Cases - Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (No. 2)

Record details

Name
Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (No. 2)
Date
[2007]
Citation
Adj.L.R. 03/06, EWHC 447 (TCC)
Keywords
Construction claim - time for completion - extension of time - the prevention principle - condition precedent to extension of time
Summary

In this recent case of the Technology and Construction Court, Jackson considered the effect of contractual formalities and preconditions in relation to the award of an extension of time, as well as the application of the 'prevention principle' in such a context. The decision goes some way to resolving what was, at the time, an undecided issue in English law and merits extended analysis.

Honeywell was a specialist subcontractor engaged by Multiplex to design, supply and install various electronic systems at the new national stadium at Wembley. The project was suffering severe delays even prior to Honeywell's commencement of works on site, and delays continued to occur after this time. The parties were at odds over the cause of such delays with Honeywell blaming poor programming and organisation on the part of Multiplex.

Honeywell was directed (pursuant to clause 4.2 of the contract) to comply with three revised programmes issued by Multiplex, each containing progressively later completion dates for the works. The third and final date of 31 March 2006 passed without completion being achieved.

The subcontract between the parties contained the following clause (11.1.3) regarding extensions of time:

'It shall be a condition precedent to the Sub-Contractor's [Honeywell's] entitlement to any extension of time under clause 11, that he shall have served all necessary notices on the Contractor [Multiplex] by the dates specified and provided all necessary supporting information including but not limited to causation and effect programmes, labour, plant and materials resource schedules and critical path analysis programmes and the like. In the event the Sub-Contractor fails to notify the Contractor by the dates specified and/or fails to provide any necessary supporting information then he shall waive his right, both under the contract and at common law, in equity and/or pursuant to statute to any entitlement to an extension of time under this clause 11.'

Clause 11.10 contained a list of 'relevant events'. Prior to the litigation, Honeywell had successfully argued in adjudication that Multiplex's directions under clause 4.2 had the effect of putting time at large. Multiplex issued proceedings seeking a declaration that its directions under clause 4.2 did not render time at large. Honeywell's defence included the following grounds:

  • As a matter of construction, as a direction under clause 4.2 was not expressly included within the list of relevant events under the extension of time clause and, as a result, Honeywell was unable to claim an extension of time in relation to the same, thus prohibiting Multiplex from insisting on the specified completion date (the 'construction point').
  • The extension of time provisions were rendered inoperable by Multiplex, as Multiplex's failure to provide proper programming information rendered compliance with clause 11.1.3 impossible (the 'inoperable point').
  • The Court should follow the reasoning of the Australian court in Gaymark ('the Gaymark point').

Jackson J rejected Honeywell's defences and held that time was not at large: it therefore falls to Honeywell to claim an appropriate extension of time.

As to the 'construction point', Jackson J derived three propositions upon reviewing the relevant authorities:

  • actions by the employer which are perfectly legitimate under a construction contract may still be characterised as prevention, if those actions cause delay beyond the contractual completion date;
  • acts of prevention by an employer do not set time at large, if the contract provides for extension of time in respect of those events;
  • insofar as the extension of time clause is ambiguous, it should be construed in favour of the contractor.

In delivering his judgment, Jackson J followed Dodd v Churton and Trollope v NWMHB and held that even though directions under clause 4.2 did not automatically qualify for consideration as a 'relevant event' under clause 11.10, they nonetheless fell within clause 11.10 insofar as it provided for 'delay caused by acts of prevention' by Multiplex. Jackson J was not persuaded that a direction causing delay was merely an act of 'hindrance' as opposed to an act of 'prevention'. Such a direction could properly amount to both.

As to the inoperable point, Jackson J held that the wording of the contract obliged Honeywell to do its best as soon as it reasonably could in providing notices or supporting information. Jackson J held that the extension of time provisions were live and properly functioning. It was incumbent on Honeywell to apply for an appropriate extension of time.

As to the 'Gaymark point', Jackson J stated:

'I am bound to say that I see considerable force in the reasoning of the Australian courts in Turner and in Peninsula and in the reasoning of the Inner House in City Inn ... Contractual terms requiring a contractor to give prompt notice of delay serve a valuable purpose; such notice enables matters to be investigated while they are still current. Furthermore, such notice sometimes gives the employer the opportunity to withdraw instructions when the financial consequences become apparent. If Gaymark is good law, then a contractor could disregard with impunity any provision making proper notice a condition precedent. At his option the contractor could set time at large.'

In the end, Jackson J did not decide one way or the other, as he distinguished Gaymark on the grounds that, unlike in Gaymark, the Wembley contract did not automatically expose Honeywell to liquidated damages in the event that the notice clause was not complied with. If Honeywell failed to comply with the provisions, it would be disentitled to an extension of time, but liquidated damages could only be claimed by Multiplex in respect of loss or damage 'caused by the failure of the Sub-Contractor'.

Jackson J also hinted at a movement away from the 'traditional' contra proferentem interpretation of extension of time clauses. Although it is unclear from the judgment whether the cases of McAlpine v Tilebox and Murray v Leisureplay were cited before the Court, Jackson J nonetheless stated that the contra preferentem principle should be 'treated with care', indicating that a measured approach is preferable, as opposed to a blanket application of the doctrine so as to rescue contractors caught by a particular clause:

'... in so far as an extension of time clause is ambiguous, the court should lean in favour of a construction which permits the contractor to recover appropriate extensions of time in respect of events causing delay.'