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OUTER HOUSE, COURT OF SESSION [2007] CSOH 190 |
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CA101/00 |
OPINION OF LORD DRUMMOND YOUNG in the cause CITY INN LIMITED Pursuer; against SHEPHERD CONSTRUCTION LIMITED Defender: ( ннннннннннннннннн________________ |
Pursuer: Keen, QC, Higgins; McGrigor
Donald
Defender: Borland; Pinsent Masons
[1] The pursuers and the
defenders are respectively the employer and the contractor under a contract
dated 15 October and
[2] The
date of possession specified in the Abstract of Conditions was
[3] Thereafter
certain disputes arising between the parties were referred to
adjudication. The adjudicator, Mr John D Spencely,
determined that the defenders were entitled to a further five-week extension of
time and directed the pursuers to repay them the sum of г150,000. That determination is not, of course,
conclusively binding, and the matters argued before the adjudicator fall to be
determined in the present proceedings as if no determination had been made by
the adjudicator. The pursuers contend
that the defenders are not entitled to any extension of time beyond the contractual
completion date,
[4] The
defenders contend that they are entitled to an extension of time of 11 weeks
in total, with the result that the contractual completion date should be fixed
at
[5] Against
the foregoing background, the pursuers have raised the present action in which
they conclude for a range of remedies.
First, they seek declarator that the Completion Date is
[6] After
a period of adjustment the action proceeded to a debate before Lord Macfadyen
(reported at 2002 SLT 781). That debate
covered a number of issues arising out of the parties' pleadings. For present purposes it is sufficient to note
that Lord Macfadyen considered the construction of clause 13.8 of the contract
conditions. He concluded that it applied
to late instructions which because of their content gave rise to a need to
adjust the contract sum or to grant an extension of time, but that it did not
apply to late instructions which, merely because of their lateness, gave rise
to a need to adjust the contract sum or grant an extension of time. I refer to this issue further at paragraphs [140]-[144]. A reclaiming motion was marked against Lord
Macfadyen's decision. This was heard by
the Second Division and was refused (reported at 2003 SLT 885), although the
decision proceeded to some extent on different grounds. The reclaiming motion did not, however, cover
the question of whether clause 13.8 extended to late instructions which because
of their lateness gave rise to a need for an adjustment of the contract sum or
an extension of time.
[7] I
intend to begin by setting out the contractual provisions that govern the
parties' claims and considering the proper approach to the construction of such
a contract. Thereafter I will deal with
the evidence that was led, first in general terms and thereafter in relation to
each of the three matters relied on by the defenders in order to justify an
extension of time. Those three matters
are: first the architect's instruction given on 23 March 1998 to use an alternative
form of gasproof membrane; secondly the instructions given by the architect in
relation to the roof steelwork and roof coverings; and thirdly the series of
instructions issued by Keppie Architects after they became contract architect
on or about 2 December 1998. After
considering the justification for an extension of time, I will consider the
construction of clause 13.8, and the issues of waiver and personal bar that
arise in relation to that clause, in order to determine whether the defenders
are entitled to an extension. Finally, I
will consider the defenders' claim in the counterclaim for direct loss and
expense that is alleged to have been caused by the various architect's
instructions.
The relevant
contractual provisions
[8] The
parties' contract incorporates the conditions of the Standard Form of Building
Contract (Private Edition with Quantities) (1980 edition), subject to a
substantial number of amendments. Clause
24.1 of that form of contract states that if the Contractor fails to complete
the Works by the Completion Date then the architect shall issue a certificate
to that effect. Clause 24.2.1 provides
for the payment of liquidated and ascertained damages in the event that the Contractor
fails to complete the Works by the Completion Date; these are payable for the
period between the Completion Date and the date of Practical Completion. The parties fixed the amount of liquidated
damages at г30,000 per week.
[9] This
is, however, subject to the power of the architect to grant an extension of
time under clause 25. Clause 25.2.1.1
provides as follows:
"If and whenever it
becomes reasonably apparent that the progress of the Works is being or is
likely to be delayed the Contractor shall forthwith give written notice to the Architect
of the material circumstances including the cause or causes of the delay and
identify in such notice any event which in his opinion is a Relevant
Event".
Clause 25.3.1 then provides:
"If, in the opinion of
the Architect, upon receipt of any notice, particulars and estimate under
clauses 25.2.1.1 and 25.2.2,
.1 any of the events which are stated by the Contractor to be
the cause of the delay is a Relevant Event and
.2 the completion of the Works is likely to be delayed thereby
beyond the Completion Date the Architect shall in writing to the Contractor
give an extension of time by fixing such later date as the Completion Date as
he then estimates to be fair and reasonable.
The Architect shall, in fixing such new Completion Date, state:
.3 which of the Relevant Events he has taken into account and
.4 the extent, if any, to which he has had regard to any
instruction under clause 13.2 requiring as a Variation the omission of any work
issued since the fixing of the previous Completion Date,
...".
Clause 25.3.3 further provides as follows:
"After the Completion Date,
if this occurs before the date of Practical Completion, the Architect may, and
not later than the expiry of 12 weeks after the date of Practical Completion
shall, in writing to the Contractor ...
.1 fix a Completion Date later than that previously fixed if in
his opinion the fixing of such later Completion Date is fair and reasonable
having regard to any of the Relevant Events, whether upon reviewing a previous
decision or otherwise and whether or not the Relevant Event has been
specifically notified by the Contractor under clause 25.2.1.1...".
Relevant Events are specified in clause 25.4 (see
clause 1.3). So far as material clause
25.4 provides as follows:
"The following are the
Relevant Events referred to in clause 25:
...
.5 compliance with the Architect's instructions
5.1 under clauses... 13.2, 13.3 (except
compliance with an Architect's instruction for the expenditure of a provisional
sum for defined work)...
...
.6 the Contractor not having received in due
time necessary instructions (including those for or in regard to the
expenditure of provisional sums), drawings, details or levels from the Architect
for which he specifically applied in writing provided that such application was
made on a date which having regard to the Completion Date was neither
unreasonably distant from nor unreasonably close to the date on which it was
necessary for him to receive the same".
Clauses 13.2 and 13.3 deal respectively with
variations and the expenditure of provisional sums.
[10] Clause
26 makes provision for loss and expense caused to the Contractor by matters
materially affecting regular progress of the Works. Clause 26.1 is in the following terms:
"If the Contractor
makes written application to the Architect stating that he has incurred or is
likely to incur direct loss and/or expense in the execution of this Contract
for which he would not be reimbursed by a payment under any other provision in
this Contract ... because the regular progress of the Works or of any part
thereof has been or is likely to be materially affected by any one or more of
the matters referred to in clause 26.2; and if and as soon as the Architect is
of the opinion... that the regular progress of the Works or of any part thereof
has been or is likely to be so materially affected as set out in the
application of the Contractor then the Architect from time to time thereafter
shall ascertain... the amount of such loss and/or expense which has been or is
being incurred by the Contractor; provided always that:
1.
the Contractor's application shall be made as soon as it has
become, or should reasonably have become, apparent to him that the regular
progress of the Works or of any part thereof has been or was likely to be
affected as aforesaid, and
2.
the Contractor shall in support of his application submitted
to the Architect upon request such information as should reasonably enable the Architect
to form an opinion as aforesaid, and
3.
the Contractor shall submit to the Architect... upon request
such details of such loss and/or expense as are reasonably necessary for such
ascertainment as aforesaid ".
Clause 26.2 provides as follows:
"The following are the
matters referred to in clause 26.1:
.1 the Contractor not having received in due time necessary
instructions (including those for or in regard to the expenditure of
provisional sums), drawings, details or levels from the Architect for which he
specifically applied in writing provided that such application was made on a
date which having regard to the Completion Date was neither unreasonably
distant from nor unreasonably close to the date on which it was necessary for
him to receive the same;
...
.7 Architect's instructions issued
under clause 13.2 requiring a Variation or
under clause 13.3 in regard to the expenditure of
provisional sums...
...".
Interpretation
of clauses 24 and 25: general considerations
[10] The
effect of provisions such as are found in clauses 24 and 25 of the present JCT
Standard Form was set out by Lord Fraser of Tullybelton in Percy Bilton Ltd v Greater London Council, [1982] 1 WLR 794, at
801:
"1. ...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.
2.
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 completion date....
3.
These general rules may be amended by the express terms of
the contract.
4.
In this case, the express terms of clause 23 of the contract
[corresponding to the present clause 25] do affect the general rule. For example, where completion is delayed '(a)
by force majeure, or (b) by reason of any exceptionally inclement weather' the architect
is bound to make a fair and reasonable extension of time for completion of the
work. Without that express provision,
the main contractor would be left to take the risk of delay caused by force
majeure or exceptionally inclement weather under the general rule".
Although these remarks relate to the 1963 JCT Standard
Form, the general approach described that passage is equally applicable to the
1980 version of the contract. It follows
that the extension of time provisions such as are found now in clause 25 are of
critical importance in ensuring that the contractor is not subjected to
liquidated damages for events that are outwith his control.
[11] Such
clauses are important for a further reason.
Under the JCT Standard Forms the employer is entitled to liquidated and
ascertained damages in the event that the contractor fails to complete the
works in time; in the present case such a provision is found in clause 24 of
the contractual conditions. Such clauses
are construed strictly, and if the contractor is prevented from completing in
time through the actings of the employer the liquidated damages clause will be
the treated as inapplicable. This point was
made by Salmon LJ in Peak Construction (
"A clause giving the
employer liquidated damages at so much a week or month which elapses between
the date fixed for completion and the actual date for completion is usually
coupled, as in the present case, with an extension of time clause. The liquidated damages clause contemplates a
failure to complete on time due to the fault of the contractor. It is inserted by the employer for his own
protection; for it enables him to recover a fixed sum as compensation for delay
instead of facing the difficulty and expense of proving the actual damage which
the delay may have caused him. If the
failure to complete on time is due to the fault of both the employer and the contractor,
in my view the clause does not bite. I
cannot see how, in the ordinary course, the employer can insist on compliance
with a condition if it is partly his own fault that it cannot be fulfilled....
I consider that unless the contract expresses a contrary intention the
employer, in the circumstances postulated, is left to his ordinary remedy; that
is to say, to recover such damages as he can prove flow from the contractor's
breach. No doubt if the extension of
time clause provided for the postponement of the completion date on account of
delay caused by some breach of fault on the part of the employer, the position
would be different. This would mean that
the parties had intended the employer could recover liquidated damages
notwithstanding that he was partly to blame for the failure to achieve the
completion date. In such a case the architect
would extend the date for completion, and the contractor would then be liable
to pay liquidated damages for delay as from the extended completion date.
The liquidated damages and
extension of time clauses in printed forms of contract must be construed
strictly contra proferentem. If the employer wishes to recover liquidated
damages for a failure by the contractors to complete on time in spite of the
fact that some of the delay is due to the employer's own fault or breach of
contract, any extension of time clause should provide, expressly or by
necessary inference, for an extension on account of such fault or breach on the
part of the employer".
Salmon LJ refers to fault or breach of contract on the
part of the employer. Nevertheless, it
is clear that his analysis applies equally to cases where the employer, through
the contract architect, instructs a variation.
A further point is of some significance.
It seems implicit in Salmon LJ's analysis that an extension of time
should still be available in cases where delay has been caused partly by the
fault of the contractor and partly by the fault of the employer; reference is
made to the employer's being "partly" to blame for the failure to
achieve the completion date. The precise
approach that should be followed in cases where delay is caused by concurrent causes,
one of which is the fault of the contractor and one of which is not, is a
matter of some importance in this case, and I return to it below.
[12] The
general approach to the interpretation of clause 25 was the subject of detailed
discussion by Colman J. in Balfour Beatty
Building Ltd v Chestermount Properties Ltd, 1993, 62 BLR 1, at 25:
"[I]t is right to
examine the underlying contractual purpose of the completion date/extension of
time/liquidated damages regime. At the
foundation of this code is the obligation of the contractor to complete the
works within the contractual period terminating at the completion date and on
failure to do so to pay liquidated charges for the period of time by which
practical completion exceeds the completion date. But superimposed on this regime is a system
of allocation of risk. If events occur
which are non-contractor's risk events and those events caused the progress of
the works to be delayed, in as much as such delay would otherwise cause the contractor
to become liable for liquidated damages or for more liquidated damages, the
contract provides for the completion date to be prospectively or, under clause
25.3.3, retrospectively, adjusted in order to reflect the period of delay so caused
and thereby reduce pro tanto the amount of liquidated damages payable by the contractor. Likewise, if the works are reduced by an
omission instructed by the architect it may be fair and reasonable to reduce the contract period for
completion prospectively or retrospectively and therefore to advance the
completion date. In view of the inherent
difficulties in predicting with precision the impact on the progress of the works
of non-contractor's risk events, particularly when operating simultaneously
with contractor's risk events the architect is given a power of retrospective
adjustment of the completion date. The
underlying objective is to arrive at the aggregate period of time within which
the contract works as ultimately defined ought to have been completed having
regard to the incidence of non-contractor's risk events and to calculate the
excess time if any, over that period, which the contractor took to complete the
works. In essence, the architect is
concerned to arrive at an aggregate period for completion of the contractual
works, having regard to the occurrence of non-contractor's risk events and to
calculate the extent to which the completion of the works has exceeded that period".
A further issue arose in the same case, namely whether
in fixing a the new completion date under clause 25 the architect should ignore
the previous completion date and start his assessment of the extension of time from
the date when the variation instruction was given, or should start with the
existing completion date and postpone it to the extent considered fair and
reasonable having regard to the delay caused by the requirement to execute the
variation instructions. Colman J.
favoured the latter approach (described as a "net" method). He said (at page 29):
"[O]ne
again returns to the purpose of the architect's powers under clause 25. He looks back after the most recently-fixed
completion date and, under clause 25.3.3, perhaps after practical completion,
assesses the extent to which the period of contract time available for
completion ought to be extended or reduced having regard to the incidence of
the relevant events. His yardstick is
what is fair and reasonable. For this
purpose he will take into account amongst other factors the effect that the
relevant event had on the progress of the works. Did it bring the progress of the works to a
standstill? Or did it merely slow down
the progress of the works? The function
which he performs under clause 25.3.3 must as a matter of construction be in
substance exactly analogous to that which he performs under clause 25.3.1. The difference is that under the former
clause he does it after the completion date and not before it. But in both cases his objective must be the
same: to assess whether any of the relevant events has caused delayed to the
progress of the works and, if so, how much.
He must then apply the result of his assessment of the amount of delay
caused by the relevant events by extending the contract period for completion
of the works by a like amount and this he does by means of postponing the
completion date.
It will be perfectly obvious
that unless the amount of time by which he postpones the completion date
corresponds with the amount of delay time caused by the relevant events, the contractor
will become potentially or actually liable for an amount of liquidated damages
commensurate with a period which does not
correspond with the amount of delay beyond the previously fixed completion date
attributable to events of which he takes the risk under the contract".
[13] The
foregoing discussion of clause 25 was described as a "valuable
interpretation" by Dyson J in Henry
Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd, 1999, 70 Con
LR 32 at paragraph 12. Certain features
of the discussion are noteworthy. First,
the scheme of sections 24 and 25 recognizes an allocation of risk: the contractor
is bound to complete the works by the completion date except to the extent that
delay is caused by events that are not at the contractor's risk. In general, as can readily be seen from the
terms of clause 25.4, these are either events such as inclement weather which
are extraneous to both parties or are events such as a variation which originate
in a decision of the employer or the architect; the architect is for this
purpose the employer's agent. Secondly,
the architect's objective is to estimate the period within which the contract
works as ultimately defined ought to have been completed, having due regard to
the occurrence of non-contractor's risk events.
The completion date is extended by that amount. Thirdly, this process involves certain
inherent uncertainties. For example, a contractor's
risk event and a non-contractor's risk event may operate concurrently in such a
way that delay can be said to result from both, or indeed either. Another possibility is that a non-contractor's
risk event merely slows the progress of the works, rather than bringing them to
a halt. Because of these uncertainties,
the architect is given power to adjust the completion date retrospectively,
because it is clearly only with hindsight that the causative potency of each of
the sources of delay can be properly assessed.
Fourthly, the inherent uncertainties in the process are recognized in
the scheme of clause 25. The architect
is not expected to use a coldly logical approach in assessing the relative
significance of contractor's risk events and non-contractor's risk events;
instead, as the wording of both clause 25.3.1 and clause 25.3.3.1 makes clear,
the architect is to fix such new completion date as he considers to be
"fair and reasonable". That
wording indicates that the architect must look at the various events that have
contributed to the delay and determine the relative significance of the contractor's
and non-contractor's risk events, using a fairly broad approach. Judgment is
involved. It is probably fair to state
that the architect exercises discretion, provided that it is recognized that
the architect's decision must be based on the evidence that is available and
must be reasonable in all the circumstances of the case. The decision must, in addition, recognize
that the critical question is to determine the delay caused by non-contractor's
risk events, and to extend the completion date accordingly. Fifthly, the completion date as so adjusted
is not to be fixed without reference to the original completion date; instead,
as Colman J. points out in the second of the passages quoted above, it is fixed
by extending the contract period by an amount that corresponds to the delay
attributable to the non-contractor's risk events.
[14] Further
authority on the application of clause 25 is found in Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd,
supra. In that case Dyson J., after
referring to the analysis of Colman J. in Balfour
Beatty, continued:
"13. [I]t is agreed that if there are two
concurrent causes of delay, one of which is a relevant event, and the other is
not, then the contractor is entitled to an extension of time for the period of
delay caused by the relevant event notwithstanding the concurrent effect of the
other event. Thus, to take a simple
example, if no work is possible on a site for a week not only because of
exceptionally inclement weather (a relevant event), but also because the contractor
has a shortage of labour (not a relevant event), and if the failure to work
during that week is likely to delay the works beyond the completion date by one
week, then if he considers it fair and reasonable to do so, the architect is
required to grant an extension of time of one week. He cannot refuse to do so on the grounds that
the delay would have occurred in any event by reason of the shortage of labour.
...
15 It seems to me that it is a question of fact in any given
case whether a relevant event has caused or is likely to caused delay to the
works beyond the completion date in the sense described by Colman J. in the Balfour Beatty case. In the present case, the [employer] has...
both a negative and a positive defence to the [extension of time] claim. The negative defence amounts to saying that
the variations and late information etc relied on by the claimant did not cause
any delay because the activities were not on the critical path, and on that
account did not cause delay. The
positive defence is that the true cause of the delay was other matters, which
were not relevant events, and for which the contractor was responsible. In my view the respondent is entitled to
advance these other matters by way of defence to the [extension of time]
claim. It is entitled to say (a) the
alleged relevant event was not likely to or did not cause delay e.g. because
the items of work affected were not on the critical path, and (b) the true cause
of the admitted delay in respect of which the claim for an extension of time is
advanced was something else. The
positive case in (b) supports and fortifies the denial in (a). The respondent could limit its defence to the
claim by relying on (a), but in my view there is nothing in cl 25 which obliges
it to do so. Likewise, when considering
the matter under the contract, the architect may feel that he can decide the
issue on a limited basis, or he may feel that he needs to go further, and
consider whether a provisional view reached on the basis of one set of facts is
supported by findings on other issues.
It is impossible to lay down hard and fast rules. In my judgment, it is incorrect to say that,
as a matter of construction of clause 25, when deciding whether a relevant
event is likely to cause or has caused delay, the architect may not consider
the impact on progress and completion of other events".
[15] Two
important points emerge from these remarks.
In the first place, in the application of clause 25, a relevant event
may still be taken into account even though it operates concurrently with
another matter that is not a relevant event.
In other words, the "but for" rule of causation, that an event
A will only be a clause of a result B if B would not have occurred but for A,
has no application. In the example given
by Dyson J. in paragraph 13, the delay would have occurred as a result of the
shortage of labour by itself, regardless of the bad weather. On the approach to causation found in the general
law of contract and delict, it could not be said that the bad weather caused
the delay because the delay would have occurred in any event. Under clause 25, however, the architect may
take the bad weather into account to the extent that he considers it fair and
reasonable to do so. This perhaps
emphasizes the general notion underlying clause 25, that it is designed to an
achieve fairness as between the contractor and the employer, and the architect
is given a reasonably wide discretion in order to achieve that result. In the second place, despite the width of the
discretion given to the architect, before he can take any particular occurrence
into account as a relevant event for the purposes of clause 25, he must be
satisfied that the occurrence was a cause of the delay in completing the
contract. This is illustrated by the
example given in paragraph 15 of Dyson J.'s opinion.
[16] Dyson
J.'s opinion in Henry Boot Construction
(UK) Ltd v Malmaison Hotel (Manchester) Ltd was considered by Judge Richard
Seymour QC in Royal Brompton Hospital NHS
Trust v Hammond (No 7), (2001) 76 Con LR 148, at paragraph 31. In that passage Judge Seymour gave a further
explanation of what is meant by "events operating concurrently". He drew a distinction between on one hand a
case where work has been delayed through a shortage of labour and a relevant
event then occurs and on the other hand a case where works are proceeding
regularly when both a relevant event and a shortage of labour occur, more or
less simultaneously. Judge Seymour
considered that Dyson J. had only been concerned with the latter situation, and
not with the former; in the former situation the relevant event had no effect
upon the completion date. I have some
difficulty with this distinction. It
seems to turn upon the question whether the shortage of labour and the relevant
event occurred simultaneously; or at least it assumes that the shortage of
labour did not significantly predate the relevant event. That, however, seems to me to be an arbitrary
criterion. It should not matter whether
the shortage of labour developed, for example, two days before or two days
after the start of a substantial period of inclement weather; in either case
the two matters operate concurrently to delay completion of the works. In my opinion both of these cases should be
treated as involving concurrent causes, and they should be dealt with in the
way indicated in clause 25.3.1 by granting such extension as the architect
considers fair and reasonable.
[17] It is
in any event clear from older authority that the fact that delay has been
caused by matters for which the contractor is responsible will not deprive the contractor
of his right to claim an extension of time for delay caused by a relevant
event. That is essentially the ratio of Wells v Army and Navy Co-operative Society,
1903, 86 LT 764. A more modern statement
of this principle is found in S.M.K.
Cabinets v Hili Modern Electrics Pty Ltd, [1984] VR 391, a decision of the
Supreme Court of Victoria. In that case,
Brooking J., whose opinion was concurred in by the other judges of the court,
stated (at 398):
"The sole remaining
matter is that of the soundness of the ground on which the arbitrator in fact
rejected the defence of prevention [that is, acts of the employer that prevent
the contractor from completing on time].
He evidently considered that where acts or omissions of a proprietor do
in fact substantially delay completion, the proprietor nonetheless cannot be
sent to have prevented the contractor from completing by the relevant date
unless the contractor would have been able to complete by that date had it not
been for the supposed prevention.... But it has been accepted for more than one
hundred years that this is not the law.
The cases are all one way".
Cases were then cited from
"The principle of the
decision is not as clear as one would wish, but appears to be that if the
supposed prevention was such as would in ordinary circumstances have made it
impossible for the contractor to complete in time, then prevention has in law
occurred, notwithstanding that the contractor may in fact have disabled himself
by his own delays from completing by the due date".
[18] While
delay for which the contractor is responsible will not preclude an extension of
time based on a relevant event, the critical question will frequently, perhaps
usually, be how long an extension is justified by the relevant event. In practice the various causes of delay are
likely to interact in a complex manner; shortages of labour will rarely be
total; some work may be possible despite inclement weather; and the degree to
which work is affected by each of these causes may vary from day to day. Other more complex situations can easily be
imagined. What is required by clause 25
is that the architect should exercise his judgment to determine the extent to
which completion has been delayed by relevant events. The architect must make a determination on a
fair and reasonable basis. Where there
is true concurrency between a relevant event and a contractor default, in the
sense that both existed simultaneously, regardless of which started first, it
may be appropriate to apportion responsibility for the delay between the two
causes; obviously, however, the basis for such apportionment must be fair and
reasonable. Precisely what is fair and
reasonable is likely to turn on the exact circumstances of the particular
case. A procedure of that nature is in
my opinion implicit in the wording of clause 25.3.1 and .3; both of these
provisions direct the architect to give an extension of time by fixing a
Completion Date that he considers to be fair and reasonable.
[19] The
foregoing construction of clause 25 is in my opinion supported by the approach
taken to concurrent causes of delay in Federal tribunals in the
"It is well settled
that the failure of a contractor to prosecute the contract work with the
efficiency and expedition requisite for its completion within the time
specified by the contract does not, in and of itself, disentitle the contractor
to extensions of time for such parts of the ultimate delay in completion as are
attributable to events that are themselves excusable, as defined in [the
relevant extension of time clause, corresponding to clause 25]. Where a contractor finishes late partly
because of a cause that is excusable under this provision and partly because of
a cause that is not, it is the duty of the contracting officer to make, if at
all feasible, a fair apportionment of the extent to which completion of the job
was delayed by each of the two causes, and to grant an extension of time
commensurate with his determination of the extent to which the failure to
finish on time was attributable to the excusable one. Accordingly, if a event that would constitute
a excusable cause of delay in fact occurs, and if that event in fact delays the
progress of the work as a whole, the contractor is entitled to an extension of
time for so much of the ultimate delay in completion as was the result or
consequence of that event, notwithstanding that the progress of the work may
also have been slowed down or halted by a want of diligence, lack of planning,
or some other inexcusable omission on the part of the contractor".
This approach recognizes the fact that culpable and
non-culpable causes of delay will frequently coexist and interact, and permits
the contracting officer, equivalent to the architect under the JCT Forms, to
apportion the delay between the culpable and non-culpable causes. That seems to me to be the only way in which
a fair result can be achieved in such cases, and in my opinion such an approach
is contemplated by the wording of clause 25.
I should add that the decision of the Board of Contract Appeals in Chas. I. Cunningham Co. was followed in
Sun Shipbuilding & Drydock Co., ANBCA
11300, 68-1 BCA (CCH) P7054 (1968).
[20] Counsel
for the pursuers founded strongly on the opinion of the court in John Doyle Construction Ltd v Laing
Management (
[21] In the
course of their submissions counsel for the pursuers advanced a number of legal
propositions. First, it was said that
for a contractor to establish an entitlement to an extension of time in respect
of delay arising out of a relevant event he must establish that the delay was
caused by the relevant event, as opposed to any other pre-existing or concurrent
matter for which the contractor himself is responsible; and he must establish
the extent of such delay. In my opinion
that proposition is too broadly stated.
It is correct that the contractor must establish that delay was caused
by a relevant event, and the extent of the delay; nevertheless, I am of opinion
that concurrent causes should be treated in the manner discussed in paragraph
[18] above. The second proposition
advanced for the pursuers was that, if a relevant event can be shown to be the
"dominant or operative" cause of a delay, the party responsible for
that event will be held responsible for the delay. I agree that it may be possible to show that
either a relevant event or a contractor's risk event is the dominant cause of
that delay, and in such a case that event should be treated as the cause of the
delay. A similar principle was
recognized in Doyle, at paragraph
[15] of the opinion of the court; the principle is derived from older case of Leyland Shipping Company Ltd v Norwich Union
Fire Insurance Society Ltd, [1918] AC 350.
Those cases refer to the "dominant" or "proximate"
cause. The pursuers' submission went
further, and referred to the "dominant or operative" cause of the
delay. In my opinion this extension is
not legitimate. Indeed, I have
difficulty in seeing what the word "operative" adds to the notion of
causation; a cause can only be relevant if it is operative, and that is as true
of concurrent causes as it is of single or "dominant" causes.
[22] The
pursuers' third proposition was that a variation instructed during a period
when the contractor is already in delay will not absolve the contractor of
responsibility for that pre-existing delay, unless it is proved that the delay
resulted from the variation. As stated,
this is correct. Nevertheless, the
"delay" that matters is delay to the Completion Date. If the contractor is, through his own fault,
in delay before a relevant event, that may explain delay that follows the
Completion Date. Alternatively, it may
be possible for the contractor to demonstrate that he would have made up the
delay caused by his own fault, and that the delay beyond the Completion Date
results from the variation. It is all a
question of fact. The pursuers' fourth
proposition was in two parts: first, it is a defence to a claim that a
variation or late instruction caused delay to establish that the matter to
which the variation or late instruction was issued was not on the critical
path; secondly, it is also a defence that the claimed delay was in fact due to
other events. The first of these
contentions was not, I think, in dispute, although the parties were sharply in
dispute as to where the critical path lay in the progress of the contractual
works. The second contention, however,
is perhaps stated rather simplistically.
In practice causation tends to operate in a complex manner, and a delay
to completion may be caused in part by relevant events and in part by contractor
default, in a way that does not permit the easy separation of these causes. In such a case, the solution envisaged by
clause 25 is that the architect, or in litigation the court, must apply
judgment to determine the extent to which completion has been delayed by
relevant events. In an appropriate case
apportionment of the delay between relevant events and contractor's risk events
may be appropriate. Precisely when and
how that should take place is a question that turns on the precise facts of the
case.
The time for issuing
instructions
[23] A
further legal issue is relevant to the present case: this relates to the time
at which the architect is obliged to issue instructions in terms of clause
25.4.6. The relevant event specified in
that clause is "the contractor not having received in due time necessary
instructions". The expression
"in due time" was said in Percy
Bilton Ltd v Greater
"What is a reasonable
time does not depend solely upon the convenience and financial interests of the
[contractors]. No doubt it is in their
interest to have every detail cut and dried on the day the contract is signed,
but the contract does not contemplate that.
It contemplates further details and instructions being provided, and the
engineer is to have a time to provide them which is reasonable having regard to
the point of view of him and his staff and the point of view of the [employer],
as well as the point of view of the contractors.
In determining what is a
reasonable time as respects any particular details and instructions, factors
which must obviously be born in mind are such matters as the order in which the
engineer has determined the works shall be carried out..., whether requests for
particular details or instructions have been made by the contractors, whether
the instructions relate to a variation of the contract which the engineer is entitled
to make from time to time during the execution of the contract, or whether they
relate to part of the original works, and also the time, including any
extension of time, within which the contractors are contractually bound to
complete the works".
The first of the specific factors mentioned by Diplock
J. is not strictly relevant to the present case, since under the parties'
contract the architect is not given power to determine the order in which the
works should be carried out. Instead,
the contractor determines the programme.
Nevertheless, the contractor's programme is clearly relevant in
determining what is a reasonable time for giving any particular
instruction. The other three factors are
all relevant. In relation to the last,
the time within which the contractor is contractually bound to complete the
works, a difference arose between the parties.
Counsel for the defender submitted that the contractual completion date,
allowing for any extension, must always set a criterion against which the timing
of instructions should be judged.
Counsel for the pursuers, by contrast, submitted that, where the contractor's
progress was such that he clearly would not complete by the contractual
completion date, it was sufficient that the instructions were in sufficient
time to meet his actual progress. In my opinion the current contractual
completion date must normally be relevant, for two reasons. First, there is the possibility that the contractor
will take special measures to accelerate progress. That is no doubt subject to an exception when
the Completion Date is past, but in that event it may be that instructions
should have been given prior to the Completion Date. The second reason is more general: the
contractual provisions expressly envisage that information will be provided by
the architect to the contractor to enable completion in accordance with the
contractual Conditions (clause 5.4), and those conditions include the important
obligation (clause 23) to proceed regularly and diligently with the works and
to complete the works on or before the Completion Date. Nevertheless, all of the factors mentioned by
Diplock J., subject to the qualification mentioned above in relation to the
first, are potentially relevant in determining what is a reasonable time for
the provision of information. Ultimately
that question is a question of fact, and will depend upon the whole
circumstances of the particular case.
Competing
approaches of parties' expert witnesses
[24] I
must now consider the factual issues that arise in this case. The defenders
relied on expert evidence from their own programming expert, Mr Alan Whitaker,
and on evidence from two witnesses of fact, Mr Kevin Cornish, who was the
defenders' senior site manager for most of the duration of the contract, and Mr
David Dibben, who at the time of the contract was the defenders' regional
manager for South West England and South Wales.
The pursuers relied solely on the evidence of their programming expert,
Mr Nigel Lowe. They did not lead any
witnesses of fact. In relation to the
witnesses of fact, I should state that I found both Mr Cornish and Mr Dibben
to be credible and generally reliable witnesses. Mr Cornish, in particular, impressed me
as having a good knowledge and understanding of what had happened as the
contract works progressed. Before I
examine the evidence in detail, however, I consider it appropriate to consider
the different approaches taken by the parties' two expert witnesses. For the defenders, who led at the proof,
evidence was given by Mr Alan Whitaker. Mr Whitaker
was a Chartered Civil Engineer and a member of the Chartered Institute of
Arbitrators. He graduated as a Bachelor
of Technology in Civil Engineering; thereafter, from 1966 to 1988, he had
worked for a number of major contractors as an engineer, site agent or
contracts manager. The projects on which
he worked were clearly very diverse; they are set out in Appendix A to his
report No 7/156 of process. His
experience extended to design and construction in industrial building
projects. It is fair to say that his
involvement was generally with large and intricate construction projects. In 1988 he established an independent
practice, Alan E Whitaker & Associates, to provide computer-based planning
services in the construction industry.
This involved the provision of critical path analysis. As an independent consultant, Mr Whitaker
was involved in a number of substantial projects. His practice continues in that area, but from
1993 onwards most of his work has been in the preparation, negotiation and
settlement of claims, and acting as an expert witness in arbitration and
litigation. He clearly had substantial
experience in that area. Mr Whitaker
produced a first report in the present case dated
Mr Whitaker
[25] As
I have mentioned, Mr Whitaker produced two reports. His position changed in number of respects
between the two reports. He explained
that this had occurred because he had obtained a significant amount of further
information during the intervening period.
In particular, the pursuers had disclosed the diaries and weekly reports
of the clerk of works. He had met
Mr Nigel Lowe, the pursuers' expert, and had discussed the as-built
programme with him. In addition, he had
been given access to further documents in the possession of the defenders and
had been provided with further information by the defenders and by
Mr Kevin Cornish, who had been their senior site manager on the
project. I think that the information
provided by Mr Cornish is important; as indicated in the last paragraph, I
considered him an impressive witness.
[26] Mr Whitaker
described his approach as follows (No 7/8 of process, paragraphs
1.5-1.11). He first examined the
programme against which the works were being constructed and tested it for
reasonableness and completeness. He then
examined the factual evidence to determine where time on the project was
critically lost and identify the cause or causes of that loss of time. He concluded that three weeks had been lost
during weeks 6, 7 and 8 of the contract; the cause of the loss in Mr Whitaker's
opinion was additional work instructed in connection with the gas venting
scheme (see paragraph [41] below). He
was further of opinion that five weeks were lost between weeks 27 and 32 of the
contract. He considered that the cause
of this loss of time was a late instruction by the architect, RMJM, to vary the
roof coverings from a built-up system to the Stramit Speedeck system. The lost time was in part concurrent with the
effect of the loss of time caused by the gas venting works. The effect of the late instruction was that
work on the roof steelwork began late; the design of the steelwork was
dependent upon the roofing system that was used. In addition, the start of the roof coverings
was similarly delayed by five weeks, because the late instruction had led to
delay in the procurement of the roof coverings.
Finally, Mr Whitaker thought that six weeks were lost between weeks
44 and 52 of the contract. This was
caused by the lateness of a substantial number of architect's instructions
varying the works following the dismissal of a RMJM and their replacement as architect
by Keppie Architects. Mr Whitaker's
overall view was that 11 weeks (6 weeks plus 5 weeks) were critically lost
during construction. On that basis, he
considered that a fair and reasonable measure of any extension of time to which
the defenders might be entitled was 11 weeks.
[27] Mr Whitaker
was critical of the as-built critical path analysis used by Mr Lowe; I
deal with his specific criticisms that analysis at paragraphs [36]-[39]
below. In evidence, Mr Whitaker
stated that he had considered undertaking a critical path analysis, but decided
not to do so. He did not have access to
an electronic version of the defenders' original programme for the project, and
because of this it was impossible to identify the defenders' original critical
path through the programme. Nevertheless,
making use of his experience in programming, Mr Whitaker had attempted to
replicate what he surmised might be the logic of the defenders' original
programme; he stated, however, that he had no great confidence that his version
of that programme was either correct or complete. Mr Whitaker stated that to continue with
a critical path analysis based on logic that he knew not to be completely
correct would have meant that he could not be sure of the evidence that he was
giving to the court. Rather than
following such a course, he adopted the method described in the last
paragraph. In his initial report (No
7/156 of process, at paragraph 2.11) he stated that the task was to identify
where critical time had been lost on the project, and that in order to do that
it was necessary to understand the construction process involved in that
project. In this way it was possible to
identify "events in that construction process which logic, experience and
common sense tell you will be critical to completion of the works". Mr Whitaker explained that he meant by
that that delay to any of these critical points would mean delay to completion
of the works as a whole unless exceptional measures were taken to recover lost
time. Mr Whitaker identified events
in the construction programme that he considered to be critical; these are
discussed subsequently. Mr Cornish
was asked about the various events that Mr Whitaker identified as critical
and confirmed in relation to each that he also considered them to be critical for
completion of the works.
[28] The
pursuers criticized Mr Whitaker's approach to the case. They referred in particular to his failure to
undertake a critical path analysis of the present project. That might be explained by the fact that Mr Whitaker
preferred to use the as-planned v as-built method. Nevertheless, the weakness of that method was
that, as Mr Whitaker acknowledged, it does not identify the critical path
and therefore needs to be used with great care and understanding of the
processes in the whole of the project.
The pursuers submitted that an expert could only give a meaningful
opinion as to which activities in a project are critical on the basis of an
as-built critical path analysis, such as that carried out by Mr Lowe. For that reason it was suggested that I
should treat with caution, and indeed scepticism, Mr Whitaker's
opinion. The pursuers also pointed out
that Mr Whitaker had significantly changed his opinion in relation to the
delay arising from the gas venting scheme between his original report of
October 2003 and his later report of March 2004 (No 7/8 of process). In justifying this, Mr Whitaker had
relied on the fact that in preparing his initial report he had a limited amount
of time and relied on Mr Lowe's as-built programme for his analysis; at
that time he had not seen the Clerk of Works' diaries and weekly reports. The pursuers were nevertheless critical of Mr Whitaker
on the basis that he provided a detailed opinion on the basis of inadequate
information.
[29] In
my opinion the pursuers clearly went too far in suggesting that an expert could
only give a meaningful opinion on the basis of an as-built critical path
analysis. For reasons discussed below
(at paragraphs [36]-[37]) I am of opinion that such an approach has serious
dangers of its own. I further conclude,
as explained in those paragraphs, that Mr Lowe's own use of an as-built
critical path analysis is flawed in a significant number of important
respects. On that basis, I conclude that
that approach to the issues in the present case is not helpful. The major difficulty, it seems to me, is that
in the type of programme used to carry out a critical path analysis any
significant error in the information that is fed into the programme is liable
to invalidate the entire analysis.
Moreover, for reasons explained by Mr Whitaker (paragraphs [36]-[37]
below), I conclude that it is easy to make such errors. That seems to me to invalidate the use of an
as-built critical path analysis to discover after the event where the critical
path lay, at least in a case where full electronic records are not available
from the contractor. That does not
invalidate the use of a critical path analysis as a planning tool, but that is
a different matter, because it is being used then for an entirely different
purpose. Consequently I think it
necessary to revert to the methods that were in use before computer software
came to be used extensively in the programming of complex construction
contracts. That is essentially what Mr Whitaker
did in his evidence. Those older methods are still plainly valid, and if
computer-based techniques cannot be used accurately there is no alternative to
using older, non-computer-based techniques.
[30] In
relation to the pursuers' other criticisms of Mr Whitaker, I do not draw
an adverse inference from his change of position in relation to the effects of
the gas venting instruction. His change
of position was made clearly in his second report, and the reasons for it were
stated in detail. His change of position
was based on the receipt of further information. To change one's opinion in the light of
further information seems to me to show openness of mind and a basic fairness
of approach. Moreover, Mr Whitaker
did indicate that his first report was produced under significant time
constraints. Overall, I found Mr Whitaker's evidence to be generally
cogent and persuasive, and for the most part I have adopted his analysis.
[31] The
pursuers also criticized the defenders' overall position on programming. They pointed out that Mr Whitaker had
only been provided with a hard copy of the defenders' original construction
programme, not with a computer version. The programme had, however, been based
on a computer programme known as Suretrack; this is a programme that is
commonly used in the construction industry.
Mr Whitaker had agreed that one reason for generating a
construction programme using Suretrack software was to enable the revisal and
updating of the construction programme as works proceeded. Mr Whitaker had also indicated concern
that the defenders had not, during the contract works, updated their Suretrack
programme, although he stated that that was not untypical. He acknowledged that critical part analysis
used proactively is "a fantastic tool", in that it can demonstrate as
works proceed whether there is any flaw in the logic of the programme. The use of a programme such as Suretrack
permits the contractor to update his programme as construction progresses and
to allow for the impact of events on the construction programme. Mr Lowe's evidence was that in his
experience most contractors who use such software will continue to use it as
the works proceed to monitor the progress of the works. In failing to do so, the defenders had
hampered the presentation of the case and had also significantly hindered the
experts in their analysis of the instructions and delays on the overall
progress of the works. The absence of
the programme also made it much more difficult to discover the contractor's
original logic. In September 1999
the defenders produced delay charts using Suretrack for the purposes of
adjudication proceedings, which suggested that the programme had existed at
that time.
[32] I
accept that understanding what had happened during the progress of the works
might have been a great deal easier if the defenders' original Suretrack
programme had been available, and in particular if it had been updated as the
works proceeded. Nevertheless, I am
bound to approach the case on the basis of the evidence that is available. The programme was not available; in any
event, even if it had been available, it is clear that it was not updated as
the works proceeded, and for that reason I doubt whether it would have been of
any real assistance. While the
defenders' loss of the programme at a time when disputes had arisen between the
parties might be regarded as culpable, I do not think that that it is the loss
of the programme that has caused the difficulties; the fundamental problem is
rather the failure to update the programme as works proceeded. The original programme is available in a hard
copy, and a view of the logic of the programme can be obtained from that. In my view, on the basis of Mr Whitaker's
evidence, failure to update the programme is relatively common, and it is easy
to understand why that is so. In all the
circumstances I do not think that I can draw any significant adverse inference
from the fact that the defenders' records were less good than they might have been
in other circumstances.
Mr Lowe
[33] Mr Lowe
carried out a critical path analysis of the project, and on that basis produced
a filtered as-built programme (No 7/161 of process). The critical path of a
construction contract is a sequence of activities through the project from
start to finish the sum of whose durations determines the overall duration of
the project. Consequently any delay to
the progress of an activity on the critical path may cause the duration of the
overall project to be extended. Thus a
critical path analysis depends upon a logical sequence of activities; each
activity falling on the critical path can only be performed when a certain
stage has been reached in a logically preceding activity. That stage varies; on occasion the succeeding
activity may be in a position to start as soon as the preceding activity has
started; in other cases it is necessary that the preceding activity should have
finished before the succeeding activity can start; in yet other cases it will
suffice if the preceding activity has been carried out in part to enable a
start on the succeeding activity. If an
activity is on the critical path to completion, any delay in starting the
activity or any increase in the length or duration of the activity will produce
a consequential effect on the date for completion. Mr Lowe carried out a critical path
analysis of the project as built, rather than an analysis of the planned
project. In an as-built analysis, it is
known what the contractor actually did; for example, it may be known that the contractor
in fact waited to complete one task before he started work on another, even
though logically there was no reason for waiting. In such a case the resulting delay would be
incorporated into an as-built programme.
That affects the logic of the programme, and links must be inserted to
show what was actually done, even though in theory a successor task could have
started earlier.
[34] In
evidence Mr Lowe stated that after producing his as-built programme he
began his analysis by identifying, by inspection, whether any of the logic
paths in the as-built situation were consistent with the planned situation as
shown in the defenders' construction programme.
He then looked at the records of the project to discover whether the defenders
had departed from their planned logic.
One example of this that he noted was the use of temporary sealing when
construction reached the fourth and sixth floors respectively; this was
designed to make the building temporarily weatherproof, to enable
weather-dependent tasks to be carried out on lower floors. Thereafter Mr Lowe started from the date
when completion was actually achieved and identified the last activity before
completion. He then worked backwards
towards the start of the project to determine the logic links in the programme
as built, and then using those links he rescheduled the programme. This identified the critical path. It was accepted by the pursuers that an
element of subjective judgment was required in this exercise; nevertheless, Mr Lowe
indicated that in exercising that judgment he relied on his knowledge and
experience of programming in the construction industry. Mr Lowe described the method that he
used in handling the programme. Tasks
were linked in three ways: first, logic lags could be used to maintain the correct
time relationship between the tasks; secondly, it was possible to insert contractor
or employer defaults to fill in the time gap between what was considered to be
the reasonable logic and the time when an activity actually began; and thirdly,
it was possible to use start flags to constrain a task to an actual start
date. Mr Lowe also stated that it
is necessary in a programme to take account of four types of restraints that
may have an effect on progress. These
are technological restraints (based on the method of construction), management
restraints (based on decisions taken by the contractor), health and safety
restraints and resources restraints (caused by lack of resources).
[35] Using
this method, Mr Lowe expressed the opinion that none of the matters relied
on by the defenders to support their claims for an extension of time had caused
any delay. He came to that
conclusion on the basis that none of those matters fell on the critical path
through the project; that critical path was set out in his as-built programme
(in No 7/61 of process). Mr Lowe's reasons for this conclusion are set out
at length in his reports.
[36] Mr Whitaker
criticized the method of delay analysis that Mr Lowe had adopted; in
particular, he was critical of the use of an as-built critical path
analysis. He stated that a critical path
analysis involves identification of the duration of the relevant activities,
based on the as-built records, and the logic links between those activities. The identification of the correct logic links
was of vital importance. Problems arose
with a critical path analysis when logic links were incorporated when they
should not be there, or if logic links were inserted which were not wholly
correct, or if necessary links were omitted.
If a mistake was made in one logic link, that was liable to produce an
error in the identification of the activities that were critical to completion
of the works, and that in turn could invalidate the critical path shown in the
relevant programme. If a number of erroneous
links were identified, Mr Whitaker stated that it would definitely be the
case that the critical path identified in the programme would not be correct.
[37] Mr Whitaker
identified what he considered to the errors in the logic links inserted by Mr Lowe
in his as-built programme (number 7/161 of process). He further suggested that Mr Lowe had
omitted certain important links from his programme. The errors referred to by Mr Whitaker
were as follows:
(i)
Line 8: AB Construct ground floor slab. The bar representing this activity was not
split to reflect that the ground floor slab was poured in two pours. In cross-examination, Mr Lowe accepted
that this would require the start of the activity to be linked to an earlier
activity; otherwise activities that were critical would become non-critical on
rescheduling, and the critical path might be altered.
(ii)
Line 12: AB construct 2nd floor to 3rd floor. This activity was not shown as critical on Mr Lowe's
programme, but in cross-examination he accepted that it should have been shown
as critical. Mr Lowe further
accepted that the link shown coming in to the activity from line 10 was
erroneous, as it omitted a floor of the building. Finally, Mr Lowe accepted that a link
was missing from his programme; he stated that there should be a start-start
(SS) link from line 11 to line 12.
(iii)
Line 13: AB construct 3rd floor to 4th floor. Mr Lowe accepted in cross-examination
that the link from line 11 to line 13 (13FS2d, signifying a finish-start link
with a time lag of two days) was erroneous; once again a floor was
omitted. Mr Lowe further accepted
that it was wrong to indicate that the start of the activity at line 13
depended upon the finish of the activity at line 11; instead, the link should
have been a SS link from line 12 to line 13.
(iv)
Line 14: AB construct 4th floor to 5th floor. This activity is shown as non-critical in Mr Lowe's
programme, but in cross-examination he accepted that this was wrong and that
the activity should be shown as critical.
Mr Lowe further accepted that the link to the start of line 14 from
the end of line 12 (14FS6d) was incorrect; instead the programme should have
shown a SS link from line 13 to line 14.
(v)
Line 15: AB construct 5th floor to 6th floor. Mr Lowe accepted in cross-examination
that the link to the start of line 15 from the end of line 13 (15FS1d) was
incorrect, and it was also incorrect to state, as the programme indicated, that
the criticality of the activity at line 15 depended on the activity at line 13. The link should rather have been a SS link
from line 14 to line 15.
(vi)
Line 15: AB construct 5th floor to 6th floor. A central feature of Mr Lowe's evidence
was the view that neither the roof steelwork nor the roof cladding was on the
critical path. The first link out of
line 15 was to the reinforced concrete stair flights at line 38 (38FF1d), that
link being shown as critical. Work on
the reinforced concrete stair flights is shown as finishing on
(vii)
Line 49: AB load out plant room equipment. The plant room was situated at roof level,
under the cladding. The last part of
this activity was the hoisting in of the chillers, which took place on
(viii)
Line 20: AB roof cladding.
In Mr Lowe's programme this work is shown in a number of sections,
the last of which refers to "penetrations". The final successor link from this line is to
snagging, shown as 60FS0d. This link is
shown as critical. On the programme that
critical link is shown to snagging taking place on or about
(ix)
Line 50: AB plant room installation. A link joins line 50 to soil stacks at line
43, the link being 50FS-1d. When
cross-examined, Mr Lowe accepted that it was probably not the case that
the contractor could only start installing plant in the plant room one day
before the completion of the soil stacks.
If that is so, the link would be incorrect.
(x)
Line 20: AB roof cladding.
The only link shown from this activity to any mechanical and electrical
activity is to soil stacks at line 43 (identified as 43FS9d). Mr Lowe considered that link to be
critical, but he thought that the only mechanical and electrical activity that
depended on the roof cladding was the testing of the soil stacks. Mr Lowe further stated (day 24, 3.45)
that there was no practical relationship between the roof cladding and the
second fix mechanical and electrical work.
He justified that position on the basis that the defenders had installed
temporary covers at 4th and 6th floor level over the 18 voids created by the
risers that run up through the building.
He conceded, however, that once the plant and equipment were in place at
the plant room level a roof would be necessary in order to take the covers off
the plant and equipment and to allow connections to be made down through the
building (day 25, 10.11). That would
require the temporary covers to be removed.
On this basis, it seems that the roof must be critical, at least once
the plant was put in place and the contractor wished to connect it to the
services running through the building.
This is a point of some importance, and I return to it at paragraph [38].
(xi)
Line 17: skim plaster finish to bedroom walls and
ceilings. The only successor link is to
line 57, decoration, and is shown as 57FS1d.
Both of these activities are shown as critical in Mr Lowe's
programme, and Mr Lowe accepted that the logic link between them is
critical. In cross-examination, however,
he conceded that this critical link was wrong (day 25, 10.36). He accepted that the link should have been
start to start rather than finish to start; it is obvious why this is so, since
decoration could clearly begin as soon as the earlier parts of the skim plaster
had dried. Mr Lowe was then asked
what would happen if the erroneous link were deleted, the correct link inserted
and the programme rescheduled; he believed that the skim plaster activity at
line 17 became non-critical. Mr Whitaker
specifically disagreed with Mr Lowe's programme at this point, as did Mr Cornish.
(xii)
Line 54: ceramic tiling.
Mr Lowe records the finish date for this activity as being
(xiii)
Line 52: AB stud partitions and dry linings. Mr Lowe's programme does not show any
link from this activity to any mechanical and electrical activity. He stated in evidence, however, that in the
area between the bedrooms and the bathrooms the stud partition walls would be
erected with the second fix electrical and plumbing work within them; metal
studs and one side of the plasterboard would be erected, followed by the
electrical and plumbing work, followed by the second side of plasterboard. On this basis Mr Lowe accepted (day 26,
10.22) that there was a relationship between the stud partitions and second fix
wiring, shown at line 44. No such link
is reflected in Mr Lowe's programme, although stud partitions and dry
linings are shown as a critical activity.
(xiv)
Line 30: install temporary windows -- timber frame and
polythene. In this case a link is shown
to first fix joinery, at line 53, in the form 53SS9D; that indicates that first
fix joinery cannot start until nine days after the start of the installation of
temporary windows and polythene sheets.
That link is between two critical activities, and should therefore be
regarded as critical. Mr Cornish,
however, considered that little work was involved in first fix joinery, and that
such work as there was not dependent upon the temporary windows; thus there was
no relationship between the two. Mr Whitaker
supported this view; first fix joinery referred to work in the bathroom area,
but this was not near the outer walls of the building and was therefore not
dependent upon the temporary windows. On
this basis it appears that the link shown by Mr Lowe is erroneous. Mr Lowe further showed a link between
temporary windows at line 30 and ceramic tiling at line 54, in the form
54SS12d. Both of these activities are
shown as critical. Mr Whitaker
stated that, before any tiling could be done, the contractor required first to
erect the stud partition walls on which the tiling was placed. If there were any link with the temporary
windows, accordingly, it would be expected that this would run through the stud
partitioning. No such link was shown, however,
and in fact the stud partitioning work started on
(xv)
Line 19: grout in steelwork.
A successor link is shown to roof cladding, at line 20, in the form 20FS-10d. When asked about this link, Mr Whitaker
stated that the logic link was erroneous because the roof cladding work was not
dependent upon the grouting of the steelwork, and the work in fact started one
week before the grouting of the steelwork.
On Mr Lowe's programme roof cladding is shown starting on
[38] It
accordingly appears that a number of errors exist in Mr Lowe's programme;
these were largely accepted by him. In my opinion that inevitably makes his
as-built critical path analysis of very doubtful value. It is in my opinion clear that such a
programme is critically dependent upon the logic links between different
activities; that was accepted by both experts.
If that is so, I am of opinion that Mr Whitaker must be correct
when he states that an error in one logic link can vitiate the whole programme,
and errors in a number of links will almost inevitably vitiate the
programme. In this connection, certain
particular parts of Mr Lowe's evidence call for comment. First, in re-examination (day 13, 2.32) Mr Lowe
was asked about the link between line 17 and line 57 (paragraph (xi)
above). In cross-examination he had
accepted that the link should have been start-start rather than finish-start,
and accepted that that could render line 17 non-critical. In re-examination Mr Lowe was asked
whether this would alter the critical path from line 57 (decoration) onwards,
and he replied that he could not say that with certainty. He went on to say, however, that this would
not affect the non-criticality of the roof covering. Nevertheless, the important point is that Mr Lowe
did not know where the critical path lay following the decoration works. It is agreed in the parties' joint minute
that the decoration works were completed on
[39] Counsel
for the pursuers submitted that Mr Lowe's evidence was not dependent upon
the use of the as-built critical path analysis.
He had analyzed the various delaying events and their effect on the
works in the context of the progress that the works had achieved on site at the
relevant time. The as-built critical
path analysis had been used as a separate tool to analyze the project. Counsel submitted that the most that could be
taken from the defenders' criticism of the critical path analysis is that it
could not be relied upon from
Conclusion
[40] For
the foregoing reasons I generally prefer the approach taken by Mr Whitaker.
His views, as contained in his second report (No 7/8 of process), appeared to
me to the based on the factual evidence.
Moreover, his method of proceeding appeared to be based on sound
practical experience and on common sense; I also found the logical connections
that he drew in discussing programming to be entirely intelligible. So far as Mr Lowe is concerned, I do not
think that it is possible to base any reliable conclusions upon his formal
critical path analysis, for the reasons discussed above. Other parts of his evidence were of
assistance, however, particularly in relation to concurrent causes of delay; I
generally accept his evidence on the delaying effect of the lifts and the stair
balustrading. I will now turn to the
areas in which, according to the defenders, critical delay was caused by
instructions issued on of the pursuers.
These were the gas venting system, the roof still work and the series of
instructions issued following the replacement of RMJM by Keppie.
Gas venting
[41] In
the original specification of the contract works a gas proof membrane was to be
inserted at foundation level to prevent the emission of radon gas from the soil
under the building. The form of membrane
originally specified was a product known as Bituthene. On
[42] It
was a matter of agreement between the experts that delays had occurred in the
construction of the substructure of the building. The experts were, however, in dispute as to
responsibility for that delay. The
crucial issue related to the delay in constructing the ground floor slab. Mr Whitaker took the view that this
activity was critical (first report, paragraph 2.12), because the reinforced
concrete frame of the building was constructed on that slab and was accordingly
dependent upon it. Mr Cornish's evidence was to similar effect. I have no difficulty in accepting that
evidence. In his second report Mr Whitaker
expressed the opinion (paragraphs 2.6-2.10) that the delay had been caused by
additional work involved in the alternative gas venting scheme. The ground
floor slab, made of concrete, was reinforced by concrete beams. In the tender scheme a straightforward
membrane was laid on top of the hardcore which supported the ground beams and ground
floor slab; the membrane was continuous, and passed under both beams and
slab. In that situation, in Mr Whitaker's
opinion, it is common practice to pour the ground beams homogeneously with the
ground floor slab. That obviously
involves a single pour. The as-built
records, however, disclosed that part of the ground beams was constructed
first, before the floor slab was constructed above them. Mr Whitaker was of opinion that that
resulted from the revised scheme. In the
revised scheme using the Proofex membrane, it was necessary to construct
polythene pipes through the ground beams to allow gas to pass out of the
building. Those pipes involved a more
complex form of construction. The
membrane required to be cut to allow each pipe to pass through it, and a
product known as Cordex Ventform was used around the pipes; the arrangement is
shown in drawing 1056(28)006D (No 6/138 of process). Mr Whitaker described the work involved
as "intricate". He stated that
that work, including the separate construction of the ground floor beams to
allow the pipes to pass through them and through the membrane, would have the
effect of delaying the pouring of the ground floor slab and would thus delay
the start of the superstructure works.
At paragraph 2.6 of his second report Mr Whitaker produced a chart
showing the planned and as-built programmes for the substructure works and the
first part of the superstructure works, namely the construction of columns and
walls to the first floor. This showed
delay to commencement of the columns and walls to first floor of 3 1/2
weeks. The actual duration of that work
was three weeks and two days, compared with five weeks planned; consequently
the delay to the completion of the activity was only two weeks and one day. Mr Whitaker expressed the opinion that
the most likely cause of the delay of 3 1/2 weeks to the start of
superstructure works was the additional work instructed in connection with the
gas venting scheme.
[43] In
evidence Mr Whitaker stated that the introduction of the gas venting
scheme had the direct effect of delaying the pouring of the first half of the
ground floor slab (day 10, 2.35). Mr Lowe
expressed the view that the ground beams and ground floor slab could have been
poured together despite the gas venting scheme; Mr Whitaker stated that
such a course would have risked damaging the gas membrane. Mr Whitaker's reason was that the
venting pipes would have been relatively unsupported when the concrete was
poured, and the connections at the ends of the pipes were delicate and would
easily be damaged. If those connections
had been disturbed, gas could permeate through the barrier that the membrane
was designed to create and enter the building; that would destroy the basic
purpose of the gas venting scheme. In
cross-examination (day 15, 12.55) it was suggested to Mr Whitaker that the
delay was actually caused by extra work required in the lift pit area in the
middle of the building; on that basis the defenders should have poured the
ground floor slab in three porous rather than two. Mr Whitaker rejected this suggestion; he
thought that the fact that the pour was not done in three sections was a
further indication that the cause of the delay was the work on the gas venting
scheme. In response to questioning by
the court (day 19, 12.15) Mr Whitaker stated that the extra work required
in the area of the lift pit was completed at about the same time as the
additional work required through the introduction of the gas venting scheme;
thus pouring the slab in three pours would not have assisted.
[44] Mr Lowe
(day 24, 12.07) described the work involved in installing the membranes and
pipes. The defenders required to cut a
hole through the membrane, slide the pipe through the hole, slide the first
part of the membrane collar on to the pipe and attach it, slide on the second
part of the collar and attach it, insert the Ventform barrier material around
the pipe, fill any voids with mortar, and wrap the membrane over the
Ventform. In my opinion that is plainly
a relatively elaborate procedure, and it is one that would not have been
required if construction had proceeded according to the tender drawings. Mr Dibben stated (day 9, 10.40) that the
requirement of gas venting introduced new work into the contract on the
critical path. The construction of the
building was complex on the ground, and the structural elements were
interrelated. Thus the additional work
immediately stopped operations that were occurring; the defenders had to put
the venting in before going on. That was
summed up in a letter to the architect dated
[45] RMJM
wrote to the defenders by letter dated
"Based
upon the information provided by you in your letters of 25 August 1998 and 31
March 1998, the Architect's Instruction issued
to you and our projects records, we estimate the effect on the Contract
Completion Date to be as follows:
1. Compliance with Architect's
Instruction No. 1 of
2. The Relevant Event caused delay to
the works for a period of 2 weeks in the timing of the achievement of the
critical first floor slab consequent upon the revised erection sequence of the
lower structure".
The letter continued by stating that
RMJM had been advised that, by direct agreement with the pursuers, the
defenders had undertaken to absorb this delay; the result was that the architect
decided that no extension of time should be granted. I should state that no evidence was led
before the court to suggest that any agreement to absorb such delay had been
concluded. The pursuers aver that such
an undertaking had been given by Mr Dibben at a meeting held on
[46] Mr Lowe
expressed the opinion that the delay in starting the superstructure was caused
by the defenders' decision to revise their original construction sequence (day
24, 12.29). He was not clear why the
revised sequence had been adopted. His
position seems inconsistent with that of RMJM, who were the contract architect
at the relevant time. On this matter, I
am of opinion that, if any substantial criticism of the defenders' decision
were possible, it would in all probability have been taken up by RMJM. The fact that it was not indicates that the
decision is likely to have been reasonable.
[47] Mr Lowe
further gave evidence that the delay in the construction of the ground floor
slab resulted from problems that were encountered with out of position
piles. This necessitated the redesign of
the pile caps at gridlines A3, A4, A12 and D3.
The ground floor slab was in fact poured in two halves, and three of the
piles in question, A3, A4 and D3, were in the area of the second pour. Consequently it is unlikely that they delayed
the first pour. It was the first pour
that was critical, however, because that permitted a start to be made on the
works above the ground floor slab. So
far as A12 was concerned, the problem was resolved on
[48] In
these circumstances I conclude that the only explanation for the delay that has
been advanced is the change in the construction activities necessitated by the
gas venting scheme. No other tenable
alternative has in my opinion been put forward.
My conclusion is supported by the defenders' contemporary claim and by
the reaction of RMJM to that claim.
There was also evidence in the Clerk of Works' diary, in the period from
[49] The
next issue that must be considered is causation: whether the instruction
relating to the gas venting scheme caused completion of the Works to the
delayed beyond the Completion Date. In
my opinion it is clear that completion of the ground floor slab was a critical
activity, as it formed the base on which the whole superstructure was
constructed. That was the view of both Mr Cornish
(day 2, 11.35) and Mr Whitaker (second report, paragraph 2.11); Mr Whitaker
stated that a delay in the ground floor slab would inevitably delay completion
of the Works as a whole unless exceptional measures were taken to recover lost
time. That seems obvious; as Mr Whitaker
explained in his report (at paragraphs 2.9 and 2.10), the delay in the ground
floor slab delayed the construction of columns and walls to the first floor,
which in turn delayed the first floor slab, which in turn delayed columns and
walls to the second floor, and so on. Mr Whitaker's
opinion was that the length of the delay was 3 1/2 weeks (second report,
paragraph 2.10). That is relatively
close to the figure put forward in the defenders' letter to RMJM of
[50] In
his second report, Mr Whitaker expressed the view (at paragraphs
2.11-2.16, under reference to the table at Page 7/8/10) that the defenders
recovered some of the time lost through the gas venting instruction; he thought
that by 17 June 1998 the defenders were between 1 1/2 and 2 weeks behind
programme, and were recovering lost time.
Mr Lowe accepted that the defenders had recovered some lost
time. Both experts agreed that at the
finish of the fifth floor slab one week of the initial delay of three weeks
four days had been recovered, reducing the delay to two weeks four days. Both experts also agreed that the sixth floor
slab finished four weeks late. Mr Cornish
(day 2, 12.04 onwards) stated that the defenders had worked longer hours and at
weekends to make up lost time as the superstructure proceeded; they had also
used additional resources. At that time
the defenders were intent on making up the time that had been lost. That had been expensive, however, and there
was no point in continuing to take exceptional measures if that became a
pointless exercise. Eventually it became
apparent that the project would be delayed by the problems with the roof
steelwork, which lay on the critical path.
At that stage it no longer seemed necessary to go to extraordinary
lengths to recover the situation, since that would have no effect on the
critical path of the project (day 3, 11.11).
At that point the defenders had stopped Sunday working and the working
of longer hours, because of the cost.
Once the project had been delayed by the roof steelwork, any such
expenditure would be a pointless exercise.
That evidence is supported by the summary that Mr Cornish made as
project manager for the site meeting held on
[51] I
have found the evidence of Mr Whitaker to be persuasive generally. His opinion was that the instruction of the
gas venting scheme caused delay to completion of the Works by 3 1/2 weeks. I am of opinion that that is supported by the
evidence summarized above; I accordingly conclude that the gas venting scheme
caused delay to completion by a period of 3 1/2 weeks.
Roof steelwork and cladding
[52] When
the defenders were invited to tender for the project the roof cladding
specification was based on a system known as Stramit Speedeck. This appears
from section H31 of the Bills of Quantities (No 6/28 of process). The Stramit system was an aluminium profiled
cladding system. Section H31 began as
follows:
"To be
read with Preliminaries/General conditions.
The Contractor
is invited to offer alternative proposals for this specification. Any alternative must achieve the technical
and visual performance inherent in this specification and relating drawings.
In any event
the Contractor or specialist will be required to assume full responsibility for
the design, construction and warranty of the roof enclosure".
The reference in that provision to
alternative proposals is an invitation to the contractor to provide Value
Engineering ("VE") proposals in relation to specified parts of the
Works. The intention was that the contractor
should put forward alternative systems of construction which would produce cost
savings; these would obviously be reflected in the Contract Sum. In the course of the tendering process the
defenders put forward a list of such proposals (No 7/17 of process); these
included the system of roof covering, where a proposal was made to use a built
up roof covering system rather than the proprietary Stramit system. The proposal relating to the roof covering
system was VE Proposal 13; it provided:
"Change specification of roof cladding to built-up
system". A saving of г5,000 was
placed against this item. In total 32 VE
proposals were made, which might result in a total saving of г128,000.
Contractual status of VE Proposal 13
[53] The
first issue that arises between the parties in relation to the roof steelwork
and cladding is the contractual status of VE Proposal 13. The defenders contend that that proposal
formed part of the contract.
Consequently, when on
[54] Certain
clauses of the parties' contract are relevant to this issue. The most significant of these is clause 14,
headed "Contract Sum". This
clause forms part of the Schedule of Amendments specially prepared for the
purposes of the parties' contract; it replaces clauses 14.1 and 14.2 of the JCT
Standard Form. Its purpose is, broadly speaking, to replace the usual JCT
clause with a provision specifying a guaranteed maximum sum and taking account
of Value Engineering savings. Clause
14.1 provides as follows:
"The
Employer shall pay to the Contractor in consideration of the carrying out and
completion of the Works the guaranteed maximum price comprising, the Contract
Sum or such other sum as shall become payable hereunder at the time and in the
manner specified in the Conditions".
Clause 14.2 indicates the significance
of the guaranteed maximum price:
"Notwithstanding
anything contained in the Contract whether express or implied and/or any claim
at law the Employer's entire aggregate liability for any payment to the Contractor
of any sum of whatsoever in nature and howsoever arising for the carrying out
and completion of the Works shall be limited to and in no circumstances exceed
the guaranteed maximum price comprised in the Contract Sum save only where the
Conditions expressly provide for any increase in the Contract Sum".
Clause 14.3 then provides:
"The
quantity and quality of work included in the Contract Sum shall be deemed to be
that which is required to be carried out and completed in compliance with the
Contract Documents".
That indicates a clear relationship
between the work that is to be carried out under the Contract and the Contract
Sum; I consider this relationship to be important for reasons that are
discussed further below. Clause 14.5
provides for adjustment of the Guaranteed Maximum Price Contract Sum in respect
of three matters: provisional sums; contingencies and day work; and unforeseen
or unknown ground conditions. No mention
is made there of Value Engineering savings.
Clause 14.6 indicates the amount of the guaranteed maximum price:
"The Guaranteed
Maximum Price Contract Sum is г4,959,578 comprising all adjustments made for
Value Engineering savings and the like and is as set out in Appendix E
hereto".
Clause 14.7 deals with VE savings; it
provides:
"The
Value Engineering savings which form part of the Contract Sum are defined and
set out in Appendix F hereto".
Finally, clause 14.8 provides that
any Value Engineering savings other than those stipulated in clause 14.7 are to
be shared between the parties in an agreed manner.
[55] VE proposal 13 is specified in
Appendix F as follows:
"Omit
stramit roofing as described in specification Clause H31:140 and substitute
with a built up roof cladding system as follows: --
╖
Topsheet
in plastisol coated steel outer sheet.
╖
Breather
membrane.
╖
Fibre
glass quilt insulation 100 mm thick.
╖
White
enamel faced under liner sheet with taped joints fixed with spacers to purlins.
Roof pitch
will need to be a minimum of 6░".
The saving brought out in respect of
the proposal is г5,000.
[56] Appendix
E sets out the calculation of the Guaranteed Maximum Price Contract Sum. The calculation proceeds as follows. It starts with the original tender sum of
г4,919,912. To that is added a
Guaranteed Maximum Price "premium" of г76,000. Three deductions are then made: current VE
savings amounting to г128,000; a saving of г100,000 if a
[57] It
is in my opinion clear from the foregoing provisions of the Contract that the
Contract Sum is calculated on the basis that the VE proposals set out in
Appendix E form part of the Works. That
is clear from clause 14.6, where it is expressly stated that the Contract Sum
includes all adjustments made for VE savings as set out in Appendix E, and from
Appendix E itself, where the calculation shows the deduction made for VE
savings. At this point it is important
to bear in mind the nature of the present contract; it involves the provision
of goods and services in consideration for a price, and generally speaking the
work that is to be provided under the contract will be reflected in that price.
This is a matter of great importance to the parties, because these matters will
determine the economic benefits that they obtain from the contract. It is,
moreover, a factor that is directly reflected in the terms of clause 14.3. It follows that if an item of work is
included in the Contract Sum it will normally form part of the contractual
Works. In the present case, therefore, I
am of opinion that the Works included the built up system of roof covering
indicated in VE Proposal 13. This
conclusion is supported by a practical consideration: if the VE proposals were
not included in the Works, the Contract Sum would have to be recalculated to
reflect the defenders' obligations as contractor. That would introduce an unnecessary
complexity; if the Works did not include the VE proposals, it would plainly
make sense to calculate the Contract Sum on that basis.
[58] Three
other provisions of the contract support the conclusion that the VE proposals
form part of the Works. First, if the
Works did not include the VE proposals, it is difficult to see the point of
clauses 14.6 and 14.7, both of which refer expressly to VE savings; clause 14
as a whole could have assumed a simpler form, as could the calculations in
Appendix.E. Secondly, clause 14.5
provides expressly for certain forms of adjustment. If the VE proposals contained in Appendix E
did not form part of the Works, it would be expected that they would be
referred to in that clause, either as provisional sums or in an analogous
manner. That was not done, however. Thirdly, clause 14.8 makes express provision
for VE savings other than those contained in Appendix E. That indicates that a clear distinction is
drawn in the contract between the Appendix E savings and other possible
savings, with the former being included in the Contract Sum and Works and the
latter being the subject of further adjustment.
[59] For
the pursuers it was contended that the contract specification provided for the
use of the Stramit system. The Bills of
Quantities (No 6/28 of process) provided at Bill 3, page 3/21-22, for metal
profiled roof cladding, for which the contractor or specialist subcontractor
was to assume full design responsibility, thus making it contractor design
work. The contractor was invited to
submit alternative proposals; such an alternative proposal was embodied in VE
Proposal 13. The pursuers' submission
was that the VE Proposals were not incorporated into the contract; only the
terms of the specification and Bills were so incorporated. The VE Proposals could be accepted or
rejected by the architect, but only following the submission of detailed
proposals by the contractor. The
relevant procedures had been agreed between the architect and the defenders at
a site meeting held on
[60] The
difficulty with the foregoing argument is twofold: it fails to give effect to
the manner in which the Contract Sum is calculated, and it fails to give
content to the provisions of clause 14, read together with Appendices E and F. In the first place, it is clear from clause
14.6, read together with Appendix E, that the Contract Sum is calculated on the
basis that all of the VE Proposals are included in the Works. That is plain from the terms of Appendix E,
and also from clause 14.6 itself, which states that the Contract Sum comprises
all adjustments made for Value Engineering savings. Clause 14.7 then states that the Value
Engineering savings which form part of the Contract Sum are set out in Appendix
F; these include VE Proposal 13. The
Contract Sum is, obviously, the consideration for the Works at the time when
the contract was concluded, and it is implicit in the notion of consideration
that the elements that are included in the calculation of the Contract Sum will
form part of the parties' contract. In
the second place, if the pursuers' argument on this point is correct, it is
difficult to see the point of clause 14.6 and .7. These sub-clauses deal with the VE savings in
a specific manner, which is quite distinct from the treatment of provisional sums
in clause 14.5. If the VE Proposals were
not part of the Works agreed on in the Contract, it would have made sense to
deal with them in the same way as provisional sums, with a subsequent
adjustment to the Contract Sum if a VE Proposal were taken up. The incompatibility of the pursuers' argument
with the structure of clause 14 is further strengthened by the provisions of
clause 14.8, which deals with VE savings other than those stipulated in clause
14.7 should be dealt with distinctly.
That is an indication that the clause 14.7 VE Proposals were part of the
Works, unlike any other VE Proposals, which would be dealt with by an
adjustment to the Contract Sum.
[61] The
pursuers' argument on this topic proceeded on the premise that the VE Proposals
in Appendix F were "optional", in the sense that the architect still
had to decide whether to adopt them. In
support of this argument reference was made to the terms of the VE Proposals;
it was said that the proposals were fluid in nature, and were presented in
outline form. It is true that the VE
Proposals were optional, but I am of opinion that this factor is neutral in
deciding whether the VE Proposals were part of the Works. The "option" in relation to the VE
Proposals can be regarded as a power to adopt or a power to reject; if the
option is construed as a power to reject its existence is wholly compatible
with the proposition that the Appendix F VE Proposals formed part of the
Works. The outline nature of the proposals
themselves is not I think a decisive factor; the proposals had clearly been
considered by the defenders, and sufficient description was given that the architect
knew broadly what was proposed in each case.
The option to accept or reject the proposals could only be exercised at
a later stage, when more detail was available.
At that stage, if the VE Proposals were part of the contract, a decision
to reject would be a variation; if they were not part of the contract, a
decision to accept would be a variation.
This factor accordingly seems to me to be neutral.
[62] The
pursuers further referred to the manner in which the Guaranteed Maximum Price
Contract Sum was calculated in Appendix E.
They submitted that the contractor had arrived at the most competitive
price for the Works by pricing on the basis that the VE savings that it
proposed to make would be achieved. This
was described as a "business gamble" taken by the contractor, and it
was suggested that it was presumably one of the reasons why a sizeable
"Guaranteed Maximum Price premium" had been added to the Contract
Sum. The fact that the VE savings were included in the final Guaranteed Maximum
Price did not incorporate them into the contract; it rather placed an onus upon
the contractor to ensure that as many as possible of its VE proposals were
accepted by the employer in order to maximize the contractor's own profit.
[63] It
is no doubt correct to suggest that the contractor had arrived at its most
competitive price by taking the VE savings into account; reduction in the price
was the obvious purpose of the VE Proposals.
It is also correct to state that a "business gamble" is
involved, but that is true of any tender.
The Guaranteed Maximum Price premium seems to me to the just that: the contractor
agreed to a cap on the price for the Works, subject to certain defined
exceptions, but took a premium in exchange.
The VE savings were taken into account in determining the Guaranteed
Maximum Price, but that merely emphasizes the point made above: the savings
were reflected in the calculation of the total Contract Sum, with all the
consequences that that entails. That
seems to me to point to the proposition that the VE Proposals were included in
the contract Works. As to the suggestion
that the VE proposals were designed to maximize the contractor's profit, it
appears to me that they were designed essentially to reduce the tender price;
whether this resulted in a greater profit would depend upon a range of factors
as the contract proceeded. If the VE
Proposals formed part of the parties' contract, any rejection of a proposal
would amount to a variation, with a potential impact on the total amount
payable by the employer, and also a potential impact on the contractor's
profit. That it cannot be said that that
was any "onus" on the contractor to have VE Proposals accepted; they
might or might not increase its profit, although they would certainly make its
tender price more competitive.
[64] The
pursuers further submitted that the defenders' argument was incompatible with
clause 1 of the Scottish Building Contract.
That clause provides that "the Contractor shall carry out the Works
(as defined in Appendix 1 hereto) in accordance with the Drawings numbered as
per the Schedule annexed to this Contract; the Schedule of Amendments to the
Building Contract and the Bills of Quantities all as annexed and signed as
relative hereto". The definition of
"Works" in Appendix 1 refers to "The Contract Works shown and
described in the Contract Drawings and in the Contract Bills and including any
changes made to these in accordance with this Contract". No reference was made in these provisions to
any link between the extent of the Works and the Contract Sum. In my opinion
the fact that no express reference is made to any such link in the provisions
cited by the pursuers is not significant.
The link exists nevertheless; the Contract Sum is paid in consideration
of the performance of the Works, and that very elementary connection creates a
link. This conclusion is not altered by
the terms of the Contract. Moreover, I
am of opinion that reliance on the Bills of Quantities is not helpful. Clause 2.2.1 of the JCT Standard Form
provides that nothing in the Contract Bills should override or modify the
application of the Building Contract, the Conditions for the Appendix. The basic contractual provisions thus
override the Bills. This analysis is
further supported by clause 14.4 of the parties' contract, which states that
the Bill of Quantities is for guidance only.
[65] The
pursuers argued that the roofing work was Performance Specified Work. Performance Specified Work is identified on
page 28 of the parties' version of the Scottish Building Contract (No 6/1 of
process); the list includes Roofing Work, with a reference to Bill H33; this is
in fact a misprint for Bill H31. Bill
H31 deals with the roof cladding but not the roof steelwork. Clause 2.4.1.2 provides that Performance
Specified Work should accord with any relevant specification in the Contract
Documents; the Contract Documents are defined in Appendix 1 to the Scottish
Building Contract as "The Contract Drawings, the Contract Bills, the
Conditions, this Appendix and the Appendix II to the Building
Contract". Consequently, as I
understood the pursuers' submissions, the system of roof cladding must be that
provided for in the contract documents rather than the defenders' VE
Proposals. They relied in particular on
the provisions of Bill H31, which indicates what is required by way of roof
cladding, under reference to the Stramit system.
[66] Whether
or not the roof cladding was properly defined in the contract as Performance
Specified Work, I do not think that that has any bearing on the question that
is crucial for present purposes, namely whether the parties' contract specified
VE Proposal 13 or the Stramit system set out in the Bill H33. If VE Proposal 13 was included in the
contract, it would override the Bills, in accordance with clause 2.2.1 of the
JCT Form. In any event, when the contractor
puts forward a VE Proposal, it is obvious that he is putting forward an
alternative to the architect's proposals, and that that alternative is one that
may or may not be accepted. In that
event, the proper interpretation is in my opinion that the contractor's
proposal, when duly accepted by the architect, will supersede the criteria for
Performance Specified Work to the extent that it is inconsistent with those
criteria. That seems to render
categorization as Performance Specified Work irrelevant. In any event, I am of opinion that the
pursuers have failed to establish that the roof cladding was Performance
Certified Work. Performance Specified
Work is defined in clause 42.1; this provides that such work must be work which
is identified in the Appendix and is to be provided by the Contractor, and of
which certain requirements have been predetermined and are shown on the
Contract drawings and in the Contract Bills.
"Contract Drawings" are defined in Appendix 1 of the Scottish
Supplement as drawings referred to in the Building Contract which have been
signed by the employer and the contractor or on their behalf. In the present case no such drawings were
produced. It is the pursuers who assert
that the roof cladding was Performance Specified Work; consequently any failure
to produce drawings must in my view mean that it has not been proved that the
roof cladding fell into the category of Performance Specified Work.
[67] Further
to their submission that the roof covering was Performance Specified Work, the
pursuers submitted that the defenders were in default, in that they had failed
to carry through the various procedures required in respect of such work. In this connection, the pursuers relied on
certain provisions of clause 2 of the contract conditions. Clause 2.4.4 of the contract conditions (a
clause forming part of the special conditions) places an obligation on the contractor
to provide the architect with all information necessary for Performance
Specified Work. Clauses 2.5.1 and 2.5.2
state that the contractor is to provide the architect with drawings, specifications
and details in respect of such work, in sufficient time for the architect to
comment on such work in line with the contractor's programme. Clause 2.7 provides that no extension of time
should be granted to the extent that there is any failure by the contractor to
provide such drawings and the like. The
procedures for use in respect of the VE Proposals were agreed at a site meeting
held on
[68] In
this part of the argument the pursuers ran together provisions that related
specifically to Performance Specified Work and the procedures that were agreed
for dealing with VE Proposals. If I am
correct that the roof cladding was not Performance Specified Work, the
provisions relating to such work are not relevant. I think that the argument can be advanced,
however, on the restricted basis that the VE procedures were not followed by
the defenders (see No 7/351 of process, page 9). It is true that the VE
procedures set out in the minutes of the site meeting of
History of instructions relating to the roof steelwork and cladding
[69] On
[70] On
receipt of the drawing 1056(26)003, the defenders passed it to their steelwork
fabrication subcontractor, Zonner Industries Limited. On
[71] In
response to Zonner's fax, RMJM acting in their capacity as structural engineer
sent the defenders a fax dated
[72] In
fact no instructions were issued by the architect during the course of the
following week. On
"VE Item
No 13 - Change roof cladding specification to a built up system.
Agreed. SCL [the defenders] to confirm that it does
not affect the lightning protection. SCL
to pick up any changes in the roof pitch on the fabricators drawings".
Mr Dibben stated that, as
recorded in the minutes, it was agreed that the defenders should proceed with
VE Proposal 13. Mr Cornish also
stated in evidence that that was his understanding of the position (day 2,
3.16). In the minutes no indication is
given that any further details or proposals were required from the defenders in
respect of VE Proposal 13; on the basis of the terms of the minutes and Mr Dibben's
evidence, I conclude that at the VE meeting it was decided that the Proposal 13
was to go ahead. The minute further
states, at paragraph 3.0, that RMJM were to issue Architect's Instructions as
appropriate to cover all of the items discussed.
[73] A
further meeting at which certain VE Proposals were discussed was held on
"I have
recommended to First Stop Hotels [the pursuers] that we retain the use of
speedeck to the main roof. I will advise
you of an instruction as soon as I can".
In relation to that letter, Mr Cornish
commented (day 2, 3.32) stated that his reaction was
"exasperation". He stated that
the situation was that the defenders had no direction as to which way to go,
because RMJM had not made their mind up.
The next communication from RMJM to the defenders was a fax dated 29
June (No 7/26 of process). This stated
"I
confirm my telephone call of Friday 26 June advising that First Stop Hotels
have agreed that the roof specification as currently instructed (Stramit
Speedeck) is not to be replaced by any alternative".
[74] The
defenders wrote (No 7/27 of process) on the same date to their roofing subcontractor,
Kelsey Roofing Industries Ltd, to confirm that it was the defenders' firm
intention to enter into a subcontract with them for the roofing works. The letter went on to state that the
specification would be as discussed at a meeting of 17 June, and that the architect
had confirmed that the Speedeck roof option was to be adopted. Mr Cornish
indicated that no order had been placed with Kelsey because that would depend
upon the outcome of RMJM's decision (day 2, 3.50); a subcontract had been
concluded with Kelsey as soon as the defenders knew what was to be built. Mr Cornish was then asked whether he was
satisfied that the regular progress of the pursuers' works was affected by
this. Mr Cornish replied in the
affirmative, and stated that all of the activities concerned were on the
critical path. At this stage he had
realized that it was impossible to get the steel and cladding in time, and he
was satisfied that this factor affected critical activities. Mr Cornish returned to this matter in
re-examination (day 8, 3.18). He stated
that meetings had been arranged with Kelsey and Zonner, at which issues had
been raised regarding purlin spacings; the defenders were pursuing RMJM to
clarify structural details. Those details
were needed by Kelsey and Zonner for their shop drawings. Load calculations were also needed from
RMJM. The purlin fixings had in fact
been raised by Zonner in their fax of 13 May.
In a subsequent fax of 15 May (No 6/354 of process) RMJM had indicated
that the purlin detail would be changed.
The relevant drawing (1056(26)003, revision A) was nevertheless issued
to the defenders on
[75] The
connection loads were provided by RMJM in a fax dated 13 July (No 7/32 of
process), and certain further details were provided in a fax from RMJM dated 17
July (No 7/34 of process). In relation
to these documents, Mr Cornish stated in evidence (day 8, 3.23) that it
was following the revisions of drawings at this time that Zonner had everything
that they needed. The final version of
the drawings, referred to in the fax of 17 July, indicated co-ordination
between the steelwork (Zonner's responsibility) and the roofing work (Kelsey's
responsibility); the further detail provided at this stage was essential for
the shop drawings. That evidence was not
contradicted and I accept it. I
accordingly conclude that the defenders' subcontractors were not in a position
to prepare shop drawings to enable fabrication to take place until after they
received the information provided with RMJM's fax of 17 July. On 20 July the defenders passed a copy of
RMJM's fax of 17 July to Zonner and Kelsey (No 7/33 of process); in that fax it
was indicated that the relevant drawings would follow as soon as they were
received by the defenders. Kelsey
responded to that fax by letter dated
Application of clause 25 to roof of steelwork and cladding
[76] Clause
25 is set out at paragraph [9] above.
The defenders' claim for an extension in respect of roof steelwork and
cladding is made on the basis that there occurred a Relevant Event of the sort
specified in clause 25.5.5.6. In short,
it is contended that the architect, RMJM, failed to provide the necessary
instructions to the defenders in due time; there were the instructions to use
the Stramit system rather than the VE proposal that was included in the
contract (see paragraph [53] above). To
establish such a claim the defenders must show, first, that they made a
specific application in writing to the architect for such instructions;
secondly, that such application was made on a date which having regard to the
Completion Date was neither unreasonably distant from not unreasonably close to
the date on which information was required; and thirdly that they did not
receive the necessary instruction in due time.
[77] The
defenders' original construction programme indicated that roof steelwork was to
start on about 27 July 1998 (No
[78] The
defenders' application for information relating to the steelwork was contained
in an Information Required Schedule (No 7/114 of process), with an accompanying
Package Procurement Schedule. This
Schedule was dated
[79] Neither
Mr Whitaker nor Mr Cornish maintained that full information relating
to roof steelwork should have been available by 8 April, the date in the
Package Procurement Schedule; both favoured a date of approximately 11
May. I accept their evidence on this
matter; I consider that such a date would have been reasonable in all the
circumstances. In this respect I rely in
particular on the evidence relating to the lead-in period required for
steelwork; 10 weeks was reasonable for this purpose. On this basis I conclude that the defenders
did not receive the necessary instructions from the architect in due time. The architect's instruction relating to the
roof cladding system that was to be adopted was only received on
Consequences of late instruction
[80] Steelwork
was delivered to the site on
[81] Mr Whitaker
expressed the view (report No 7/8 of process, paragraphs 2.17, 2.41) that the
roof steelwork and roof coverings were critical to the completion of the
works. He gave two reasons for this
conclusion. First, the roof coverings
provided a partial weather tight state so that fitting-out of the building
could progress. Secondly, the roof
coverings formed the plant room, where all the service plant and equipment was
housed and to which all of the pipework and electrical and communications
cables were connected. Mr Whitaker stated
(first report, No 7/1 5/6 of process, paragraph 2.12; in evidence, day 10,
12.12 onwards) that the erection of roof steelwork was a critical milestone in
the project; any delay in the steelwork would result in delay to completion of
the Works as a whole. The ability to
construct the roof cladding was directly dependent upon the roof steelwork, and
the cladding enclosed the plant room, which was of major significance in a
highly serviced building. Mr Cornish
agreed that direction of the roof steelwork was a critical activity, for
broadly similar reasons to those given by Mr Whitaker (day 2, 11.20 and
11.41).
[82] Mr Lowe
expressed a contrary view. He was of
opinion that the roof steelwork and coverings were not on the critical path,
and thus could not have caused delay to completion of the Works. The reason for this view was that, at the
instigation of Mr Cornish, temporary weatherproofing had been installed at
fourth floor level and then, as construction proceeded, at sixth floor level
(day 3, 11.44). In their Project
Manager's Summary for August 1998 the defenders advised the architect that they
intended to use temporary sheeting at sixth floor level to allow first fix
services to proceed on the fourth and fifth floors by 1 September (No 7/3 of
process). Thus adequate weatherproofing
had been installed to enable mechanical and electrical works to proceed at
lower levels. Those works hand started
on
[83] On
this matter, I prefer the views of Mr Whitaker, as supported by Mr Cornish. It is clear that the hotel was a heavily
serviced building. The mechanical and
electrical plant was situated in the roof space; consequently the provision of
a roof covering was critical to the installation of that plant, which was
obviously highly susceptible to wet conditions.
This is made clear by photographs that were spoken to in evidence; in a
photograph at sixth floor level taken on
[84] In
his report (No 6/351 of process, page 1, at paragraph 1.7) Mr Lowe
advanced a number of arguments which, he said, led to the conclusion that the
defenders could not have proceed with the steelwork any earlier than they
actually did.
1. Mr Lowe relied first on the fact
that the fire escape stairs above sixth floor level had not been
constructed. In my opinion this point is
not relevant. Mr Whitaker stated
that it was obvious that, if the roof steelwork had been available any earlier,
the concrete stairs could easily have been finished (day 13, 2.10). Mr Cornish gave evidence that the fire
escape stairs were built off the critical path (day 5, 10.52). Moreover, in cross-examination (day 25,
11.16), Mr Lowe accepted that, if the stairs had not been completed, the
defenders could have started the steelwork in a different area and come back to
the area immediately adjacent to the fire escape stairs at the end. For these reasons I do not think that this
point is established.
2. Mr Lowe further relied on the
construction of the lift shaft above sixth floor level, which was not completed
until August. Mr Cornish gave
evidence that, if there had been a problem with this matter, he would have
ensured that propping was used to take the load from the steelwork, so that the
lift pit could be cast at a later date (day 5, 10.55). Mr Whitaker agreed with that suggestion
(day 13, 2.23). Mr Lowe disagreed
with these views. On this matter I
prefer Mr Cornish, who was actually on site at the material time, and Mr Whitaker. I accordingly conclude that this point is not
established.
3. Mr Lowe relied on the fact that
the upstand walls around the perimeter of the sixth floor had not been
constructed; these were required to bear the weight of the structural steel in
the roof. Mr Lowe relied in particular on the fact that the upstand walls
had not been completed until
4. The fourth point made by Mr Lowe
was that the roof steelwork could not start earlier because falsework and
formwork used in constructing the sixth floor slab required to be removed from
beneath the sixth floor. Mr Whitaker's
view was that it was not necessary to remove the falsework and formwork from
below sixth floor level to allow steel erection at that level (day 13,
2.34). Mr Cornish (day 3, 12.20)
stated that the erection of steelwork could have proceed despite the falsework
and formwork below sixth floor level.
The falsework and formwork could have been removed in three ways; the
tables could have been stripped in situ at fifth floor level; the tables could
have been removed from the building by crane to Church Street, a nearby street,
and dismantled there; or the tables could have been removed intact, placed on a
flat bed lorry and driven to a remote part of the site for dismantling. In my opinion it is clear that the existence
of the falsework and formwork at fifth floor level would not have prevented the
construction of the steelwork. I further
conclude that it could have been removed using one or other of the methods
described by Mr Cornish.
5. Mr Lowe's fifth point was that
the roof space at sixth floor level was used by the reinforced concrete subcontractor,
E P Rothwell & Sons, to strip formwork and formwork tables until the steel
arrived on site. Mr Cornish gave
evidence that Rothwell simply took advantage of the roof space because it was
known that the steel would not be available until a later date (day 3,
12.16). He further stated that, if it
had been necessary, the falsework and formwork could have been dismantled in
any of the three ways described in paragraph 4 above. Mr Whitaker's evidence was broadly in
agreement with Mr Cornish. I accept
Mr Cornish's evidence on this matter, and I conclude that this point is
not established.
6. The sixth argument relied on by Mr Lowe
was that, for the steel erectors to start work, it was necessary that an access
scaffold should be constructed to provide a safe system of working for them;
this would include a cantilever for the roof overhang. Mr Cornish gave evidence that the access
scaffold was built for the cladding contractor (day 5, 11.04), and in
particular to enable the construction of louvres. The steel erectors were permitted to use it,
but it was not for their benefit.
Without it, they could have proceeded with steel erection using
harnesses, lanyards or roof mounted cherry pickers; that would have been a safe
method of working. Mr Whitaker
agreed with that evidence (day 13, 2.40).
Mr Lowe disagreed with the position taken by Mr Cornish. He accepted, however, that cherry pickers
could be used if they could be put in place (day 25, 12.15). On this .I prefer the evidence of Mr Cornish
and Mr Whitaker. Mr Cornish
was on site at the relevant time, and I find that he gave his evidence by
reference to the actual conditions that he experienced. I am satisfied that one of the methods that
he suggested could have been used without difficulty.
7. Mr Lowe's final point related to
the provision of suitable cranage for the steel erection. Mr Lowe suggested that the tower crane
on site could not service both the concrete walls at roof level and the
steelwork at the same level. Mr Cornish
gave evidence that the steel erectors would have been given preference over any
other trades; in any event the crane could have been used before
Extension of time
[85] For the
reasons stated above, in particular at paragraphs [80] and [81], I am of
opinion that the Works were delayed due to the late instructions given by the architect
in respect of the roof steelwork. That
entitles the defenders to an extension of time, and the next question is how
long that extension should be. Mr Whitaker
dealt with this matter in his report No 7/8 of process, at paragraph 2.48:
"Having carefully
considered all of the above facts, I am of the opinion that the roof steelwork
and the roof cladding were critical to the completion of the Works. I am further of the opinion that these
critical tasks commenced 5 weeks later than planned and that being critical
tasks this caused a five week delay to completion of the whole of the
Works".
Mr Whitaker developed this matter at paragraph
2.53. He was of opinion that the
defenders were delayed in the completion of the Works until
Instructions following replacement of RMJM by Keppie
[86] After
the roof cladding had been put in place Mr Whitaker's evidence was that
work on the project became much more intensive (No 7/8 of process, paragraph
2.54). His view was based on the
defenders' daily diary and report sheets and the Clerk of Works' diary. Both the defenders and the Clerk of Works, Mr
Foley, reported at meetings that the Works were proceeding approximately 5
weeks late. On
"[The
defenders] noted the [pursuers'] change to the Design Team and felt that their
concerns at his change so late in the contract should be recorded. They would of course do their best to assist
the new design team members".
In his evidence Mr Cornish
stated that he wanted the defenders' concerns to be recorded because a lot of
unresolved issues existed and a new design team would be coming on to the
project without any initial knowledge of it; indeed they did not even have the
project drawings and documentation (day 3, 1.51 onwards). Mr Cornish added that it was obvious at that
site meeting that the new design team knew nothing about the job; they had
asked the defenders to photocopy all the documentation and courier it to them;
the defenders did that. Neither Mr Cornish
nor Mr Whitaker had ever encountered such a situation previously in their
careers. At the site meeting held on 2
December the defenders stated that they continued to be 5 1/2 weeks behind
programme and had issued a 57-week target programme. Mr Foley agreed that the Works were 5 1/2-6
weeks behind programme.
[87] The
defenders contend that, following the change of design team, a substantial
number of items were instructed late.
These, it is said, had an effect on the completion of the contract
Works, and constituted Relevant Events for the purposes of clause 25. The defenders' contention was first advanced
at site meeting No 13, held on
1. Final fix items to en suites
[88] The
Works did not originally include the installation of fittings into the shower
rooms attached to the hotel bedrooms (referred to in the documentation as en
suites). At site meeting No 9, held on
[89] On
"On
i.
Toilet
roll holder - Anticipated delivery 10
days = due
ii.
Towel
rack - Anticipated delivery
21 days = due
iii.
Grab
bar - Anticipated
delivery 21 days = due
iv.
Robe
hook - Anticipated delivery
10 days = due
v.
Glass
shelf - Anticipated delivery
10 days = due
vi.
Shaving
mirror - No delivery period quoted.
On 22nd
January 1998 Architects issued further instructions, these included updated
quotations stating that all items except the shaving mirror are subject to a 21
day lead-in period.
On
The shaving
mirrors were delivered in good time.
However, all other items were not delivered until
The further
delaying factor was that delivery of items i, iv and v was received 17 days
later than quoted by Keppie in their letter of
Further to
the delayed deliveries, revised instructions were issued regarding fixing of
the items. Thompson MacLeod confirmed
fixing positions of items ii, iii, iv and v and soap dispensers on
Thompson
MacLeod subsequently gave verbal instructions changing heights for the toilet
roll holder on
The security
screws supplied for the shaving mirrors were unsuitable for the locations in
the en-suites. SCL had to order new
security screws for all the shaving mirrors.
These were delivered on
On
As previously
mentioned, fixing of item v (glass shelf) started on
The
installation of all the available en-suite fittings was completed on
We anticipate
the shelves will be delivered before
Mr Cornish, who was the author
of that letter, spoke to its contents (day 3, 3.18). On the basis of his evidence, I am satisfied
that the statements of fact in the letter are substantially accurate.
[90] Mr Cornish
(day 3, 2.46 onwards) explained that the defenders had envisaged finishing
rooms and snagging them on a floor by floor basis; thereafter the rooms would
be locked so that one could gain entry and damage the work that had been
done. Because of the difficulties
mentioned in the letter that was not possible; it was necessary to keep going
back into bedrooms and bathrooms in order to install each successive item as it
arrived. The problems were summarized in
Mr Cornish's project manager's report to the site meeting held on
[91] Mr Cornish
gave evidence that a reasonable time for instruction of the en suite fittings
would have been ten weeks prior to the Completion Date (day 3, 3.00) that would
have been in late November 1998. He
explained that that would have enabled the defenders to start the process of
ordering the fittings earlier; they would thus have secured delivery at an
earlier stage. This would have helped
the defenders to complete the rooms systematically, floor by floor, and to lock
rooms once they had been completed. Mr Whitaker's
evidence (report, No 7/8 of process, paragraph 2.70 and accompanying table; day
15, 3.45) was that a reasonable date for issuing the instruction would have
been
[92] I
accept the evidence of Mr Whitaker, which was supported by the evidence of
Mr Cornish, that the instruction should have been issued on or about
Pursuers' criticism of defenders' case on instructions following Keppie's
appointment
[93] At
this point it is convenient to deal with certain general criticisms made by the
pursuers of the defenders' arguments relating to instructions given following
the replacement of RMJM by Keppie. These
related in particular to the delay analyses set out by Mr Whitaker in his
second report (No 7/8 of process).
First, Mr Lowe criticized the type of delay analysis carried out by
Mr Whitaker as a "theoretical exercise" (in his report No 6/351
of process, and in evidence: day 22, 2.35).
Mr Whitaker had stated in evidence that he had carried out a small
version of a critical path analysis in respect of each activity; these were
contained in the tables in his second report.
The pursuers submitted, however, that no practical analysis had been
carried out by Mr Whitaker. The en
suites were taken as an example: Mr Whitaker's analysis started from the
premise that the reasonable time for issue of the instruction had to be
measured against a Completion Date of
[94] I
do not think that this criticism is well founded. The method used by Mr Whitaker was as
follows (day 11, 3.36 onwards). He first
established a chronology, based on what actually happened on site in respect of
each of the enumerated items. He then
calculated the time that was reasonably required for delivery, installation and
snagging. In part this calculation was
based on what actually happened, and in part was based on Mr Whitaker's
judgment as to what was reasonable for any particular aspect of the work. I was satisfied that he had great experience
of programming in the construction industry and that his estimates of the
periods required for particular items of work were reasonable. Once Mr Whitaker had calculated the
period required for delivery, installation and snagging he worked backwards
from the contractual completion date (
[95] The
pursuers' second criticism of Mr Whitaker's approach was that, in his
delay tables, he used "guesstimates" for the duration of, for
example, order, delivery and installation.
In fact it is clear from Mr Whitaker's tables that he did take
account of what actually happened in determining the duration of any particular
activity. Thus, in relation to the fix
items in the en suites, he based his analysis on the issue of the relevant
instruction on 22 January, the start of installation on 11 February and the end
of the installation period on 10 March.
All of these were actual dates, a point that was accepted by Mr Lowe
in cross-examination (day 26, 10.50).
This point applies generally to all of the final fix items. In some cases Mr Whitaker had to
estimate the duration of one part of an activity, for example (in the case of
the en suite fittings) snagging and the necessary period for ordering the
fittings. As indicated in the last
paragraph, however, I am satisfied that Mr Whitaker's estimates were
reasonable; they were based on his experience in the construction industry, and
none of them appeared to me to be exaggerated.
The pursuers' third criticism of Mr Whitaker was that he had made
excessive allowances for snagging. In
relation to the en suite fittings, the pursuers submitted, on the basis of Mr Lowe's
evidence (day 22, 2.57) that the contractor should tidy up when he finished
working in an area. That was not
snagging; snagging involved in dealing with items of work that had been done
incorrectly. This difference is, I
suspect, more semantic than real. As
work proceeds on a task such as installing bathroom fittings, it is obvious
that some untidiness will result; it also seems to me to be very likely that
some items may not be properly installed, or that tiles or woodwork may be
damaged. All of these matters would
require to be dealt with, on a room-by-room basis. That is what I understand snagging to amount
to. Given the number of rooms involved,
I did not find Mr Whitaker's estimates (14 days for fittings in 167
bathrooms) excessive. The pursuers'
fourth criticism of Mr Whitaker's approach was that he had not endeavoured
to demonstrate that any of the listed items were on the critical path. On the basis of Mr Lowe's evidence, the
pursuers submitted that they were not. I
have already indicated that I am unable to rely on Mr Lowe's exercise in
determining the critical path, at least in the later stages of the
contract. In a sense, as a contract
nears completion, more items will fall on the critical path because practical
completion is impossible until they have been completed. This culminates in the last item to be completed
which is, of necessity, on the critical path.
In relation to the various items of work that Mr Whitaker thought
caused delay to completion as a result of late instructions following the
appointment of Keppie, I am satisfied that each of them was on the critical
path, in the sense that the work was necessary before a hotel could be said to
have achieved practical completion.
[96] Fifthly,
the pursuers criticized Mr Whitaker's analysis because he had made use of
the original completion date of
[97] Finally,
the pursuers submitted that the defenders had sought to categorize the various
events following the appointment of Keppie as late instructions. The evidence was not to that effect, however;
each of these heads of claim amounted to additional work and thus a
variation. In my opinion there is no
incompatibility between a late instruction and a variation. A particular instruction may amount to a
variation, but it may still be late; that seems elementary. Thus I do not think that the defenders'
approach to the items instructed following Keppie's appointment is erroneous on
this ground. Indeed, once it became
clear that further instructions were likely to be given regarding final fix
items in the bedrooms and en suites, Mr Cornish produced the schedule
referred to in paragraph [88] above; this was discussed at the site meeting of
7 October 1998, and was designed to ensure that timeous instructions were given
in respect of all of those items.
Following the issuing of that document, I am of opinion that the
provisions of clause 25 relating to late instructions were applicable.
[98] Mr Lowe
also gave evidence on the effect of the instruction relating to the en suite
fittings. He criticized Mr Whitaker's
allowance of 14 days for snagging, on the basis that most of what Mr Whitaker
described as snagging was merely tidying up.
I reject this criticism, for the reasons stated above; it seems to me
that the difference is largely semantic, and that some time would be required
to ensure that the rooms were in good order following the completion of the
installation of the final fix items. Mr Lowe
further concluded that this item of work did not fall on the critical path and
thus did not delay completion. In my
opinion the lateness of the instruction inevitably meant that the completion of
this item would fall after the contractual completion date. I am further opinion that this item was
critical, in the sense that properly fitted out bathrooms were essential for
practical completion of the hotel.
2. Bedhead lighting
[99] Originally
bedhead lighting was not part of the Works.
At the site meeting held on
"These
are items that cannot be deferred any longer.
Electrically, we cannot of course complete bedrooms without bedhead
lights. (Work commences
The defenders received an Architect's
Instruction in relation to the bedhead lighting on
"The
bedhead lights were not part of our contract.
However, since the bedhead lights are hard wired it is not possible to
bring power into the rooms until the bedhead lights are fitted, nor is it
possible to test and commission the electrical services.
On
We then
received your instruction to supply and fix the bedhead lights on
In site
meeting No. 12 (6th January 1999), minute 3.5, Keppie state that the
bedhead lights supplier could deliver approx. 50% of the fittings by 20th
January 1999 with the balance by 5th February 1999 on early receipt
of an order.
SCL placed an
order for the items on
Deliveries
were not made in accordance with the date quoted by Keppie. Actual deliveries were received as follows:
36 No.
304 No.
The further
delaying factor was that:-
a. 36No. were delivered 6 days later than the
dates quoted.
b. 134No. were delivered 13 days later than the
dates quoted.
c. 170No. were delivered in accordance with the
quoted dates".
The Clerk of Works' report for the
week ending
[100] Mr Whitaker
dealt with the bedhead lights in his report (No 7/8 of process) at paragraphs
2.71-2.73, with a table summarizing his position on page
[101] Mr Lowe
accepted in cross-examination that the instruction relating to bedhead lighting
was issued late (day 26, 12.09). He was not re-examined on that matter. He did, however, state that the late
instruction did not cause any delay to completion, on the basis that this
lighting did not fall on the critical path.
In my opinion this item was critical, in the sense that the proper
fitting out of the bedrooms was necessary before practical completion could be
said to have taken place.
[102] In
my opinion a written request for an Architect's Instruction was made in the
schedule produced at the site meeting held on
3. Trouser presses
[103] The
supply and installation of trouser presses was not part of the original
contract. At the time of site meeting No
9, which was held on
"The
trouser presses were not part of our contract.
However, they are wired in and then covered with a duct from the
furniture case goods manufacturer.
Consequently, the trouser presses are required in order to finish the
furniture installation, power up the rooms and test and commission the
electrical works.
On
Our letter
dated 30th November to RMJM confirms that trouser presses need to be
delivered floor by floor to our programme.
The programme
was confirmed to the client via our fax dated
On
On
A sample
trouser press was fitted in the mock-up room and the following problems were
identified:
a. Cable tidy boxes incorrectly sized.
b. Setting out of trouser press position seemed
incorrect and required clarification.
c. Trouser presses were plug in type not hard
wired as the client required (the specification was correctly installed with
single gang sockets).
These
problems were witnessed by Janet Matthews [an operations manager for the
pursuers] and communicated to Keppie Architects by fax dated
On
a. Fit cable tidy box and decorate.
b. Setting out position clarified.
c. Remove of all single gang plugs and replace
with fused spurs.
The further
delaying factor was that trouser press installation started on
Further to
fitting the trouser presses we wrote to yourselves on
The evidence did not disclose
precisely when fitting of the trouser presses was completed, but it is clear
from the letter that this had not occurred by
[104] Mr Whitaker
dealt with trouser presses in his second report (No 7/8 of process) at
paragraphs 2.78-2.87, and in a table found on page 32. His opinion was that a reasonable date for an
instruction relating to trouser presses would have been
[105] In
my opinion a written request for information relating to trouser presses was
made in the schedule produced by Mr Cornish at site meeting No 9, held on
7 October 1998, and indeed in the Information Required Schedule of 26 January
1998. It was not suggested that this
application was made on a date unreasonably close to or unreasonably distant
from the date when the information was required. I am accordingly of opinion that the
defenders made a written request for the appropriate instruction in accordance
with clause 25.4.6. I accept the
evidence of Mr Whitaker that an Architect's Instruction should have been
issued in early December 1998. I
therefore consider that the relevant instruction was not issued "in due
time" for the purposes of clause 25.4.6, and that there was accordingly a
Relevant Event within the meaning of that clause. In relation to the criticality of this item, Mr Cornish
stated that the installation of the trouser presses affected the defenders'
ability to complete the fitting out of the bedrooms; electricians, carpenters
and decorators all had to carry out work in relation to the fitting of the
trouser presses. In addition a separate
commissioning exercise was required (day 4, 11.09 onwards). Mr Whitaker stated (in his report No
7/156 of process, and paragraph 2.12) that the bedroom fit out activity was
critical. In my opinion that is
clear. Mr Whitaker further
expressed the opinion (in his second report) that as a result of the late
instruction regarding trouser presses the completion of the Works was delayed
until
[106] Mr Lowe
gave evidence that the problems with the trouser presses related to the system
of wiring. He thought that Keppie had
dealt with that problem as quickly as possible (day 26, 12.36 onwards). In addition, Mr Lowe expressed the view
that the instruction in relation to the trouser presses was issued in good time
having regard to the contractor's actual progress on site (in his report, No
6/351 of process, page 16). In cross-examination (day 26, 12.39) Mr Lowe
reiterated that the instruction was not late; although the issue had been
raised by the defenders at the site meeting of 7 October, he thought that
that was only in the context of a "delivery situation". In my opinion that is not the correct
analysis of the matter raised at that site meeting; while the trouser presses
were raised as a client supply item, Mr Cornish made it clear that he
wanted the precise responsibilities in respect of such items to be determined
as a matter of urgency. The schedule
produced by the defenders at that meeting includes the comment "Install
w/c
4. Central atrium beam encasement
[107] At
site meeting No 10, held on 4 November 1998, the defenders tendered a monthly
report which contained a list of outstanding information as at that date (No
7/42 of process, page 13). The seventh
item included in that list was "Details of gantry to Central Atrium (if
required)". That item related to a gantry across the atrium of the hotel to
which window cleaning harnesses could be fixed, and the encasement of beams in
the central atrium area with MDF boarding.
The list of outstanding information indicated that all of the items
mentioned were required as a matter of urgency, and not later than
[108] Mr Whitaker
expressed the opinion that a reasonable time for the issue of the instruction
relating to the gantries would have been
[109] I
am further of opinion that the issue of this instruction was critical for the
completion of the project. Mr Cornish
(day 4, 11.45) explained by the information was important. The atrium was six storeys high and a
scaffold was required to reach every floor.
Until all trades had completed work on the curtain wall, the scaffolding
could not be removed. Until the
scaffolding was removed, however, the defenders were unable to do the second
and final fix work at low level in the entrance area; that would apply to
joinery and decoration at that area. In
addition, a quarry stone doorframe and revolving door had to be installed after
the scaffolding had been removed.
Consequently the atrium gantries and encasement had a critical effect on
the ability to complete the entrance area of the hotel. Support for Mr Cornish's evidence on
this matter is found in his project manager's report to the site meeting held
on
[110] The
pursuers submitted that the work on the central atrium beam encasement was not
critical; in particular, the Clerk of Works' diary disclosed that work was
carried out at ground level on items such as the slab for the revolving doors,
where work had largely been carried out before the scaffolding for the
higher-level work was erected. In
addition, the Clerk of Works' diary disclosed that a floor screed was laid in
the atrium on 2 January, although it was removed on 6 and 7 January because it
was not thought sufficiently durable. On
14 January work began on a slate floor, with protection being supplied as
necessary. Consequently any delay in the
floor related to deficiencies in the concrete screed rather than the
scaffolding. Furthermore, the beam
encasement was programmed on the defenders' 57-week programme (number 7/45 of
process) to finish on 1 February. On
that basis, evidence of Mr Cornish that proceeded on the basis of the
original completion date of 25 January was, it was submitted, irrelevant. Mr Lowe expressed the opinion that the
instruction relating to the atrium gantries was issued in good time having
regard to the contractor's actual progress on site (report, No 6/351, page
16). In my opinion the criticism of the
defenders' case on this matter is not conclusive. The fact that work on the floor was able to
proceed while the scaffolding was up is hardly surprising, since the
scaffolding would have been close to the wall.
It was the ability to finish the floor and to finish work on the doors
that was critical. Moreover, I consider
that it was necessary to use the original completion date as a reference point
in determining whether there was delay; the fact that other delays existed
(delays which were reflected in the 57-week programme) is taken into account to
the treatment of concurrent causes.
5. Fibre optic lighting in bar and
breakfast bar areas
[111] In
the bar and breakfast bar areas of the hotel fibre optic lighting was to be
provided. Mr Whitaker dealt with
this matter in his second report (No 7/8 of process) at paragraphs 2.95-2.99,
and in the accompanying table on page 36.
He indicated that on Thursday 21 January 1999, two working days before
the then Completion Date, Keppie sent the defenders a quotation from Carmichael
Lighting Associates for the supply of the fibre optic lighting (produced with
No 7/160 of process). In their covering
letter Keppie informed the defenders that that quotation had been sent directly
to the relevant subcontractor, Browns Electrical, on
[112] The
evidence of Mr Cornish was that the defenders would have required to
supply Nash Fisher with details of the fibre optic lighting two weeks before
the bar and breakfast bar carcasses were due to be delivered to site; in
addition, allowance would have to be made for the period necessary for
procurement, but Mr Cornish did not know what that was (day 4, 12.15). In
the minute of site meeting No 13 (No 7/45 of process, at page 10) it was
indicated that the procurement period was 3-4 weeks. Mr Whitaker thought that the two-week
period for the work and snagging was reasonable and that the procurement period
had to be taken into account (day 12, 1.56).
On that basis, a period of five to six weeks was required. Taken back from the Completion Date, that
indicates an Architect's Instruction at the beginning of December 1998. In my opinion that would have been a
reasonable time for the relevant Instruction.
That was, of course, very close to the point where Keppie were
instructed in place of RMJM, and that may explain why no Instruction was issued
at that time. An application in writing
had in my opinion been made, in the form of the Information Required Schedule
dated
[113] On
the foregoing basis, I consider that the failure to issue the relevant Architect's
Instruction in time to allow the installation of the fibre optic lighting prior
to the completion date would constitute a Relevant Event for the purposes of
clause 25.4.6. The revised Instruction
was in fact issued on
[114] The
bar and breakfast bar had not been fitted at the time of the site meeting held
on 3 February 1999; at that time Mr Cornish reported that fitting would
not take place until 1 March (No 7/45 of process, page 10). Neither expert witness was clear as to when
the bar and breakfast bar were in fact fitted.
The last item of work relating to the fibre optic lighting was
instructed on
[115] In
this case the pursuers repeated the general criticisms that applied to all of
the final fix items. Mr Lowe
expressed the opinion that the instruction was issued in good time having
regard to actual progress. In my opinion
the general criticisms are not well founded in this case, and I prefer the
evidence of Mr Whitaker to that of Mr Lowe regarding the timing of
the instruction.
6. External mounted floodlights
[116] Floodlights
were to be mounted on the outside of the building at plant (sixth floor)
level. The work involved is dealt with
by Mr Whitaker in his second report (No 7/8 of process, paragraphs
2.104-2.111, and table on page 39). At
site meeting No 12, held on
[117] Mr Whitaker's
evidence was that a reasonable time for issuing an instruction relating to the
high-level lighting was 9 December 1998; he thought that the problem should
have been identified by the design team before it was noticed by the Clerk of
Works (second report, page 39; day 12, 2.18).
Mr Cornish thought that the instruction should have been issued
even earlier (day 5, 10.45). The
relevant Instruction was in fact issued on
[118] The
pursuers criticized the evidence of Mr Cornish and Mr Whitaker in
that they both suggested that instructions should have been issued by the architect
before the problem was noticed by the Clerk of Works. Mr Whitaker's evidence, at least, was
that the problem should have been identified by the design team before it was
noticed by the Clerk of Works. Nevertheless,
a Relevant Event under clause 25.4.6 cannot occur until a written application
for an instruction is made and that did not occur until 6 January. For this reason I reject the view of
Mr Whitaker and Mr Cornish that the instruction should have been
issued on 9 December or earlier; instead I consider 11 January to be
the appropriate date. Mr Lowe gave
evidence that the instruction in relation the external floodlights was issued
in good time having regard to the contractor's actual progress on site. For the reasons discussed in the last
paragraph I do not agree with that view.
Counsel for the defenders drew attention to one further aspect of Mr Lowe's
evidence in relation to the floodlights, and also the cooling system for the
refuse room. In cross-examination (day
26, 2.42) Mr Lowe stated that the fixing of the floodlights did not affect
practical completion because the floodlights were excluded from the
handover. The same would apply to the
stair balustrading (a matter discussed below where the defenders were in
default). In re-examination (day 27,
2.19) Mr Lowe was asked whether practical completion could be achieved
before the stair finishes and balustrades were completed on 12 April. He replied that these were in his opinion
necessary for completion. On that basis
12 April would be the correct date for practical completion. Shortly afterwards (day 27, 2.26), Mr Lowe
was asked about the position on 28 March, and in particular whether as at that
date the completion of the Works had been delayed by the stair finishes and
balustrades. Mr Lowe replied
"Simplistically, yes". He was
then asked whether the same was true of the louvres to the refuse room, and he
replied "Yes. My answer applies to
the other items". That indicates
that Mr Lowe accepted that the major items of work that had not been
completed by 29 March were causing delay as at that date. He accepted that this would apply to both the
cooling system to the refuse room and the stair balustrades and finishes, but
it would seem that the same point must apply to the floodlights.
7. Cooling system for the refuse room
[119] It
was decided by the pursuers prior to site meeting No 10, held on
[120] At
the next site meeting, held on 3 February 1999, Mr Cornish recorded in his
project manager's summary (No 7/45, page 11, item 10) that the defenders had
been instructed on 29 January to procure fans, louvres and an air conditioning
unit, and to build an enclosure in the refuse room and carry out extensive
builders work. Mr Cornish indicated
in his report that there was little prospect that that work would be completed
until mid or late March. The terms of
the instruction of 29 January are found in No 6/129 of process as AI
131. At the site meeting of 3 February
(minutes, paragraph 4.1.14) receipt of information for the condensers and
ventilation to the refuse room was confirmed.
It was noted that the subcontractor required electrical specification
for the controls. It was further
specified that the vent grille was to be full height to accommodate three
openings, and was to be coloured to match the render. It was further noted (minutes, paragraph
5.2.5) that, according to the mechanical engineer, the fan coil arrangement to
the refuse room was causing delay. The
problem of heat in the refuse room required the enclosure of the condenser unit
within partitioning inside the refuse room.
It also required that extract and ventilation fans and grilles should be
installed, along with a fan coil unit designed to contain chilled water within
the refuse room itself, in order to keep the refuse room cool. The relevant instruction for this solution is
found at AI 135, issued on
[121] Mr Cornish
gave evidence that the instruction relating to the chilling system in the
refuse room should have been issued as part of the first fix mechanical works,
by October 1998 (day 4, 2.42). Mr Whitaker
considered that instruction should have been issued no later than the middle of
November 1998; the matter had first been raised at the site meeting held on 4
November, and RMJM had stated that an instruction would follow (No 7/42 of
process, page 4). In their original
Information Required Schedule dated 26 January 1998 (No 7/114 of process) the
defenders had asked that information relating to electrical works should be
issued by
[122] Against
the foregoing background, I am of opinion that the Architect's Instruction
issued on
[123] As
to the length of time that should be allowed by way of extension, Mr Whitaker's
opinion (second report, paragraph 2.117) was that the defenders were delayed in
completing the Works until 9 April 1999 as a result of the lateness of the
instruction to provide cooling to the refuse store. Counsel for the defenders submitted that,
since the refuse store cooling was only completed on
[124] The
pursuers submitted that Mr Cornish had not been able to indicate the
effect that the works on the cooling system for the refuse room would have on
overall progress of the works; moreover, he had given evidence that the content
of these works was a fairly minor part of the works as a whole and did not
affect work in the bedrooms. In my
opinion the answer to this point is that these works occurred at the very end
of the contract, and work was in fact continuing on 29 March when the handover
meeting occurred. At that stage any work
that is still outstanding, if it is essential for the usable occupation of the
building, must necessarily be critical.
That point was in effect accepted by Mr Lowe in the passages in his
evidence discussed at paragraph [122] above; these apply equally to the cooling
system for the refuse room. Moreover, in
questioning by the court during evidence in chief, Mr Lowe accepted that
the last item to be completed is, by definition, on the critical path (day 22,
3.14). That point can in my opinion be
generalized; any work of significance that is still outstanding at handover
must be on the critical path.
8. Trees
[125] On
13 November 1998 English Landscapes, the defenders' landscape subcontractors
sent a fax to RMJM (No 7/159 of process) to state that trees of the variety
that had been specified (Liriodendron tulipifera 'Aureomarginatum') were not available; English Landscapes
suggested an alternative, namely the standard variety of that species, and
requested further instructions. RMJM's
appointment was terminated shortly thereafter. At site meeting No 12, held on
[126] Mr Whitaker
(second report, paragraphs 2.118-2.121 and accompanying table) expressed the
opinion that the defenders were delayed in completing the Works until 31 March
1999 as a consequence of the lateness of the instruction with regard to the
alternative variety of tree to be planted.
His view was that the instruction should have been issued no later than
[127] The
pursuers submitted that much of the delay in planting the trees was the result
of either weather conditions or default by the contractor or subcontractor. The Clerk of Works' diary (No 6/19 of
process) indicated that on 8 March that it was too wet for planting and also,
on 15 March, that the topsoil had not been cultivated to specification and was
of poor quality. In fact the entry on 8 March notes that the soil was still too
wet for planting but that the landscaping contractor was fixing trees that had
already been planted. That suggests that
work was progressing. I have been unable
to find any entry relating to the landscaping work on 15 March. On 18 March it is narrated that the Clerk of
Works went right through the landscaping scheme with the landscape architect. He agreed to write to the contractor
regarding planting and the replacement of plants. The Clerk of Works then went through the
scheme with the landscape subcontractor and agreed snags to be corrected. These entries do not suggest that bad weather
was a serious problem; indeed, it appears from the Clerk of Works' diary that
on the whole the weather during the first three weeks of March was fine, good
or very good. The fact that snagging
work had to be carried out is hardly surprising. In my opinion the pursuers' submission on
this matter is without substance.
9. External render
[128] The
exterior walls of the hotel at ground floor level were to be covered with
render. In the defenders' Information Required Schedule produced for site
meeting No 12 (No 7/44 of process, page 14) it is indicated that on 18 November
1998 the defenders had made an application for information in respect of the
Andura coatings that had been specified by the architect, that information
being required by 30 November. At the
site meeting, which was held on
[129] Mr Whitaker
was of opinion that the Architect's Instruction for the render should have been
issued by
[130] In
my opinion that Relevant Event caused completion of the Works to be delayed
beyond the Completion Date. Mr Cornish
gave evidence that work on the rendering could not begin until the issues set
out in the defenders' letter of 10 February were dealt with (day 4, 3.27). Moreover, the specification provided that the
defenders should not start rendering work until the colour and texture of the
render had been approved. Definitive
instructions were not given until 15 February, which was three weeks after the
Completion Date. It is obvious that the
rendering had to be completed before the hotel could be said to be completed;
indeed, the necessary scaffolding and other equipment would make it difficult
to run the hotel while rendering work was proceeding. In his second report Mr Whitaker
expressed the opinion (paragraph 2.128) that the defenders were delayed until
[131] The
pursuers submitted that the completion of the external render resulted from a
series of contractor defaults relating to the eaves cladding and the interface
between the windows and the blockwork.
In this respect they relied on the evidence of Mr Lowe, who stated
that the scaffolding on the outside of the building was not taken down in line
with the programme because of difficulties encountered in the detailing of the
eaves at roof level (report, No 6/351 of process, paragraph 2.128). Mr Lowe further stated that the
scaffolding remained in place as a result of contractor default because the
installation of the cladding to the underside of the roof overhang was not as
detailed on the architect's sketch. Mr Cornish,
however, gave evidence (day 7, 2.19) that the problem with the eaves arose
because Kelsey, the subcontractor, had suggested that a colour strip should be
used to cover the fixings on the eaves panelling; this was not accepted by the architect
on visual grounds. It was then pointed
out that the fixings could not be seen from the ground, and the architect then
accepted the suggestion. This was the
only evidence as to what actually occurred on site, and I cannot hold that it
involved contractor default. The
relevant architect's sketch was not produced, and there was no evidence of any
material departure from the sketch. In
addition, the dismantling of the scaffolding was completed on
Delay by defenders: lifts
[132] The
pursuers contended that, even if the defenders were correct in asserting that
Completion had been delayed by the various matters discussed above, it was also
delayed by two further matters, the lifts and the stair balustrades. Both of these were the responsibility of the
defenders or the defenders' subcontractors.
They accordingly operated as concurrent causes of the delay. The delay caused by these two items was such
that completion could not have occurred any earlier than it did. This contention raises the issue of
concurrent causes, discussed at paragraphs [18]-[19] above. Before considering that issue, however, I
must deal with the evidence relating to the lifts and the stair balustrades.
[133] In
relation to the lifts, in the defenders' programme work was originally planned
to start on
[134] Mr Whitaker
ultimately conceded (day 15, 11.18) that the lifts had been installed late, and
that this was a problem for which the defenders had been responsible. He further accepted that it involved a delay
that was concurrent with other delays until
[135] In
my opinion the pursuers were correct in asserting that Completion was delayed
by work on the lifts. That delay was the
responsibility of the defenders and their subcontractors; indeed, the defenders
do not argue the contrary. I accordingly
conclude that the delay in completing the lift installation was a concurrent
source of the delay in Completion. That
delay lasted until 24 March, when it is agreed that the lift installation was
completed.
Delay by defenders: stair balustrades
[136] In
the Bills of Quantities stair balustrading and finishes are listed as
provisional sums. It is noted that the
works are to be executed by a domestic subcontractor. In the defenders' original construction
programme (No 7/156 of process) stair balustrading appears in the
"finishes" section. The dates
for starting and finishing this activity were
"[Mr Cornish]
advised all concrete in atrium and lift lobby will be skim plastered to remedy
inaccuracies in concrete. [Mr Cornish]
confirmed angle edge beads will be used to ensure straight, clean edges of
concrete".
That work was necessary in order to
carry out the work on the stair balustrades and finishes. The relevant architect's
instructions (Nos 78 and 105) were issued on 4 September and
[137] Problems
occurred as the stair balustrading work continued. The Clerk of Works noted concerns about
quality on 2 March 1999 and recorded that the need to carry out drilling for
base plates created dust, which had an impact on the snagging of the atrium
area (9, 11 and 12 March 1999; Mr Cornish, day 7, 12.37). Although it is
agreed that completion occurred on 29 April, some snagging work occurred as
late as 20 April (Clerk of Works' diary).
It was not possible to achieve Practical Completion without the main
stair and the fire escape stairs; for these to the available for use the
balustrading had to be complete, as the handrail was obviously necessary (Mr Cornish,
day 7, 12.47). The defenders did not
seek any extension of time in respect of the stair balustrades.
[138] In
my opinion completion was delayed by the work on the stair balustrades. That delay was the responsibility of the
defenders as contractor; that was not in dispute. I accordingly conclude that the work on the
stair balustrades and the stair finishes was a concurrent source of the delay
in completion. That delay lasted until
[139] I
should mention one further matter. In
their written submissions the pursuers referred to certain other items of work
that were said to have delayed Practical Completion and which were the
responsibility of the defenders or their subcontractors. These included the
installation of utilities and lagging in the plant room. Both of these, however, were considered by Mr Lowe
not to be on the critical path. It follows that the only delay that they can
have caused to Practical Completion is the delay in their own completion. It is not entirely clear when work on
utilities came to an end; the gas supply to the hotel was turned on on 15
February, and the gas main itself appears to have been installed either on or
shortly after 5 February (Mr Cornish, day 7, 3.08). In all the circumstances I do not regard this
activity as of great significance. It
was not explored at great length in evidence, and it is not clear on the
evidence what the causes of the delay were; it is impossible to exclude the
possibility that progress was slow simply because it was known that completion
was going to be delayed for other reasons.
Lagging in the plant room appears to have continued, according to the
Clerk of Works' diary, for most of February and until 10 March. On 15 March it is recorded that the defenders
were cleaning up in the plant room. The
issue of the plant room lagging was first raised by the pursuers in
cross-examination of Mr Whitaker.
Counsel for the defenders objected to the line of evidence, on the basis
that it had not been put to Mr Cornish during his cross-examination. That objection was maintained in
submissions. In my opinion the objection
was well founded, and I sustain it. Mr Cornish
was the obvious witness of fact on this matter, and elementary fairness
dictates that it should have been put to him.
He might have been able to provide some reason for the apparent
delay. For this reason I will disregard
the issue of the plant room lagging.
Clause 13.8
[140] The
next issue that must be considered is the application of clause 13.8 of the
Conditions of Contract. Clause 13.8 sets
out certain procedures that are to be followed if the contractor considers that
any architect's instruction or the equivalent will require either an adjustment
to the contract sum or delay the completion date. So far as material it is in the following
terms:
"13.8.1
Where, in the opinion of the Contractor, any instruction, or other item which,
in the opinion of the Contractor, constitutes an instruction issued by the Architect,
will require an adjustment to the Contract Sum and/or delay the Completion
Date, the Contractor shall not execute such instruction (subject to Clause
13.8.4) unless he shall have first submitted to the Architect, in writing,
within 10 working days (or within such other period as may be agreed between
the Contractor and the Architect[)] of receipt of the instruction, details of:
1. Initial estimate of the adjustment (together
with all necessary supporting calculations by reference to the Contract
Documents);
2. Initial estimate of the additional resources
(if any) required and his method statement for compliance;
3. Initial estimate of the length of any
extension of time to which he considers he is entitled under Clause 25 and the
new Completion Date (together with all necessary supporting documentation by
reference to the Master Programme);
4. Initial estimate of the amount of any direct
loss and/or expense to which he may be entitled under Clause 26; and
5. Any such other information as the Architect
may reasonably require.
13.8.2 The Contractor
and the Architect shall then, within 5 working days of receipt by the Architect
of the Contractor's estimates, agree the Contractor's assessments. Following such agreement, the Contractor
shall immediately thereafter comply with the instruction and the Architect
shall grant an extension of time under Clause 25.3 of the agreed length (if
any) and the agreed adjustments (if any) and the agreed adjustments (if any) in
relation to clauses 13.8.1.1 and 13.8.1.4 shall be made to the Contract Sum.
13.8.3 If
agreement cannot be reached within 5 working days of receipt by the Architect
of the Contractor's estimate on all or any of the matters set out therein;
then;
1. the Architect may nevertheless
instruct the Contractor to comply with the instruction; in which case the
provisions of Clauses 13.5, 25 and 26 shall apply; or
2. the Architect may instruct the Contractor
not to comply with the instruction, in which case the contractor shall be
reimbursed all reasonable costs associated with the abortive [instruction].
13.8.4 The Architect
may, by notice to the Contractor before or after the issue of any instruction,
dispense with the Contractor's obligation under Clause 13.8.1, in which case
the Contractor shall immediately comply with the instruction and the provisions
of Clauses 13.5, 25 and 26 shall apply.
13.8.5 If the
Contractor fails to comply with any one or more of the provisions of Clause
13.8.1, where the Architect has not dispensed with such compliance under Clause
13.8.4, the Contractor shall not be entitled to any extension of time under
Clause 25.3".
[141] The
terms of clause 13.8 were considered by Lord Macfadyen when the action was at
debate; his decision is reported at 2002 SLT 781. Lord Macfadyen made the following comments
(at 793):
"[30] In
my opinion, the language of clause 13.8 is
prima facie applicable to all architect's instructions, including those in
respect of the expenditure of provisional sums.
There is no qualification of the reference in clause 13.8.1 to architect's
instructions to suggest that any subcategory of such instructions is to be
excluded from the scope of the clause.
The repetition of the substance of clause 13.3.1 in clause 13.8.6,
although apparently redundant, lends support to the contention that clause 13.8
applies, without distinction, to all architect's instructions.
...
[32] In my
view a distinction falls to be drawn between, on the one hand, a late
instruction which, simply because of its lateness, gives rise to a need to
adjust the contract sum and/or grant an extension of time and, on the other
hand, an instruction which, although late, is of such a nature that it would,
whenever issued, have given rise to a need to make such an adjustment or grant
such an extension. The latter category
of instruction falls, in my view, within the scope of clause 13.8, whereas the
former does not. It is in my view
difficult to formulate the distinction more precisely in the abstract. It would, in my view, be wrong to say simply
that clause 13.8 has no application to late instructions. On the other hand, a failure to comply with
clause 13.8 will not, in my view, exclude a claim for extension of time in so
far as the extension is made necessary by the lateness of the instruction as
distinct from its content.
...
[35] In my
opinion the architect's power under clause 25.3.3 [to grant extensions of time]
must be read subject to the special provision of clause 13.8.5. Clause 13.8.5 defines the effect of failure
to comply with the provisions of clause 13.8.1 as being that 'the Contractor
shall not be entitled to any extension of time under clause 25.3'.... The contractor's
right to [an extension] is, therefore, in my opinion, removed, in terms of
clause 13.8.5, if the contractor fails to comply with the provisions of clause
13.8.1".
When the defenders reclaimed against
Lord Macfadyen's decision his opinion on the foregoing matters was not
challenged.
[142] Nevertheless,
in his submissions senior counsel for the pursuers contended that Lord
Macfadyen's construction of clause 13.8 was mistaken. He emphasized the wording of clause 13.8.1,
which refers to "any" instruction which in the opinion of the contractor
would require an adjustment to the Contract Sum or delay the Completion Date.
No distinction is made between content and timing; instead all that is relevant
is the impact of an Architect's Instruction on cost or completion. The wording of the remainder of the clause
was likewise mandatory; clause 13.8.5 denied the contractor a right to
"any extension of time under clause 25.3".
[143] In
my opinion Lord Macfadyen's construction of clause 13.8 is clearly
correct. That construction is based on a
distinction between delay caused by the lateness of an instruction and delay
caused by its content; the clause applies to the latter type of delay but not
to the former. That makes practical
sense. This can be seen by considering a
hypothetical example where the delay is clearly caused by lateness alone. Suppose that external walls are to be covered
in render of a particular specification, the colour to be advised by the architect. According to the contractor's programme work
on the render is to start on 15 October and, because of a 14-day lead-in time,
information on the colour is required by 1 October. The architect instructs the colour on 10
October. Because of the lead-in time,
work cannot begin until 25 October. In those circumstances, what would be the
point of using the clause 13.8 procedure when the architect's instruction was
received on 10 October? There is no
additional cost. So far as lateness is
concerned, delay is inevitable because the instruction was 10 days late. Using the clause 13.8 procedure does not give
the architect the option of cancelling it, or instructing something else; that would
merely add to the delay. The sensible
course is clearly that the contractor should proceed with the work
immediately. In my opinion the clause
cannot have been intended to operate in such circumstances. The same must be true in all cases where
delay is caused by the mere lateness of an instruction or variation, rather
than its content. In conclusion, I would
merely add that clause 13.8 does not appear to have been well thought
through. It is, so far as I am aware, an
unusual clause, innovating upon the standard JCT scheme. In these circumstances I do not see any need
to give it a liberal construction; it should be construed so that it does not
operate where it makes no contractual sense.
Moreover, support for Lord Macfadyen's construction can be found in the
wording of clause 13.8.1 itself. Where
the content of an instruction is the problem, it can be said that it is the
"instruction" (the word used in clause 13.8.1) that has caused the
delay. Where delay in the lateness of
the instruction is the source of the problem, however, it is the lateness
rather than the instruction that causes the delay. Exactly the same analysis applies to
variations. A variation may or may not
cause delay because of its content. If
the work instructed is fundamentally different, it is quite possible that the
content will give rise to delay. Where
the variation is relatively minor, however, it is unlikely that content will
cause delay; nevertheless, if the variation is issued late that may cause
delay, and the example given above is still in point. In every case it is necessary to examine the
particular instruction or variation to discover whether any resulting delay is
caused by lateness or content.
[144] On
this basis, I am of opinion that with one exception all of the Architect's
Instructions founded on by the defenders for the purposes of the counterclaim
are outwith the scope of clause 13.8. In
every case except the gas venting, for the reasons discussed above in relation
to the individual Architect's Instructions, I consider that it was the lateness
rather than the content of the Instruction that caused the delay to completion.
The result is that in none of these cases does clause 13.8 preclude the
defenders from claiming an extension of time under clause 25. In relation to the gas venting scheme, the
defenders admitted that it was content rather than lateness that caused the
delay. In this case the defenders did
not make use of the clause 13.8 procedure.
In these circumstances it is necessary to consider the issues of waiver
and personal bar.
Waiver and personal bar
[145] Waiver
involves the abandonment of a right: Armia
Ltd v Daejan Developments Ltd, 1979 SC(HL) 56, at 69 per Lord Fraser of
Tullybelton; and at 72 per Lord Keith of Kinkel. The word "right" must in my opinion
be relatively widely construed. It
should include not only a right in the narrowest sense, consisting of a claim
against another person, but should also extend to other forms of legal
entitlement. These include entitlements
that may more properly be described as a privilege or an immunity; a privilege
is an entitlement to prevent another person from exercising a claim-right, and
an immunity is an entitlement to prevent another person from exercising a
power. (The terminology used here is
derived from W.N. Hohfeld, Fundamental Legal Conceptions as applied in Judicial
Reasoning, (New Haven, 1923)). I am of
opinion that the pursuers' right to invoke clause 13.8 is properly characterized
as an immunity; the defenders have a power to use that clause to claim an
extension of time, and the pursuers have an immunity against that power if the
defenders do not fulfil the requirements of the clause. In my opinion an immunity can be the subject
of waiver. That view is I think
supported by the decision of Lord Eassie in E
& J Glasgow Ltd v UGC Estates Ltd, [2005] CSOH 63, where (at paragraph
[33]) he states:
"In a
contractual context, waiver of a contractual term may necessarily imply that
something which does not satisfy all the contractual conditions is yet to be
treated as being within those provisions because the party having an interest
to insist on full satisfaction has either expressly, or by implication arising
from the factual circumstances, waived his right to insist on one or more of
the contractual conditions being duly fulfilled. In ordinary usage, waiving a contractual term
is indeed to say that one is not insisting on one's right to require due
observance of the term....[T]he authorities illustrate that a contractual term
which is definitive of a contractual entitlement may be waived".
[146] The
defenders issued a series of notices in terms of clause 25 of the Contract
Conditions (Nos 7/130-7/152 of process).
For the purposes of the following analysis I will concentrate on the
first of these (No 7/130), which related to the gas venting scheme;
nevertheless I think that exactly the same analysis applies to the later
notices. The first delay notice was
issued on
[147] Later,
on 9 October and 17 November 1998 letters were written by the architect, RMJM,
in relation to the claim for an extension of time as a result of the gas
venting instructions (Nos 6/36 and 6/37 of process). Nothing was said in these letters about
clause 13.8. Instead, the defenders'
claim was rejected because, it was said, the defenders had agreed to absorb the
delay; I discuss this matter at paragraph [45].
Moreover, the letter of 9 October dealt with claims under express
reference to clause 25. RMJM indicated
that in their view the gas venting instruction constituted, a Relevant Event
under clause 25.4.5.1, and that event caused the defenders delay. A similar point can be made in relation to
other letters from the architect; these include RMJM's letter of
[148] The
pursuers argued that there was no evidence to suggest that they were directly
involved in any decisions relating to extension of time taken by the architect. Consequently the defenders required to rely
on the actings of the architect as agent of the pursuers. Nevertheless, the architect had no implied
authority to vary or waive the terms of a building contract. Reference was made to
[149] Clause
13.8 must in my opinion be construed as imposing procedural requirements,
rather than dealing with matters of substance.
In respect of any extension of time, the substative provision is clause
25; in respect of prolongation costs and other form of direct loss and expense,
it is clause 26. Clause 13.8 is clearly
conceived against the background of these two clauses. It applies where in the contractor's opinion
any instruction will either require an adjustment to the Contract Sum or delay
the Completion Date (clause 13.8.1). In
that event, the contractor is directed not to execute the instruction without
first submitting to the architect initial estimates of various matters,
including the likely adjustment to the Contract Sum, the likely extension of
time that will be required and the estimated amount of direct loss and expense
under clause 26. Thereafter the contractor
and the architect may, within five working days, agree the contractor's
estimates; if they fail to do so the architect is given the choice of ordering
compliance with the instruction, in which case the provisions of clauses 25 and
26 apply, or instruct the contractor not to comply with the instruction. Essentially, the however, the clause is
designed to provide a pre-estimate of the cost in time and money of complying
with a proposed instruction. In that way
the cost can be agreed conclusively in advance; failing that the architect may
decide to withdraw the instruction, usually, it may be supposed, because the
cost is too great; or alternatively the architect can proceed with the
instruction regardless, in which case clauses 25 and 26 apply. It follows in my opinion that the function of
the clause is essentially procedural in nature.
There is a facility to agree certain matters, but failing that the
substantive provisions of the contract apply.
[150] One
further aspect of clause 13.8 must be considered; this is the effect of clause
13.8.4 and clause 13.8.5. Clause 13.8.4
authorizes the architect, by notice the contractor, to dispense with "the contractor's
obligation" under clause 13.8.1, in which case clauses 25 and 26
apply. Clause 13.8.5 provides that, if
the contractor fails to comply with clause 13.8.1, he will not be entitled to
any extension of time under clause 25.
There is thus an express power to dispense with the requirements of
clause 13.8.1, and the question arises as to whether this impliedly excludes
waiver of the clause. In some cases an
express power to dispense with a provision might well exclude a right of
waiver. Nevertheless, I think that such
cases are exceptional, and that the norm is that waiver should be available even
when there is an express right of dispensation.
My reason for this conclusion is twofold. First, waiver, like other forms of personal
bar, is based on elementary considerations of justice; these are well expressed
by Dixon J. in a passage cited in paragraph [154] below in relation to the
right of estoppel in the law of
[151] In
relation to the gas venting scheme, I am of opinion that the pursuers waived
the requirements of clause 13.8, both through their own actings at the meeting
held on 8 April and through the actings of RMJM in their approach to the claim
intimated on 31 March. The function of
clause 13.8 is to ensure that, if an instruction or variation is issued, the
question of delay and any financial consequences are dealt with
immediately. In that way the architect
is able to assess the consequences of the relevant instruction and to decide
whether to maintain the instruction or to revert to the previous position. If an application is made for an extension of
time, however, that flatly contradicts the scheme of the clause. That is in my opinion sufficient to put the architect
on notice that clause 13.8 is not being used.
The same applies to the employer if he becomes aware of the claim for an
extension of time. Failure to invoke
clause 13.8 is of significance, given its contractual importance, especially in
working through the legal and financial consequences of the step that the architect
proposes to take. If the claim is made
for an extension of time, there is in my view a very obvious need to invoke
clause 13.8, if the immunity conferred by that clause is truly to be invoked. In the present case no attempt was made to
invoke clause 13.8, or indeed to refer to it in any way. In these circumstances, in particular having
regard to the facts set out at paragraphs [146] and [147] above, I am of
opinion that the immunity contained in that clause was waived. In drawing this inference I rely principally
upon the immediate reaction to the defenders' claim, as disclosed at the
meeting held on 8 April. It is clear
from the minutes of that meeting that the claim for an extension of time was
discussed at length. In view of the
apparent importance of clause 13.8, it would be very surprising if no mention
were made of the clause unless either the pursuers or the architect, acting on
their behalf, had decided not to invoke the clause. It is adding significance of both
representatives of the pursuers and representatives of RMJM were present at the
meeting, yet neither mentioned the clause.
[152] One
further requirement of waiver is that the person asserting it must have
conducted his affairs in reliance on the waiver, although there is no need for
him to have acted on it to his prejudice:
Armia Ltd v Daejan Developments Ltd, supra, per Lord Fraser of Tullybelton
at 69 and per Lord Keith of Kinkel at 72.
In the present case I am of opinion that the defenders did clearly act
on the basis of the waiver at the meeting held on 8 April, in that they pursued
a claim under clause 25 without any reference to clause 13.8. No doubt, if clause 13.8 had been applied
strictly, the defenders would have been out of time prior to 8 April, but that
did not happen. The defenders continued
to pursue claims under clause 25 in relation to both the gas venting scheme and
the various other sources of delay discussed previously, and that is in my
opinion sufficient to satisfy the requirement of conducting affairs in reliance
on the waiver.
[153] For
the pursuers it was submitted that the defenders had led no evidence to suggest
that the architect was even aware of the terms of clause 13.8 when he issued
decisions in relation to applications for extension of time. Waiver of a right cannot be inferred from
circumstances that may be consistent with its retention; moreover, because
waiver involves the abandonment of a right for all time it cannot be based on a
mere oversight. Reference was made to Evans v Argus Healthcare (Glenesk) Ltd, 2001 SCLR 117, at paragraph [11]; to Armia Ltd v Daejan Developments Ltd, supra,
at 69 and 71-72; and to Oak Mall Greenock
Ltd v McDonald's Restaurants Ltd,
[154] The
defenders also rely on the principle of personal bar. The classic statement of personal parties of
clause that of LC Birkenhead in Gatty v
Maclaine, 1921 SC (HL) 1, at 7:
"Where A
has by his words or conduct justified B in believing that a certain state of
affairs exists, and B has acted upon such belief to his prejudice, A is not
permitted to affirm against B that a different state of fact existed at the
same time".
The rationale of the doctrine of
personal bar is set out by LP Rodger in William
Grant & Sons Ltd v Glen Catrine Ltd, 2001 SC 901; citing Dixon J. in Grundt v Great Boulder Pty Gold Mines Ltd,
(39) 59 CLR 641, at 674-675, Lord Rodger said (at 921):
"[T]he
basal purpose of the doctrine of estoppel 'is to avoid or prevent a detriment
to the party asserting the estoppel by compelling the opposite party to adhere
to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm
from which the law seeks to give protection is that which would flow from the
change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the
party who altered his situation upon the face of it cannot complain. His complaint is that when afterwards the
other party makes a different state of affairs the basis of an assertion of
right against him then, if it is allowed, his own original change of position
will operate as a detriment. His action
or inaction must be such that, if the assumption upon which he proceeded were
shown to be wrong and an inconsistent state of affairs were accepted as the
foundation of the rights and duties of himself and the opposite party, the
consequence would be to make his original act or failure to act a source of
prejudice'".
[155] It
is accordingly necessary for the defenders to establish both a representation,
express or implied, that a certain state of affairs exists and actings on the
faith of that representation, to the prejudice of the person who so acts. In
relation to the gas venting instruction, I think that an implied representation
can be inferred from the actings of both the pursuers and RMJM at the meeting
held on 8 April. In this case, however,
I am of opinion that it cannot be said that the defenders acted on such a
representation to their prejudice. What they
did was to pursue a claim under clause 25, without regard to the implications
of clause 13.8. If clause 13.8 had been
invoked, however, the defenders would have had no claim under clause 25 because
any such claim was barred by clause 13.8.5.
Thus they were not actually prejudiced.
No doubt they incurred expense in pursuing the clause 25 claim, but I do
not think that that is sufficient to amount to prejudice for the purposes of
the law of personal bar.
[156] Because
of the view that I have taken on the construction of clause 13.8, it is not
necessary to consider how waiver or personal bar would apply to elements of the
defenders' claim other than the gas venting instruction. In these cases, however, a broadly similar
analysis would apply, subject to one exception.
In relation to personal bar, as against waiver, I think that it could be
said that there was prejudice, in that the defenders repeatedly failed to make
use of the clause 13.8 procedures on the assumption that their claims were
being dealt with under clause 25 alone.
Concurrent delays
[157] I
accordingly conclude that the delay in completion was the result of concurrent
causes. The majority of those were the
result of the late instructions or variations issued by the architect, and are
Relevant Events for the purposes of clause 25; two of those causes, however, the
work on the lifts and the work on the stair balustrading, were the fault of the
defenders or their subcontractors. In my
opinion none of the causes of delay can be regarded as a "dominant"
cause; each of them had a significant effect on the failure to complete
timeously. The pursuers advanced an
argument based on the proposition that the items involving contractor default,
the lifts and the stair balustrades, were the "dominant" cause of the
delay, but I am of opinion that this contention must be rejected. Indeed, the lateness of the instructions
relating to the gas venting scheme and the roof steelwork had a major effect on
the progress of the works, to a substantially greater degree than the items
involving contractor default. Consequently the case is one of true concurrent
causes. In those circumstances the
correct approach is in my opinion that set out at paragraph [18] above. Clause 25 requires that the architect should
exercise his judgment to determine the extent to which completion has been delayed
beyond the Completion Date by Relevant Events, or non-contractor's risk
events. Put another way, that involves a
determination of the aggregate period within which the Works as ultimately
defined should have been completed having regard to the incidence of Relevant
Events. That determination must be made
on a fair and reasonable basis, as required by clause 25. In a case such as the present where there is
true concurrency between Relevant Events and events that involve contractor
default, apportionment will frequently be appropriate. In my opinion this is such a case. Apportionment enables the architect to reach
a fair assessment of the extent to which completion has been delayed by
Relevant Events while at the same time taking into account the effect of other
events which involve contractor default.
Where the decision of the architect is challenged, the court must of
course perform the same exercise.
[158] That
leads on to the question of how the exercise of apportionment is carried
out. That exercise is broadly similar to
the apportionment of liability on account of contributory negligence or
contribution among joint wrongdoers. In
my opinion two main elements are important: the degree of culpability involved
in each of the causes of the delay and the significance of each of the factors
in causing the delay. In practice
culpability is likely to be the less important of these two factors. Nevertheless, I think that in appropriate
cases it is important to recognize that the seriousness of the architect's
failure to issue instructions or of the contractor's default may be a relevant
consideration. The causative
significance of each of the factors is likely to be more important. In this respect, two matters appear to me to
be potentially important. The first of
these is the length of the delay caused by each of the causative events; that
will usually be a relatively straightforward factor. The second is the significance of each of the
causative events for the Works as a whole.
Thus an event that only affects a small part of the building may be of
lesser importance than an event whose effects run throughout the building or
which has a significant effect on other operations. Ultimately, however, the question is one of
judgment.
[159] In
the present case the defenders have established eleven matters that constitute
Relevant Events. These matters, and the
extent to which they delayed completion, are as follows:
1. Gas venting: 18 February (but
concurrent with roof steelwork).
2. Roof steelwork: 1 March.
3. En suite fittings: 25 March.
4. Bedhead lighting: 19 February (or 17
February according to Mr Whitaker).
5. Trouser presses: 13 March.
6. Central atrium beam encasement: 1
March.
7. Fibre optic lighting: 15 March.
8. External mounted floodlights: 31
March.
9. Cooling to refuse room: 12 April.
10. Trees: 19 March.
11. External render: 8 March.
The pursuers have established two
concurrent causes: the installation of the lifts, which delayed completion
until 24 March, and the construction of the stair balustrades, which delayed
completion until 12 April.
[160] The
original Completion Date was
[161] In
considering the extent to which that period should be reduced, the matters
referred to at paragraph [157] must be considered. I do not consider culpability to the a major
factor; nevertheless, the sheer quantity of late instructions following
Keppie's appointment is I think significant; so is the fact that the failure to
issue instructions occurred following requests for information which started
(during the course of the Works) on 7 October 1998. So far as the causative significance of each
of the events is concerned, all caused some delay, although the delay resulting
from the gas venting instruction was concurrent with 3 1/2 weeks of the delay
resulting from the late instruction relative to the roof steelwork. The two items that had the longest lasting
effect were the cooling to the refuse room and the stair balustrades, both of
which concluded on about 12 April. In
relation to the causative significance of each of the events for the Works as a
whole, I must I think take account of the fact that items such as the en suite
fittings, the bedhead lights and the trouser presses affected all of the
bedrooms in the hotel. Finally, I must
take account of the fact that the number of Relevant Events is substantially
greater than the number of items for which the defenders are responsible;
moreover some of them, notably the gas venting and roof steelwork instructions,
related to important matters that had significant effects on the overall
progress of the Works. Taking all these
circumstances into account, I am of opinion that the part of the total delay apportioned
to Relevant Events should be substantially greater than that apportioned to the
two items for which the defenders are responsible. I consider that a fair and reasonable result
would be that the defenders are entitled to an extension of time of nine weeks
from the original Completion Date. On
that basis I conclude that completion has been delayed beyond the completion
Date by Relevant Events for a period of nine weeks, or until
Prolongation costs
[162] In
the counterclaim the defenders' fourth conclusion (as amended) is for payment
of the sum of г27,069.10, inclusive of value added tax. This is said to represent the costs incurred
by the defenders as a result of the prolongation of the contract works. In the joint minute it is agreed that, to the
extent that the Works were prolonged beyond the original Completion Date, the
defenders incurred loss and/or expense arising from the prolongation of the
works from
[163] The
defenders seek to recover their prolongation costs under clause 26 of the JCT
Standard Form. Clause 26 has two formal
requirements. First, the contractor must
have must have made written application to the architect stating that he has
incurred or is likely to incur direct loss and/or expense in the execution of
the Contract because the regular progress of the Works had been was likely to
be materially affected by failure to receive timeous instructions. Secondly the application must be made as soon
as it had become, or should reasonably have become, apparent that the regular
progress of the Works had been or was likely to be affected. In my opinion both of these requirements were
satisfied in the present case. The
defenders made a series of written applications to recover direct loss and
expense that they alleged had been caused by prolongation; these are found in
Nos 7/137, 7/141, 7/142, 7/144, 7/146, 7/147, 7/149 and 7/150 of process. It appeared that the applications were made
as soon as it became apparent that the Works might be prolonged.
[164] The
defenders' claim is based on clause 26.2.1; it is said that the defenders did
not receive necessary instructions in due time.
For the reasons discussed above in relation to the defenders' claim for
an extension of time, I am of opinion that the defenders did not receive
instructions in due time in respect of the roof steelwork and the nine items
narrated above where instructions were given following the replacement of RMJM
by Keppie. The reasoning applicable to
an extension of time seems to me to be equally applicable to a claim for direct
loss and expense based on clause 26.2.1.
It was clear in my opinion that the regular progress of the Works was
"materially affected" (clause 26.1) by the instructions that were not
received in due time; that appeared from the evidence that is summarized above
in relation to an extension of time. Mr Cornish
was asked (day 4, 3.48) how satisfied he was that late instructions were
critical to the defenders' completion of the Works. Mr Cornish replied that the late
instructions were "completely critical". He went on to say that he was satisfied that
they affected the regular progress of the Works "in a very profound
way". I thought that these views
were justified by the evidence as a whole.
I accordingly conclude that the requirements of clause 26 are satisfied.
[165] For
the pursuers it was submitted that the defenders' claim for propagation costs
should be refused for the same reasons as were advanced in opposition to their
claim for an extension of time. I have granted an extension of time, and
consequently I reject this part of the argument. It was further submitted that, even if the
defenders were entitled to an extension of time to resist liability for
liquidated and ascertained damages, they were not automatically entitled to
prolongation costs for an identical period.
It was submitted in particular that, if a contractor incurs additional
costs that are caused both by an employer delay and by a concurrent contractor
delay, the contractor should only recover compensation to the extent that it
was able to identify the additional costs caused by the employer delay as
against the contractor delay. If the contractor
would have incurred the additional costs in any event as a result of the contractor
delay, he would not be entitled to recover those additional costs.
[166] It
is I think correct that a claim for prolongation costs need not automatically
follow success in a claim for extension of time. The wording of clause 26 differs from that of
clause 25, and different considerations may apply. In the present case, however, I am of opinion
that the claim for prolongation costs should follow the result of the claim for
extension of time. In this respect the
decision in John Doyle Construction Ltd v
Laing Management (
[167] It
will be apparent that I have rejected the pursuers' argument that, if prolongation
costs are caused both by an employer delay and by a concurrent contractor
delay, the contractor will not be entitled to recover such costs if he would
have incurred them as a result of the contractor delay. That approach seems to be based on a rigidly
logical application of the principles of causation as they apply in the general
law of contract and delict. Under clause
26, however, as with clause 25, I am of opinion that such an approach is not
appropriate; instead, the direct loss and expense sustained by the contractor should
be apportioned between the events for which the employer is responsible and the
events for which the contractor is responsible.
Conclusion
[168] For
the reasons stated above I conclude that the pursuers are not entitled to
declarator that the Completion Date is