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1----------------- Delay---------------1

Effectively Dealing With Time Delays and ExtensionsBefore They Occur

- Frank Cahill, Partner,Baker & McKenzie, Solicitors.

WHO SHOULD BEAR THE RISK FOR TIMEDELAYS?

Modem construction contracts usually contain detailedprovisions providing for the granting of an extension oftime to the contractor where specified events beyond thecontrol ofthe contractor cause delay to practical completionofthe works. The extension oftime clause will provide forthe extending of the date for practical completion of theworks. These provisions regulate the application ofdamages, usually liquidated damages, for a failure by thecontractor to bring the works to practical completionby thedate for practical completion.

In the absence oftime extensionprovisions (and subjectto the contractor's obligations under the contract) thecontractor bears the risk of a delay caused by industrialdisputation, inclement weather and other such delays.However, the contractor would not be responsible fordelays caused by the principal. Such delays are oftenreferred to as "acts ofprevention" wherein delay is causedby acts (including the ordering ofa variation), defaults oromissions ofthe principal or those for whom the principalis contractually responsible.

Essentially there are three categories of delay whichmight be suffered by the contractor:

(a) delay caused by the contractor;(b) acts of prevention by the principal;(c) neutral causes of delay, e.g. inclement weather,

certain types of industrial disputation.

There will be no extension of time granted to thecontractor for (a) but there should be for (b). In the case of(c) this is essentially a matter for negotiation. Manyconstruction contracts are based on the view that anythingwhich is beyond the control ofthe contractor should entitlethe contractor to an extension oftime. However, the effectof this is that the risk of neutrally-caused time delays istransferred to the principal. The principal has no controlwhatsoever over such delays. Whilst the contractor alsohas no control over the cause of certain of these delays,nevertheless, the contractormaybe in apositionto rearrangethe work so that the effect of the delay can be minimised.This suggests perhaps that the time extension clause should

be drafted to reflect the above situation.As a broader proposition however, it would seem that

the consequences ofneutral delays should be shared on anequitable basis between principal and contractor, havingregard to the nature of the particular neutral delay:

(a) inclement weather - the contractor may takeresponsibility for this provided an appropriateallowance is permitted to be included in theconstruction program;

(b) industrial disputation - it is possible for thecontractorto make an allowance in the constructionprogram for a particular number of days of strikeaction. Beyond that allowance the risk could beshared equally such that the contractor is grantedan extension oftime ofone day for every two dayslost;

(c) loss or damage to the works by fire, etc - anextension of time must be given to the contractorin such circumstance to reflect the reality of thedelay suffered. This assumes that the principalwill proceed to have the works completed,notwithstanding the loss or damage to the works;

(d) authority delays - an authority delay might beavoided by making application for approval at anearlier date: it is suggested that the party mostclosely involved in the particular approval processbear the risk of an authority delay. The nature ofthe delay should be assessed to allocateresponsibility;

(e) neighbour and third party delays - the nature ofthecause ofthe delay needs to be assessed in order toequitably allocate responsibility. In the case of(d)and (e) it may be appropriate to share theconsequences;

(f) latent conditions - once again the nature of thelatent conditions and the nature of their impactupon the project must be assessed. Where a latentcondition is encountered which necessitates achange in the design (in a construct only contract),then the ordering of any necessary variationresulting from the changed design may involve anextension oftime for the benefit ofthe contractor.

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Where a variation is not involved, it ·may beequitable for the risk to be sharedbetweenprincipaland contractor. It has been suggested by MaxAbrahamson (Abrahamson, Risk Management(1984) 1ICLR244) and in the NPWC/NBCC JointWorking Party "No Dispute" paper (May 1990)that a party to a contract should bear a risk where:(i) the risk is within the party's control;(ii) the party can transfer the risk, e.g, through

insurance;(iii) the preponderant economic benefit of

controlling the risk lies with that party;(iv) to place the risk upon that party is in the

interests of efficiency including planningincentive and innovation;

(v) if the risk eventuates, the loss falls on thatparty in the first instance and it is notpracticable or there is no reason under theabove principles to cause extensiveuncertainty by attempting to transfer the lossto the other party.

The Joint Working Party considered it important that"... those obligations and risks that are within the controlof the Principal should be borne by the Principal, andthose obligations and risks that are within the control ofthe Contractor should be borne by the Contractor."However, this statement does not deal with the category ofso called "neutral" risks. Standard form contracts inAustralia, New Zealand and internationally deal with theissue of risk beyond the control of both principal andcontractor in a number ofrisk areas by providing reliefforthe contractor where, for example, delays and additionalcosts are incurred by the contractor. This "relief' to thecontractor effectively places the risk of such occurrencessquarely upon the principal. In many instances this doesnot reflect so much a policy ofrisk sharing as risk transfer.

In circumstances where the contractor is delayed andincurs additional expense, the contractor would be fullyresponsible for such delays and additional expense unlessotherwise provided for in the contract. Where the contractdoes provide for reimbursement and/or relief to thecontractor, this may be viewed as a transfer of risk fromcontractor to principal (or a direct allocation ofrisk to theprincipal) for a risk over which the principal may not haveany control.

In many projects an attempt is made to define riskallocation in the construction contract for delays beyondthe control ofthe parties by providing very limited groundsentitling the contractor to an extension of time. In theextreme, a principal may attempt to make the contractorresponsible for the consequences of all delays other thanthose caused by acts of prevention.

In the case oftime and delay risks which are beyond thecontrol ofeither principal or contractor, often the principaland contractor can do little more than allow a contingencyfor the risk. Sometimes a tenderer will refuse to take on therisks proposed under the contract and will decline to tenderor will qualify its tender. Sometimes a principal will

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decide not to proceed with the projectbecause ofthe extentof exposure to risks beyond his control.

If, however, the principal or contractor decides to takeresponsibility for a particular construction risk, it mustmake reasonable commercial allowance for thecontingency. Ifthe allowance is too great the tenderer maylose the project. If the principal allows too great acontingency the project may cease to be financially viable.

Sometimes the project can be restructured or thecircumstances changed to reduce particular constructionrisks. At a time where much emphasis is placed upon"partnering" concepts (i.e. the acknowledgement byprincipal and contractor that cooperative contracting isbetter than adversarial contracting), it is important thatproject planners adopt an approach which endeavours tominimise risk to both principal and contractor. In the caseof time delay risks, often the allowance of adequate timeand an appropriate contracting strategy will reduce thetime pressures which sometimes are unnecessarily orunrealistically imposed upon a project.

DRAFTING THE TIME EXTENSION CLAUSEIncluded in the appendix to this paperare time extension

clauses for the following standard form contracts:(a) JCC E and F 1994 (Australia);(b) AS 2124 - 1992 (Australia);(c) AS 4300 - 1995 (Australia);(d) NZIA 7th edition (New Zealand);(e) NZS 3910: 1987 (New Zealand);(f) FIDIC 4th edition 1992 (International);(g) FIDICDesignBuildandTurnkey (December 1994)

(International);(h) ICE 6th e4ition (UK);(i) I Chem Eng Conditions of Contract for Process

Plant (UK).

From a consideration ofthese standard form contracts,the following criteria emerges in relation to entitlement toan extension of time:

(i) the cause of delay generally must be beyond thecontrol of the contractor, although not alwaysexpressed as such;

(ii) the delay may be expressed as a delay which willor is likely to delay practical completion of theworks (e.g. JCC, AS 2124), i.e. a delay essentiallywhich affects the critical path of the project.Alternatively, the test may simply be "ifwork isdelayed" (NZIA). This is a much more "relaxed"test. In some of the forms (e.g. NZS, FIDIC 4thedition, ICE 6th edition), the contractadministrator has considerable discretion as towhether the Contractor is fairly entitled to anextension of time, arguably leading to theincreased likelihood of disputes;

(iii) the cause ofdelay must be one which is specifiedin the contract;

(iv) the contractor and the contract administrator(engineer, architect, superintendent, employer'srepresentative etc) are required to respectively

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claim and to determine the claimwithinparticulartime frames;

(v) the contractor is entitled to an extension of timefor acts ofprevention;

(vi) in some of the forms the contract administratormay grant to the contractor an extension of timewhere the contractor has not made a claim (e.g.JCC). This is a mechanism which entitles thecontract administrator, inter alia, to grant anextension oftime for acts ofprevention (see PeakConstructions (Liverpool) Ltd v McKinneyFoundations Ltd (1970) 1BLR 111). This keepsthe liquidated damages provisions alive;

(vii) some of the forms (e.g. FIDIC 4th edition, ICE6th edition) provide for an interim determinationofan extension oftime with provision for a finalreview. The final review cannot decrease anyextension of time already granted.

Time means money and the drafting of the timeextension clause should be regarded as an extremelyimportant mechanism for the benefit ofboth principal andcontractor. The clause should be drafted with specificregard to the project risks likely to be encountered. Clarityofintent is paramount and the clause should be as free fromdisputation as possible.

An example ofa building contract that arguably did notdeal adequately or in sufficient detail with risk allocationfor time delays is KBH Constructions Pty Ltd v PSDDevelopment Corporation Pty Ltd (1990) 21 NSWLR348; 7 BCL 90. The builder sought various declarationsfor an extension of time of 177.5 days and relief fromliquidated damages deducted by the proprietor.

The contract form (JCCB 1985) provided that thebuilder may notify the architect of the nature, cause andextent of any delay if he desired an extension of time.Delay was defined to include any delay caused bycircumstances beyond the control ofthe builder, including"any act, default or omission on the part ofthe Proprietor,the Architect, any Separate Contractor, employee or agentofthe Proprietor". The architect, therefore, hadto determinewhether an act was beyond the control of the builder andwhether an extension of time should be granted. Thearchitect also had power to grant an extension where thebuilder had not requested one.

The main interest in this case for present purposes wasthe manner in which the contract allocated the risk fordelay: by not addressing specific causes of delay andallocating risk for them the parties left the architect with avaguely defined discretion. The end result was that whenthe discretion was exercised, one ofthe parties disputed itand they ended up in court. This is a most unsatisfactoryway to administer a contract. It is suggested that morespecific drafting to suit the project circumstances is calledfor.

The application of time bars continues to be a topicalissue: in Opat Decorating Service (Australia) Pty Limitedv Hansen Yuncken (SA) Pty Limited (1994) 11 BCL 360, aNPWC3 contract was designated the head contract and an

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SCNPWC3 contract was the sub-contract. The issue inthis case was whether the giving ofnotice within the timelimit was a condition precedent to the granting (or perhapsmore accurately "the consideration of the claims for anextension oftime") ofan extension oftime. The Court heldthat such exclusion clauses should be construed strictly(Port Jackson Stevedoring Pty Limited v Salmond &Spraggon (Australia) Pty Limited (1978) 139 CLR 231);that the purpose of such clauses is to ensure that notice isgiven at an early stage so that the party in receipt of thenotice can inspect and investigate promptly the events orcircumstances and consider their position (JenningsConstructions Limited v QH & M Birt Pty Limited (1986)8 NSWLR 18); and that such a failure to give notice asrequired by the contract was destructive ofthe claim made(Wormald Engineering Pty Limited v ResourcesConservationists Company (1989) 8 BeL 158).

Further in Leighton Contractors Pty Limited v SouthAustralian Superannuation Fund Investment Trust (1996)12 BCL 38 amodified standardjointconstructionagreementform containeddetailedclauses regarding claims for delays,variations, extensions and time adjustments. There it wasalso held that "the givingofnoticeprior to commencing thework is a condition precedent to claimingfor the work asa variation... The stipulation is mandatory and the rightto claim for a variation is contingent upon compliance."(per King CJ at 47).

WHO SHOULD BEAR THE COST OF DELAYS?If the risk allocation for delays is properly allocated in

the contract along the lines set out in section A above, thecosts of delays suffered by the contractor shouldautomatically follow and be so reflected in the drafting.

However, unless the contract specifically deals withthe question of allocation of delay costs, a court will notimply a provision to the effect that a contractor will beautomatically entitled to delay costs as a consequence ofhaving been granted an extension of time for a particulardelay. Harwood v Civic Constructions Pty Ltd (unrep,NSW Supreme Court 11812/1990, Cole J, June 1, 1990)involved a building contract that arguably did not dealadequately with risk allocation for delay. Harwood (thesub-contractor) contended that certain terms be impliedinto four sub-contracts betweenhe and Civic ConstructionsPty Ltd (the contractor) to the effect that any additionalcosts incurred by the sub-contractor because of delaysoccurring in the normal building process would beunderwritten by the contractor.

Further, Harwood contended for an implied warrantythat the various contract works were capable of beingcompleted within their nominated times for completion.

None ofthese matters were the subject ofagreement inthe sub-contracts, although there was provision in threesub-contracts for a fair extension oftime to be granted for"delays not causedor contributed to by act ordefault ofthesub-contractor".

Harwood sought damages for delay and argued thatCivic was in breach of the implied terms because Civicfailed to progress the main building works and this made

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timely performance ofthe sub-contract works impossible.Cole J refused to imply any terms in the sub-contract. Theeffect ofthe judgment was that the question ofwhether ornot works can be completed within a nominated time is onefor the business judgment ofthe sub-contractor and hencethere is no room, in the absence of express provision, forany warranty from the contractor.

If a sub-contractor wishes to protect himself againstunforeseen contingencies, he should ensure that properprovision is made. to this effect in the contract.

As mentioned above, in three of the contracts underconsideration, the parties had dealt with delays beyond thecontrol ofthe sub-contractorby a provision for "reasonableextension of time". The parties could have provided forreimbursement for costs occasionedby such delay, but hadnot done so. In the light ofthese circumstances, Cole J wasnot prepared to supply the parties' omission.

The fourth contract had express provisions:(i) obliging the contractor to use his best endeavours

in all reasonable ways to ensure that the sub­contractor was not obstructed or hindered incarrying out his obligations;

(ii) providing for notification by the sub-contractor tothe builder of any anticipated delay;

(iii) entitling the sub-contractor to an extension oftime for delays due to certain enumerated matters;and

(iv) allowing extra expenses to be added to the contractsum ifthe expenses were "directly resulting fromsome default of the builder", not beingcircumstances beyond the builder's control.

Cole Jconsidered the sub-contract to comprehensivelydeal with the obligations of the parties and again was notprepared to imply a general term that the contractor wouldreimburse the sub-contractor for additional costs causedby extended performance times.

CONSEQUENTIAL EFFECTS OF DELAYS ON THEPROJECT

These effects include:(a) further delay suffered due to weather, industrial,

etc which would not have been experienced if theproject had not suffered the earlier delay;

(b) increased costs of any material and labour costescalation;

(c) the missing ofseasonal (e.g. Christmas) trading inthe case of a shopping centre, cinema etc;

(d) the missing of a "window of opportunity", forexample, being first on the market and thus aheadof the competition for a particular type ofdevelopment;

(e) losing business (e.g. sales ofapartments) throughlate completion.

All such matters must be taken into account in pricingthe costofconstructing aproject and in assessing liquidateddamages for late completion. It may also lead to the viewthat general damages will be a more appropriate remedy

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for late completion in some of the above circumstances.It has been said that liquidated damages obligations are

almost invariably expressed to cover one particular classofdamage only, namely that caused by failure to hand overthe project for occupation on the required completion date,and not those quite different delay damages which in aconstruction project can easily be incurred by the ownerduring the construction period. (Hudson's Building andEngineering Contracts, 11th Edition, 1995 at p.ll 08).

SPECIAL CONSIDERATIONS RELATING TOCOMPLETION OF A PROJECT

Practical CompletionThe meaning of practical completion in construction

contracts will be determined in most cases by the definitionfound in the particular contract. In Murphy CorporationLimited v Acumen Design & Development (Queensland)Pty Ltd and Derek Graham Hooper (1995) 11 BCL 274 itwas said that:

"In broad terms the words mean, as put by Salmon LJin J Jarvis & Sons Limited v Westminster Corporation(1969) 1 WLR 1448 at 1458:

'completion for all the practicalpurposes, that is tosay, for the purpose of allowing the employers totake possession of the works and use them asintended'.

Ordinarily the best evidence that such a stage has orhas not been reached will be a certification from theContract's Superintendent, but that does not mean, inmy view, that in the absence of a certification forPractical Completion, the Contractor can neverprovein legalproceedings that such a stage had in fact beenreached. One situation where the Contractor couldprove that such a stage had been obtained in theabsence ofa certification wouldbe where the employerhad taken possession ofthe works as completed on anexpressed or implied understanding that a stage ofPractical Completion had been reached and then usedthem for the intendedpurpose. " (at 294-5)

Staged CompletionA special consideration is "staged" completion.Many of the standard form construction contracts

provide for the division of the Works into sections orseparable portions and provide for staged completion ofthe separable portions such that each separable portion hasits own date for practical completion. The issues that arisein relation to staged completion of the Works include thefollowing:

(a) an appropriate description/definition of eachseparable portion ofthe Works is most important.The separable portions must be carefully definedso that there is no overlap between the variousseparable portions comprising the Works. Whilstthis is a practical point rather than a legal point, thelegal consequences can be quite dramatic if thedefinition is not made correctly;

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(b) the contractor's obligations to carry out andcomplete the Works must be extended to includean obligationto carryoutand complete the separableportions of the Works by the prescribed dates forpractical completion;

(c) the calculation ofliquidated damages applicable toeach separable portion must be a genuine pre­estimate ofthe loss or damage to be suffered by theprincipal ifthe contractor fails to achieve practicalcompletion of a separable portion by the date forpractical completion of that separable portion;

(d) the liquidated damages clause should specifywhether the liquidated damages applicable to eachseparable portion are cumulative or separate anddistinct from one another;

(e) even though the Works is divided into separableportions, arguably there should still be an obligationto complete the Works (being the sum of all theseparable portions) by the prescribed dateapplicable to the Works as a whole;

(f) defects liability periods must be carefully defined,having regard to the nature ofthe Works and theiruses.

Often a principal will decide not to divide the Worksinto separable portions but nevertheless will specifyintermediate "key dates" or "milestone dates". Liquidatedor general damages may apply to such dates. In PhilipsHong Kong Limitedv The Attorney General ofHong Kong[1993] 9 Const. LJ 169-260; (1993) 61 BLR 49, thequestion arose on appeal to the Privy Council as to whetherthe application of liquidated damages to late completionby a key date, inter alia, led to double compensation, wherethe same delay resulted in the date for completion notbeing met.

The contractworks includedthe design, supply, testing,delivery, installation and commissioning of a processorbased supervisory system for the approach roads and twin­tube tunnels whichwere to be constructedunder SmugglersRidge and Needle Hill Mountains in the New Territories aspart of the Shing Mun section of the Project.

Insteadofadopting the more usual course ofemployinga main contractor with overall responsibility forconstructing the Shing Mun section and allowing the maincontractor to subcontract portions of the contract, thegovernment entered directly into a total of seven separatecontracts (the "designatedcontracts") including the Philipscontract. By dealing directly with the contractors, thegovernment was seeking to exercise greater control overthe whole project than would be possible under a singleoverall contract.

The total value ofthe seven contracts was overHK$600million while the Philips contract alone involved overHK$50 million. The Philips contract was detailed andincluded a substantial number ofstandard provisions usedbythe governmenton otherprojects. Eachofthe designatedcontracts contained its own individual program for theprogress of the work in the form of a flow chart. Each ofthe designated contracts also containedthe programs which

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the other contractors were required to meet. Each of thecontractors should therefore have been aware of theactivities on which the other contractors would be engagedat each stage of their work and the possible consequencesofdelay onthe partofone contractoronthe othercontractors.

The government provided an explanation as to how theliquidated damages in the contract were calculated.

So far as the missing of key dates was concerned, theamount ofdamages was calculated by applying a formulato what was anticipatedwouldbe the value ofthe interfacingcontracts (the actual value ofthe contracts was higher). Inthe case ofdelay in completion ofthe whole ofthe Philipscontract the calculation was partly based on a formulaappliedto the total value ofthe Philips contract inaccordancewith a manual of instructions for contracts of this naturewhich the government had prepared. This was a perfectlysensible approach in a situation such as this where it wouldbe obvious that substantial loss would be suffered in theevent of delay, but what that loss would be was virtuallyimpossible to calculate precisely in advance.

In the case ofa government body, the nature ofthe lossit will suffer as a result ofthe delay in implementing its newroad program, is especially difficult to evaluate. Thegovernment reasonably adopted a formula which reflectedthe loss ofreturn on the capital involved at a daily rate, towhich were added values for supervisory staff costs, thedaily actual cost of making any alternative provision anda sum for fluctuations. Except for the "alternativeprovision", the appropriate figures were calculated byreference to the estimated final contract sum.

Philips argued that this approach fell down becausewholly unfairly it could and most probably would result inthe government receiving at least double compensation. Itwas suggested that this could happen because thegovernment would receive liquidated damages both forthe delay which causes a key date to be missed and againwhen the same delay resulted in the date for completion notbeing met. It was suggested it could also happen as a resultof the same delay causing two or more key dates to bemissed. (Liquidated damages continues to be paid inrespect of the earlier key date after the later key date ismissed.)

As to the first argument, the government's responsewas that the two categories ofliquidated damages were tocover different heads of loss so it was perfectly proper forpayments to be made under each head. Where a key datewas missed, the loss to which the liquidated damagesprimarily related was the added expense to which thegovernment would be put in compensating the interfacingcontractor whose contract was delayed. It was for thisreason that the figure for liquidateddamages was calculatedon the value of the interfacing contract or contracts and,accordingly, increased with the number ofthose contractsaffected by the date being missed.

This was a quite different head ofloss from that alreadydescribed which was covered by the liquidated damagespayable for missing the date for completion.

Accordingly, the Privy Council, in agreement with theHong Kong Court of Appeal, held that the clause was

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enforceable and that the liquidated damages payable for acontractor's failure to meet certain key dates was a quitedifferent head of loss from that covered by the liquidateddamages payable for missing the date for completion. It isinteresting to note the comments of the Privy Council onwhether the sum payable by way of liquidated damageswould be wholly out of proportion to any loss which thegovernment was likely to suffer. The argument ofPhilipsthat such a clause was penal did not recommend itselfto thePrivy Council:

"It would mean that it would be extremely difficult todevise any provision for the payment of liquidateddamages in the case ofa contract of this sort whichwould not be open to attack as being penal ... Such aresultwouldundermine the wholepurpose ofparties toa contract to be able to agree beforehandwhatdamagesare to be recoverable in the event of a breach ofcontract." ((1993) 61 BLR 49 at 54.)

The Privy Council concluded that:"So long as the sum payable in the event of non­compliance with the contract is notextravagant, havingregard to the range oflosses that it could reasonablybe anticipated it would have to cover at the time thecontract was made, it can still be a genuine pre­estimate of the loss that would be suffered and so aperfectly valid liquidated damageprovision". ((1993)61 BLR 49 at 59.)

A difficulty may arise where the range ofpossible lossis broad. Lord Woolf stated (at 59) that:

"Where it should be obvious, in relation to part oftherange, the liquidated damages are totally out ofproportion to certain of the losses which may beincurred, the failure to make special provision forthose losses may result in "liquidated damages" notbeing recoverable ... However the court has to becareful not to set too stringent a standard and bear inmindthatwhat theparties have agreedshouldnormallybe upheld. Anyotherapproach will lead to undesirableuncertainty especially in commercial contracts. "

It is important to note that the government was able toproduce evidence ofits calculations ofliquidated damagesfor each relevant key date and for the overall completiondate of the works as a whole.

EARLY OCCUPATION ISSUESThe leading case on the term "occupation" is Wheat v

E Lacon & Co Ltd [1966] AC 552. The test is whether theperson in question has some control over the premisessuch that he can prevent injury to visitors. It would seemto follow from this that any person in physical occupationof the premises would be an occupier for the purposes ofoccupiers' liability since he will also have the power to dosomething. It would also follow that someone may be anoccupier even though he is not in physical occupation as inthe Wheat case.

The control test allows more than one person to be in

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occupation at the same time: Thompson v Commonwealth(1969) 70 SR NSW 398. Joint occupiers can each be incontrol of the whole or the same part of the premises ordifferent parts of the same premises as where a landlordlets flats but retains control of the common areas such asstairs and lifts.

In AMF International v Magnet Bowling Ltd [1968] 1WLR 1028 it was held that financial loss consequentialupon damage to property can be recovered, subject to theordinary rules ofremoteness ofdamage in any case wherethe occupier's duty extends to prevention of damage toproperty.

A principal normally parts with temporary possessionofthe site under what is in effect a revocable license, underwhich the contractor has a high degree ofeveryday controlofthe site. In general, a principal only impliedly warrantsto do nothing positive to impede or obstruct the contractor.If a principal is an occupier and the contractor merely avisitor then an express term of the contract would beneeded to restrict the obligations of the principal. Asbetweenthe contractorand its sub-contractors it is normallyclear that the contractor has overall control of the site.

The potential liability ofthe principal and the contractorasjointoccupiers to thirdparties (i.e. betweenthe contractorand the contractors ofthe principal orbetween the principaland sub-contractors) and also to a far wider class of thirdparties, such as adjoining owners or occupiers renders itessential that an effective indemnity clause is present in thecontract between the principal and the contractor so as toredistribute the burden ofsuch claims effectively accordingto whatever policy is deemed to be appropriate.

A finding of occupancy under the law does notnecessarily connote liability and in these circumstancesthe nature of the occupancy is of vital importance indetermining whether or not there has been breach of theduty ofcare. Thus a principal out ofpossession for a three­year period, for instance, will generally be less likely to befound to be in breach of the duty than the contractor ineffective control of the site.

The facts of the AMF case (supra) are worth noting:The principal entered a building contract with contractorsfor the construction ofa bowling alley. The principal alsoentered into a separate contract with A for the sale andinstallation of the timber bowling lanes and machinery inthe building and agreed on dates when the building wouldbe ready to receive this equipment. A entered under thebuilding contract and commencedwork at a stage when theroof was on, but guttering and external surface drainagewere incomplete, and external doorways were unfinished.A's work was separated from the rest ofthe work inside thebuilding by a polythene screen. After an exceptionallyheavy rain storm, surface water flooded into the buildingthrough one of the doorways and damaged A's work. Acompleted its work and brought an action against theprincipal and the contractor. The Court found that thedamage could have been prevented by the contractortaking relatively simple precautions and that the contractorwas in a betterposition to assess any risk but also noted thatthe principal did not ascertain whether the premises were

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fit and ready for A's work to begin. The Court held thatboth parties were occupiers and liable to A and that asbetween each other the principal was liable as a jointtortfeasor for 40% and the contractor for 60% of thedamage.

Earlyoccupationpriorto Practical Completion is criticalto certain projects (whether for fitout, staff training etc).Arguably no standard form deals adequately with theissues.

Many of the standard form construction contractsprohibit the principal from taking occupation ofthe worksprior to practical completion without the consent of thecontractor. Where consent is grantedthe principal becomesliable for the parts of the works taken over and has theresponsibility to insure them. See for example clause 9.10of the ICC forms.

Practice Note 31B (April, 1994) issued by the RoyalAustralian Institute of Architects, states that:

"When the Works reach the stage ofdeemed or actualPractical Completion, a number of other importantconsequences follow. These are:• That the Proprietor is entitled to possession ofthe

Site. It may, however, mean that the Proprietorcannot still physically occupy the Works until thebuilding certificates or certificates offitness areissued by local government authorities.

• The defects liability period commences (i.e. workthat has been completed and becomes defective orfaulty, as opposed to incomplete work during thedefects liability period must be made good by theBuilder).

• The risk generally reverts solely to the Proprietor(the insurance ofthe Works taken out in accordancewith the contract coming to an end).

• Ifa retentionfund or bankguarantee has been usedas aform ofsecurity by the Builder, usually halfofit is released by the Proprietor thereafter.

• The limiting ofthe power to issue variations underparticular contracts (e.g. AS 2124).

• Liquidated or Ascertained Damages (ifany) ceaseto accrue, and the Proprietor is then entitled toreceive them." (At 1-2).

However, other standard forms of contract give theprincipal the right to use or occupy any part of the workswhich the superintendent considers can be taken overwithout interfering with the contractor's obligations tocomplete the Works. Upon so taking over a part of theWorks the principal may be required to insure that part ofthe Works; alternatively the contractor remains obligatedto insure all ofthe works but any additional premiums areadded to the contract sum.

Standard form contracts often provide that if theprincipal uses or occupies anypart ofthe works without theconsent ofthe contractor then practical completion will bedeemed to have occurred from the commencement of theuse or occupation by the principal.

An alternative to such early use and occupation is tostage the works. This requires careful planning of all

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aspects of the works and the contractual consequences ofrequiring the works to be completed by the contractor in anumber of stages. Often the contract provisions becomeunnecessarily complex.

Wherever a deeming ofpractical completion occurs asa result ofearly use and occupation the principal will losethe benefit ofany liquidated damages provisions and mayencounter serious difficulties in having the remainder ofthe works completedby the contractor on satisfactory terms.

The following case illustrates the care which must betaken in preparing contracts which provide for early orcontemporaneous occupation prior to completion:

In English Industrial Estates Corporation v GeorgeWimpey & Co Ltd (1973) 7BLR 122, the English IndustrialEstates Corporation ("EIEC") entered into a contract withGeorge Wimpey & Co Ltd ("George Wimpey") whoagreed to build an extension to a factory leased to ReedsCorrugated Cases Ltd ("Reeds").

Reeds proposed to extend the factory, but wanted tocontinue making corrugatedcardboardwhilst the extensionwork was being done. In order to make the cardboard, theyintended to install a new machine in the board machinehouse. It was to be fed with rolls ofpaper weighing overa ton each. The machine would consume these rolls at sucha rate that Reeds needed storage space for hundreds ofthese large rolls of paper.

When the work was substantially completed there wasa fire in the buildings which destroyed most of the plantand machinery. The issue was whether the fact that Reedsoccupied the factory and used it for the purposes ofproduction was tantamount to being in "possession",thereby being responsible for the risk of the fire damage.

The contract was a standard form contract whichincorporatedbills ofquantities. The material clauses ofthecontract were:

"20(A)(l) The Contractor shall insure against lossand damage by fire all work executedandall unfixedmaterials andgoods ... andshall keep such work, materials andgoodsso insured until Practical Completion ofthe Works and until the Employer shallauthorise in writing the cancellation ofsuch insurance. "

"16. If at any time ... before PracticalCompletion of the Works, the Employer,with the consent of the Contractor, shalltake possession ofany part orparts ofthesame .(d) the said relevant part shall, as

from the date on which theEmployershallhave takenpossession thereof,be at the sole riskofthe Employer. "

Clause 12 of the printed form provided:"Nothing in the Contract Bills shall override, modifyor affect in any way whatsoever the application orinterpretation of that which is contained in theseConditions ".

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In addition, there were two relevant provisions in thebills of quantities which expressly contemplated thepremises being used during construction:

"C. Employer may install equipment as the workproceeds... the contractors shall permit the Employer orany other person authorised by him to place andinstall as much plant and equipment during theprogress ofthe building as is possible before thecompletion ofthe various parts ofthe works ...

D. Occupation ofcompletedparts ofthe WorksThe Contractorshall allow the Employer or anyperson authorised by him to occupy and use anypart or parts of the Works as soon as, in theopinion ofthe ArchitectorEmployer, suchpart orparts can be occupied and used without impedingthe progress ofcompletion ofthe Works ... "

The Court of Appeal concluded that Reeds had nottaken possession of the relevant part of the Works for thepurposes of clause 16 of the contract. Each of the judgescame to this conclusion based on different reasoning.

Lord Denning held that the special provisions C and Dwere inserted specially so as to enable the contractors tomake their calculations and that it was on the basis oftheseprovisions that the contractors made their tender and theemployers accepted it.

Furthermore, provisions C and D were specific andspecially inserted whereas conditions 12 and 16 weregeneral terms and as such insofar as conditions 12 and 16were inconsistent with provisions C and D, they should berejected. In the alternative, Lord Denning held that all theterms could actually be read together; that the condition 16deals with the usual building contract where the employerdoes not take possession, whereas the special provisions Cand D were designed to deal with the specific instancewhere Reeds were installing plant and equipmentwhile thework was in progress. In either case, the contractorsremained liable to insure the works andcharge the increasedcost to the employers.

The contractors, at the time ofthe fire, had not handedover to the employers the responsibility for the boardmachine house, the reel warehouse orthe factory extensionseast and south. Reeds were using and occupying thoseplaces, but, until actual handover, it was the responsibilityofthe contractors to insure them. The risk had not passedto the employers. It remained with the contractors and theyor their insurers had to bear the loss.

LIQUIDATED DAMAGES FOR LATECOMPLETION - TOPICAL ISSUES

The application of liquidated damages by a principalfor late completion by a contractor and the challengesassociated therewith continue to lead to litigation andarbitration. Can the contract drafting be made clearer so asto avoid such disputed situations, i.e. the rights andobligations of principal and contractor are drafted withgreater clarity to avoid disputation?

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In CS Phillips Pty Ltd and Anor v BaulderstoneHornibrookPty Ltd (Supreme Court ofNew South Wales,Common Law Division, Giles J No. 55040/1994, 26October, 1994), the defendant Baulderstone HornibrookPty Ltd ("Baulderstone") contracted with Franklins Ltd("Franklins") to construct and commission a distributionfacility and associated works at Ingleburn in New SouthWales. Bya subcontract in the JCCB-1985 form the firstplaintiff CS Phillips Pty Ltd ("Phillips") contracted withBaulderstone for the contractual steelworks for thatproject.The contract price was $3,159,650.00 and the subcontractworks were to be completedby December 11, 1993 subjectto extension of time in accordance with the subcontract.Philips provided security by way of bank guarantees toBaulderstone under the subcontract and now sought torestrain Baulderstone by injunction from making a demandupon the security because of Phillips' late completion.

Clause 10.15 of the subcontract provided:"10.15 Ifthe Subcontractor shallfail to substantially

complete (as defined, where appropriate and,if at all, in item J 1 of the Appendix), theSubcontract Works by the date or within theperiodhereinprovidedthe Subcontractorshallpayorallow to theBuilderbywayofLiquidatedand Ascertained Damages a sum calculatedat the rate stated in item J 2 ofthe Appendix tothis Agreement for the period during whichthe Subcontract Works remain or haveremained not completed and any such summay be deducted from any moneys then dueand owing or to become due and owing to theSubcontractor by the Builder or may beotherwise recovered from the Subcontractorby the Builder as a debt due and owing. Anysum to which the Subcontractor may becomeliable in terms ofthis clause shall be exclusiveofany amount for which the Subcontractormay become liable under clause 10.16. "

Item J.2 in the Appendix to the subcontract containedthe narration"LiquidatedDamages for SubcontractWorks"and a reference to clause 10.15, and provided in the printedform for the insertion ofa dollar amountperweek. A dollaramount of $5,750.00 had been typed in, and the printedword "week" had been deleted and replaced in typescriptby the word "day". All the typescript was then ruledthrough and replaced by "N/A". The alteration was dulyinitialled. It was common ground that N/A was a shortform for "not applicable".

The plaintiffPhillips' principal argument was that theparties to the subcontract had agreed that there should beno damages at all for delay. Hence, they said the securityprovided under the subcontract was not available toBaulderstone, and Baulderstone was not entitled to call forpayment under the guarantees, so far as Baulderstoneclaimed to be entitled to damages compensating for losssuffered in consequence of delay.

Although at first sight this was no more than a questionof construction of the subcontract, Baulderstone stated

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that itwishedthe opportunityto call evidence ofsurroundingcircumstances to aid in that construction.

The Court then considered relevant case law:In Temloc LtdvErrillProperties Ltd (1987) 39 BLR30

the contract provided by clause 24 for the architect to issuea certificate to that effect ifthe contractor failed to completethe works by the completion date, and that:

"... the Contractor shall, as the Employer may requirein writingnot later than the date oftheFinal Certificate,payor allow to the Employer the whole or such part asmay be specified in writing by the Employer ofa sumcalculated at the rate stated in the Appendix asliquidated and ascertained damages for the periodbetween the Completion Date and the date ofPracticalCompletion and the Employer may deduct the samefrom any moneys due or to becomedue to the Contractorunder this Contract (including any balance stated asdue to the Contractor in the Final Certificate) or theEmployer may recover the same from the Contractoras a debt ... ".

The Appendix in the contract was completed to read"Nil". It was held that on the proper construction of thecontract it had been agreed that there shouldbe no damagesat all for delayed completion.

Croom-Johnson LJ adopted the trial judge's view thatthe agreement, excluding liquidateddamages, also excludeddamages at large.

Watkins LJ agreed and Nourse LJ said (at 39-40):"I think it clear, both as a matter ofconstruction and

as one of commonsense, that if (1) clause 24 isincorporated in the Contract and (2) the partiescomplete the relevant part ofthe Appendix, either bystating a rate at which the sum is to be calculated or,as here, by stating that the sum is to be nil, then thatconstitutes an exhaustive agreement as to the damageswhich are or are not to bepayable by the Contractor inthe event ofhis failure to complete the works on time. "

In Baese Pty Ltd v RA Bracken BuildingPty Ltd (1990)6 BCL 137, Giles J distinguished Temloc Ltd vErrillProperties Ltd (supra) when considering clauses 10.14 and10.15 of the JCCB-1985 head contract. Those clauseswere in quite different terms from Cl10.15 of the JCCB­1985 subcontract, on which Giles J did not think it couldbe distinguished in the same way. Temloc Ltd vErrillProperties Ltd was followed in Surrey Health BoroughCouncil v Lovell Construction Ltd (1988) 42 BLR 25 so faras it is held that C124 was exhaustive in respect ofdamagesfor non-completion.

Giles J regarded that for the purposes ofthe applicationbefore him in the present case, if the symbols "N/A" havethe same effect as "Nil", the plaintiffs had a strong case thatBaulderstone could not call for payment under theguarantees on the ground that it was entitled to damagescompensating for loss suffered in consequence of delay.

Giles J went on to state:"Two views arepossible in relation to "N/A". On oneview instead ofstating a rate for the calculation ofa

22

sum, theparty stated that there was no applicable rateand meant thereby that no sum was to be calculated:they intendedthe same as ifthere hadbeen the insertionofthe word "Nil".

On the other view, by inserting "N/A " the party statedthat the item in the Appendix had no application andmeant thereby that the item in clause 10.15 itselfwerenot operative at all aspart ofthe subcontract - in effectthat Cl1 0.15 was struckoutofthesubcontract. Perhapsthere will be evidence available and admissible to aidin the construction ofthe subcontract in this respect.However, in the absence ofthat evidence it seems to methat the better view is the one first mentioned. Thesubcontract included special conditions deleting oraltering a number of clauses in the printed form,including deleting Cl 10.08 to Cl 10.14 inclusive andCl 10.17 to Cl 10.20 inclusive. Had the partiesintended by "N/A " that Cl1 0.15 should be written outofthe subcontract, leaving damages at large, then theywould have so provided by an express deletion ofCl10.15 in the same manneras they deleted those clauses.Accordingly, for the purposes of this application theplaintiffs still have a strong case that Baulderstonecouldnot callfor payment under the guarantees on theground that it was entitled to damages for delay. "

It should be stated that the above case dealt withinterlocutory orders sought requiring Baulderstone torestore an amount received by Baulderstone under bankguarantees provided by the plaintiff.

Cases such as the above are a strong reminder of theneed to take considerable care with contract conditions,even in completing the appendix!

Balfour Beatty Building Limited v ChestermountProperties Limited (1993) 62 BLR 1 considered theunderlying contractual purposes of the completion date/extensionoftime/liquidateddamages regime. The Court stated:

"At thefoundation ofthis code is the obligation oftheContractor to complete the Works within the contractualperiod terminating at the Completion Date and onfailure to do so to pay liquidated damages for theperiod oftime by which Practical Completion exceedsthe Completion Date. Butsuperimposedon this regimeis a system ofallocation ofrisk. Ifevents occur whichare non-Contractor's risk events and those eventscause theprogress ofthe works to bedelayed, inasmuchas such delay wouldotherwise cause the Contractor tobecome liable for liquidated damages, or for moreliquidated damages, the contract provides for theCompletion Date to be prospectively or, under clause25.3.3, retrospectively, adjusted in order to reflect theperiodofdelay so causedand thereby reducepro tantothe amount of liquidated damages payable by theContractor. Likewise, ifthe Works are reduced by anomission instruction by the Architect, it may be fairand reasonable to reduce the contract period forcompletion prospectively or retrospectively andtherefore to advance the Completion Date. "

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The Court went on to state:"It was common ground that if the Contract failed to

provide for power to grant an extension of time onaccount ofdelays caused by an act ofprevention, theeffect on the act of prevention was to prevent theEmployer relying on the Completion Date/LiquidatedDamages provision in the Contract. If the obligationto complete the Works was to be performed within areasonable time there couldbe no extensions on accountofRelevant Events and the Employer's only hope ofcompensation would be to recover unliquidateddamagesfordelay: seePeak Construction (Liverpool)Ltd v McKinney Foundations Ltd (1970) 1 BLR 111.The remarkable consequences of the application ofthis principle could therefore be that if, as in thepresent case, the Contractorfell well behind the clockand overshot the Completion Date and was unlikely toachieve Practical Completion untilfar into thefuture,if the Architect then gave an instruction for the mosttrivial variation, representing perhaps only a day'sextra work, the Employer would thereby lose all rightto liquidated damagesfor the entireperiod ofculpabledelay up to Practical Completion or at best, on theRespondent's submission, the Employer's right toliquidateddamages would be confined to theperiodupto the act ofprevention. For the rest ofthe delay hewould have to establish unliquidated damages. Whatmight be a trivial variation instruction would on thisargumentdestroy the whole liquidateddamages regimefor all subsequent purposes.

So extreme the consequencefor thefuture operation ofthe Contract couldhardly reflect the common intention,particularly having regard to the very specificdistribution ofriskprovisions which are agreed to beapplicable in respect of Relevant Events occurringbefore the Completion Date. It is certainly aconstruction which is most improbable in the absenceofsome other express provision supporting it. "

Inthepresentcase the Architect issuedaFinal Certificateofnon-completion under the Contract which gave rise to aclaim by the Employers to be entitled to deduct the sum of£3.8 million as liquidated and ascertained damages.

The Contractor claimed that variations instructionsissued after the most recently set Completion Dateinvalidated the Employer's entitlement to liquidateddamages. As indicated above, the Contractor wasunsuccessful with his argument.

The Contractor contended alternatively that he shouldhave been given an extension of time on account of thevariation instructions issued after the Completion Date ona "gross" basis and not on a "net" basis. That is, the newCompletion Date should have been fixed having regard tothe date when the Works could fairly and reasonably beexpected to be completed having regard to the date whenthe variations were ordered. This would mean ignoring theprevious Completion Date and starting the time extensionassessment from the date when the variation instruction

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was given. This was the gross approach.The net approach, however, involved starting with the

existing Completion Date and extending it by the amountwhich the Architect considered as fair and reasonablehaving regard to the delay caused by the requirement toexecute the variation instructions.

The Court went on to state:"Against this backgroundthe contention that the "grossmethod is fair" to both parties cannot stand up. IfaContractorovershoots thepreviouslyfixed CompletionDateyou mustpay liquidateddamagesfor the whole oftheperiodoftimefrom thatdate to Practical Completionunless the Architect subsequently extends the timeforcompletion by reason of a Relevant Event byretrospectively postponing the Completion Date. Ifthe Relevant Event is a variation instruction, theArchitect will have to consider whether it is fair andreasonable that the Contractor's total period oftimefor completion should be increased. If the variationworks can reasonably be conducted simultaneouslywith the original works without interfering with theirprogress and are unlikely to prolong PracticalCompletion, the Architect might properly concludethat no extension of time was justified. He wouldtherefore leave the Completion Date where it was.That would leave the Contractor to pay liquidateddamages for the amount of time by which he hadexceeded the original period of time for completion.His continuing liability to pay liquidated damageswhile he is at the same time carrying out the variationworks does not reflect an assumption by him ofthe riskofloss oftime due to what would otherwise be an actofprevention. It merely reflects his breach ofcontractby failing to complete the original works within theoriginal or last-jixed contract periodfor completion.

In contrast, ifthe Architect were to assess the length oftime required to carry out the variations works and torefix the Completion Date at the end, such periodstarting from the date of the variation instruction, itwould produce a result which would be unfair to theEmployer. If that were done, the Employer would bedeprived of any compensation for the Contractor'sbreach infailing to complete by the earlier CompletionDate. The additionalperiodoftime then allowed to theContractorfor completion ofthe Works, would not beco-extensive with any period of delay caused by aRelevant Event. The submission that this is not unfairto the Employer because he has brought it upon himselfby requesting a variation during a period ofculpabledelay is misconceived because it assumes that theRelevantEvents in general or variation instructions inparticular are to be treated according to differentprinciples depending on whether they occur before orduring a period ofculpable delay. As I have alreadyheld, I cannot accept that the contract expressly orimpliedly contemplates any such differences inprinciple. "

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It should be noted, however, that a different resultmight eventuate in a contract form other than the onewhich was the subject of the above case namely, JCT80form of contract. The case highlights some of thecomplexities involved in ordering a variation, no matterhow small, after the date for practical completion haspassed without practical completion being achieved.

The following case also assists in putting acts ofprevention into proper context: in Turner CorporationLimited (Receiver & Manager appointed) v Austotel PtyLimited (Supreme Court of New South Wales, CommonLaw Division Construction List Cole J No.55093 of1993,2 June, 1994) the Court considered the contractor'sargument that the proprietor had lost its entitlement toliquidateddamages in the sum of$l,725,000. This contractinvolved a JCCA 1995 with quantities form.

The originaldate forpractical completionwas 3October,1991. This was subsequently extended by the arbitratorsto 22 November, 1991. The builder requested instructionsfrom the architect regarding the provision of a gas leakdetector on the project on 27 September, 1991. Thearchitect did not issue the instructions until 20 February,1992. Practical completion was achieved on 1 May, 1992(the date ofpractical completion).

The Court stated the builder's argument as follows:"... the Builder argued that the delay in provision ofinstructions regarding the gas leak detector entitled itnot only to an extension oftime ofseven days, coupledwith a consequent entitlement to cost ofdelay, but alsoresulted in the Builder being entitled to invoke the"prevention principle ".

Shortly put, the Builder asserted that not only was itentitled to an extension ofseven days to the date forPractical Completion arisingfrom delay in provisionof instructions, thus minimising the time for which itmight be liable for liquidated damages for failure toachieve Practical Completion by the datefor PracticalCompletion, but that achievement of its contractualobligation of Practical Completion by the extendeddate for Practical Completion was prevented by thelate receipt of those instructions. This latter aspectwas said to result in the Proprietor not being entitledto recover any sum by way of liquidated damagespursuant to the provisions of the contract because ithad preventedperformance. "

After analysing the provisions ofthe JCC 1985 form ofcontract, the Court stated:

"There has been debate regarding thejuridicial basisfor the so called "prevention principle" disentitling aproprietor to recover liquidated damages where itsacts, or actsfor which it is responsible, havepreventedperformance of the contract. Some have thought itflows from an implied term in the contract. Othersground it on a "broad notion ofjustice ... that a manshould not be allowed to recover damagesfor what hehimselfhas caused ". Yet others have thought ofit asa rule of law based on a matter offairness which

24

nonetheless could be excluded by contract. Perhapsthere might now be added an additional basis that itwould be to unjustly enrich a proprietor were it tobenefit by obtainingdamagesfor delayfor which itwasresponsible. Whatever be the juridicial basis I agreewith Brooking J that "it is grounded uponconsiderations offairness andreasonableness. "(SMKCabinets v Hili Modern Electrics Pty Limited (1984)VR391 at 394-396).

Whether there has been prevention, so it seems to me,must depend upon the terms of the contract. Theconcept ofprevention however it may be phrased ordescribed, relates to acts ofthe Proprietor or thoseforwhom it is responsible which prevent the Builderfromfulfilling its contractual obligations. The obligationupon the Builder under the JCCAform is to bring theworks to Practical Completion by the datefor PracticalCompletion. The date for Practical Completion is thenominated date in the contract (11 October, 1990)"subject to adjustment as providedfor in section 9 ".The clauses within section 9 contemplate delays oftwotypes which entitle the Builder to an extension oftime.Thefirst type is delay inprogress ofthe Works resultingfrom "any cause or causes beyond the control oftheBuilder including an act ... ofdefault or omission onthe part of the Proprietor, the Architect ... ". Thesecond class ofdelay is that resultingfrom a variationdirected by the Architect. In each instance the delaymust be one which is likely to or may reasonably beexpected to result in delay in the Works "reachingPractical Completion ". In respect ofdelay generatedby these two distinct types the Builder has a right toseek an extension of time to the date for PracticalCompletion.

It follows that as the Proprietor is responsible for itsown act or an act ofanotherfor whom it is responsiblewhich might be described as an act preventing theBuilder from bringing the Works to PracticalCompletion by the Datefor Practical Completion, theBuilder has a right to applyfor an extension oftime tothe Date for Practical Completion to the extent towhich it would be delayed by that act in bringing theworks to Practical Completion. The consequence isthat the Builder could never say that it was preventedfrom completing the works on time, that is, by the Datefor Practical Completion, by the so calledpreventingact ofthe Proprietor because the preventing act oftheProprietor entitles theBuilder to applyfor an extensionof time equivalent to the delay to the progress oftheworks caused by the otherwise preventing act. Suchact would fall within clause 9.01 if it was not avariation or clause 9.07, ifit was.

It follows, in my view, that under the JCCA form ofcontract thepreventionprinciple has no application inrelation tofailure toperform the contractualobligationto bring the works to practical completion by the Date

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for Practical Completion as a result of an assertedpreventing actfor which the Proprietor is responsible.Essentially that is because that act is one beyond thecontrol ofthe Builder, or from a variation, and eachentitles the Builder to an extension oftime to the Datefor Practical Completion, equivalent to the delay whichit would suffer in bringing the works to PracticalCompletion.

Ifthe Builder, having a right to claim an extension oftime fails to do so, it cannot claim that the act ofprevention which wouldhave entitled it to an extensionof the time for Practical Completion resulted in itsinability to complete by that time. A party to a contractcannot rely upon preventing conduct ofthe otherpartywhere it failed to exercise a contractual right whichwould have negated the effect of that preventingconduct.

It seems to me that if there is a contractual provisionregarding time which permits an extension oftime tothe Date for Practical Completion (whether with orwithout the payment ofany additional cost) for an actoforfor which a Proprietor may be responsible whichhas the effect ofpermitting variation ofthe contractualtimefor Practical Completion, an act which otherwisemight prevent the Builder from completing by thecontractually required date for Practical Completioncannot be an act ofprevention because the contract isextended to accommodate the caused delay toperformance, andthe contractualobligation regardingtimeforperformances thus varied. That is, the obverseofpreventingcompletion by the contractually requiredtime. The act of the Proprietor does not preventperformance of the contractual obligations withintime: it entitles the Builder to applyfor a contractualvariation extending time for performance.

Here the Builder claims an extension of seven daysarising from the alleged act ofprevention. It wasgranted the time it claimed. Thereafter, so it seems tome, it cannot assert that it was prevented fromcompleting on time, that is by the date for PracticalCompletion, in consequence ofthe allegedpreventingact. "

This case appears to put the onus onto the builder toapply for a time extension for acts of prevention by aproprietor. The builder cannot seek to invalidate theliquidated damages clause by failing to claim an extensionof time for the proprietor's acts of prevention.

In a more recent case, Turner Corporation Limited (InProvisional Liquidation) v Co-Drdinated Industries PtyLtd & Drs (1995) 11 BCL 202, Rolfe J considered inconsiderable detail the case law relating to prevention andarrived at the following principles (at 221-222):

"(a) Where the contractprovides an extension oftimeclause, which can accommodate delay causedbytheprincipalandprovides the contractualregime

25

or mechanism whereby the delay is to becalculated, thefact theprincipalmayhave causeddelay has the effect that an allowance should bemade in accordance with the contract. It doesnothave the effect that the contractualprovisionsare thereby overlooked orput aside or that timeis put "at large ".

(b) In any event the principal's action must cause"actual", as opposed to potential delay in thesense that the completion ofthe work is delayedby the actions of the principal. It is not to thepoint to say that there could have been a delay.It is necessary to establish that delay was caused.

(c) In any event one must determine, as a matter offact, what the overall effect ofthe action oftheprincipal was. As the illustration to which I havereferred, and the illustration referred to inMcAlpine, make clear it cannot be right that asmall actual delay brings about the result forwhich the contractor contends in the presentcase. That delay must be judged in all thecircumstances of the case. Certainly it mayallow some reliefto the contractor, but to suggestthat it eradicates all delay caused by thecontractor prior thereto, or even subsequentthereto ifnot causally related to the activities oftheprincipal, would be to set up a legalprinciplefar exceeding the one where aparty cannot replyupon its own default. "

CONCLUSIONThe completiondate/time extension/liquidateddamages

regime in modem construction contracts is by no meanssettled. Clearer and simpler risk allocation of timemanagement will be likely to result in less disputationconcerning the parties' rights to time extensions, delaycosts and liquidated damages. Clarity of drafting isabsolutely critical in relation to the drafting of specialconditions and project specific documentation.

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APPENDIX

JCC E, F -1994 (BUILDING WORKS CONTRACTS- JOINT CONTRACTS COMMITTEE)

9.01 Notifications of DelaysIfthe commencement orprogress ofthe execution ofso

much of the Works constituted by anyone or more of theStages is or will be delayed by any cause beyond thecontrol of the Builder including any act (other than anyinstruction by the Architect as to a Variation) default oromission on the part of the Proprietor, the Architect, anySeparate Contractor, employee or agent of the Proprietorin a manner which might reasonably be expected to resultin a delay in that Stage or those Stages reaching PracticalCompletion the Builder shall, if he desires to claim anextension oftime for Practical Completion ofthat Stage oranyone or more ofthose Stages, as soon as practicable andin any event not later than twenty (20) days after the causeof delay arose give a notice in writing to the Architectidentifying the affected Stage or Stages and stating thenature, the cause and where possible, the extent ofthe delay.

9.02 Notice of Claimed ExtensionAs soon as practicable the Builder shall give a further

notice inwriting to the Architect statinga fair andreasonabletime or times by which in his opinion the time or times forPractical Completion of the identified Stage or Stagesshould be extended.

9.03 Architect's DeterminationSubject to the Builder having complied with the

provisions of Clauses 9.01 and 9.02 the Architect shall assoon as practicable but not later than twenty (20) days afterreceiving the Builder's notice pursuant to Clause 9.02determine what, if any, extension or extensions of timetime for Practical Completion of the particular identifiedStage or Stages shall be granted to the Builder and shallthereupon notify in writing the Builder accordingly.

9.04 Deemed ExtensionIf the Architect does not notify the Builder in terms of

Clause 9.03 the time or times for Practical Completion ofthe identified Stage or Stages shall be deemed to beextended by the time or times stated in the Builder's noticegiven under Clause 9.02.

9.05 Architect May ExtendNotwithstanding that the Builder has not given either

of or both notices pursuant to Clause 9.01 and 9.02 theArchitect may at any time by notice in writing addressedto the Builder extend the time or times for PracticalCompletion ofanyone or more Stages ifin his opinion theBuilder would otherwise be entitled to such an extensionor extensions.

9.06 Condition Precedent to Extension of TimeNotwithstanding the preceding provisions of this

Section 9 the Builder shall not be entitled to any extensionof time unless he shall have taken proper and reasonablesteps both to preclude the occurrence ofthe cause ofdelayand/or to avoid or minimise the consequences thereof.

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AS2124-1992 (AUSTRALIAN STANDARDGENERAL CONDITIONS OF CONTRACT)

35.5 Extension of Time for Practical CompletionWhenitbecomes evidentto the Contractorthat anything,

including an act or omission of the Principal, theSuperintendent or the Principal's employees, consultants,other contractors or agents, may delay the work under theContract, the Contractor shall promptly notify theSuperintendent in writing with details ofthe possible delayand the cause.

When it becomes evident to the Principal that anythingwhich the Principal is obliged to do or provide under theContract may be delayed, the Principal shall give notice tothe Superintendent who shall notify the Contractor inwriting of the extent of the likely delay.

If the Contractor is or will be delayed in reachingPractical Completion by a cause described in the nextparagraph and within 28 days after the delay occurs theContractor gives the Superintendent a written claim for anextension oftime for Practical Completion setting out thefacts on which the claim is based, the Contractor shall beentitled to an extension of time for Practical Completion.

The causes are:(a) events occurring on orbefore the Date for Practical

Completion which are beyond the reasonablecontrol ofthe Contractor including but not limitedto -(i) industrial conditions;(ii) inclement weather;

(b) any of the following events whether occurringbefore, on orafterthe Date for Practical Completion

(i) delays caused by ­- the Principal;- the Superintendent;- the Principal's employees, consultants,

other contractors or agents;

(ii) actual quantities of work being greater thanthe quantities in the Bill ofQuantities or thequantities determined by reference to theupper limitofaccuracy stated in the Annexure(otherwise than by reason of a variationdirected under Clause 40);

(iii) latent conditions;(iv) variations directed under Clause 40;(v) repudiation or abandonment by aNominated

Sub-Contractor;(vi) changes in the law;(vii) directions by municipal, public or statutory

authorities not caused by the Contractor;(ix) claims referred to in Clause 17.1 (v);(x) any breach of the Contract by the Principal;(xi) any other cause which is expressly stated in

the Contract to be a cause for extension oftime for Practical Completion.

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Where more than one event causes concurrent delaysand the cause ofat least one of those events, but not all ofthem, is not a cause referred to in the preceding paragraph,then to the extent that the delays are concurrent, theContractor shall not be entitled to an extension oftime forPractical Completion.

In determining whether the Contractor is or will bedelayed in reaching Practical Completion regard shall notbe had to -

- whether the Contractor can reach PracticalCompletion by the Date for Practical Completionwithout an extension of time;

- whether the Contractor can, by committing extraresources or incurring extra expenditure, make upthe time lost.

With any claim for an extension of time for PracticalCompletion, or as soon as practicable thereafter, theContractor shall give the Superintendent written notice ofthe number of days extension claimed.

If the Contractor is entitled to an extension of time forPractical Completion the Superintendent shall, within 28days after receipt of the notice of the number of daysextension claimed, grant a reasonable extension oftime. Ifwithin the 28 days the Superintendent does not grant thefull extension of time claimed, the Superintendent shallbefore the expiration of the 28 days give the Contractornotice in writing of the reason.

In determining a reasonable extension of time for anevent causing delay, the Superintendent shall have regardto whether the Contractor has taken all reasonable steps topreclude the occurrence of the cause and minimise theconsequences of the delay.

Notwithstanding that the Contractor is not entitled toan extension of time the Superintendent may at any timeand from time to time before the issue ofthe Final Certificateby notice in writing to the Contractor extend the time forPractical Completion for any reason.

A delay by the Principal or the failure of theSuperintendent to grant a reasonable extension of time orto grant an extension oftime within 28 days shall not causethe Date for Practical Completion to be set at large butnothing in this paragraph shall prejudice any right of theContractor to damages.

AS4300-1995 (AUSTRALIAN STANDARDGENERAL CONDITIONS OF CONTRACT FORDESIGN AND CONSTRUCT)

35.5 Extension of Time for Practical CompletionWhen itbecomes evidentto the Contractorthat anything,

including an act or omission of the Principal, theSuperintendent or the Principal's employees, consultants,other contractors or agents, may delay the work under theContract, the Contractor shall promptly notify theSuperintendent in writing with details ofthe possible delayand the cause.

When it becomes evident to the Principal that anything

27

which the Principal is obliged to do or provide under theContract may be delayed, the Principal shall promptly givenotice to the Superintendent who shall promptly notify theContractor in writing of the extent of the likely delay.

If the Contractor is or will be delayed in reachingPractical Completion by a cause described in the nextparagraph and within 28 days after the delay occurs, theContractor gives the Superintendent a written claim for anextension of time for Practical Completion setting out thefacts on which the claim is based, the Contractor shall beentitled to an extension of time for Practical Completion.

The causes are -(a) any of the following -

* (i) industrial conditions;* (ii) inclement weather; or

(iii) any other cause,

occurring on or before the Date for PracticalCompletion and which are beyond thereasonable control of the Contractor; and

(b) any ofthe following othercauses whetheroccurringbefore, on or after the Date for PracticalCompletion -(i) delay or disruption caused by ­

- the Principal;- the Superintendent;- an employee, consultant, other contractor

oragentofthe Principal orSuperintendent;(ii) actual quantities ofwork being greater than

the quantities in a Schedule of Rates byreference to the upper limit of accuracyapplicable to clause 3.3(b) and stated inAnnexure Part A (otherwise than by reasonof a variation);

(iii) a Latent Condition;(iv) a variation;(v) a change in Legislative Requirements;(vi) a directionby amunicipal, public or statutory

authority but not where the direction arosefrom the failure ofthe Contractor to complywith a Legislative Requirement;

(vii) delay by a municipal, public or statutoryauthority not caused by the Contractor;

(viii) a claim referred to in clause 17.1(iv);(ix) a breach of the Contract by the Principal;(x) another cause which is expressly stated in

the Contract to be a cause for an extension oftime for Practical Completion;

Where more than one event causes concurrent delaysand the cause ofat least one of those events, but not all ofthem, is not a cause ofdelay listed in clause 35.5(a) or (b),then to the extent that the delays are concurrent, theContractor shall not be entitled to an extension oftime forPractical Completion.

Notwithstandingthe precedingparagraphthe Contractorshall be entitled to an extension of time if the concurrentdelay occurs after the Date for Practical Completion and

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the cause ofthe delay is one or more ofthe events listed inclauses 35.5(b)(i), (iv), (viii) and (ix).

In determining whether the Contractor is or will bedelayed in reaching Practical Completion regard shall notbe had to -

- whether the Contractor can reach PracticalCompletion by the Date for Practical Completionwithout an extension of time; or

- whether the Contractor can, by committing an extraresources or incurring extra expenditure, make upthe time lost.

With any claim for an extension of time for PracticalCompletion, or as soon as practicable thereafter, theContractor shall give the Superintendent written notice ofthe period of extension claimed.

If the Contractor is entitled to an extension oftime forPractical Completion the Superintendent shall, within 28days ofreceipt ofthe notice ofthe numberofdays extensionclaimed, grant a reasonable extension oftime. Ifwithin the28 days the Superintendentdoes not grant the full extensionof time claimed, the Superintendent shall before theexpiration of the 28 days give the Contractor notice inwriting of the reason.

In determining a reasonable extension of time for anevent causing delay, the Superintendent shall have regardto whether the Contractor has taken all reasonable steps topreclude the occurrence of the cause and minimise theconsequences of the delay.

Notwithstanding that the Contractor is not entitled to orhas not claimed an extension of time, the Superintendentmay at any time and from time to time before the issue ofthe Final Certificate by notice in writing to the Contractextend the time for Practical Completion for any reason.

A delay by the Principal or the failure of theSuperintendent to grant a reasonable extension of time orto grant an extension oftime within 28 days, shall not causethe Date for Practical Completion to be set at large butnothing in this paragraph shall prejudice any right of theContractor to damages.

* Note: Clauses 35.5(a)(i) and 35.5(a)(ii) prefixed by"*,, are optional andthe Annexure shouldbe completedappropriately. If the Annexure options are notcompleted, the particular Clause will apply.

NZIA 7TH EDITION (GENERAL CONDITIONS OFCONTRACT)

8.03 Extensions of TimeThe Time for Practical Completion shall be extended

beyond that stated in the Specific Conditions or beyondany extended time fixed hereunder if work is delayed byreason of:

(a) non-availability of permits unless this is causedwholly or in part by any act or default of theContractor;

(b) the suspension of the Contract Works by the

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Contractor where authorised by the Contract;(c) weather sufficiently inclement to interfere with

the progress of the Contract Works;(d) any strike, lockout or other industrial action;(e) loss or damage to the Contract Works or any part

thereof not due to the fault of the Contractor;(f) Variations to the Contract Works provided that the

extended time, if agreed when a Variation isordered, shall constitute the extended time;

(g) failure of the Architect to supply in due time alldetails and directions necessary for the carryingout of the Contract Works and for which theContractor has applied in writing at a reasonabletime to allow the Architect to prepare such detailsand directions;

(h) the late supply by the Employer of any materials,services or work;

(i) an act or default by a Separate Contractor;U) any other significant cause beyond the control of

the Contractor;(k) the death of the Contractor.

Where Sectional Practical Completion applies as notedin the Specific Conditions, the time for achieving SectionalPractical Completion shall be extended in the mannerdescribed in this Clause.

8.04 Claim for Extension of TimeThe Contractor shall so notify the Architect if the

Contractor considers that the Contract Works have beendelayed or one or more ofthe reasons stated in Clause 8.03and shall submit a claim for an extension of time. Theclaim shall be made within 25 Working Days of theoccurrence ofthe cause ofthe claim, stating the extensionclaimed and the reasons therefor. The Architect shallinvestigate the claim and, within 25 Working Days, shallnotify the Contractor of any extension of the Time forPractical Completion or Sectional Practical Completion.

NZS 3910: 1987 (CONDITIONS OF CONTRACTFOR BUILDING AND CIVIL ENGINEERINGCONSTRUCTION)

9.2 Extension of times9.2.1 The Engineer shall grant an extension of the time

for completion of the Contract Works or for anySeparable Portion ifthe Contractor is fairly entitledto an extension by reason of:(a) the net effect of any Variation; or(b) weather sufficiently inclement to interfere

with the progress of the works; or(c) any strike, lockout or other industrial action, or(d) the late supply by the Principal ofany services

or work; or(e) any circumstances not reasonably foreseeable

by an experienced contractor at the time oftendering and not due to the fault of theContractor.

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9.2.2 The Engineer shall not be bound to grant anextension unless:(a) the Contractor notifies the Engineer that he

claims an extension and states the grounds forthe extension;

(b) the notice is given with 20 Working Days afterthe circumstances arise which are relied on asthe grounds for extension, or as soon aspracticable thereafter;

(c) the notice either gives details of the period ofextension sought or is followed within areasonable time by a further notice givingsuch details.

9.2.3 Where the effect ofany ground for an extension isof a continuing nature, the Contractor may givemore than one notice each claiming a specificperiod of extension on that ground.

9.2.4 Upon receipt ofnotice of a claim for extension oftime the Engineer shall investigate the claim. TheEngineer shall within 20 Working Days or as soonas practicable thereafter determine whether or notthe Contractor is fairly entitled to an extension andshall notify the Contractor of his decision.

9.2.5 Upon receipt of details of the period of extensionsought by the Contractor the Engineer shall, if hehas determined that the Contractor is fairly entitledto an extension, then determine the period of theextension and notify the Contractor ofhis decisionas soon as practicable.

FIDIC 4TH EDITION 1992 (CONDITIONS OFCONTRACT FOR WORKS OF CIVIL ENGINEERINGCONSTRUCTION)

43.1 Time for CompletionThe whole ofthe Works and, ifapplicable, any Section

required to be completed within a particular time as statedin the Appendix to Tender, shall be completed, inaccordance with the provisions of Clause 48, within thetime stated in the Appendix to Tender for the whole oftheWorks or the Section (as the case may be), calculated fromthe Commencement Date, or such extended time as may beallowed under Clause 44.

44.1 Extension of Time for CompletionIn the event of:(a) the amount or nature of extra or additional work,

or(b) any cause ofdelay referred to in these Conditions,

or(c) exceptionally adverse climatic conditions, or(d) any delay, impediment or prevention by the

Employer, or(e) other special circumstances which may occur,

other than through a default oforbreach ofcontractby the Contractor or for which he is responsible,

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being such as fairly to entitle the Contractor to an extensionof the Time for Completion of the Works, or any Sectionor part thereof, the Engineer shall, after due consultationwith the Employer and the Contractor, determine theamount of such extension and shall notify the Contractoraccordingly, with a copy to the Employer.

44.2 Contractor to Provide Notification andDetailed Particulars

Provided that the Engineer is not bound to make anydetermination unless the Contractor has:

(a) within 28 days after such event has first arisennotified the Engineer with a copy to the Employer;and

(b) within 28 days, or such other reasonable time asmay be agreed by the Engineer, after suchnotification submitted to the Engineer detailedparticulars of any extension of time to which hemay consider himself entitled in order that suchsubmission may be investigated at the time.

44.3 Interim Determination of ExtensionProvided also that where an event has a continuing

effect such that it is not practicable for the Contractor tosubmit detailed particulars within the period of 28 daysreferred to in Sub-Clause 44.2(b), he shall nevertheless beentitled to an extension of time provided that he hassubmitted to the Engineer interimparticulars at intervals ofnot more than 28 days and final particulars within 28 daysof the end of the effects resulting from the event. Onreceipt of such interim particulars, the Engineer shall,without undue delay, make an interim determination ofextension of time and, on receipt of the final particulars,the Engineer shall review all the circumstances and shalldetermine an overall extension of time in regard to theevent. In both such cases the Engineer shall notify theContractor accordingly, with a copy to the Employer. Nofinal review shall result in a decrease of any extension oftime already determined by the Engineer.

FIDIC DESIGN, BUILD AND TURNKEY(DECEMBER 1994)

8.3 Extension of Time for CompletionThe Contractor may apply for an extension ofthe Time

for Completion ifhe is or will be delayed either before orafter the Time for Completion by any of the followingcauses:

(a) a Variation (unless an adjustment to the Time forCompletion is agreed under Sub-Clause 14.3);

(b) a force majeure event (as defined in Sub-Clause 19.1);(c) a cause ofdelay giving an entitlement to extension

of time under a Sub-Clause of these Conditions,unless the Contractor has not complied with suchSub-Clause;

(d) physical conditions or circumstances on the Site,which are exceptionally adverse and were not (by

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the Effective Date) foreseeable by an experiencedcontractor; or

(e) any delay, impediment or prevention by theEmployer.

The Contractor shall, within 28 days of the start oftheevent giving rise to the delay, give notice to the Employer'sRepresentative ofthe Contractor's intention to apply for anextension of the Time for Completion, together with anyother notice required by the Contract and relevant to suchcause. The Contractor shall keep such contemporaryrecords as may be necessary to substantiate any application,either on the Site or at another location acceptable to theEmployer's Representative, and such other records as mayreasonably be requested bythe Employer's Representative.The Contractor shall permit the Employer's Representativeto inspect all suchrecords, and shall provide the Employer'sRepresentative with copies as required.

Within 28 days of the first day of such delay (or suchother period as may be agreed by the Employer'sRepresentative), the Contractor shall submit full supportingdetails of his application. Except that, if the Contractorcannot submit all relevant details within suchperiodbecausethe cause ofdelay continued for a period exceeding 7 days,the Contractor shall submit interim details at intervals ofnot more than 28 days (from the first day ofsuch delay) andfull and final supporting details ofhis application within 21days of the last day of delay.

The Employer's Representative shall proceed inaccordance with Sub-Clause 3.5 to agree or determineeither prospectively or retrospectively such extension ofthe Time for Completion as may be due. The Employer'sRepresentative shall notify the Contractor accordingly.When determining each extension oftime, the Employer'sRepresentative shall review his previous determinationsand may revise, but shall not decrease, the total extensionof time.

ICE 6TH EDITION (CONDITIONS OF CONTRACT)

43. Time for CompletionThe whole ofthe Works and any Section required to be

completedwithin a particular time as stated in the Appendixto the Form of Tender shall be substantially completedwithin the time so stated (or such extended time as may beallowed under Clause 44) calculated from the WorksCommencement Date.

44. Extension of time for Completion(1) Should the Contractor consider that:

(a) any variation ordered under Clause 51(1); or(b) increased quantities referred to in Clause 51 (4);

or(c) any cause ofdelay referred to in these Conditions;

or(d) exceptional adverse weather conditions; or(e) other special circumstances of any kind

whatsoever which may occur,

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be such as to entitle him to an extension of time for thesubstantial completion ofthe Works or any Section thereofhe shall within 28 days after the cause of any delay hasarisen or as soon thereafter as is reasonable deliver to theEngineer full and detailed particulars injustification oftheperiod ofextension claimed in order that the claim may beinvestigated at the time.

(2) Assessment of delay(a) the Engineer shall upon receipt ofsuch particulars

consider all the circumstances known to him atthat time and make an assessment of the delay (ifany) that has been suffered by the Contractor as aresult of the alleged cause and shall so notify theContractor in writing;

(b) the Engineer may in the absence of any claimmake an assessment ofthe delay that he considershas been suffered by the Contractor as a result ofany of the circumstances listed in Sub-Clause (1)ofthis Clause and shall so notify the Contractor inwriting.

(3) Interim grant of extension of timeShould the Engineer consider that the delay suffered

fairly entitles the Contractor to an extension ofthe time forthe substantial completion of the Works or any Sectionthereof such interim extension shall be granted forthwithand be notified to the Contractor in writing. In the eventthat the Contractor has made a claim for an extension oftime but the Engineer does not consider the Contractorentitled to an extension of time he shall so inform theContractor without delay.

(4) Assessment at due date for completionThe Engineer shall not later than 14 days after the due

date or extended date for completion of the Works or anySection thereof (and whether or not the Contractor shallhave made any claim for an extension oftime) consider allthe circumstances known to him at that time and takeaction similar to that provided for in Sub-Clause (3) ofthisClause. Should the Engineer consider that the Contractoris not entitled to an extension oftime he shall so notify theEmployer and the Contractor.

(5) Final determination of extensionThe Engineer shall within 14 days of the issue of the

Certificate ofSubstantial Completion for the Works or forany Section thereof review all the circumstances of thekind referred to in Sub-Clause (1) ofthis Clause and shallfinally determine and certify to the Contractor with a copyto the Employer the overall extension of time (if any) towhich he considers the Contractor entitled in respect oftheWorks or the relevant Section. No such final review ofthecircumstances shall result in a decrease in any extension oftime already granted by the Engineer pursuant to Sub­Clauses (3) or (4) of this Clause.

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I CHEM ENG (CONDITIONS OF CONTRACT FORPROCESS PLANT)14. Delays and Extensions of Time14.1 Ifthe Contractor shall be delayed in the performance

ofany ofhis obligations under the Contract by anyofthe matters specified in Sub-Clause 14.2, he shallforthwith give notice thereof to the Engineer andshall become entitled to such extension ofany dateorperiod specified in the Contract for the completionor doing ofanything by the Contractor as shall in allthe circumstances be fair and reasonable. TheEngineer shall, as soonas the extentandconsequenceofany such delay are known, grant such extensionbynotice both to the Purchaserand to the Contractor.A notice given by the Contractor under Clause 43(Force Majeure) shall also constitute a notice underthis sub-Clause.

14.2 The matters of delay entitling the Contractor to anextension of date or period under this Clause are:(a) delay caused by the occurrence of conditions

to which the provisions of Sub-Clause 5.3apply;

(b) delay due to the Engineer giving any Variationorder which is not withdrawn, or the approvalby the Engineer ofthe Contractor's proposalsfor a Variation, except where such proposalsrelate to a defect due to a default on the part ofthe Contractor;

(c) the giving of any suspension order by theEngineer, except where given by reason oftheContractor's breach of Contract;

(d) delay caused by force majeure as defined inClause 43 (Force Majeure);

(e) delay caused by any breach ofthe Contract bythe Purchaser;

(f) delay caused by the failure of any Sub­Contractor nominated by the Engineer inaccordance with Clause 9 (Nominated Sub­Contractors) to perform such Sub-Contractor' sobligations despite all due supervision by theContractor.

14.3 The Contractor shall at all times use his bestendeavours to minimise any delay in theperformance ofhis obligations under the Contract,whatever may be the cause of such delay.

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