hardly reflect the common intention, particularly having regard to the very specific distribution of risk provisions which are agreed to be applicable in respect of relevant events occurring before the completion date. It is certainly a construction which is most improbable in the absence of some other express provision supporting it. 14.22 Another argument which recurs was also considered by Colman J in the Balfour Beatty case40 (and touched upon in the passage just cited). The question was, assuming that a variation was granted late in a contract when the contractor was already much delayed, how was an extension of time to be calculated? To give an example, assume that a contract required completion by 1 April, the contractor having been given possession on 1 January. Thus the contract period was three calendar months, but the contractor was dilatory so that as at 31 May the works were only nearing completion, but completion would be achieved the following day, 1June, two calendar months late. If on 31 May the employer issued an instruction with the effect that the works could not be completed until 1 July, what extension should be granted? The court had to decide between two rival approaches: (1) what was described as the gross method said that as the contractor would not be able to complete before 1 July he was entitled to an extension of time to that date, effectively a three-month extension wiping out the contractor's liability to liquidated damages arising from the contractor's earlier delays; and (2) what was described as the net method would grant him an extension of one month, that being the additional delay caused by the employer's exercise of his right to issue a variation. The judge held that the net method was the correct method on the terms of the contract before him. The effect of this decision was summarised by Dyson J as follows:41

[T]he completion date as adjusted was not the date by which the contractor ought to have achieved practical completion, but the end of the total number of working days starting from the date of possession within which the contractor ought fairly and reasonably to have completed the works. 14.23 In a perfect world when a delaying event occurs entitling the contractor to an extension of time, the engineer, architect or other person having the power and duty to extend time would be able to do so and would do so straight away. However in the real world extensions of time are often not given straight away for a number of reasons it may be that the contractor is late in giving notification of delay, or gives inadequate information. It may simply be impossible to assess the full consequences of a delaying event; for example, will it take two weeks or two months to deal with unforeseen ground conditions? In other cases the contractor and the employer's representative may take different views as to whether the event causing delay is one for which the employer or one for which the contractor takes the risk. 14.24 This can create a problem for the contractor. Delay on a major project carries the risk of the contractor incurring liquidated damages, possibly wiping out any profit on the project. If the contractor believes that he is entitled to an extension of time, and has the courage to stick by his judgment, he can just continue as before in the belief that in due course his view will be vindicated. But if he is wrong, then he may not obtain an extension of time and may by his inaction be liable for liquidated damages. On the other hand the contractor might be able to take steps to mitigate the delay, for example by persuading his workforce to work overtime at enhanced rates, but might incur considerable expense in so doing. 14.25 Where this tension arises, a contractor will often claim that he has been forced to accelerate, that is to say to increase resources in order to accommodate the effects of an event which would cause delay to completion were such resources not deployed. Where a contractor deploys such additional resources under the duress created by the prospect of otherwise facing a liability for liquidated damages, the contractor will often claim that the failure on the part of the employer or the employer's representative to grant an extension of time amounts to a constructive instruction to accelerate. This concept, although often deployed in claims (and having found some favour in the US42), has not been endorsed in English reported cases, doubtless because many such cases, if not resolved amicably, are resolved through adjudication or arbitration. However in one case a very experienced judge has awarded additional expense arising from a contractor's attempts to complete on time in the absence of an extension of time.43 This is not an easy area of the law if the delay arises as a consequence of a variation being instructed then acceleration costs may be regarded as part of the cost associated with the variation. If the failure by the employer's representative arose out of an obstinate refusal to recognise the contractor's rights, perhaps for commercial reasons, then the recovery of additional costs may be justifiable as damages for breach of contract, of course subject to any contractual provisions limiting liability for damages. However if the circumstances giving rise to delay were wholly unforeseeable and the amount of time to which the contractor was entitled was impossible to assess, then the failure to grant an extension of time may not have been a breach of contract, and the legal basis for recovery by the contractor of additional costs incurred in mitigating the delay may be somewhat uncertain. This is an area little explored in the decided cases, but of considerable practical importance to a contractor assessing what to do in the face of an event delaying the works.44 14.26 It has been held in some Commonwealth authorities that if the employer or his representative fails to operate the extension of time machinery at the right time, or at all, this may result in time being set at large, rather than it being found that there has been a constructive instruction to accelerate. In Anderson v Tupeka County Council,45 Williams J in the New Zealand Court of Appeal said:

If no date is specified within which the works are to be completed, how is it possible for the contractor to complete the works by a specified date? Or how can he have broken a contract to complete on a specified date if he did not know beforehand what the date was on which he was under an obligation to complete? A proviso which was intended to preserve to the contractee the right to recover penalties in any event which, had it not been for the proviso, would have deprived him of that right, should be expressed in clear and unambiguous terms. If it had been intended to allow the Engineer to decide ex post facto whether there was a breach of contract to complete, it should have been very plainly stated. This decision was followed in the Canadian decision of Hawl-Mac Construction Ltd v Candle River46 in which Wallace J held that an engineer's failure to issue his decision before the expiry of the original completion date had the effect of setting time at large so that no liquidated damages could be claimed by the employer: The extension clause in the present contract provides that the time for completion shall be extended for the time lost due to the owner-caused delays and that the engineer, upon receipt of an extension of time, shall fully and fairly consider it and fix the time of the extension. Having failed to perform this obligation before the time for completion of the contract period, it is my opinion there was no longer a specified date within which the contract was to be completed or from which penalties could be imposed. The English case law, referred to at paragraph 14.21 above, suggests that (subject to the precise terms of a particular contract) the English Courts are not averse to the extension of time even after the end of the contract period, thus taking away the foundation of these Commonwealth authorities. However in Bernhard's Rugby Landscapes Ltd v Stockley Park Consortium Ltd,47 HH Judge Humphrey LLoyd QC suggested that there could come a point at which the extension of time machinery could be said to have broken down: A breakdown of the contractual machinery occurs when without material default or interference by a party to the contract, the machinery is not followed by the person appointed to administer and operate it and, as a result, its purpose is not achieved, and is either no longer capable of being achieved or is not likely to be achieved. It can for most practical purposes be equated to interference by a contracting party in the process whereby the other is deprived of a right or benefit, e.g., the failing of an employer to re-appoint an administrator or certifier on the resignation of a previously appointed person: see Panamena Europea NavigationvFrederick Leyland & Co Ltd.48 Non-compliance with the machinery by the administrator is not itself sufficient: the effect must be that either or both of the parties to the contract do not in consequence of the breakdown truly know their position or cannot or are unlikely to know it. Either is then free to have its position established by the appropriate means available: litigation or arbitration (preceded, if the contract so requires, by recourse to adjudication or the like). If the true position is or can be established by other contractual means then the breakdown is likely to be immaterial even where the result of the breakdown is that one party does not obtain the contractual right or benefit which would or might otherwise have been established by the machinery, e.g., the issue of a certificate, provided that the true position can be restored by the operation of other contractual machinery. 14.27 Thus the position in English law appears to be that if a supervising officer, engineer, architect or other employer's representative, fails to grant extensions of time during the currency of the contract, it may be that this will be construed as being a constructive instruction to accelerate or possibly as a breakdown of the extension of time machinery so that time is set at large. However, given that most construction contracts of any sophistication will contain machinery to enable disputes to be resolved expeditiously and during the currency of the

contract (including statutory rights to go to adjudication) it is more likely that courts or arbitrators will hold that such dispute resolution machinery negates either of those results.49 14.28 A difficult and much debated problem arises out of provisions limiting the contractor's right to claim an extension of time in the event of non-compliance with notice provisions.50 Most modern construction contracts not only contain extension of time clauses but also require the contractor to give notice of an alleged right to an extension of time. A much-debated issue is how such provisions affect or are affected by the application of the prevention principle. To give an example, assume that the giving of notice by the contractor is a condition precedent to the grant of an extension of time based upon an employer's breach of contract.51 If the contractor by oversight fails to give notice, then the employer may be entitled to claim liquidated damages as a result of delay caused by his own breach of contract. Does the prevention principle operate to stop this unmeritorious right to recover liquidated damages? 14.29 The starting point is that as a liquidated damages clause is usually inserted in contracts for the benefit of the employer who will seek to rely upon it, such clauses are construed contra proferentem, that is to say that any ambiguities are construed strictly against the interest of the employer.52 Even where a time-bar clause appears to be a condition precedent, a court or arbitrator may refuse to construe it as such if the result would be a commercial nonsense.53 However, it is then necessary to consider what the result is, if on its true construction a notice provision is truly a condition precedent, and if on the face of the contract a contractor who does not give notice in accordance with its terms, will lose his right to an extension of time and thus be exposed to a liability for liquidated damages. 14.30 An Australian case, Gaymark Investments Pty Ltd v Walter Construction Group Ltd,54 suggests that the contractor is relieved of the liability to complete by the stipulated date even if notice has not been given. This view has been supported by the editors of Keating on Construction Contracts55 and Professor Jones.56 On the other hand, there is a formidable body of authority suggesting that parties should be held to the terms of their agreement.57 14.31 Less controversially, if the contract contains a condition precedent to the employer's right to recover liquidated damages, that will be given due effect (and any such clause will be construed against the employer's interest).58 CONCURRENT DELAY 14.32 We have already cited at paragraph 11.7 above Akenhead J's comment that:59 [W]here there are two coeffective and concurrent causes of delay to a construction project, one of which is the defendant's breach of contract and one which is not, the claimant can recover its loss to that extent in full from the defendant. Although this is a topic much discussed and a point much raised, it happens less in practice upon analysis than practitioners sometimes think. 14.33 We would question whether the problem is as infrequent as the quotation suggests. If nothing else, the problem is frequently encountered at the time when claims are first put forward, when cases are pleaded in formal written pleadings, and when negotiations take place. It may be worthwhile considering why these problems recur. It will be seen that some of the difficulties arise from attempts to define what is meant by concurrent delays or concurrent causes of delay. 14.34 We would, with the greatest respect, agree with Akenhead J that by the time cases come for final decision, whether in arbitration or litigation, questions of causation tend to have been simplified by the blunt instrument of the facts for example, despite the employer's protestations, it becomes obvious that a culture of indecision on the part of the employer or the employer's representative in issuing instructions, or a tendency to instruct variations, has blown

the contractor off course and made it impossible for the contractor to execute the works efficiently and economically; or, in the opposite direction, if the contractor has relied upon every minor variation in an attempt to distract attention from a failure to mobilise timeously and work efficiently. In either of these cases the deciding tribunal may have no difficulty in deciding that the real cause of delay was the employer's or the contractor's responsibility, as the case may be. However, other cases may prove more complicated, and certainly may appear more complicated at an early stage when the parties seek advice, or when the person responsible for granting extensions of time has to make his or her decisions. 14.35 Certain influences are capable of clouding the issue, not least the programming tools available through modern computer power. Managing a construction site with many trades, some of which can operate concurrently and others of which can only act consecutively, is an immensely complicated task. That skill has been assisted by modern programming professionals using such software as Primavera. The availability of such skills, and the expectation that competent contractors will avail themselves of these human and technological resources has led to the widespread requirement in contracts that the contractor provide and update a CPM (critical path method) or similar programme for the works. The intent is that the employer should be able to know how the contractor intends to carry out the works amongst other things, this enables the employer to assess whether the contractor is up to speed or not, and whether a variation to the works would or would not cause delay to completion of the whole or part of the works. 14.36 Part of these programming skills is to identify whether there is a critical path60 through the works and, if so, where it goes. Sometimes it is obvious to take a simple contract to build one dwelling house replacing an existing house, you cannot erect walls until you have laid foundations. You cannot lay foundations until the site has been cleared. You cannot knock down the house that is on the site until you have possession. Thus the critical path, at least in the early stages, runs through obtaining possession of the site, knocking down the existing building, laying foundations, building walls. However, if there are two separate dwellings to be built, the path may not be so obvious (eg, is it necessary that one house be constructed before the other?). If there are one hundred houses to be built, the assessment of the critical path becomes even more complicated. 14.37 These programming problems have a tendency to interconnect with a legal distinction which is not always made with sufficient clarity. The JCT forms of contract (and their predecessors the RIBA forms) produced a mentality in the United Kingdom which tended to link extensions of time with recovery of loss and expense, so that if the contractor established that an extension of time was due, the expectation was that the contractor would recover loss and expense for the losses suffered by the contractor during the delay period for which an extension of time was granted. 14.38 However, the legal concepts applicable to the grant of an extension of time and the award to a contractor of losses suffered during a period of delay are distinct. In respect of the first, where there are concurrent causes of delay at least one of which is the contractual responsibility of the employer, the prevention principle, as explained above, has the effect that the courts are reluctant to allow the employer to recover liquidated damages in respect of a period of delay which would have been suffered by the employer in any event by reason of matters for which the employer is contractually responsible. 14.39 The same principle applies to the converse case, where the contractor is claiming recompense for expenses suffered by him during a period of delay. It is offensive to justice for a contractor to recover his standing costs or preliminaries from an employer if he would have incurred those costs in any event because (for example) of his own delays in mobilisation.

14.40 Thus it is important always to keep in mind who is claiming damages or expenses and who is resisting recovery of such damages or expenses. This distinction can be obscured by the reliance upon programming evidence of the type referred to above. If a computer programme is used during a contract to help plan the work, the programme will be helpful in reaching a decision as to what needs to be done next in order to attempt to complete the project by the earliest possible date, and in any event (if possible) by any date stipulated in the contract for the whole or sections of the works. But in assessing liabilities after completion of the contract such programming materials can be misleading,61 not least because they concentrate upon establishing the critical path thus the critical path might be shown as going through section A of the site, but section B may be only days behind on a separate sub-critical path. Thus if, for example, the employer manages to show that by reason of his defaults the contractor was likely to finish a year late, this may defeat the contractor's claim for loss and expense during that year because the contractor would always have suffered that loss. If the evidence shows that because of the employer's variations the contractor could not have completed less than 364 days late, the contractor should not recover loss and expense. On the other hand, the employer's recovery of liquidated damages should be limited to that measured by one day of delay being the difference between the contractor's one-year delay and the employer's 364day delay. Moreover, reliance upon computer programmes creates a tendency to encourage the view that greater precision as to causes of delay is possible than is truly realistic in the jumble of events that occur for differing reasons on construction projects. 14.41 This is not to say that computer programming evidence has no part to play in presenting or defending a claim for an extension of time very far from it; our point is simply that the purpose for which such evidence is to be deployed must be kept clearly in mind. The contemporaneous computer programme prepared by the contractor may be very powerful evidence of how the contractor intended to carry out the works. Revisions to that programme may be useful evidence to show the impacts that delays had upon the contractor during the course of the works. Recreation of such a programme may be a useful way for the employer to illustrate that the contractor did not keep to his own programme for reasons which were not of the employer's making. In Balfour Beatty Construction Ltd v London Borough of Lambeth62 HH Judge Humphrey LLoyd QC said: By now one would have thought that it was well understood that, on a contract of this kind, in order to attack, on the facts, a clause 24 certificate for non-completion (or an extension of time determined under clause 25), the foundation must be the original programme (if capable of justification and substantiation to show its validity and reliability as a contractual starting point) and its success will similarly depend on the soundness of its revisions on the occurrence of every event, so as to be able to provide a satisfactory and convincing demonstration of cause and effect. A valid critical path (or paths) has to be established both initially and at every later material point since it (or they) will almost certainly change. Some means has also to be established for demonstrating the effect of concurrent or parallel delays or other matters for which the employer will not be responsible under the contract. 14.42 Experience of extension of time disputes reveals proponents for different approaches to analysis of events.63 The United Kingdom-based Society of Construction Law attempted in 2002 to bring some uniformity to this subject, publishing The Society of Construction Law Delay and Disruption protocol, but this has not met with universal approval and the debate continues. We would comment that a method of analysis that most closely adheres to the facts rather than highly theoretical approaches tends to find favour with most tribunals. 14.43 An issue that occurs from time to time is who is entitled to any float in a contract programme. For example, a contractor entering into a contract with a one-year contract period may plan to complete the work within 11 months what happens if the employer is guilty of

delay eating into that float? There is authority for the proposition that the float should be available to the contractor if, absent any express contractual provision, he would become liable to pay liquidated damages if the float were extinguished by preceding employer-risk delays. This principle is supported by the judgment in Royal Brompton Hospital v Hammond.64 The contractor is entitled to an extension of time for a project delay reflecting float in an agreed contract programme if that extension would enable it to avoid paying liquidated damages. 14.44 When the evidence has been heard, and the analysis of the programmers has been considered, it will often then be necessary to consider how to proceed if it is apparent that delay has been caused by both the employer and the contractor. Considering this problem, in Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd65 Dyson J said: [I]t is agreed that if there are two concurrent causes of delay, one of which is a relevant event, and the other is not, then the contractor is entitled to an extension of time for the period of delay caused by the relevant event notwithstanding the concurrent effect of the other event. Thus, to take a simple example, if no work is possible on a site for a week not only because of exceptionally inclement weather (a relevant event), but also because the contractor has a shortage of labour (not a relevant event), and if the failure to work during that week is likely to delay the works beyond the completion date by one week, then if he considers it fair and reasonable to do so, the architect is required to grant an extension of time of one week. He cannot refuse to do so on the grounds that the delay would have occurred in any event by reason of the shortage of labour. As a statement of the application of the prevention principle, this was entirely in line with the authorities cited at paragraph 14.16 above: it is to be noted that the contractor in the Henry Boot case was seeking to avoid the application of liquidated damages accordingly the decision says nothing as to the effect of concurrent causes of delay on a contractor's claim for recovery of his losses consequent upon alleged delay on the part of the employer. 14.45 In a Scottish case, City Inn Ltd v Shepherd Construction Ltd,66 Lord Drummond Young, commenting upon Dyson J's decision, said: [I]n the application of clause 25, a relevant event may still be taken into account even though it operates concurrently with another matter that is not a relevant event. In other words, the &but for' rule of causation, that an event A will only be a [cause] of a result B if B would not have occurred but for A, has no application. In the example given by Dyson J in para 13, the delay would have occurred as a result of the shortage of labour by itself, regardless of the bad weather. On the approach to causation found in the general law of contract and delict, it could not be said that the bad weather caused the delay because the delay would have occurred in any event. Under clause 25, however, the architect may take the bad weather into account to the extent that he considers it fair and reasonable to do so. This perhaps emphasises the general notion underlying clause 25, that it is designed [to achieve] fairness as between the contractor and the employer, and the architect is given a reasonably wide discretion in order to achieve that result. We would add that the fairness which the clause is intended to achieve is that the employer should not recover liquidated damages when his own delays would have prevented the project completing on time it could be said that this is an application of the but for test to which Lord Drummond Young referred, but applied to the employer's claim for liquidated damages. 14.46 In Royal Brompton Hospital NHS Trust v Hammond (No. 7)67 HH Judge Seymour QC having referred to what Dyson J had said in the Henry Boot case, said: However, it is, I think, necessary to be clear what one means by events operating concurrently. It does not mean, in my judgment, a situation in which, work already being delayed, let it be

supposed, because the contractor has had difficulty in obtaining sufficient labour, an event occurs which is a relevant event and which, had the contractor not been delayed, would have caused him to be delayed, but which in fact, by reason of the existing delay, made no difference. In such a situation although there is a relevant event, &the completion of the Works is [not] likely to be delayed thereby beyond the Completion Date.' The relevant event simply has no effect upon the completion date. This situation obviously needs to be distinguished from a situation in which, as it were, the works are proceeding in a regular fashion and on programme, when two things happen, either of which, had it happened on its own, would have caused delay, and one is a relevant event, whilst the other is not. In such circumstances there is a real concurrency of causes of the delay. It was circumstances such as these that Dyson was concerned with in Henry Boot. 14.47 This dictum illustrates the importance of being clear as to the principle being applied and the facts to which that principle is being applied. What the judge appears to us to be saying was that if a later event for which the employer is responsible has no effect at all upon a delay already caused by the contractor's default, no extension of time would be justified in respect of that event: this seems an obvious statement of common sense. Thus, for example, if when the contract is a year in delay the employer issues an instruction for a variation that would have caused a month's delay to an undelayed contract, the issue of the variation would not entitle the contractor to an extension of time. This is because on the facts the employer does not fall foul of the prevention principle nothing he did in fact prevented the contractor from completing in time. 14.48 Commenting upon the passage in the Royal Brompton case cited in paragraph14.46 above, Lord Drummond Young said:68 In that passage Judge Seymour gave a further explanation of what is meant by &events operating concurrently'. He drew a distinction between on one hand a case where work has been delayed through a shortage of labour and a relevant event then occurs and on the other hand a case where Works are proceeding regularly when both a relevant event and a shortage of labour occur, more or less simultaneously. Judge Seymour considered that Dyson J had only been concerned with the latter situation, and not with the former; in the former situation the relevant event had no effect upon the Completion Date. I have some difficulty with this distinction. It seems to turn upon the question whether the shortage of labour and the relevant event occurred simultaneously; or at least it assumes that the shortage of labour did not significantly predate the relevant event. That, however, seems to me to be an arbitrary criterion. It should not matter whether the shortage of labour developed, for example, two days before or two days after the start of a substantial period of inclement weather; in either case the two events operate concurrently to delay completion of the Works. In my opinion both of these cases should be treated as involving concurrent causes, and they should be dealt with in the way indicated in clause 25.3.1 by granting such extension of time as the architect considers fair and reasonable. If what HH Judge Seymour was contemplating was a situation where two causes operate concurrently but one (for which the contractor is responsible) just happens to commence before the other (for which the employer is responsible) then we would agree with this criticism of his decision. On appeal to the Inner House this passage of Lord Drummond Young's Opinion was upheld by the majority of the Extra Division of the Inner House69 However, if as we suggest above, HH Judge Seymour was considering a much simpler situation where causes of delay can be separated more definitively, then it may be that the criticism is ill-founded. 14.49 Having reviewed other (older) authorities Lord Drummond Young continued:70

While delay for which the contractor is responsible will not preclude an extension of time based on a relevant event, the critical question will frequently, perhaps usually, be how long an extension is justified by the relevant event. In practice the various causes of delay are likely to interact in a complex manner; shortages of labour will rarely be total; some work may be possible despite inclement weather; and the degree to which work is affected by each of these causes may vary from day to day. Other more complex situations can easily be imagined. What is required by clause 25 is that the architect should exercise his judgment to determine the extent to which completion has been delayed by relevant events. The architect must make a determination on a fair and reasonable basis. Where there is true concurrency between a relevant event and a contractor default, in the sense that both existed simultaneously, regardless of which started first, it may be appropriate to apportion responsibility for the delay between the two causes; obviously, however, the basis for the apportionment must be fair and reasonable. Precisely what is fair and reasonable is likely to turn on the exact circumstances of the particular case. 14.50 The decision of Lord Drummond Young has been criticised in so far as it might be suggested that it represents the law of England71 (a similar suggestion had been made in an earlier Scottish case, Laing Management (Scotland) Ltd v John Doyle Construction Ltd72) in particular it has been said to be inconsistent with Peak v McKinney and the Henry Boot case. Certainly, if there is true concurrency, those authorities and the prevention principle would suggest that apportionment would be inappropriate the correct answer on the English authorities would be that the contractor would not be entitled to recover liquidated damages where his default would have prevented completion by the contractual date in any event. If, however, the position is, as on many projects, that many causes operate together in such a way that precise attribution of responsibility for delay is difficult or impossible, but the architect can see that on a broad brush basis the contractor was responsible for X% of the delay and the employer for Y%, there seems to be no reason, on a fair and reasonable basis, why an apportionment exercise as suggested in by Lord Drummond Young in City Inn should not be carried out. Whilst such an apportionment might not have the precision sought by programming experts, it may well achieve the closest approximation to justice which can be achieved in some cases. City Inn has been followed in a case in Hong Kong.73 14.51 The decision of the Lord Ordinary, Lord Drummond Young, was appealed74: his decision was upheld on appeal. After a review of the authorities, Lord Osborne said75: In the first place, before any claim for an extension of time can succeed, it must plainly be shown that a relevant event is a cause of delay and that the completion of the works is likely to be delayed thereby. In the second place, the decision as to whether the relevant event possesses such causative effect is an issue of fact which is to be resolved, not by the application of philosophical principles of causation, but rather by the application of principles of commonsense. In the third place, the decision-maker is at liberty to decide an issue of causation on the basis of any factual evidence acceptable to him. In that connection, while a critical path analysis, if shown to be soundly based, may be of assistance, the absence of such an analysis does not mean that a claim for extension of time must necessarily fail. In the fourth place, if a dominant cause can be identified as the cause of some particular delay in the completion of the works, effect will be given to that by leaving out of account any cause or causes which are not material. Depending on whether or not the dominant cause is a relevant event, the claim for extension of time will or will not succeed. In the fifth place, where a situation exists in which two causes are operative, one being a relevant event and the other some other event for which the contractor is to be taken to be responsible, and neither of which could be described as the dominant cause, the claim for extension of time will not necessarily fail. In such a situation, which could, as a matter of language, be described as one of concurrent causes, in a broad

sense ., it will be open to the decision-maker, whether the architect, or other tribunal, approaching the issue in a fair and reasonable way, to apportion the delay in the completion of the works occasioned thereby as between the relevant event and the other event. In that connection, it must be recognised that the background to the decision making, in particular, the possibility of a claim for liquidated damages, as opposed to one for extension of time, must be borne in mind and approached in a fair and reasonable manner. DEDUCTION OF LIQUIDATED DAMAGES 14.52 Most carefully drawn construction contracts contain a provision entitling the employer to deduct liquidated damages from sums otherwise due, often after the issue of a certificate such as a Certificate of Non-Completion provided for under clause 24.1 of the 1998 JCT Standard Form of Building Contract Private with Quantities. The issue of such a certificate will often be a condition precedent not only to deduction of liquidated damages but also to recovery of liquidated damages at all.76 14.53 In cases to which the Housing Grants, Construction and Regeneration Act 1996 applies, it will also be necessary for the employer to give a withholding notice complying with section 111 of that Act.77 1 Other legal systems share this cautious approach and have mechanisms for controlling or striking down penal damages provisions see for example Article 1152 of the French Civil Code. 2 [2005] EWHC 281 (TCC); [2005] BLR 271 at paragraph [35]. 3 [1906] AC 368 at 375-376. 4 [1915] AC 79 at 86-88. 5 [1905] AC 6. 6Supra. 7 [1912] AC 394. 8Supra. 9 6 Bing 141. 10 (1882) 21 Ch D 243. 11 (1886) 11 App Cas 332. 12(1993) 61 BLR 41 at 58-59. 13Supra, at paragraph 48. 14Supra. 15 [1962] AC 600. 16 [1993] AC 573. 17 Court of Appeal, 13 March 1990. 18Murray v Leisureplay plc [2005] EWCA Civ 963; CFW Architects v Cowlin Construction Limited [2006] EWHC 6 (TCC); 105 Con LR 116; Steria Ltd v Sigma Wireless Communications Ltd[2008] BLR 79; M & J Polymers v Imerys Minerals Limited [2008] EWHC 344 (Comm); [2008] 1 Lloyd's Rep 541; General Trading Company (Holdings) Limited v Richmond Corporation Limited [2008] EWHC 1479 (Comm); [2008] 2 Lloyd's Rep 475; Liberty Mercian Limited v Dean & Dyball Construction Limited [2008] EWHC 2617 (TCC); [2009] BLR 29; Tandrin Aviation

Holdings Ltd v Aero Toy Store LLC [2010] EWHC 40 (Comm); [2010] Lloyd's Law Rep Plus 84. See also the Australian cases of AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170; Ringrow Pty Ltd v BP Australia Ltd [2005] HCA 71; State of Tasmania v Leighton Contractors Pty Ltd [2005] TASSC 133. 19 [2009] EWHC 551 (Comm); [2009] 1 Lloyd's Rep 658, affirmed [2009] EWCA Civ 855. 20 Some instances of such clauses being held to be unenforceable are Bramall & Ogden Limited v Sheffield City Council(1983) 29 BLR 73, Stanor Electric v R Mansell (1988) CILL 399 and the arbitrator's award under consideration in Braes of Doune Windfarm (Scotland) Ltd v Alfred McAlpine Business Services Ltd [2008] EWHC 426 (TCC); [2008] BLR 321. 21 See Keating on Construction Contracts, 8th edition at paragraph 9-014; McGregor on Damages, 18th edition at paragraphs 13-025 and 13-026; Professor D Jones A.M., Can Prevention be Cured by Time Bars? [2009] ICLR 57 at 59 and 60. 22Wall v Rederiaktiebolaget Luggude [1915] 3 KB 66; Widnes Foundry v Cellulose Acetate Silk Co [1931] 2 KB 393. 23[1970] BLR 111 at 121. 24 [1984] VR 391. 25McAlpine Humberoak Limited v McDermott International Inc.(1992) 58 BLR 1 at 21-22; Shawton Engineering Limited v DGP International Limited [2005] EWCA Civ 1359; [2006] BLR 1 at paragraph 29. 26 [2005] EWCA Civ 1359; [2006] BLR 1. 27Supra. 28(1984) 29 BLR 5. 29 See SMK Cabinets (supra) at 398-400. 30 See SMK Cabinets (supra). 31Percy Bilton Limited v Greater London Council [1982] 1 WLR 794; (1982) 20 BLR 1. 32 For a helpful review of extension of time clauses to be found in a range of standard form contracts, see Keith Pickavance and Wendy MacLaughlin A Little of Time at Large: Proof of a Reasonable Time to Complete in the Absence of a Completion Date, October 2005 published by the Society of Construction Law. 33John Barker Construction Limited v Portman Hotel Limited(1996) 83 BLR 31. 34Scheldebouw BV v St James Homes (Grosvenor Dock) Ltd [2006] BLR 113 where it was held that these concepts are overlapping but not synonymous. They connote that the decisionmaker must use his professional skills and his best endeavours to reach the right decision, as opposed to a decision which favours the interests of the employer. See also Amec Civil Engineering Ltd v Secretary of State for Transport[2005] BLR 227. 35See Costain Limited v Bechtel Limited [2005] EWHC 1018 (TCC); [2005] CILL 2239, but see to the contrary the trenchant views of HH Humphrey LLoyd QC in Some Thoughts on NEC 3 in [2008] ICLR 468 particularly at 475-476. 36Miller v LCC (1934) 50 TLR 479. 37 See for example Amalgamated Building Contractors Co Ltd v Waltham Holy Cross UDC [1952] 2 All ER 452; Balfour Beatty Building Ltd v Chestermount Properties Ltd(1993) 62 BLR 1.

38 In Balfour Beatty Building Ltd v Chestermount Properties Ltd (supra) at 27. 39 A similar suggestion was condemned by the Court of Appeal in McAlpine Humberoak Limited v McDermott International Inc (supra) at 35. 40Supra. 41 In Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 ConLR 32 at paragraph 12. 42 See footnote 50 to Geoffrey Smith and James Perry, The Evolution of Global Claims and Laing Management (Scotland) Ltd v John Doyle Construction Ltd [2005] ICLR 212 at 240. 43Motherwell Bridge Construction Ltd v Micafil Vakuumtechnik (2002) 81 ConLR 44, a decision of HH Judge Toulmin CMG, QC. It is to be noted that the delay was caused by the instruction of additional works by the employer (see paragraphs [543]-[548]). Thus for reasons explained in the text above, the recovery of additional costs was not difficult conceptually. 44 There is also a further problem discussed in Mellors, Baker, Lavers and Chalmers FIDIC Contracts: Law and Practice at paragraphs 5.189 and 5.190 as to whether an instruction to accelerate is a permissible instruction in the absence of express power to do so. Usually a power to vary the contract does not include a power to order the contractor to complete contract works within a shorter period than allowed in the contract, especially where the contractor may contend that the instruction is impossible. Such an instruction may be extremely unwelcome as it will often require the contractor to divert resources urgently needed on another project. 45 (1900) 19 NZLR 1. 46 (1984) 60 BCLR 57. 47(1997) 82 BLR 39. 48 [1947] AC 428. 49 See in this context Cowan and Bellhouse, Common Law Time at Large Arguments in a Civil Context [2007] Const LJ 598. 50 For one amongst many articles discussing this problem, see Crispin Winser Shutting Pandora's Box: the Prevention Principle after Multiplex v Honeywell (2007) 23(7) Const LJ 511. 51 For examples of such clauses in widely used standard forms, see clause 61.3 of the NEC3 form and clause 20.1 of each of the FIDIC 1999 standard forms of contract, both of which require the contractor to give notice at peril of losing a right to claim an extension of time if notice is not given. For a discussion of the practical effect of these clauses, see Ronan Champion, Variations, Time Limits and Unanticipated Consequences, SCL Paper No 138. 52 See the passage from the judgment of Salmon LJ cited at paragraph 14.13 above. 53 This expression comes from the judgment of Chadwick LJ in Chiemgauer Membran- und Zeltbau GmbH (formerly Koch Hightex GmbH) v New Millennium Experience Co Ltd (formerly Millennium Central Ltd) (No 1) [1999] CILL 1595 at 1597. Similarly, if extension of time provisions are poorly drafted so that they are inherently uncertain or unworkable, they may be held to fail altogether. See Bramall and Ogden Ltd v Sheffield City Council(1985) 29 BLR 73 and Arnold and Co Ltd v Attorney-General of Hong Kong(1989) 47 BLR 129. 54 (2000) 16 BCL 449. 55 8th edition at paragraph 9-025.

56 In the article already cited above, Can Prevention be Cured by Time Bars? [2009] ICLR 57. See also the carefully thought through contribution of Tony Marshall in Delay, Progress and Programming [2010] ICLR 137 and Mathew Stulic Prevention and the Allocation of the Risk of Project Delays: Evolution or Revolution? SCL Paper No 163, May 2010. 57Turner Corporation v Austotel Pty Ltd (1994) 13 BCL 378; Turner Corporation Ltd (In Provisional Liquidation) v Co-Ordinated Industries Pty Ltd (1994) BCL 202; City Inn Ltd v Shepherd Construction Ltd[2003] BLR 468 at paragraph 23 construing a time-bar clause as giving a contractor an option whether to apply for an extension of time; Beckhaus v Brewarrina No. 2 [2004] NEWSC 1160; Dcor Ceilings Pty Ltd v Cox Constructions Pty Ltd (No. 2) [2005] SASC 483; [2006] CILL 2311; Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd [2007] EWHC 447 (TCC); [2007] BLR 195; Steria Ltd v Sigma Wireless Communications Ltd[2008] BLR 79. Commentaries suggesting that Gaymark is wrong include Ian Duncan Wallace, Liquidated Damages Down Under: Prevention by Whom? (2002) 7:2 Construction and Engineering Law 23, and Prevention and Liquidated Damages: A Theory Too Far? (2002) 18 BCL 82; Baker, Bremen and Lavers, The Development of the Prevention Principle in English and Australian Jurisdictions [2005] ICLR 197; Dr Hamish Lal, The Rise and Rise of Time-Bar Clauses for Contractors' Claims: Issues for Construction Arbitrators SCL Paper No 142, September 2007. The two Australian Turner cases referred to above were affirmed by the New South Wales Court of Appeal in Peninsula Balmain Pty Ltd v Abigail Contractors Pty Ltd [2002] NSWCA 211; (2002) 18 BCL 322: this decision needs to be considered with some care: it has been suggested that it lends support to Gaymark, but appears to turn upon the specific power conferred upon the supervising officer to unilaterally extend time a power exercised by the referee in the dispute resolution process. Thus in the result the contractor was relieved to an extent of a liability for liquidated damages despite not having served notice timeously. Thus the contractor lost its entitlement to an extension of time but was granted a discretionary extension of time. We would suggest that the judgment of Hodgson JA is supportive of the approach supported by the authorities referred to in this footnote rather than the Gaymark approach. 58Token Construction Co Ltd v Charlton Estates Ltd (1976) 1 BLR 48; Pyrok Industries Ltd v Chee Tak Engineering Co Ltd(1988) 41 BLR 124; JF Finnegan Ltd v Community Housing Association Ltd(1993) 65 BLR 103 at p. 113 and 77 BLR 22, and W Hing Construction Co Ltd v Boost Investments Ltd[2009] BLR 339 paragraphs 131 and 149. 59 AXA Insurance UK plc v Cunningham Lindsey United Kingdom [2007] EWHC 3023 (TCC) at paragraph [265]. 60 One definition of critical path is in BS 6079-2.2000, Part 2, paragraph 2.41: The sequence of activities through a project network from start to finish, the sum of whose durations determines the overall Project duration. 61 See for example the criticism made by HH Judge Wilcox QC of evidence given in Great Eastern Hotel Co Ltd v John Laing Construction Co Ltd [2005] EWHC 181 (TCC) at paragraphs [306]-[308]: the defendant's delay expert carefully constructed three critical paths starting at the beginning of the project in July 1997 At best they are theoretical constructs identified retrospectively once the project was completed. These are not paths which were identified by either party during the project itself. 62 [2002] EWHC 597 (TCC); [2002] BLR 288 at paragraph [30]. 63 See for example The Great Delay Analysis Debate, SCL Paper 130, March 2006. 64 [2002] EWHC 2037 (TCC); 88 ConLR 1 at paragraph [246]. 65 (1999) 70 ConLR 32 at paragraph 13.

66[2008] BLR 269 at paragraph 15. Affirmed on appeal - see below. 67 (2000) 76 Con LR 148 at paragraph 31. 68City Inn Ltd v Shepherd Construction Ltd (supra) at paragraph 16. 69 [2010] CSIH 68; [2010] BLR 473 at [39]. 70 At paragraph 18. 71 See the editorial in [2008] BLR 270 -271; Jeremy Winter, How Should Delay be Analysed Dominant Cause and its Relevance to Concurrent Delay, SCL Paper 153. By contrast Dr Mastrandrea in Concurrent Causation in Construction Claims [2009] ICLR 75 at 96 has commented: Although the decision has generated a flurry of excitement, this seems unwarranted. Thus, a direction to equivalent effect had been set out more than 25 years earlier in the judgment of Salmon LJ in relation to the evaluation of delays, some of which were and some of which were not the subject of extension of time provisions in Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd. In The Evolution of Global Claims and Laing Management (Scotland) Ltd v John Doyle Construction Ltd [2005] ICLR 212 at 242 James Perry comments upon the American courts' differing approaches to apportionment. 72[2004] BLR 295. 73W Hing Construction Co Ltd v Boost Investments Ltd [2009] HKCU 221; [2009] BLR 339 at paragraph [61]. 74City Inn Ltd v Shepherd Construction Ltd [2010] CSIH 68; [2010] BLR 473 75 At paragraph [42] 76 See paragraph 14.28 above. 77 See in this context Reinwood Ltd v L Brown & Sons Ltd [2008] UKHL 12; [2008] BLR 219.

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