EXTENSIONS OF TIME AND

DAMAGES FOR DELAY

RECENT DEVELOPMENTS
A paper presented to the Society of
Construction Law at a meeting
in Reading on 25th September 2012

Seb Oram
November 2012
D148

www.scl.org.uk

EXTENSIONS OF TIME
AND DAMAGES FOR DELAY
RECENT DEVELOPMENTS
Seb Oram

Introduction
Claims brought in respect of delays, and disruption to the course of works, are
often difficult to present. One of the major difficulties in recent years has
been in establishing that losses have resulted, as a matter of causation, from
the delaying event.
The critical questions that arise, and need to be addressed in evidence, include:
(i)

Who bears responsibility for the delaying event?

(ii)

The effect on completion:

o

Does the event fall within any contractual extension of time

(EOT) provision so as to give the contractor (C) more time
within which to complete the contracted works?

In light of this, has C completed the works in time? That

will depend on what Cs original time obligation was under
the contract, and whether that is modified by the application
of the prevention principle.

(iii) If C is in breach of his completion obligation, what delay damages

can the employer (E) claim (liquidated and/or general)?
(iv) Is C entitled to compensation for the prolongation of the works?
(v)

Has C or E suffered loss as a result of disruption to the progress of

works (ie a disturbance of Cs regular and economic progress
and/or delay to a non-critical activity, even though there may be no
delay in completion)?

Each partys claims will be subject to contractual principles of causation,

mitigation, and remoteness. There is therefore a critical need to establish the
extent to which the proved event has caused a quantifiable delay and/or loss.

The time for performance

Construction contracts are typically framed to impose two separate
obligations:
1.

By reference to a possession date and an end date for completion

(whether of the whole works or for sections). In the absence of a
completion date, where the contractor acts in the course of a business

it will be an implied term of the contract that he will complete the

works within a reasonable time.1
2.

A distinct obligation to proceed with the works regularly and

diligently: the surrounding circumstances of the contract may
necessitate the implication of a term that the contractor will proceed
with reasonable diligence and maintain reasonable progress.2

Breach of either of these terms will entitle E to seek damages. In the absence
of a valid liquidated damages clause, he will need to prove his loss. Whether
or not E will also be able to terminate the contract will depend whether the
breach goes to the root of the contract, or whether (in respect of the time
obligation) time has been made of the essence of the particular obligation.3
Absent express provision in the contract, where the risk and cost of delay falls
will depend on the parties completion obligation:4 for example, 1, if there is
no fixed date for completion and only an obligation to complete in reasonable
time, the cause and impact of the delaying event may affect what amounts to a
reasonable time; for example, 2, if the contract has a fixed completion date,
the cost of delay may initially be at Cs risk but (unless the parties have made
adequate provision for extensions of time) a delaying event may have the
effect of disapplying that fixed completion date (by setting time at large).5
A recurring difficulty that has troubled the courts in recent years is how to deal
with delay where it has two or more separate causes, the effect of which is felt
contemporaneously, and where C and E are each responsible for at least one of
those causes (a concurrent event). The starting point is how a concurrent
event affects Cs obligation to complete.

Contracts with a fixed completion date the prevention

principle
That starting point leads to the well-established proposition that an act of
prevention by the employer (E) will release C from his obligation to complete
the works within, or by, any fixed period or date. The occurrence of such an
act makes time at large so that the original obligation to complete the works

1
2
3
4

Supply of Goods and Services Act 1982 s 14.

Keating on Construction Contracts (London, Sweet & Maxwell, 9th ed 2012), para 8004.
The normal rule is that time is not of the essence in construction contracts, unless it
expressly so provides: Keating, note 3, para 8-008.
I suggest that this is what is meant by the proposition that, if there is no allocation of risk
in the contract, any resulting loss would lie where it falls (see, for example, Ascon
Contracting Ltd v Alfred McAlpine (1999) 66 ConLR 119 (TCC), para [68]).
Once time is at large, or where there is no fixed completion date from the outset, whether
or not there is unreasonable delay is a composite question depending on all the
circumstances existing at the time that the question arises. The fact that E had the benefit
of a contractual timescale (even if underestimated) is a relevant factor: Shawton
Engineering Ltd v DGP International Ltd [2005] EWCA Civ 1359, paras [67]-[69]. The
fact that there has been protracted delay does not mean that C is necessarily in breach, if
the cause of the delay is outside his control.

by a fixed date is replaced by an obligation to complete within a reasonable

time.6
Where it applies, the prevention principle therefore has a number of important
consequences:
o

E will be unable to claim liquidated damages. This is simply

because the fixed completion date having become irrelevant, there
is no date from which liquidated damages can be assessed.7

E can still claim general damages, but has to prove his loss,8 and C
will only be liable for damages for delay in the event the time that
he takes to complete is unreasonable.

E will be able to terminate the contract only by making time of the

essence of the outstanding obligation. Usually this is done by
giving notice. Notice can only be given, however, if C is already
in breach of contract, i.e. once the recipient is already guilty of
unreasonable delay.9

In practice, general damages claims cannot usually be included in

the final account.

The principle reflects the fact that a fixed completion date gives rise both to an
obligation on C to complete within that time, and a right on his part to have
that time available to complete the work.10
Prevention is therefore a reference to Cs ability to reach completion. What
is required is that the delaying event in fact (ie as a matter of causation,
established by evidence) makes it impossible to reach the completion date.
Evidence that progress of the works was affected will be necessary.11 A minor
variation that is given just before completion, for example, may not therefore
be enough.
As to the scope of the prevention principle, Multiplex Constructions v
Honeywell12 clarified that:
1.

It is based on the proposition that a promisee cannot insist upon the

performance of an obligation which he has prevented the contractor
from performing;

6
7

Holme v Guppy (1838) 3 M & W 387 (Exchequer).

Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd 1 BLR 111 (CA), pages
126-127.
8 Peak Construction, note 7, page 121.
9 Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1 (CA).
10 De Beers UK Ltd v Atos Origin IT Services UK Ltd [2010] EWHC 3276 (TCC), (2010)
134 Con LR, para [177]; Wells v Army & Navy Co-operative Society (1902) 2 Hudsons
BC (4th edition) 346 (CA).
11 Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm), 136 Con LR 190,
paras [263]-[264] (this case is wrongly titled Dhabi v SD Marine Services within
www.bailli.org).
12 Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (2007) 111 Con LR
78 (TCC).

2.

An act of prevention does not need to be wrongful (for example, it

can be an instruction for varied work, or any act that interferes with
Cs planned progress),13 let alone a breach of contract on the part of
E; but it must cause delay beyond the contractual completion date;
and

3.

Acts of prevention by E do not set time at large if the contract

provides for extensions of time in respect of those events.

It is similarly inapplicable if C, in accepting the variation, nonetheless agrees

to complete within a fixed time (see for example De Beers v Atos Origin,14
although there was no agreement on the facts), or in rare situations where the
original contract imposes a fixed date irrespective of any ordered variations.15
Recent cases provide assistance on: (i) the approach that the court will take to
the interpretation of an EOT clause; (ii) the effect of concurrent events causing
delay; and (iii) the extent to which the delaying event must have caused delay
to completion in fact.

Avoiding the prevention principle: construing extension of time

clauses
EOT clauses therefore have an important role in allowing E to retain the
benefit of a fixed completion date (and, thereby, the benefit of any liquidated
damages clause). It is important to remember that:
1.

E has no right to extend time in the absence of such a clause;16

2.

If the EOT clause is not sufficiently wide to cover the delaying

event, E cannot try to discount that event (that is, give credit to C
for) and claim liquidated damages for the balance of Cs delay; 17
and

3.

Not only must the EOT clause exist, but E must have exercised it.

This last principle derives from the Court of Appeal decision in Peak
Construction.18 The view in Australian case law is that if the reason for the
EOT clause not being exercised is that C has not complied with a precondition
to give notice to E, E still cannot rely on that to refuse to extend time, because
to do so would be to benefit from his own wrong.19 That conclusion was
reached by a strict approach to construction of the clause.

13
14
15
16
17

Adyard Abu Dhabi, note 11, para [242].

De Beers UK Ltd v Atos Origin, note 10, para [168].
Keating, note 2, paras 8-014, 8-015.
Dodd v Churton [1897] 1 QB 562 (CA).
Peak Construction, note 7, page 125, citing para 6-028 in Atkin Chambers, Hudsons
Building and Engineering Contracts (London, Sweet & Maxwell, 12th ed 2010).
18 Peak Construction, note 7, pages 122 and 127.
19 Gaymark Investments Pty Ltd v Walter Construction Group Ltd [1999] NTSC 143, 16
BCL 449.

English courts have not adopted the same approach. Multiplex and Steria v
Sigma Wireless together suggest that:20
o

The contra proferentem approach is no longer favoured. Rather, if

the clause is ambiguous, the courts favour a purposive construction
which validates the instrument, and which therefore permits C to
recover appropriate extensions of time.21

Notice provisions fulfil an important purpose. It would be odd,

where a contract makes it a precondition for C to obtain an EOT
that he gives notice to E, that C should, by failing to comply, be in
a better position (because he can fall back on the prevention
principle so that time becomes at large). Such a precondition will
therefore be upheld.

Clear words will however be necessary in order for a notice clause

to amount to a precondition to an entitlement to an EOT.

Even where Cs entitlement to an EOT is subject to a precondition

of giving notice, the court is likely to adopt an unstringent
interpretation of what the notice provision requires C to give
notice of.22 In Walter Lilly (in a claim by C for expenses), the
court considered that it is legitimate to bear in mind what
knowledge and information the recipient of the notice already had
because of his involvement on the project.23

Does Es failure to operate an EOT clause amount as an act of prevention?

The point did not need to be decided in Multiplex although argument
proceeded on the basis that it would. C would seem likely to be able to rely
upon an estoppel (as in Steria). In practice the availability of adjudication
may render the point academic.

The effect of concurrent events

Concurrency arises when more than one event is the effective cause of a single
period of delay, and where their separate impact cannot be disentangled. An
important distinction must be drawn between the effect of concurrent causes in
the context of contractual EOT clauses, and in the context of the application of
the prevention principle.
Common to both a contractual claim for an extension, and the application of
the prevention principle, C must show or quantify the impact that that event
had in delaying the progress of works.24 The claim may therefore fail if E
shows that there was no impact on the critical path of the project.

20 Multiplex, note 11, para [57] and Steria v Sigma Wireless Communications Ltd [2007]
EWHC 3454 (TCC), 118 Con LR 177, paras [81], [87]-[89] and [95].
21 This approach was also adopted in Adyard Abu Dhabi, note 11, para [255].
22 Multiplex, note 12, paras [95]-[104] and Steria, note 20, paras [90]-[91].
23 Walter Lilly & Co Ltd v Mackay [2012] EWHC 1773 (TCC), paras [464]-[468].
24 Adyard Abu Dhabi, note 11, para [265]-[282].

The effect of concurrent causes on a contractual claim to EOT

To obtain an EOT, C must establish that a delay was in fact caused to the
completion date by a relevant event falling within the clause:
o

In extension of time cases the essence of such a claim, both in

regard to liability and quantum, must be that, but for the extension
of time event relied upon, the contractor would as a fact have
completed earlier, by the amount of their claimed extension
period, than their eventual completion date so (with the onus of
proof on the contractor) reducing their liquidated damages to that
extent.25

Where there are concurrent events, only one or some of which

entitle C to a contractual extension, the EOT clause is likely to be
interpreted so that C will be entitled to an extension if the relevant
events impact on the completion date was of equal causative
potency.26

C will be entitled to an extension for the full period caused by the

relevant event notwithstanding the causal effect of the other
event.27 The English courts have not followed the position in
Scotland that, as a matter of contractual interpretation, a
requirement to give a fair and reasonable extension allows the
contract administrator to apportion delay in those circumstances.28

The question of what is the aggregate period of extension to which

C is entitled, in light of the relevant event, is however a question
of fact. It depends on its impact on progress as a whole, and
therefore other events can be taken into consideration (see Henry
Boot and Adyard Abu Dhabi29). In Walter Lilly v Mackay,
Akenhead J said:

In the context of this contractual based approach to extension, one

cannot therefore do a purely retrospective exercise. What one can not do
is to identify the last of a number of events which delayed completion
and then say it was that last event at the end which caused the overall
delay to the Works. One needs to consider what critically delayed the
Works as they went along ...30

25 Hudson, note 17, para 6-059.

26 Steria, note 20, paras [130]-[131]. This is because, where the parties have expressly
provided in their contract for an EOT in the case of certain events, they must be taken to
have contemplated that there could be more than one effective cause of delay (one of
which would not qualify for an extension of time) but nevertheless by their express words
agreed that in such circumstances the contractor is entitled to an EOT for an effective
cause of delay falling within the relevant contractual provision.
27 Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con
LR 32 (TCC) and De Beers UK v Atos Origin IT Services UK, note 10, para [177].
28 Walter Lilly, note 23, paras [366]-[370].
29 Henry Boot, note 27 and Adyard Abu Dhabi, note 11, paras [286]-[287].
30 Walter Lilly, note 23, para [365].

The length of the extension will be approached on a net basis (ie

the period required in light of the relevant event, such as a
variation, will be added to the existing completion date rather than
commencing from the time that the delaying event occurs).31

The effect of concurrent causes on the application of the prevention

principle
o

C must establish that the event in question has in fact caused delay
to the completion date by virtue of causing actual delay to the
progress of the works. The conduct therefore has to render it
impossible or impracticable for the other party to do his work
within the stipulated time. The act relied upon must actually
prevent the contractor from carrying out the works within the
contract period or, in other words, must cause some actual delay.32

That means that the prevention principle cannot apply if the delay is
caused by two events, the effect of which cannot be separated from
each other, one of which is Cs responsibility. C could not then
establish that Es delay would in fact have delayed completion,
because his own fault would have done so anyway.33

But if the effect of each of these causes on completion can be

isolated from the other, then C can rely on the prevention principle.
That, however, does not seem to be a case of true concurrency.
Thus in Jerram Falkus Coulson J commented on a suggestion in
Keating:
The learned editors suggest that the prevention rule probably

applies even if the contractor has by his own delays disabled

himself from completing by the due date. ... In fact, on an analysis
of that case, and indeed the other cases referred to in the Keating
footnote, it becomes apparent that they were not dealing with
concurrent delay, but instead with the situation where the contractor
was in delay for part of the time but where, for other periods of
delay, the contractor could show that they were the result or acts of
prevention on the part of the employer. I am in no doubt that, in
those circumstances, the prevention principle applies. But none of
those cases deal with concurrent causes of delay ...34

31 Balfour Beatty v Chestermount Properties Ltd (1993) 32 Con LR 139 (QB); Walter Lilly,
note 23, para [364].
32 See Adyard Abu Dhabi, note 11, para [282] and Jerram Falkus Construction Ltd v Fenice
Investments Inc (No 4) [2011] EWHC 1935 (TCC), para [49].
33 Accordingly, I conclude that, for the prevention principle to apply, the contractor must
be able to demonstrate that the employers acts or omissions have prevented the
contractor from achieving an earlier completion date and that, if that earlier completion
date would not have been achieved anyway, because of concurrent delays caused by the
contractors own default, the prevention principle will not apply: Coulson J in Jerram
Falkus, note 32, paras [50]-[52].
34 Jerram Falkus, note 32, para [51].

The effect of concurrent causes on a claim for damages for delay

As a general rule, the existence of concurrent causes will defeat a claim for
damages. [C] cannot recover damages for delay in circumstances where he
would have suffered exactly the same loss as a result of causes within his
control or for which he is contractually responsible.35

Claims arising from delay

Those that most frequently need to be considered are:
o

delay costs costs incurred as a result of the delay in the timely

redelivery of possession of the site. An orthodox liquidated
damages clause is targeted exclusively at these (although it will be
a matter of construction whether it extends further)36 and

disturbance costs costs incurred due to disruption of the parties

planned progress, the corollary of Cs obligation to proceed
regularly and diligently.

Unless the schedule of works becomes a contract document, the usual position
will be that C is entitled to decide on the sequence of works required to
perform the works within the contractual timeframe.37 While a successful
delay claim therefore requires proof of an impact on the completion date (see
for example Royal Brompton Hospital NHS Trust v Hammond (No 1)38), that
is not necessarily so for a disruption claim.

Building and proving delay claims

Global claims:39 These have generally been discouraged. However, in Walter
Lilly Akenhead J set out various propositions:
Ultimately, claims by contractors for delay or disruption related loss
and expense must be proved as a matter of fact. Thus, the Contractor
has to demonstrate on a balance of probabilities that, first, events
occurred which entitle it to loss and expense, secondly, that those events
caused delay and/or disruption and thirdly that such delay or disruption
caused it to incur loss and/or expense (or loss and damage as the case
may be). I do not accept that, as a matter of principle, it has to be shown
by a claimant contractor that it is impossible to plead and prove cause
and effect in the normal way or that such impossibility is not the fault of
the party seeking to advance the global claim. One needs to see of
course what the contractual clause relied upon says to see if there are

35
36
37
38
39

De Beers UK, note 10, para [178].

Hudson, note 17, para 6-019.
GLC v Cleveland Bridge (1986) 34 BLR 50 (CA).
Royal Brompton Hospital NHS Trust v Hammond (No 1) [2000] EWHC 39 (TCC).
Described in Walter Lilly, note 23, as a contractor's claim which identifies numerous
potential or actual causes of delay and/or disruption, a total cost on the job, a net payment
from the employer and a claim for the balance between costs and payment which is
attributed without more and by inference to the causes of delay and disruption relied on.

contractual restrictions on global cost or loss claims. Absent and subject

to such restrictions, the claimant contractor simply has to prove its case
on a balance of probabilities ...40
It is open to contractors to prove these three elements with whatever
evidence will satisfy the tribunal and the requisite standard of proof
There is nothing in principle wrong with a total or global cost
claim. However, there are added evidential difficulties (in many but not
necessarily all cases) which a claimant contractor has to overcome 41
Akenhead J went on to make clear that if a global cost claim is shown to
have been caused in part by other matters, this does not mean that Cs
claim will be reduced to nothing. Where the tribunal can take out of the
global loss elements for which the contractor cannot recover, it will do
so. It is not correct in law that a global award will be disallowed where
C has himself created the impossibility of disentanglement.
Recoverability of overheads / profit.42 In principle, where C suffers delay on
grounds entitling him to compensation he can still claim overheads (the loss,
arising because he is unable to take on other projects, of his opportunity to
defray his head office costs over those other projects), and lost profit.
However:
o

C must prove on a balance of probabilities that if the delay had not

occurred he would have secured work or projects which would
have produced a return (over and above costs) representing a profit
and/or a contribution to head office over-heads.

The use of a formula is a legitimate and helpful way of

ascertaining what that return can be calculated to be.

A court or contract administrator does not have to be certain that

the overheads and profit have been lost, but confident that the loss
allowed has actually been incurred as a result of the delay or
disruption causing factors.

Recoverability of sub-contractor costs and expenses: These have always been

recoverable, so long as C has in fact suffered them (see, for example, Peak
Construction43). They will in principle be recoverable even where the subcontractors claim is the subject of a settlement agreement so long as, broadly
speaking, it was a reasonable settlement of a sufficiently strong claim.44
Impact where two defendants are jointly liable, and the claimant settles with
one: The claimant will need to give credit for the whole amount recovered

40
41
42
43
44

Walter Lilly, note 23, para [486] (a).

Walter Lilly, note 23, para [486] (c) and (d).
Walter Lilly, note 23, paras [540]-[543].
Peak Construction: note 7.
See Walter Lilly, note 23, paras [563]-[565].

under the settlement; if he wishes to argue that there should be some

apportionment of it, he bears the onus.45
Note that an event entitling C to an extension of time will not necessarily
entitle him to extra payment for loss / expense. Cs entitlement for the latter
depends on either (i) the event falling within a contractual clause to further
payment; or (ii) the event amounting to a breach of contract on Es part. 46 In
particular, where there are concurrent events, C will usually not be entitled to
claim extra payment.

Final points
Evidence: The emphasis on proving delay on completion as a matter of fact
and causation has continued to lend importance to critical path analysis (see,
for example, the approach and criticisms of the expert evidence in Walter
Lilly47). In De Beers v Atos48 it was suggested that evidence might otherwise
be provided: (i) by reference to contemporaneous notes / timesheets; or (ii) by
testimony of workers, perhaps on a sample basis. Earlier cases suggest that, in
a proper case, the court may be willing to infer, in the absence of other
evidence, that the causes of the delay at one stage have a continuing effect so
as to produce the same delay at a later stage. However that probability will
diminish with the passage of time and the complexity of intervening events
(see for example Ascon49).
Conclusiveness clauses / withholding notices: Clauses that bind the parties to
the conclusiveness of, for example, a final account on questions of extensions
of time and C expenses claims, will be upheld if their commercial effect can
be identified and made to operate effectively (see Jerram Falkus50). Of
interest, however, in the same case the court was less willing to refuse to
investigate the merits of a claim, following settlement of the final account,
merely because of a failure to serve a withholding notice.51
Notice preconditions: As set out above, the courts have upheld these in
relation to EOT claims.52 They were also upheld in relation to a Cs loss and
expense claim in Gear Construction v McGee Group,53 although it may be

45 Walter Lilly, note 23, para [594].

46 A relevant basis might be Es implied obligation not to do any act to prevent C from
performing the contract or to delay his performance of it (see Barque Quilp v Brown
[1904] 2 KB 264 (CA); also Hudson, note 17, para 3-136). That will oblige him to
supply all necessary information and drawings to C in reasonable time for him to carry
out his obligations: Roberts v Bury Commissioners (1870) LR 5 CP 310, pages 325-326.
47 Walter Lilly, note 23, paras [98]-[99] and [377]-[388].
48 De Beers, note 10, para [106].
49 Ascon, note 4, para [95].
50 See Jerram Falkus, note 32, paras [30], [40]-[41].
51 Jerram Falkus, note 32, para [33] (Coulson J): The dispute is now concerned with the
parties final entitlement on the substantive merits, not just interim cash flow (where the
service of withholding notices is important).
52 See note 19 and its linked main text.
53 WW Gear Construction Ltd v McGee Group Ltd [2010] EWHC 1460 (TCC), 131 Con
LR 63.

10

important that counsel had conceded that the clause did not bar a common law
claim. Clear words would no doubt be needed to exclude a common law
claim.
Acceleration / Recovery: A claimant seeking an extension of time may be
required to implement steps to recover the programme (either because a failure
to do so will break the chain of causation, or by virtue of his obligation to
mitigate his loss).54 But he is not required to incur additional expense in doing
so.55 If he in fact takes steps that reduce the delay (eg by absorbing slack
time) he must give credit for avoided losses.
Can the innocent contractor claim the costs of extra resources added to the
project in order to increase the progress of works? He can if there is an
express instruction by E, and under general principles of mitigation a party can
recover expenses incurred in undertaking reasonable steps to mitigate, even if
they do not work. But it has been said that the doctrine of mitigation is
unlikely to provide much assistance where there is contractual machinery for
dealing with EOTs and loss and expense.56
Finally, constructive acceleration (pressure from the employer to make good
the delay, perhaps derived from a refusal to extend time) is not a doctrine that
has gained general acceptance.57
Liquidated damages and acceleration: If the contract contains an express
acceleration clause, and C fails in breach of contract to comply with an
acceleration instruction, it seems that Es losses will fall within a liquidated
damages clause. The underlying cause of any loss is the delay that already
exists at the time that the instruction to accelerate is given.58
At the time of writing, an application for permission to appeal is pending in
Walter Lilly.59

Seb Oram is a barrister practising at 3 Paper Buildings in London.

Seb Oram and Society of Construction Law 2012

The views expressed by the author in this paper are his alone, and do not necessarily
represent the views of the Society of Construction Law or the editors. Neither the
author, the Society, nor the editors can accept any liability in respect of any use to
which this paper or any information or views expressed in it may be put, whether
arising through negligence or otherwise.

54 Ascon, note 4, paras [27] and [31].

55 Ascon, note 4, para [35]; also Steria, note 20, para [166] (C was entitled to a reasonable
time as contemplated by its programme, and it would have been unreasonable in the
extreme to require them to accelerate).
56 Ascon, note 4, para [56].
57 See for example Ascon, note 4, para [51].
58 Masons (a firm) v W D King Ltd [2003] EWHC 3124 (TCC), 92 Con LR 144, paras [65][68].
59 Walter Lilly: note 23.

11

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