110 Can sectional completion be achieved by inserting the phasing dates in the bills of quantities
Preliminaries section?
It used to be a feature of local authority housing contracts that the bills of quantities contained a series of dates or times when certain blocks of dwellings had to be completed. Sometimes this was expressed as a number of weeks from the date of possession. For example: ‘Block A – six weeks, Block B – ten weeks’ etc. A variant was where existing properties were involved and the contractor was to be allowed possession of blocks of ten dwellings at a time and not entitled to take possession of another dwelling until one had been completed. If JCT contracts were involved, this process was unlawful. In the case of other types of contract, it might be lawful, but probably unworkable in practice.
Where there is just one date for possession and one date for completion in the contract, sectional possession or completion can- not be achieved by simply inserting intermediate dates in the specification or bills of quantities.165 Certainly not in JCT con-
tracts, which have a clause giving priority to the printed form over other contract documents (see, for example, clause 1.3 in SBC and IC). In these contracts, the single completion date in the contract particulars of the printed form will take precedence even though there is a whole regimen of blocks and dates in the bills of quanti- ties, because the bills of quantities are not allowed to override or modify the printed form. Therefore, although the bills clearly state
165 M J Gleeson (Contractors) Ltd v Hillingdon Borough Council(1970) 215 EG 165
that the contractor can only take possession of houses in ten- dwelling lots, on the true construction of the contract the contractor’s right is to take possession of the whole of the dwellings at the date for possession in the contract particulars and its obliga- tion to complete does not bite until the single date for completion. If the dates in the bills of quantities have any relevance at all, which is doubtful, they may simply indicate the order in which the blocks are to be finished. However, a contractor completing all the dwellings on the single completion date has fulfilled its obligations. If the contract is not part of the JCT series and there is no simi- lar priority clause, the usual rule that ‘type prevails over print’ will apply and any sectional possession or completion dates stated in the bills of quantities or specification would apply in preference to the date in the contract. However, this would cause some contrac- tual problems. For example, most standard form contracts provide for only one certificate of practical completion, one certificate of making good defects and one rectification period (or their equiva- lents). Such contracts refer to extension of time in relation to the single completion date or fixing a new single completion date. Such problems can be resolved only by goodwill on both sides or with the assistance of an adjudicator, arbitrator or judge. In the JCT 98 series of contracts, putting sectional completion into a standard building contract required a considerable number of contract amendments. Although this is no longer necessary in the 2005 series, because completion in sections has been incorporated into the basic contracts, where JCT contracts are not used a tremendous amount of amendment would be necessary to avoid problems – as a glance at the former sectional completion supplements will demonstrate.
111 The contract is SBC, which includes provision for sections. The employer wants to rearrange the sections. Can that be done with an architect’s instruction?
The fact that the contract is to be carried out in sections has been agreed between the employer and the contractor when they exe- cuted the contract. In other words, the sections are a term of the contract. Therefore, in order to change the sections it is necessary to have a further agreement between employer and contractor. It is not something the employer can unilaterally decide, any more than
the employer can unilaterally decide to reduce the contract sum by 20 per cent.
Still less can the sections be changed by the architect through the medium of an architect’s instruction. Apart from any other consid- eration, the architect is not empowered by the contract to issue an instruction to that effect. Therefore, any such instruction would be void.
If the employer wishes to rearrange the sections, the contractor’s consent must be sought. Even where both parties agree, the change cannot be achieved by an architect’s instruction. If the contractor is willing, the employer must organise the drafting of a special adden- dum to the contract setting out the variation agreed between the parties and any other matters that arise from the change (for exam- ple, it will be necessary to amend the liquidated damages). Both parties must sign the addendum.
112 The contract is SBC in sections. The dates for possession and completion have been inserted for each section. Section 2 cannot start until section 1 is finished. The contractor is saying that possession of section 2 must be given on the due date even if it is the contractor’s own fault that section 1 is not finished.
This is a common problem when the contract is divided into sec- tions, each with its own date for possession and completion, but two or more of the sections are interdependent. For example, a refurbishment project may be divided into three sections, but sec- tion 2 may be dependent on section 1 in a practical sense, because the contractor cannot physically be given possession of section 2 until section 1 has been completed. That is usually because the occupants of section 2 have to be moved to section 1 when it is fin- ished. Usually, the dates for possession and completion of each section are inserted into the contract as a series of dates. The date for completion of section 1 and the date for possession of section 2 will probably be separated by a week or so to allow occupants and furniture to be moved from one section to another.
If section 1 is not finished by the completion date, even due to the contractor’s fault, the contractor is still entitled to take pos- session of section 2 on the appointed date in the contract particulars (see clause 2.4 of SBC). If it is physically impossible
for such possession to take place, the employer will be in breach of contract. The contractor is, therefore, correct.
Where a project is split into sections, any extensions of time must be given in respect of the particular section affected by the delaying event. There is no provision that the delay in one section will affect another. Therefore, even if the whole of the delay to section 1 enti- tles the contractor to an extension of time, it will be only section 1 that is extended and not section 2.
If the cause of the delay is entirely the fault of the contractor, the architect may say that the contractor, being responsible for the delay to section 1, is clearly responsible for the delay to section 2 also and it cannot expect to take possession of section 2 on the date set out in the contract particulars. This approach is very common, but wrong. The cause of the delay to possession of section 2 is not the contrac- tor’s delay to section 1, but the fact that the two sections are linked. If they were not linked, the contractor’s delay to section 1 would not affect section 2. One of the difficulties is that, where the dates for possession and completion are simply set out as a series of dates, there is nothing to warn the contractor about the likely problem.
A situation that was similar, but quite different in effect, occurred in Trollope & Colls Ltd v North-West Metropolitan Regional Hospital Board.166There were three sections, each with
a separate contract sum and set of conditions. Although the start of section 3 was shown in the contract as being subject to the completion of section 1, the date for completion of section 3 was given as a particular date. Therefore, when the completion of sec- tion 1 was delayed, the start of section 3 was also delayed, but the date for completion of section 3 remained the same. Therefore, the period for completion was reduced from 30 to 16 months. This seriously affected the contractor, but the House of Lords refused to imply a term into the contract that the completion date for section 3 should be extended accordingly.
There are two probable supplementary issues: the first is whether anything can be done to avoid the problem in new con- tracts; the second is whether anything can be done where the situation outlined in the question is currently in place.
To avoid the problem is relatively straightforward. The employer must clearly show the links in the sections. The contract particulars
should be amended to delete the current setting out against ‘Sections: Dates of Possession of sections’ and in its place or on a separate, but properly attached and signed, sheet, section 1 would have a date for possession and a date for completion, but section 2 would not have a date for possession. It would simply state: ‘The date for possession is x days after the date of practical completion of section 1.’ Therefore, a delay to completion in section 1 (from what- ever cause) would be reflected in the date of possession of section 2 and there would be no breach of contract, because section 2 could be given to the contractor on the due date. The date for completion of section 2 would not be inserted, but rather: ‘The date for comple- tion is x weeks after the date that possession of this section was taken by the contractor’. It is difficult to see the grounds on which the contractor could make any financial claim on the employer for delays to section 1 that cause a delay to the possession of section 2 if this method of setting out the dates was implemented. It has been said that the dates for possession and completion cannot be entered in this way, because they are not actual dates. That would be to take the wording too literally. The important thing is that the wording enables the dates to be unerringly calculated, albeit not until practi- cal completion of section 1 has taken place.
How to rectify the situation if proper provision has not been made is slightly more complex. If there is provision for the employer to defer possession of any of the sections by the appro- priate amount, the employer must do so and the contractor will be entitled to an extension of time and probably whatever amount of loss it has suffered as a result of the deferment of possession. If there is no deferment provision or if the delay exceeds the period of deferment allowed under the contract, the situation appears to be that there is a breach of contract which, dependent upon circum- stances, may be a repudiation. The contractor would be entitled to recover as damages the amount of loss he has suffered. If there was no provision for the delay situation in the contract, the architect would be unable to make any extension of time and the contrac- tor’s obligation with regard to section 2 would be to complete within a reasonable time. Therefore, liquidated damages for this section would not be recoverable.
SBC and IC now provide for such breaches to be dealt with by extension of time and loss and/or expense under SBC clauses 2.29.6 and 4.24.5 and IC clauses 2.20.6 and 4.18.5 respectively. The amount payable to the contractor, whether by virtue of a loss