TIME AT LARGE AND REASONABLE TIME FOR COMPLETION
ONG RUI YING
TIME AT LARGE AND REASONABLE TIME FOR COMPLETION
ONG RUI YING
A project report submitted in partial fulfillment of the
requirement for the award of the degree of
Master of Science (Construction Contract Management)
Faculty of Built Environment
Universiti Teknologi Malaysia
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Dedicated to my personal Lord and Saviour Jesus Christ and to my beloved parents and siblings.
ACKNOWLEDGEMENTS
First of all, I would like to express my gratitude to my supervisor, Assoc. Prof. Dr Rosli Abdul Rashid for his guidance and advice in order to complete this master project. A special thanks to all the lecturers for the course of Master of Science (Construction Contract Management), for their patience and kind advice during the process of completing the master project.
A debt of gratitude is owed to many individuals who have also given me support, help and tolerance in writing and completing this master project. Not forgetting my dearest parents and siblings for their unconditional love and support. Lastly, I would like to express my thanks to my fellow course mates, who have in their own way helped me a great deal throughout the preparation and production stages of this master project. Care and concern from my house mates are also greatly appreciated.
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ABSTRACT
Time is an extremely important issue in construction. Timely completion of the construction works by the contractor is of great importance to the employer. Therefore, most construction contracts specify time for performance in achieving completion of the works. However, during the execution of the contract, circumstances may arise which render that completion date unenforceable. At common law, the contractor’s obligation to complete the works by the specified date is removed if the employer delays the contractor in the execution of the works. When the specified completion date no longer applies, time is said to be “at large”, and the contractor’s obligation is merely to complete the works within a reasonable time. What does it mean by reasonable time? It is most certainly not “as and when the contractor sees fit”. The study is aimed at determining the meaning of “reasonable time” when time is at large. Findings of this study will assist contractors to assess a reasonable time to complete the works when time at large occurs. The approach adopted in this research is case law based. There are no limitations as for the court cases referred to in this study in terms of type of projects as long as the case is related to reasonable time. A total of ten cases centered on what is a reasonable time were studied. Through the analysis of courts’ judgments, the meaning of “reasonable time” when time at large occurs was determined. “Reasonable time” means reasonable under the existing circumstances, assuming that those circumstances, in so far as they involve delay, are not caused or attributed to by him and excluding circumstances which were under the control of the contractor, considering what in ordinary circumstances was a reasonable time for performance and then considering to what extent the time for performance of the contractor was in fact extended by extraordinary circumstances outside his control.
ABSTRAK
Masa merupakan satu isu yang penting di dalam pembinaan. Kerja pembinaan yang disiapkan oleh kontraktor tepat pada masanya adalah satu aspek yang amat penting kepada majikan. Oleh itu, kebanyakan kontrak pembinaan menetapkan masa untuk penyiapan kerja. Bagaimanapun, ketika perlaksanaan kontrak, keadaan-keadaan yang tertentu mungkin timbul dan menyebabkan tarikh penyiapan tidak boleh dikuatkuasakan. Di dalam ‘common law’ kewajipan kontraktor untuk menyiapkan kerja pada masa yang ditetapkan akan dibatalkan sekiranya majikan melambatkan kontraktor dalam perlaksanaan kerja. Apabila masa penyiapan kerja yang ditetapkan tidak dapat dikuatkuasakan lagi, situasi ‘time at large’ akan berlaku dan tanggungjawab kontraktor hanyalah menyiapkan kerja dalam masa yang wajar. Apakah makna masa yang wajar? Pastilah bukan “sebagaimana dan apabila kontraktor rasa sesuai”. Kajian ini adalah untuk menentukan makna “masa yang wajar” apabila keadaan ‘time at large’ berlaku. Dapatan kajian ini akan membantu kontraktor untuk menilai apakah masa yang wajar untuk penyiapan kerja apabila situasi ini berlaku. Pendekatan yang digunakan dalam kajian ini adalah berdasarkan kes undang-undang. Kes mahkamah yang dirujuk di dalam kajian ini tidak dibataskan dari segi jenis projek, asalkan kes-kes tersebut berkaitan dengan masa yang wajar. Sebanyak sepuluh kes yang berkaitan dengan masa yang wajar telah dikaji. Melalui analisis keputusan mahkamah, makna “masa yang wajar” dapat ditentukan. “Masa yang wajar” bermakna wajar di bawah keadaan yang wujud, mengandaikan bahawa keadaan yang berkaitan dengan kelewatan tersebut bukan disebabkan olehnya dan tidak termasuk keadaan yang di bawah kawalan kontraktor, mempertimbangkan apa yang di bawah keadaan biasa merupakan masa yang wajar untuk penyiapan kerja dan seterusnya mempertimbangkan sejauh mana masa untuk menyiapkan kerja adalah dilengahkan oleh keadaan luar biasa di luar kawalannya.
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TABLE OF CONTENTS
CHAPTER TITLE PAGE
DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENTS iv
ABSTRACT v
ABSTRAK vi
TABLE OF CONTENTS vii
LIST OF TABLES x LIST OF CASES xi LIST OF ABBREVIATIONS xv 1.0 INTRODUCTION 1.1 Background Studies 1 1.2 Problem Statement 5
1.3 Objective of the Research 6
1.4 Scope of the Research 6
1.5 Significance of the Research 7
2.0 TIME AT LARGE
2.1 Introduction 9
2.2 Standard Form Provisions 10
2.2.1 Public Works Department (P.W.D)
Form 203A (Rev. 10/83) 10
2.2.2 Pertubuhan Arkitek Malaysia (PAM)
(2nd Edition, 1998) 12
2.2.3 Federation Internationale des Ingenieurs
Conseils (FIDIC) Construction Contract (1999) 14
2.3 Time for Completion 15
2.3.1 Time of the Essence 16
2.4 Damages for Late Completion 19
2.4.1 Liquidated Damages 20
2.5 Extension of Time 22
2.5.1 Purposes of Extension Provisions 22 2.5.2 Grounds for Extension of Time 24
2.5.2.1 Force Majeure 24
2.5.2.2 Variations and Extra Works 26 2.5.2.3 Exceptionally Adverse Weather
Conditions 27
2.5.2.4 Late Possession of Site 28
2.5.2.5 Sub-contractors 29
2.5.2.6 Delay in Approvals and Instructions 29 2.5.2.7 Other Commonly Stipulated Grounds 30 2.5.2.8 Causes beyond the Contractor’s Control 31
2.6 Time at Large 31
2.6.1 Events Giving Rise to Time at Large 32 2.6.1.1 No Time or Date Fixed in the Contract 35 2.6.1.2 Time or Date Ceases to Apply by Acts
of Prevention 36
2.6.1.3 Waiver 43
2.6.1.4 Failure of Contractual Machinery 44
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3.0 REASONABLE TIME
3.1 Introduction 47
3.2 Reasonable Time 49 3.3 Statutory Provisions that Apply the term “Reasonable Time” 54
3.3.1 Sale of Goods Act 1957 (Revised 1989) 54 3.3.2 Supply of Goods and Services Act 1982 (UK) 55 3.3.3 International Sales 56 3.4 Conclusion 57 4.0 REASONABLE TIME WHEN TIME IS AT LARGE 4.1 Introduction 59
4.2 Reasonable Time when Time is at Large 60 4.2.1 Reasonable Time Where No Time for Completion is specified in the Contract/ Contract is Silent as to Time 60
4.2.2 Reasonable Time where the Stipulated Date Has ceased to be Applicable by Reason of Prevention or Breach 68
4.3 Conclusion 78 5.0 CONCLUSION AND RECOMMENDATIONS 5.1 Introduction 80
5.2 Summary of Research Findings 80 5.3 Problems Encountered during Research 82
5.4 Conclusion 82
REFERENCE 83
LIST OF TABLES
TABLE NO TITLE PAGE
4.1 Reasonable time where no time for completion is specified in the contract/contract is silent as to time 73
4.2 Reasonable time where the stipulated date has ceased to be applicable by reason of prevention or breach 76
xi
LIST OF CASES
CASES PAGE
A Bell & Son (Paddington) Ltd v CBF Residential Care and
Housing Association. (1989) 46 BLR 105 11
Abdul Rahim bin Syed Mohd v Ramakrishnan Kandasamy &
Anor. [1996] 3 MLJ 385, HC 17
Afovos Shipping Co v Pagnan [1983] 1 WLR 195 at 201 (HL) 10
Amalgamated Building Contractors Ltd v Waltham Holy Cross
Urban District Council [1952] 2All ER452 at 452 (CA). 36
Amherst v James Walker [1983] Ch 305 at 315 (CA) 48
Arab Malaysian Corpn Builders Sdn Bhd v ASM Development
Sdn Bhd. [1998] 6 MLJ 136 20
Astea (UK) Limited v Time Group Limited [2003] EWHC 725
(TCC) 43
Attwood v Emery (1856), 1 CB (NS) 110; 26 LJCP 73 54
Ayadurai v Lim Hye [1959] MLJ 143 17
Balfour Beatty Building Ltd v Chestermount Properties Ltd 62
Build LR 1 45
Barque Quilpue Ltd v Bryant (1904) 36
Bernhard’s Rugby Landscapes Ltd v Stockley Park
Consortium (No 2) [1998] 44
BFI Group of Companies Ltd v DCB Integration Systems Ltd
[1987] CILL 328 11
CASES PAGE
British and Commonwealth Holdings plc v Quadrex Holdings Inc.
[1989] QB 842; [1989] 3 All ER 492, CA 16
British Steel Corporation v Cleveland Bridge & Engineering Co
Ltd [1984] 1 All ER 504, 24 Build LR 94. 64
Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd
(1989) 51 BLR 16 2
CCECC (HK) Ltd v Might Foundate Developement Ltd & Ors
[2001] HKCU 916 69
Chaffer and Tassie v Richards (1905) 26 NLR 20. 27
Charles Rickards Ltd v Oppenheim [1950] 1 KB 616. 43
Charnock v Liverpool Corporation [1968] 1 WLR 1498 (CA) 48
Chye Fook & Anor v Teh Teng Seng Realty Sdn Bhd
[1989] 1 MLJ 308, HC. 18
Dodd v Churton [1897] 1 QB 562 (CA). 42
Earth & General Contractors Ltd v Manchester Corporation
(1958) 108 LJ 665 28
Etablissements Chainbaux S.A.R.L. v Harbormaster Ltd
[1955] 1 Lloyd’s Rep. 303 69
Fairclough v Rhuddlan Borough Council (1985). 29
Felton v Wharrie (1906) 28
Fisher v Ford (1840), 12 Ad. & El. 654 59
Ganam d/o Rajamany v Somoo s/o Sinnah [1984] 2 MLJ 290. 18
Gaymark Investments Pty Ltd v Walter Construction Group
(1999) NTSC 143,(1999) 16 BCL 449; (2005) 21 Const LJ 70 33 Greater London Corporation v Cleveland Bridge and
Engineering (1984) 34 BLR 57 48
Hock Huat Iron Foundry v Naga Tembaga Sdn Bhd
[1999] 1 MLJ 65. 19
Holme v Guppy (1838) 3 M&W 387 4, 22, 28, 36
Hydraulic Engineering Co Ltd v McHaffie, Goslett & Co.
(1878) 4 QBD 670 52, 54
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CASES PAGE
J and J Fee Ltd v The Express Lift Company Ltd
[1993] 34 ConLR 147. 36
Jamshed Khodaram Irani v Burjorni Dunjibhai
(1915) LR 43 IA 26 17
Kenny and Hingles’ Trustee v Union Government (1928) TD 272 27
Lai Yew Seong v Wong Chieu Gook (1913) 1 FMSLR 12 17
LeBaupin v Crispin [1920] 2 KB 714. 25
Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89 21
Lombard plc v Butterworth [1987] Q.B. 27 at 535 (C.A.) 20
Lyle Shipping Co. v Cardiff Corporation [1900] 2 QB 638 54
Maniam v The State of Perak [1975] MLJ 75 21
Meyer v Gilmer (1899) 18 NZLR 129 42
Mohamed Habidullah v Bird & Co. AIR 1922 PC 178 17
Murdoch v Lockie (1897) 15 NZLR 296 42
Neodox Ltd v Swinton and Pendlebury Borough Council (1958) 5
BLR 34 53
North West Metropolitan Regional Hospital Board v Bickerton
(1970) 29
Panamena Europea Navigacion (Compania Limitada) v
Frederick Leyland & Co Ltd [1947] AC 428 (HL). 32, 45
Pantland Hick v Raymond & Reid [1893] AC 22. 60
Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd
(1970) 1 BLR 111 13, 29, 39
Percy Bilton v Greater London Council [1982] 1 WLR 794 29, 38
Raineri v Miles [1981] AC 1050 (HL) 48
Rapid Building Group v Ealing Family Housing Association Ltd
(1984) 29 BLR 5 4, 13, 22, 28, 39
Rickards v Oppenheim [1950] 1 KB 616 69
Russell v Viscount Sa da Bandeira (1862) 13 CB (NS) 149 42
Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151. 17, 21
CASES PAGE
Shawton Engineering Ltd v DGP International Ltd
[2005] EWCA Civ 1359. 70
SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391;
(1984) 1 Const LJ 159 36, 42
Startup v Macdonald (1843), 6 Man. & G. 593 59
Tan Ah Kian v Haji Hasnan [1962] MLJ 400, HC;
[1963] MLJ 175, FC. 18
Taylor v The Great Northern Railway Company [LR] 1 CP 385. 62
Temloc Ltd v Enrill Properties Ltd (1987) 39 BLR 30 12
Tew v Newbold-on Avon School Board (1884) 1 C&E 260 42
Thamesa Designs Sdn Bhd v Kuching Hotels Sdn Bhd
[1993] 3 MLJ 25 21
The Lyle Shipping Company Ltd v The Corporation of Cardiff
[1900] 2 QB 638. 62
Thornhill v Neats (1860) 8 CB (ns) 149 42
Trollope & Colls Ltd v NW Metropolitan Regional Hospital
[1973] 1 WLR 601 (HL) 42
United Scientific Holdings Ltd v Burnley Borough Council
[1977] 2 All ER 62, HL, [1978] AC 1050 (HL) 3, 16
Yeoh Kim Pong Realty Ltd v Ng Kim Pong [1962] MLJ 118 17, 18
Walter Lawrence v Commercial Union Properties
(1984) 4 ConLR 37. 27
Wells v Army and Navy Cooperative Society (1902) 86 LT 764 41
Westwood v Secretary of State for India (1863) 7 LT 736 42
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LIST OF ABBREVIATIONS
AC Law Reports Appeal Case
All ER All England Law Reports ALJ Australian Law Journal ALR Australian Law Reports
ALJR Australian Law Journal Reports App Cas Appeal Cases
B Beavan
B & S Best and Smith’s Reports Build LR Building Law Reports
CA Court of Appeal
CB Common Bench Reports
Ch Chancery
Ch App Chancery Appeal
Ch D The Law Reports, Chancery Division CIDB Construction Industry Development Board CLD Construction Law Digest
DC Divisional Court, England Const LJ Construction Law Journal Const LR Construction Law Reports
CP Law Reports, Common Pleas
CPD Law Reports, Common Pleas Division DLR Dominion Law Reports
Exch Exchequer Reports
Eq Equity Case
FC Federal Court
F & F Foster & Finlayson’s Reports
H & N Hurlstone & Norman’s Exchequer Reports
HL House of Lords
HKC Hong Kong Cases
HKLR Hong Kong Law Reports
IR Irish Reports
JKR Jabatan Kerja Raya
KB King Bench
LGR Local Government Reports
LJKB (QB) Law Journal Reports, King’s (Queen’s) Bench Lloyd’s Rep Lloyd’s List Reports
LR Law Reports
LT Law Times Reports
JP Justice of the Peace / Justice of the Peace Reports MLJ Malayan Law Journal
NZLR New Zealand Law Reports PAM Pertubuhan Arkitek Malaysia PWD Public Work Department
PD Probate, Divorce and Admiralty Division of High Court
QB Queen Bench
TCC Technology and Construction Court
SLR Singapore Law Reports
WLR Weekly Law Reports
CHAPTER 1
INTRODUCTION
1.1 Background Studies
Time is an extremely important issue in construction. Together with cost and quality, it is a primary objective of project management, and a major criterion by which the success of a project is judged. The scope of this subject includes three basic time-related issues which are commencement, progress and completion (Murdoch and Hughes, 2000). This may be seen from clause 21.1 of PAM 98:
On the Date of Commencement stated in the Appendix, possession of the site shall be given to the Contractor who shall thereupon begin the Works, and regularly and diligently proceed with the same and complete the same on or before the Date for Completion stated in the Appendix subject to any extension of time in accordance with Clause 23.0 and/or sub-clause 32.1(iii).
Unless the Contract Documents shall otherwise provide, possession of the Site as complete as may reasonably be possible but not so as to constitute a tenancy, shall be given on or before the “Date of Possession” stated in the Letter of Acceptance of Tender to the Contractor who shall thereupon and forthwith commence the Works (but subject to sub-clause (a) hereof) and regularly and diligently proceed with and complete the Works on or before the Date of Completion as stated in the Appendix.
and clause 23.1 of JCT 98, which states:
On the Date of Possession possession of the site shall be given to the contractor who shall thereupon begin the Works, regularly and diligently proceed with the same and shall complete the same on or before the Completion Date.
Contracts of all kinds commonly specify a date for the performance of some obligation (Wallace, 1995). Where it comes to building contracts, stipulated periods are provided within which the buildings have to be delivered became an essential condition of the agreement (Guest, 1975). It is usual to name the date by which completion is required, as can be seen in Clause 39 of PWD 203A. Even where no precise date has been included in the contract itself, a court may be persuaded to imply a term for completion by a certain date, on the ground that the parties must have intended this, as seen in Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd1. The contractor’s obligation to complete the works by the completion date is, like all such obligations, backed up by legal sanctions. Under certain types of contract (for example contracts for the sale of perishable goods), time is expressly or impliedly “of the essence”. Consequently, the employer’s remedy for any lateness in performance or completion will be an award for damages for breach of contract (Murdoch and Hughes, 2000).
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Under what circumstances can time be held to be of the essence of a contract? According to Chow (2004), in United Scientific Holdings Ltd v Burnley Borough Council2, the House of Lords, citing with approval a statement on the position in Halsbury’s Laws of England (4th Ed), ruled that time should not be held to be of the essence unless the following conditions are present:
1. The parties must have expressly stipulated in the contract that conditions as to time should be strictly complied with
2. The nature of the subject-matter of the contract and the surrounding circumstances demonstrate that time should be considered to be of the essence
3. The party who has been subjected to unreasonable delay gives notice to the party in default making time of the essence
Section 56 (3) of Contract Act 1950 states the effect of acceptance of performance at time other than agreed (the completion date which is also the essence of the contract) upon, which reads:
If, in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of the promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of the acceptance, he gives notice to the promisor of his intention to do so.
The position in the rules contained in section 56 (3) of the Contracts Act 1950 is that: if in a contract in which time is of the essence, a party fails to perform it by the stipulated time, the innocent party has the right either to rescind the contract, or to treat it as still subsisting. If he treats it either expressly or by conduct as still
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continuing, the contract exists but time ceases to be of the essence and become at large. Consequently he cannot claim liquidated damages under the contract unless there is a provision as to the extension of time. However, this cessation can be revived and so time can be restored to be the essence by the innocent party serving a notice to the party in default giving a new date of completion. If this is done, there would be a date from which liquidated damages could be calculated (Sinnadurai, 1987).
At common law, the contractor’s obligation to complete the works by the specified date is removed if the employer delays the contractor in the execution of the works. When the specified completion date no longer applies, time is said to be “at large”, and the contractor’s obligation is merely to complete the works within a reasonable time. A fundamental point is that the time for completion can only be extended where the contract permits, and strictly in accordance with the contract provisions (Murdoch and Hughes, 2000). It is a common belief in the construction industry that extensions of time are solely for the benefit of the contractor. At face value by giving the contractor more time to complete the works and by reducing his liability for liquidated damages they do appear to be one-sided. It is not the contractor who has most need of extension of time provisions, it is the employer. A string of well documented cases from Holme v Guppy3 to Rapid Building v Ealing4 confirm that the courts will not uphold liquidated damages where the employer has prevented completion on time unless there is express provision in the contract to extend time for the employer’s default (Eggleston, 1992).
The ultimate dispute on a construction contract is for an employer to assert that time is of the essence and to determine without paying whilst the contractor is claiming time to be at large and determining for non-payment (Eggleston, 1992).
3
(1838) 3 M&W 387.
4
5
Problem also arises in the wording employed by many of the standard forms of contract as there was a shortcoming in that some of them did not fully cater in the extension of time clause for all delays caused by the employer. General sweep-up wording in an extension of time clause (such as “or other unavoidable circumstances”) has been held by the English courts not to cover employer defaults. Similarly in Malaysia, only PAM 98 Clause 23.7(xi) allows the Architect to grant an extension of time for “any act of prevention or breach of contract by the Employer.” This is designed to be a “catch-all” provision so that time does not inadvertently become at large. Other forms like IEM, PWD 203A and CIDB do not have such similar provision (Martin, 2005). Thus, time will be at large when the employer causes delay to the contractor e.g. by ordering extra work and there is no provision for extension of time for the contractor.
1.2 Problem Statement
The phrase “time at large” is much loved by contractors, the suggestion that the contractor has as much time as he wants to finish the works. This is not what it means. Time becomes at large when the obligation to complete within the specified time for completion of a contract is lost. The obligation then becomes to complete within a reasonable time. It is most certainly not “as and when the contractor sees fit”. The question then is what is a reasonable time? What is generally at stake in the matter of whether or not time is at large is the employer’s right to deduct liquidated damages for late completion. The right is lost completely if time becomes at large – the employer can still sue for general or unliquidated damages for late completion – but regard will then had to be the contractor’s entitlement to a reasonable time (Eggleston, 1992).
Time being “at large” does not mean that the Contractor has no obligation to complete the work. He has to complete in a “reasonable time”. What is reasonable will depend on all the circumstances at the time (Murdoch and Hughes, 1992). Calculating a reasonable time is not an easy matter and, as Emden’s Building Contracts, puts it:
When a reasonable time for completion becomes substituted for a time specified in the contract ….then in order to ascertain what reasonable time is, the whole circumstances must be taken into consideration and not merely those existing at the time of the making of the contract.
1.3 Objective of the Research
The objective of this study is to determine the meaning of “reasonable time” when time is at large.
1.4 Scope of the Research
The approach adopted in this research is case law based. There are no limitations as for the court cases referred to in this study in terms of type of projects as long as the case is related to time at large and reasonable time. The standard forms of contract that will be referred to are:
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2. Public Works Department (P.W.D) Form 203A (Rev. 10/83)
3. Construction Industry Development Board (CIDB) Standard Form of Contract for Building Works (2000 Edition)
4. International Federation of Consulting Engineers / Federation Internationale des Ingenieurs Conseils (FIDIC) Construction Contract (1999)
1.5 Significance of the Research
This research should give a review to contractor and employer as to what is time at large and when does it apply. When the parties in the industry are equipped with the knowledge of time at large and its implications on both contractor and employer, this situation can be avoided as much as possible. Suggestion on what is a reasonable time to complete the works in the event of time at large is also provided for through this research.
1.6 Research Methodology
This research involved literature review on time-related matters in the construction industry. Initial study will be carried out involving extensive reading and understanding of the concepts involved.
Then data and information collecting will be carried out. Primary source will be law cases found in Malayan Law Journal through the access of Lexis Nexis
available in the university’s online database. Secondary sources such as articles, journals, textbooks and related websites will also be studied and referred to in the course of the whole research.
Analysis will be done on collected information and will be arranged in an orderly manner. Finally, writing up will be carried out, followed by checking and correction of writing.
CHAPTER 2
TIME AT LARGE
2.1 Introduction
Most construction contracts specify time for performance in achieving completion of the whole of the works and many have additional requirements for phased or sectional handovers. Time may be fixed either by reference to specified dates or by reference to a construction period. If the latter method is used it is essential that a precise completion date can be established. This means that there must be an identifiable commencement date from which time runs and there must be no uncertainty on whether the construction period takes in or excludes holiday periods. These may seem obvious matters but it is extraordinary how often in construction industry disputes it is found that the intentions of the parties in respect of time have not been clearly expressed or have been misapplied. (Eggleston, 1992).
Similarly, according to Chow (2004), a date is fixed from which the time for completion begins to run. Frequently, this is the date on which the contractor takes possession of the site, but this is by no means the rule. In large and elaborate
projects, it is not always possible for the owner to afford the contractor unencumbered possession of the whole site and it is quite common in these situations for the contract to provide that time for completion begins to run from some stipulated date in lieu of the date of site possession. As an alternative to stipulating the period within which the works have to be completed, a contract may provide that the contractor’s obligation is to complete the works on or before a particular date. Thus, instead of stipulating that the works shall be completed within 24 months from 1 January 2003, a construction contract may merely provide that the works shall be completed on or before 31 December 2004. In this case, the contractor has the whole of the period up to the end of the stipulated day of completion to perform his obligation.5
2.2 Standard Form Provisions
Construction contracts usually contain elaborate provisions stipulating the time within which the contractor is required to complete the construction of the works, as well as the conditions under which such time may be extended. Standard form provisions related to commencement and completion of works, damages for non-completion and extension of time is looked into.
2.2.1 Public Works Department (P.W.D) Form 203A (Rev. 10/83)
Subject to any requirement for completion in parts or sections in the Contract, clause 39(a) basically reiterates the obligation of the Contractor to complete the
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whole of the Works by the Date for Completion as stated in the Appendix or such extended time as granted by the Superintending Officer (Lim, 2004).
Clause 40 provides the machinery whereby the Government and the Contractor can agree in advance the damages to be payable by the Contractor if the Contractor fails to complete by the Date for Completion or within any extended time granted by the Superintending Officer. This agreed damages expressed as Liquidated and Ascertained Damages is provided in the Contract to negate the necessity of the Government having to prove the actual loss suffered in the event of the Contractor’s breach for delayed completion.6 In other words, it is designed to allow the Government to sue for or deduct the Liquidated and ascertained Damages simpliciter from the money due to the Contractor. The enforceability of this provision is subject to section 75 of the Contracts Act 1950 which reads:
When a contract is broken, if a sum is named in the contract as to the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the other party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
Lim (2004) also noted that although not specifically stated in clause 40, it is implicit that the Superintending Officer should only issue the Certificate of Non-completion after he has fully evaluated and granted the appropriate extension of time (if any) to the Contractor pursuant to clause 43.7 In addition, it is essential that the rate for Liquidated and Ascertained Damages is clearly inserted in the Appendix. The clause is not enforceable and no amount can be recovered by the Government if
6
See BFI Group of Companies Ltd v DCB Integration Systems Ltd [1987] CILL 328.
7
See A Bell & Son (Paddington) Ltd v CBF Residential Care and Housing Association (1989) 46 BLR 105. If a new completion date is fixed and the contractor has not completed by that date, it is implicit that a non completion certificate to that effect must be issued by the architect whether or not a certificate had been issued in relation to an earlier and superseded completion date.
it is omitted. In this case, the Government would have to resort to claim general damages against the Contractor for delayed completion. However, if “NIL” is inserted as the rate, it would be construed to constitute an agreement by the parties that no damages would be payable by the Contractor and the Government would be precluded from even claiming general damages against the Contractor for delayed completion.8
Clause 43 provides for the Superintending Officer to grant an extension of time on specified grounds and an extension of time is grantable on those grounds and no other. The Superintending Officer has no inherent power to extend the time for completion and in the absence of an express provision such as this clause he would have no power to do so. This clause is an improvement over the extension of time clause in the PAM (1969 edition) form of contract which contained limited grounds for extending time and did not cover many common delaying events, such as failure to give possession of site on the due date.
2.2.2 Pertubuhan Arkitek Malaysia (PAM) (2nd Edition, 1998)
According to Rajoo (1999), clause 21 of PAM 1998 Form is one of the most important clauses in the contract. It provides for the employer to give site possession in whole or parts by appropriately designating the Date of Commencement or Dates of Commencement. This enables the contractor to be given site possession in one go or alternatively by defined sections based on the needs of the employer. The contractor’s primary obligation is to complete the Works by the contractual date for completion. As his secondary obligation, the contractor is then to begin the Works and proceed ‘regularly and diligently’ so as to complete the Works ‘on or before’ the completion date set out in the Appendix of the PAM1998 Form.9 He has the whole
8
Temloc Ltd v Enrill Properties Ltd (1987) 39 BLR 30.
9
13
period between the Dates of Commencement and Completion to carry out and complete the Works in a manner he considers best.10 The Dates of Commencement and Completion must be specified in the Appendix and, subject to the grant of any extension of time under clauses 23 or 32.1(iii) of the PAM 1998 Form (the latter clause permits an extension of time for reinstatement of war damage), the contractor is bound to complete the work by the specified Date for Completion. Clauses 21.2 and 21.3 go on to cure the inadequacy of the PAM 1969 Form in dealing with commencement and completion in phases. If the employer requires the work to be completed in parts, these two clauses set out the mechanics of how the contractor can be obligated to complete the Works in part. Clause 21.4 empowers the architect to issue instructions requiring the postponement of any work to be executed under the contract. The employer or the architect may be forced by circumstances to call for delay in the whole or part of the Works. Without this express power, the architect would have no power to control the contractor’s order of working.
Clause 22 on damages for non-completion provides machinery whereby the parties can agree in advance the damages payable by the contractor and recoverable by the employer if he fails to complete the Works by the Date/s for Completion stated in the Appendix, or within any extended period certified by the Architect under clauses 23 or 32.1 (iii). Both liquidated damages and extension of time clauses will be construed strictly contra proferentem against employer if there is any doubt as to the construction of the provision11 (Rajoo, 1999).
Clause 23 on extension of time of the PAM 1998 Form is aimed at allocating the risks of non-completion between the parties. It reduces the contractor’s risk in relation to delays by entitling him to an extension of time for practical completion on account of delay based on various circumstances, putting back the date on which liquidated damages will start to apply. It is the main provision under which any alteration to the Date for Completion can be made and refers to an extension of time
10
Supra note 4.
11
meaning a lengthening of the period within which the Works have to be completed (Rajoo, 1999).
2.2.3 Federation Internationale des Ingenieurs Conseils (FIDIC) Construction Contract (1999)
Clause 8 of the FIDIC Construction Contract includes provisions for commencement and completion of works, delay damages and extension of time, all in one clause. The engineer shall give the Contractor not less than 7 days’ notice of the Commencement Date. Unless otherwise stated in the Particular Conditions, the Commencement Date shall be within 42 days after the Contractor receives the Letter of Acceptance.12 The Contractor then has the obligation to complete the whole of the Works and each Section, if any, within the Time for Completion including achieving the passing of the Tests on Completion and completing all work which is stated in the Contract as being required for the Works or Section to be considered to be completed.13
If the Contractor fails to comply with the Time for Completion, the Contractor is subject to pay delay damages to the Employer for this default. These delay damages shall be the sum stated in the Appendix to Tender, and payment is provided to be made on daily basis. However, the total amount due cannot exceed the maximum amount of delay damages (if any) stated in the Appendix to Tender. The delay damages do not relieve the Contractor from his obligation to complete the Works, or from any other duties, obligations or responsibilities which he may have under the contract.14
12
Clause 8.1 of the FIDIC Form.
13
Clauses 8.2(a) and 8.2(b) of the FIDIC Form.
14
15
FIDIC Form has a provision in clause 19 which elaborates on force majeure, such as the definition of force majeure, notice of force majeure, its consequences and release from performance under the law. Such a provision is not found in other standard forms of building contract such as PWD 203A, PAM 1998 and CIDB 2000.
2.3 Time for Completion
According to Eggleston (1992), building forms usually specify a date for completion in the appendix whereas civil engineering forms usually specify a time for completion. The date for completion is therefore calculated from a date for commencement given by the engineer. In both cases, procedural variations are often introduced and the objective of establishing a precise date for completion can be lost. For example, tenderers are commonly allowed to give their own preferred times for completion or to offer an alternative to that specified in the tender documents. However, if the contractor is allowed to fix his own time, it is necessary that this time is linked in the contract documentation to either a start date or a completion date. Without one or the other there will be no firm date for completion. Similar problems in fixing the date for completion with certainty can arise when extensions of time are granted. Differences of approach in various standard forms of contract may be in part responsible. The danger of granting periods of time instead of fixing new dates is that uncertainty can be created as to whether such periods, particularly where they are expressed in days, cover working days only or include weekends and holidays.
2.3.1 Time of the Essence
Section 56(1) of the Contracts Act provides that failure to perform within a fixed time in a contract, where time is essential, would render the contract voidable. When time is of the essence in a contract, failure to complete by the specified date is a breach of a condition entitling the innocent party to treat the contract as repudiated. If the contract is a supply contract and the goods are offered late, acceptance of the goods can be refused. If the contract is a construction contract and the contractor fails to finish on time, the employer is entitled to dismiss the contractor from the site and has no liability for payment for the unfinished work. However, this is not the usual position in a construction contract. Finishing late does not normally entitle the employer to dismiss the contractor from the site; it is a breach of warranty and damages are the employer’s remedy. Nor does finishing late normally excuse the employer from payment for unfinished work. The question then is what governs whether or not time is of the essence in contracts. (Eggleston, 1992).
Sinnadurai (2003) noted as well that difficulties remain in determining when time would be regarded as of the essence of the contract. At common law, time was always regarded as of the essence of the contract in the sale of land. However, equity did not take such a strict view. This attitude of equity towards time, did not apply in cases when the parties had expressly agreed that time should be of the essence. The exceptions to the common law rule that ‘time is always of the essence of the contract’ were discussed by the House of Lords in United Scientific Holdings v Burnley Borough Council 15 and by the Court of Appeal in British and Commonwealth Holdings plc v Quadrex Holdings Inc.16 The common law rule has been assimilated by equity so that a court will examine the whole scope of the transaction to decide whether the parties really meant the time stipulated to be of the essence of the contract. Section 56 of the Contracts Act appears to follow the English law whereby the rules contained in the section are not different from the
15
Supra note 2.
16
17
position arrived at in common law.17 Section 56 is the most invoked provision of the Contracts Act dealing with time and the scope of this section has been considered in a number of cases.18 The position is if in a contract in which time is of the essence, a party fails to perform it by the stipulated time, the innocent party has the right either to rescind the contract, or to treat is as still subsisting. If he treats it either expressly or by conduct as still continuing, the contract exists but time ceases to be of the essence and becomes at large. Consequently he cannot claim the liquidated damages under the contract unless there is a provision as to the extension of time. However, this cessation can be revived and so time can be restored to be of the essence by the innocent party serving a notice to the party in default giving a new date of completion.19
The law relating to time for performance under the Contracts Act was dealt with exhaustively by Visu Sinnadurai J in Abdul Rahim bin Syed Mohd v Ramakrishnan Kandasamy & Anor.20 Time, in a contract for the sale of land, is of the essence in two main situations; firstly where the intention of the parties was such that the time was of the essence of the contract for the fulfillment of their respective obligations and secondly, where the nature of the subject matter or the surrounding circumstances are such that the time specified for the performance is of the essence. There is little difficulty in considering whether time is of the essence of a contract if there is an express provision in the contract itself stating that it is so. In contracts where the phrase ‘time is of the essence’ is employed, it is generally accepted that the parties in these cases have clearly intended that the provision dealing with time is an essential term of the contract. In such cases, both parties must perform their respective obligations within the time stipulated. Where there is no express provision in the contract making time of the essence, the courts will then have to consider the nature of the property, the surrounding circumstances and the nature of the contract to determine whether time was intended by the parties to be the essence
17
Yeoh Kim Pong Realty Ltd v Ng Kim Pong [1962] MLJ 118. See also Jamshed Khodaram Irani v Burjorni Dunjibhai (1915) LR 43 IA 26 (section 55 of the Indian Contract Act is similar to section 56 of the Malaysian Act).
18
See Lai Yew Seong v Wong Chieu Gook (1913) 1 FMSLR 12; Ismail bin Haji Embong v Lau Kong Han [1970] 2 MLJ 213; Ayadurai v Lim Hye [1959] MLJ 143. See also the Privy Council decision of Mohamed Habidullah v Bird & Co. AIR 1922 PC 178.
19
Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151. 20
of the contract. In Yeoh Kim Pong Realty Ltd v Ng Kim Pong21 time was not expressly stated to be of the essence. It was held that considering the intention of the parties, and on an ‘examination amongst other things of attendant circumstances’, time was of the essence of the contract in question. It was also pointed out by the judge, as seen in the case of Ganam d/o Rajamany v Somoo s/o Sinnah22 that the mere stipulation of a date fixed for completion in a contract does not, by itself, make time to be of the essence of the contract. The nature of the property and the surrounding circumstances would still have to be considered in such cases.
The general principles regarding time were also spelt out by Gill J in the case of Tan Ah Kian v Haji Hasnan.23 There are three situations whereby time is of the essence of the contract: (i) where the parties have expressly stipulated in the contract that it shall be so; (ii) where it was not originally stated to be but had been made so by giving reasonable notice to the other, who had failed to perform the contract with sufficient promptitude; and (iii) where from the nature of the contract or of its subject matter, time must be taken to be of the essence of the agreement.
In building contracts, time of the essence of the contract is an interesting stipulation encountered frequently. This stipulation is usually inserted by quantity surveyors or engineers in the preliminaries section of the bill of quantities or in some portion of the contract specification. There are occasions where such stipulations in a contract document are intended to be literally construed. Thus, in a contract to construct facilities for a particular event such as a games village for a major sports event, it is clear that the owner will be left with very benefit if the project is delivered after the dates set for the games. (Chow, 2004).
Chye Fook & Anor v Teh Teng Seng Realty Sdn Bhd24 is a case dealing with late completion of a building, where time was of the essence of the contract. The 21 [1962] MLJ 118. 22 [1984] 2 MLJ 290. 23 [1962] MLJ 400, HC; [1963] MLJ 175, FC. 24 [1989] 1 MLJ 308, HC.
19
specific question before the High Court was whether the purchaser ‘could sue for rescission on the agreement [that] … as the house was not completed … [on] the completion date’. In a detailed judgment, Abdul Malek J dealt with relevant case law and statutory law on the subject, particularly, sections 56 and 76 of the Contracts Act. In Hock Huat Iron Foundry v Naga Tembaga Sdn Bhd25 the Court of Appeal also considered the subject in relation to the provisions of Contracts Act 1950. The position, as a result of the operation of section 56(1) of this Act and as set out in the earlier decision of Loke Yuen Cheng & Anor v Vintex Sdn Bhd26, is that where the parties to a contract clearly intends that time is to be of the essence of the contract, then the occurrence of any delay in performance would render the contract voidable at the option of the innocent party. If the innocent party elects to exercise the option, the effect is that the contract is annulled so that the situation is as though it had never existed. In the circumstances, the employer forfeits whatever recourse under the contract, including an action for damages, and can only seek redress through restitution.
2.4 Damages for Late Completion
The contractor’s obligation to complete the works by the completion date is backed up by legal sanctions. Under certain types of contract such as contracts for the sale of perishable goods, where time is expressly or impliedly of the essence, any lateness in performance entitles the other party to determine the contract. However, construction contracts very rarely fall into this category. Thus, the employer’s remedy for late completion will be an award of damages for breach of contract. It is standard practice in building and civil engineering contracts to state in advance what the damages shall be for delay, and this is usually done by specifying a fixed sum of money to be due for every day, week or month by which the contractor fails to meet
25
[1999] 1 MLJ 65.
26
the prescribed completion date. Such sums are called liquidated and ascertained damages or LADs (Murdoch and Hughes, 2000).
Halsbury’s Laws of Malaysia (Building and Construction) also stated that generally, contracts for construction works usually provide that in the event of the contractor’s failure to complete by the date specified for completion, the contractor is to pay a specified sum or that the employer may deduct a specified sum from money due to the contractor.27
2.4.1 Liquidated Damages
Delay in performance is treated as going to the root of the contract without regard to the magnitude of the breach.28 Damages for a contractor’s failure in breach of contract to complete on time are often subject of a provision for liquidated damages (Furst and Ramsey, 1991).
According to Murdoch and Hughes (2000), a claim for liquidated damages can only succeed where the contract makes express provision for it. Most building contracts contain such a clause. Liquidated damages provisions are in principle perfectly acceptable and they are to be encouraged as they enable the parties to know from the start as much as possible about the risks they bear.
When the LAD are agreed, the employer’s only remedy for late completion by the contractor is a sum not exceeding the specified amount. He does not have an
27
See PAM Conditions of Contract (1998) cl 22; IEM Conditions of Contract cl 40; PWD Conditions of Contract Forms 203/203A cl 40. See also Arab Malaysian Corpn Builders Sdn Bhd v ASM Development Sdn Bhd [1998] 6 MLJ 136.
28
21
option of claiming unliquidated damages. Should no date for Completion be inserted in the Appendix, then no liquidated damages will be payable since there is then no date from which liquidated damages can run. There must be a definite date to act as a starting point and if the completion date has passed due to the default of the employer for which no extension of time is given by the architect, the employer’s right to liquidated damages will be lost.29 (Rajoo, 1999).
Section 75 of the Contracts Act 1950 deals with the effect of a sum named in a contract which is payable in cases of breach of contract, and in Malaysia ‘there is no difference between penalty and liquidated damages’.30 Section 75 of the Act provides:
When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
29
See Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151; Thamesa Designs Sdn Bhd v Kuching Hotels Sdn Bhd [1993] 3 MLJ 25.
30
Maniam v The State of Perak [1975] MLJ 75; Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89.
2.5 Extension of Time
2.5.1 Purposes of Extension Provisions
According to Eggleston (1992), a contractor is under a strict duty to complete on time except to the extent that he is prevented from doing so by the employer or is given relief by the express provisions of the contract. The effect of extending time is to maintain the contractor’s obligation to complete within a defined time and failure by the contractor to do so leaves him liable to damages, either liquidated or general, according to the terms of the contract. In the absence of extension provisions, time is put at large by prevention and the contractor’s obligation is to complete within a reasonable time. The contractor’s liability can then only be for general damages but first it must be proved that he has failed to complete within a reasonable time. Therefore, extension of time clauses have various purposes which are:
1. to retain a defined time for completion
2. to preserve the employer’s right to liquidated damages against acts of prevention
3. to give the contractor relief from his strict duty to complete on time in respect of delays caused by designated neutral events
It is a common belief in the construction industry that extensions of time are solely for the benefit of the contractor. At face value by giving the contractor more time to complete the works and by reducing his liability for liquidated damages they do appear to be one-sided. It is not the contractor who has most need of extension of time provisions, it is the employer. A string of well documented cases from Holme v Guppy31 to Rapid Building v Ealing32 confirm that the courts will not uphold liquidated damages where the employer has prevented completion on time unless
31
Supra note 3.
32
23
there is express provision in the contract to extend time for the employer’s default. Lord Fraser’s comment in Bilton v GLC33 sums it up:
‘… The general rule is that the main contractor is bound to complete the work by the date for completion stated in the contract. If he fails to do so, he will be liable for liquidated damages to the employer. That is subject to the exception that the employer is not entitled to liquidated damages if by his acts or omissions he has prevented the main contractor from completing his work by the completion date: see, for example, Holme v Guppy (1838) and Wells v Army and Navy Co-operative Society (1902). These general rules may be amended by the express terms of the contract…’
Extension of time clauses are commonly entered into construction contracts essentially for the benefit of the employer, since in the event of prevention or breach by the employer a contractual date for completion may be maintained and the liquidated damages provisions preserved. For an extension of time provision to be effective in such circumstances it must clearly give the means to extend the period for completion (Brewer Consulting, 2005). Chow (2004) also pointed out that under English common law, time extension provisions are regarded as being inserted for the benefit of the employer since they operate to keep alive the liquidated damages provisions in the event of delay caused by the employer’s acts of prevention. The courts have consequently ruled that they are to be interpreted contra proferentum against the employer.
33
2.5.2 Grounds for Extension of Time
According to Chow (2004), construction contract provisions may either stipulate a list of events in respect of which extensions of time may be granted or, alternatively, adopt a more general formulation. Both approaches should take into account the attitude of the courts in construing time extension clauses. From the employer’s standpoint, it is crucial that the provisions should expressly allow for extensions in respect of delays arising from a breach or act of prevention caused by the employer. The formulation adopted in the major standard forms such as the JCT Contract (1998), ICE Conditions of Contract (7th Ed, 1999) and PAM 1998 is a combination of both approaches. The time extension provision typically lists the common causes of delay in respect of which the employer accepts that time extensions may be granted, followed by a general “catch all” paragraph which is intended to bring within the ambit of the provisions events of delay which have not been specifically stated in the clause. Thus, under clause 44(1) of the ICE Conditions of Contract (1999 Ed), paragraphs (e) and (f) extend the power for extending time to cover “any delay, impediment, prevention or default by the employer” and “other special circumstances of any kind whatsoever which may occur”. A similar approach is used in clause 8.4(e) of the FIDIC Contract (1999).
2.5.2.1 Force Majeure
The expression ‘force majeure’ is of French origin. Under the French Civil Code force majeure is a defence to a claim for damages for breach of contract. It needs to be shown that the event made performance impossible, was unforeseeable and was unavoidable in occurrence and effects (Eggleston, 1992).
According to Chow (2004), the expression force majeure was first used in clause 23(a) of the JCT 63 Form and has since been retained in successive editions of that standard form. In the 1998 edition of the JCT Contract, it is specified as a
25
“relevant event” for the purpose of time extensions under clause 25. The term itself is a curious French expression which is usually considered to cover a host of highly unusual and superhuman events. In the classic case of LeBaupin v Crispin34, the court accepted that the “term is used with reference to all circumstances independent of the will of man, and which it is not in his power to control…” It was held to include wars, epidemics and strikes, but a cautionary note was struck in the judgment of that case on the interpretation of a force majeure clause:
… [The force majeure clause] should be construed in each case with close attention to the words which precede or follow it with due regard to the nature and general terms of the contract. The effect of the clause may vary with each instrument…35
Chow (2004) further noted that at first instance, it may be difficult to appreciate the need for the JCT Contract to expressly include force majeure as a ground for time extension. Events such as wars, strikes and inclement weather are already separately listed in the time extension provisions, so that it could be suggested that the expression as used in the JCT form must have been intended to provide for something else. There is no direct authority on this point, but it is highly arguable that the original objective may have been as a general premise to cover any event, other than those specifically mentioned, which resides beyond human anticipation. If so, the conceivable range of events must be a very narrow one and it is not surprising that there has been no reported case on the JCT contract where this ground for time extension has been considered.
Clause 19.1 of the FIDIC conditions provided a more elaborate definition of this expression and defines force majeure as an “exceptional event or circumstance” which satisfies the following criteria:
1. It must be beyond the control of the relying party.
34
[1920] 2 KB 714.
35
2. The relying party could not have reasonably provided for the event or circumstances before entering into the contract.
3. Having arisen, the relying party could not have reasonably avoided or overcome the said event or circumstance.
4. It must not be substantially attributable to the other party.
A force majeure event under the FIDIC Contract must therefore satisfy all the four conditions prescribed here. In the context of a construction claim advanced by the contractor, the “other party” refers to the employer. Chow (2004) therefore noted that the paragraph appears to envisage that where the claim arises from, say a breach by the employer, it is considered that the contractor will in most cases elect to sue for breach of contract, rather than invoke the force majeure clause since this reduces the onus of proof and is likely to provide him with a more extensive range of reliefs. Clause 19.1 also specifically lists down a number of situations which are deemed to be treated as force majeure which include wars, terrorism, strikes and lockouts and natural catastrophes.
2.5.2.2 Variations and Extra Works
Eggleston (1992) stated that when variations or extra works cause delay to completion, the contractor will have a clear case for extension of time, or if there is no express provision to extend time, the employer will have lost his right to liquidated damages. It is the following types of questions which give rise to arguments. For example, have the variations actually caused delay to completion? Are the extra works really extra? Could the contractor have accommodated them in his programme? Some of these matters have been considered previously and others are considered under particular forms but it is worth just noting here that extra quantities are not necessarily the same as extra works and in some forms of contract, it is the contractor and not the employer who takes the risks on quantities.
27
The particular situation where omissions of work may be a premise for a time extension should be noted. Such a situation may arise, for instance, where plant and equipment have already been bought on site and these have been prepared to support the execution of a particular item of work. This item of work is then subsequently omitted, thereby necessitating a new and possibly less productive sequence of work. There is no direct English case authority on this point, but in the South African case of Kenny and Hingles’ Trustee v Union Government36, it was held that where the language of a time extension provision empowered the engineer to assess the period of delay consequent upon the ordering of extras, it would be reasonable for the engineer to “take into account in deciding as to allowances for such delay the effect of other orders requiring omissions.” (Chow, 2004).
2.5.2.3 Exceptionally Adverse Weather Conditions
This ground of time extension is found in the provisions of most of the major standard forms. The general formulation is that time may be extended only when the contractor can demonstrate that the weather conditions encountered could be properly described as exceptional”. In construing the term “exceptional”, consideration should be given as to whether the weather itself was exceptionally adverse or inclement, so as to give rise to the delay and not whether the magnitude of the delay itself was exceptional.37 It is suggested that this construction is consistent with the intent of this provision in the other standard forms as well.
In Malaysia, the predominant issue with weather conditions, in so far as construction operations are concerned, is the intensity of rainfall. To formulate a case for extension of time on the basis of exceptional rainfall, a contractor has to show, from site records, the number of days in a particular month in which the actual rainfall actually encountered exceeds a prescribed level and this is commonly referred
36
(1928) TD 272 at 289. See also another South African case, Chaffer and Tassie v Richards (1905) 26 NLR 20.
37
to as the number of “wet days”. Next, the contractor compares the number of wet days encountered with the number of wet days which are indicated by statistical averages in meteorological records. Exceptional rainfall conditions for a particular month are then established when the number of wet days actually encountered exceed the number of wet days recorded in these meteorological averages. However, it is not sufficient for an applicant for time extension to merely show the incidence of wet days and hence, adverse weather conditions. It is necessary to establish the link between the conditions and the progress of works, and in particular, the contractor has to show that the nature of the construction operations being undertaken during the period of “wet days” in a particular month are indeed operations which are susceptible to the effects of these exceptional rainfall conditions (Chow, 2004).
2.5.2.4 Late Possession of Site
Under common law, an employer is treated to have committed a breach of contract if he fails to give timely possession of site.38 Consequently, to ensure that time will not be set at large in the event of a late handover of site to the contractor, most standard forms expressly includes this event as one of the grounds for time to be extended (Chow, 2004). Eggleston (1992) brought up the issue that whether or not failure by the employer to give possession of site at a time convenient to the contractor is an act of prevention will depend on the wording of the contract. If the contract simply states a date of possession of the site, the contractor is entitled to the whole of the site from the outset; but if the contract specifies phased release of the site, the contractor is obliged to accommodate the restrictions that will impose.
38
See Felton v Wharrie (1906) Hudson’s Building and Engineering Contracts (4th Ed) Vol 2, p 398; Earth & General Contractors Ltd v Manchester Corporation (1958) 108 LJ 665; Rapid Building v Ealing Family Housing (1984) 29 BLR 5; Holme v Guppy (1838) 3 M&W 387.
