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Contractor cannot rely upon the prevention principle

1 Aug 11 The Technology and Construction Court has thrown out a contractor's attempt to rely upon the prevention principle to excuse the delay on a project. The contractor alleged that the delays had been caused by the employer and the statutory undertakers.

Jerram Falkus' (JFC) works for Fenice were delayed by 86 days, and Fenice deducted liquidated damages. JFC alleged that Fenice and/ or their servants or agents had prevented completion and that, by reason of the deletions to the extension of time provisions, which meant that no extension of time could be granted in relation to such acts of prevention, time was set at large. The implication of this was that Fenice would not be entitled to deduct damages. In addition, JFC claimed loss and expense. There had already been three adjudications between the parties. Fenice claimed that the issues raised in the present action were the same as had been dealt with in the parties' third adjudication. Since JFC had not challenged the decision in the third adjudication, Fenice maintained that the adjudicator's decision was final and binding.

The issues before the present court were whether the adjudicator's decision dated 28 October 2010 was final and conclusive so that the arguments JFC sought to put before the court were not open to them. There was also an issue as to whether Fenice could challenge JFC's claim for loss and expense because JFC's Final Account and Final Statement were conclusive, and/ or, if JFC's Final Account and Final Statement were conclusive, were they also prevented from raising their own delay claims.

The court also had to decide whether JFC had been prevented from completing the works on time, and if there had been an agreement between the parties to vary the liquidated damages.

Clause 1.9.1 of the parties' contract provided that the Final Account and Final Statement were to be conclusive evidence for the purposes of any adjudication, arbitration or legal proceedings. Clause 1.9.14 provided:

"In the case of a dispute or difference on which an Adjudicator gives his decision on a date which is after the date of submission of the Final Account and Final Statement or the Employer's Final Account and Employer's Final Statement, as the case may be, if either Party wishes to have that dispute or difference determined by arbitration or legal proceedings, that Party may commence arbitration or legal proceedings within 28 days of the date on which the Adjudicator gives his decision."

Clause 2.26 set out the Relevant Events which might give JFC an entitlement to an extension of time. Two of the provisions had been deleted. These were any act or omission by the Employer and any default by a Statutory Undertaker. Clause 2.28 stated that the employer should issue a written non-completion notice identifying JFC's failure to complete the works by the due date.

DELAY

JFC claimed that they had been delayed by 53 days due to works by British Gas and EDF, and that there was an additional delay of 46 days caused by late instructions in respect of the levels of two houses. These delays were concurrent. JFC's case was these delays had been caused by Fenice's acts of prevention and they were not, therefore, entitled to deduct liquidated damages. Fenice denied that the works had been delayed by British Gas and EDF. It blamed the delays in respect of the levels on JFC. Fenice's alternative argument was that if there had been delays due to the statutory undertakers, since these had been concurrent with the delays because of the levels, for which JFC was responsible, they could not be liable under the prevention principle.

The documentation showed that JFC had been falling behind between the end of 2008 and the beginning of 2009. By 16 March 2009, their progress report showed that they were 10 weeks behind. This would have meant completion would have been in August 2009. This delay had, therefore, been noted long before any of the alleged delay events which JFC now sought to rely upon. The works were completed on 9 September 2009 i.e. events had occurred which had caused an additional delay of one month between March and September 2009.

DELAY CAUSED BY THE LEVELS

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Sawyer and Fisher, Fenice’s agents, had written to JFC about the problems with the levels on 11 June 2009, pointing out that the design had been JFC's responsibility because they were the design and build contractor. JFC's case was that Fenice had delayed in approving the solution it came up with and that this had delayed completion. In the judge's view, Fenice had been entitled to consider the proposed solution carefully. They did not have to provide an automatic response to JFC's suggestion in order to help them out of the difficulty they had created. The evidence did not support JFC's contention that Fenice had been unacceptably slow in responding. Fenice could not be blamed for any of the delay caused by the problems with the levels in the houses.

DELAY CAUSED BY BRITISH GAS AND EDF

The British Gas works had been delayed, but this would not have delayed the works as a whole beyond the original completion date of 10 July. Even if there had been any evidence of delay by British Gas, it would have been JFC's responsibility because British Gas had come to site later than had been planned because JFC's scaffolding had been in the way, and prevented British Gas from carrying out the necessary trenching work.

EDF had been appointed as JFC's subcontractors. Any problems with their works were JFC's responsibility. In addition, there was no evidence to show that EDF's works had caused critical delay.

In conclusion, the judge expressed concern at the "hopeless nature" of JFC's case, and that they had incurred costs of £75,000 in re-running the same arguments. He said that he was troubled about the quality of the legal advice which JFC had received and commented that that side of the case would be explored in more depth when it came to the application for costs.

Jerram Falkus Construction Ltd. v Fenice Investments Inc. (No. 4), [2011] EWHC 1935 (TCC)

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