Reasons for Allowing or Denying Extension of Time

In the majority of projects it is seen that the parties to contract work in unison for the purpose for solving the problems. These problems are related to the delays in projects, as and when they are raised. Though, some of the projects do not go forward in an efficient manner and result in disputes being raised. This leads to the parties looking into the contract. Most of the standard form of construction contracts, allows the grant of extension of time, by the contract administrators, for getting the work completed. This is done in such cases where a delay takes place due to varied reasons. These provisions have to benefit both of the contracting parties (Burr, 2017). This discussion resolves around the reasons for extension of time claim, and the result of not adhering to the stated timeline.

The standard construction contracts cover extension of time clauses where the criteria is set out on the manner in which the extension is awarded. There is no reference made in the JCT regarding the calculation of extension of time based on actual delay to completion (Chappell, 2015). Though, under clause 25 of JCT, it is provided that the extension of time provision sets out a number of relevant events which could result in an extension of time being given to the contractor, where the same is considered by the architect to have delayed their work far beyond the present date of completion (Bawden, 2012). The architects’ needs to make certain the reasonable and fair assessment of what this delay was, as was seen in the case of City Inn Limited v Shepherd Construction Limited [2010] ScotCS CSIH 68. This clause is meant to protect the right of liquidated damages of the employer for the contractor delays. This principal of extension of time benefits the employer. The reason for this is that in absence of this extension of time, the entitlement to employer to liquated damages can be delayed, where the delay is due to default or prevention of employer (Farrell, 2010).

Under the JCT contract, there is no express restriction under the contract on extension of time claim once the practical completion is done and it becomes difficult to find the implicit bar. Clause 2.7 has the closest provision where it is stated that when the delay becomes apparent, the contract has to give notification to the contract administrator. This can be deemed as an immediate requirement; however, no consequence has been stated in the contract for failure in notifying the same immediately and even the courts are not likely to interpret this clause as being a condition required for claiming relief (Thomson Reuters, 2012).

Extension of Time Clauses under JCT

Under clause 2.8, the contract allows the liquidated damages to be claimed by the employer during any time till the issuance of final certificate. The guidance notes of the JCT to the contract provide that the liquidated damages are not required to be taken into consideration by the contract administrator for the purpose of calculation of any certificate. The employer has to deduct the same from the certified amount. It becomes difficult to ascertain why the contract permits the employer to claim these damages once the practical completion is done without the contractor being given a reciprocal right for claiming extension of time (Chappell, 2017).

There are certain cases where the contractor would be entitled to an extension of time and there are others where the same would be denied. For instance, in the case of Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1990) 70 ConLR32, QBD (TCC), Justice Dyson gave an effective approach which is followed till date. This case stated that where the contract was silent regarding the entitlement of the contractor to the extension of time, particularly when there was a concurrency in between the employer risk event and the contractor risk event, where both of these had an impact over the works programme, the contractor had the entitlement to extension of time for the full duration. But where the contract would have provided for such entitlement to not be given, the extension of time would not have been granted (ICLG, 2017). 

There are certain cases where contractual remedies become available to the employer in such cases where the contract is exceeded beyond the contractual completion date. These are the events when the time is of essence in the building contracts. This happens only in three cases, i.e., where it is specified that time is of essence for the contract, where time being of essence is necessary implication, and where one of the party is in delay to unreasonable extent, the time can be made as essence where the other party gets a notice on party in breach creating reasonable and new date for the purpose of completion. When such happens, due to the breach of terms of the contract, a claim for the breach of contract can be made, by treating it as repudiatory. This allows the other party to terminate the obligation performance and claim damages. An examples of this was Peak Construction (Liverpool) Limited v McKinney Foundations [1970] 1 BLR 111, which led to the employer being given the right of determining the contract at the end of period (Law Explorer, 2016).

Alternative Dispute Resolution in Construction Contracts

In Walter Lilly & Company Ltd v. MacKay and DMW Developments Ltd [2012] EWHC 1773, the manner in which the delay had to be analysed was given. This helps in deciding if the extension of time has to be given, or the remedies under the contract law have to be applied. The court in this case held that in analysing the delay, there was a need of carrying out factual analysis where it had to be considered what caused the critical delay in the work (Clarks Legal, 2013). This has to be looked on monthly basis for being sensible and proportionate in looking at the delay. For determining the cause of delay in work, it was required to identify the longest sequence of pending work. Merely the last even does not result in delays and there is a need to look at the delays before the completion too (Hawkswell Kilvington Ltd, 2012).

Based on this analysis, the situation of Madeleine does provide a lot of scope to the contractor to be given an extension of time claim. However, before that is done, there is a need to analyse if the delays were caused due to fault of the employer or the contractor, or the mix of both. Where it was the fault of Madeleine, she would be liable not only to give the extension of time claim but also relevant damages, and additional costs to contractor. Where the delay was only due to the issues of contractor, they would not be allowed the valid extension of time claim under JCT. But where the work of the contractor was delayed by two events in which one was fault of the contractor and the other of employer, the extension of time would have to be granted to the contractor. Though, when this is done, the entitlement of costs due to concurrent delay would not be granted to the contractor, till the contract expressly states so. This is due to the fact that a higher test of causation is applicable on the costs of contractor as compared to the time extension (Hawkswell Kilvington Ltd, 2012).  

Thus, in conclusion, the best manner on deciding upon the extension of time to be given to the contractor or to deny the same has to be based on the guidelines given by the judges in Walter Lilly & Company Ltd v. MacKay and DMW Developments Ltd. This is due to the fact that with this case, the correct approach towards analysing of the entitlement of the contractor to the extension of time was provided. Where, even after the extension of time claim, the contract is not completed, or where the extension of time claim is denied and the work is likely to exceed the contractual completion date, the contractual remedies stated above can be made use of. 

Arbitration: Private and Contractual Type of ADR

Introduction 

Disputes, irrespective of the profession in which they take place, hamper the work due to the negative impact caused due to these. In the construction contracts also, the disputes are raised, particularly on the matters related to the payment and the extension of time. When such disputes are raised, the best option is to go forward with the Alternative Dispute Resolution (ADR) methods, in place of going through with litigation mode. This discussion is focused on providing the best possible ADR for a project in discussion, along with highlighting the procedure under it, its various advantages and the disadvantages.

ADR

As stated in the introduction segment, the ADR are a mode of solving disputes. In comparison to litigation, these are deemed as more useful, due to the fact that ADR take less cost and time. Also, these allow for the parties to put across their points and reach a mutual conclusion to the dispute. There are different modes of ADR which can be adopted in the construction contracts to resolve the dispute raised, and these include arbitration, adjudication, mediation and conciliation.

Arbitration is the private and contractual type of ADR. In it, the disputes are determined by the third party arbitrator, or an arbitration panel, which is selected by the disputing parties (Pinsent Masons, 2006). Based on the documents provided, material facts, and the applicable principles and rules of law, the disputes are solved. In comparison to litigation, this method helps the disputing parties in choosing the person who would resolve their dispute. And where the parties are unable to decide a single arbitrator, each party decides an arbitrator, and these two arbitrators then decide a third arbitrator, thus forming an arbitration panel. Thus, in this method, there is an ease of selection of the dispute resolving party. The process of arbitration is administered through the appointed arbitrator subjected to the contractual rules and the statutory regulatory framework, as is used by the domestic courts. This method has limited rights of appeal and the successful party gets awarded the legal costs. There is no instance of formal requirement in the English law for an arbitration agreement, which allows it to be verbal; but, where the same is not done in a written manner it stays out of the supervising regime established through the Arbitration Act, of the courts (Kondev, 2017).

In UK, all standard form contracts, the arbitration clauses are traditionally found and are quite often related to the clauses of adjudication, and an example of this is JCT 16. In the recent past, there has been a tendency in setting out the dispute resolution default to litigation in place of arbitration, which leaves the parties to agree to the mode of arbitration as the manner of resolving the disputes. Arbitration is initiated through notice to concur where the agreement on the arbitrator appointment is provided, and where this is not done, the arbitrator is appointed by the nominating body. In the procedure of dispute resolution, arbitration is combined usually with mediation and adjudication (Chappell, 2008). 

Advantages and Disadvantages of using Arbitration as ADR Method

There are a number of advantages and disadvantages in the use of arbitration as a mode of ADR. The very first advantage of using this method is that arbitration is private and there are no public records of any of the proceedings; however, these proceedings are not necessarily confidential. The other advantage is that arbitration s a speedy method; however, the same is dependent on the conduct of the arbitrator in the arbitration process. Based on the relevant expertise of the arbitrator, the arbitrator can be agreed upon by the parties. The award given by the arbitrator can be enforced through the court’s judgment. The method of arbitration is also coupled with its share of disadvantages. The parties have to not only bear the cost of the arbitrator but also of the venue. At times, the process of court is mimicked in arbitration, which denies the advantage of speed and informality. There is also a limitation in sanction or compulsion where the parties fail in complying with the arbitrator’s directions, which slows down the entire arbitration process in a grave manner. Further, there is no power available with the arbitrator to undertake interim measures, for instance, for the purpose of preserving of property. Again, there is a limited right to appeal (Barnes and Davies, 2015).

In comparison to the other forms of ADR, arbitration proves to be the best. This method is better in comparison to mediation as in arbitration the selected arbitrator has relevant background to decide on the matter, and with an arbitration panel the expertise is increased. The decisions are made by the arbitration panel through a majority vote. On the other hand, in mediation, there is a single mediator, restricting the skill pool. Again, in arbitration, the method is decided where the arbitrator plays the role of the judge and decides on the matter. However, in mediation the mediator simply facilitates the discussion and does not judge the matter (Find Law, 2018). 

When it comes to the comparison between arbitration and adjudication, the procedure under arbitration is easier in comparison to adjudication. This is because there is a time period for the procedure of adjudication which is usually a twenty eight day process started where a notice is served by the party. Also, there are stringent limitations in complying with dealing with adjudication. Another drawback of adjudication is that the adjudicator does not have a power of awarding the costs till the time the parties agree to it. The award of adjudication needs to be enforced by the courts, but this process does not dispose of the issue at hand. The decision of the adjudicator usually lasts till the practical completion and at this point the same can be litigated or arbitrated where the same is not accepted. So, anyhow the matter has to be resorted to arbitration, which is also the case in mediation. This is the reason for holding the supremacy of arbitration and stating that it is the best method of solving the dispute (Tollers Solicitors, 2016).

Conclusion 

Thus, from the discussion carried on in the ensuing parts, it becomes clear that the ADRs are the best manner of resolving the disputes, which helps in saving the costs and also the time. This process helps in mutually solving the disputes raised in the construction contracts. Out of the different modes which can be used for the purpose of solving the dispute, in terms of ADRs, the best method is to go forward with arbitration. This method would help in solving the dispute and is already established as being better in comparison to mediation and adjudication. 

References 

Barnes, ‎P., and Davies, M. (2015) The JCT 2011 Building Sub-contracts. West Sussex: John Wiley & Sons.

Bawden, S. (2012) Delays and Time Extensions under JCT Contracts. [Online] Holmes & Hills LLP. Available from: https://www.holmes-hills.co.uk/news/2012/december/delays-and-time-extensions-under-jct-contracts/ [Accessed on: 07/02/18]

Burr, A. (2017) Delay and Disruption in Construction Contracts: First Supplement. London: Taylor & Francis.

Chappell D. (2008) The JCT Minor Works Building Contracts 2005. 4^th ed. Oxford: Blackwell Publishing.

Chappell, D. (2015) Construction contracts: Questions and answers. Oxon: Routledge.

Chappell, D. (2017) Understanding JCT standard building contracts. Oxon: Routledge.

Clarks Legal. (2013) Guidance on contractor claims: extensions of time and loss and expense. [Online] Clarks Legal. Available from: https://www.clarkslegal.com/Blog/Post/Guidance_on_contractor_claims_extensions_of_time_and_loss_and_expense [Accessed on: 07/02/18]

Farrell, C. (2010) City Inn vs Shepherd Construction: concurrent delay. [Online] Lexology. Available from: https://www.lexology.com/library/detail.aspx?g=c297d6ea-ab7e-4dae-84c6-1b3f15b6b7c2 [Accessed on: 07/02/18]

Find Law. (2018) Mediation vs. Arbitration vs. Litigation: What’s the Difference? [Online] Find Law. Available from: https://adr.findlaw.com/mediation/mediation-vs-arbitration-vs-litigation-whats-the-difference.html [Accessed on: 07/02/18]

Hawkswell Kilvington Ltd. (2012) Specialist solicitors to the construction and engineering industries. [Online] Hawkswell Kilvington Ltd. Available from: https://www.hklegal.co.uk/2012/07/26/extensions-of-time-and-concurrent-delay/ [Accessed on: 07/02/18]

ICLG. (2017) Construction & Engineering 2017. [Online] ICLG. Available from: https://iclg.com/practice-areas/construction-and-engineering-law/construction-and-engineering-2017/england [Accessed on: 07/02/18]

Kondev, D. (2017) Multi-Party and Multi-Contract Arbitration in the Construction Industry. West Sussex: John Wiley & Sons.

Law Explorer. (2016) Extensions of time/Adjustment of the completion date. [Online] Law Explorer. Available from: https://lawexplores.com/extensions-of-timeadjustment-of-the-completion-date/#fn-fnref18_7 [Accessed on: 07/02/18]

Pinsent Masons. (2006) Construction Arbitration – Past and Present. [Online] Pinsent Masons. Available from: https://www.pinsentmasons.com/mediafiles/1316796178.htm [Accessed on: 07/02/18]

Thomson Reuters. (2012) Ask the team: can a contractor claim an extension of time after practical completion?. [Online] Thomson Reuters. Available from: https://constructionblog.practicallaw.com/ask-the-team-can-a-contractor-claim-an-extension-of-time-after-practical-completion/ [Accessed on: 07/02/18]

Tollers Solicitors. (2016) Adjudication, Arbitration And Mediation – What’s the difference? [Online] Tollers Solicitors. Available from: https://www.tollers.co.uk/news/2016/adjudication-arbitration-and-mediation/ [Accessed on: 07/02/18]