John Barker Construction Ltd v London Portman Hotel Ltd

(1996) 83 BLR 31: Guideline on whether the

Architect/Contract Administrator has granted a fair and

reasonable extension of time

By Leonard Kok

1.0 The law relating to Extension of Time

1.1 Before embarking on a critical review of the assessment on the quantum

and validity of EOT being granted, it is pertinent to state briefly the current

state of the law as applicable. It was clearly stated in the English case of

Percy Bilton Ltd v Greater London Council (1982) 20 BLR 1 by Lord

Fraser: “….. The general rule is that the main contractor is bound to

complete the work by the date of completion stated in the contract. If he

fails to do so, he will be liable for liquidated damages to the employer.

That is subject to the exception that the employer is not entitled to

liquidated damages if by his acts or omissions he has prevented the main

contractor from completing his work by the completion date. "

1.2 Therefore, a Contractor is under a strict duty to complete on time and

failure to do so leaves him liable to damages either liquidated or general

according to the terms of the contract except to the extent that he is

prevented from doing so by the Employer or is given relief by the express

provisions of the contract for an extension of the time of completion.

Where an act of prevention by the Employer causes a delay to completion

and that delay is not covered by an extension of time provision in the

contract and/or where the extension of time provision have not been

properly administered or have been misapplied, time is then put at large

and the Contractor's obligation is to complete within a reasonable time.

Only when the Contractor has failed to complete within a reasonable time

would he then be liable for general damages.

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1.3 The extension of time clause has the following purposes:

(i) to retain the Contractor's obligation to a defined time for completion

after dealing with specified causes of delay ;

(ii) to preserve the Employer's right to liquidated damages against acts of

prevention;

(iii)to give the contractor relief from his strict duty to complete on time in

respect of delay caused by designated events which are outside the

control of both the Employer and the Contractor

1.4 As indicated under paragraph 1.3 (i) and (ii) above, it is the Employer and

not the Contractor who would benefit from and therefore has most need of

extension of time provisions in that the courts would not uphold liquidated

damages where the Employer has prevented completion on time unless

there is an express provision in the contract to extend time for the

Employer's default.

1.5 However, under paragraph 1.3 (iii) above, it is the Contractor who has the

most to benefit from such delay events caused by neutral circumstances

for which he is given relief from his otherwise strict duty to complete on

time.

1.6 The phrase "the Contractor shall forthwith give written notice" does not

mean that an application for an extension of time is a condition precedent

to any extension being granted. The Contractor's obligation is to give

notice only of delay and there is an independent duty on the part of the

Architect as the contract administrator to consider the Contractor's

entitlement to an extension whether or not an application has been made

particularly when the Employer has caused any delay to completion. It is

important to understand that the facility for the Architect to grant

extensions if they fall due is essential in order to maintain the extension

provisions. Otherwise, if an application of the Contractor was a condition

precedent to an extension, it would be at the option of the Contractor to

determine whether or not the provisions were effective, and by choosing

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not to apply for an extension to cover for acts of prevention the Contractor

could render the liquidated damages provision become inoperative. This

surely could be detrimental to the Employer.

1.7 Under the Malaysian Standard Form of Contract issued by Pertubuhan

Akitek Malaysia (PAM ) provided by Clause 23 thereof, if the Architect is of

the opinion that any of the events stated by the Contractor to be the

cause of the delay is a relevant event which entitled the Contractor to an

extension of time and that completion of the Works is likely to be delayed

thereby beyond the completion date, then he is required to give the

Contractor an extension of time by fixing such later date as the extended

completion date as he then estimates to be fair and reasonable. In

considering whether a relevant event is likely to cause delay for the Works

beyond completion, the Contractor need to prove that the variations and

late information etc. relied upon by the Contractor did cause delay

because the affected activities were on the critical path and on that

account did cause delay.

1.8 There are legal cases to suggest that where the Architect acts he must do

so in accordance to the contract, which requires him to grant a fair and

reasonable extension of time. What it means is that even if the architect

acts fairly his certificate may become invalid if it can be shown that he has

failed to apply the contractual machinery to his decision making process.

In the English case of John Barker Construction Ltd v London

Portman Hotel Ltd (1996) 83 BLR 31 which involves the refurbishment of

a multi-storey hotel in London, it was held by the judge Mr. Recorder

Toulson QC that it was an implied requirement of a valid decision under

the extension of time clause 25 that the architect should act fairly and

lawfully and that such a duty is consistent with the architect's quasi-arbitral

position, and the courts are used to applying a fairness test when

reviewing a decision of a person with quasi- arbitral powers. [*B9-26]

1.9 On the evidence it was ruled that the effect of the architect making an

impressionistic assessment instead of a logical analysis of delay rendered

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his extension of time fundamentally flawed. The judge came to this

conclusion based on the following evidence of the architect Mr. Miller as to

how he came to his assessment of a fair and reasonable extension of

time:

Generally

(1) He listed 21 items considered to be relevant events contributing to

an extension of time, and concluded that an extension of 9 days

should be given for floors 9 to 11 and of 7 days for floors 2 to 8.

(2) He looked at the job in three section, bedrooms (or guest rooms),

bathrooms and corridors, on the basis that the workforce could get

on in each one of those three areas without being impeded by what

was happening (or not happening) in either of the others. He said

that it was apparent that the area of greatest delays was the

bathrooms, so he arrived at his assessment of a reasonable

extension by adding the individual periods, which he considered

allowable for each relevant event affecting the bathrooms.

(3) He said that he had done an analysis of the contractor's claim in a

methodical way, taking into account the contractor's stated

programme, the progress of the works at the time and the effect of

the relevant events on subsequent works.

However, there is not documentary evidence to support Mr. Miller's

evidence that such an exercise was conducted or to indicate what form it

took. When it came to the details of individual items, Mr. Miller was in

difficulty in recalling how he assessed the periods of time, which he did.

1.9 The following passages, which appeared in the judgment of Mr. Recorder

Toulson QC, indicated the incorrect approach taken by the architect Mr.

Miller in the assessment of a fair and reasonable extension of time:

(a) Item 9: The cutting of pockets in bathroom screeds to accommodate legs

of baths and bath waste

For example, he was right in treating this item a relevant event as the

problem did not manifest itself at the time when a sample bathroom was

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built, and the contractors were not to blame for the late emergence of the

problem. But how he allowed 2 days for it was never clear until the case

came to trial. The work had to be carried out with percussion tools, and it

was done by sub-contractors. It began on 14 July 1994 and continued until

9 September 1994. It took about 4 days per floor and disrupted the second

fix plumbing, with consequent serious delaying effect on the completion of

the bathrooms. In the opinion of the plaintiff's expert it did not ultimately

delay the overall completion of the works, but that was because greater

delay was caused by matters outside the bathrooms, which were the

corridors.

On the basis that the critical path lay through the bathroom, Mr. Miller

explained the 2 days in oral evidence under cross examination by saying

that this was not an allowance for the time which the work took, but only

for the time when the contractors were unable to do it, because the hotel

objected at certain times to the noise caused by the Kango hammers used

to break the screed. However, this contradicted his reference to CV 67 JD

on his annotated copy of his extension of time report, his letter dated 2

February 1995 to the contractors setting out the relevant events which he

had taken into account, and his witness statement, which all suggest that

he intended to allow for delay caused by having to do the work, rather than

merely for the time it could not be done.

It is not thought that Mr. Miller in giving his explanation for his assessment

of 2 days was trying to mislead, but it seems an improbable explanation

and, if correct, it is irrational. Even the defendant's counsel accepted that it

was not rational to allow 2 days for the item when the work could not be

done. Either the item should have been disallowed or it should have been

allowed and a proper assessment made of its consequences.

(b) Items 7,8 and 27: Redecoration of Corridor Walls

At the time of tender, the contractor was required to: remove the old

wallpaper; wash the walls to remove all adhesive and sand; (if necessary)

score the old plaster to provide a key for the wallpaper adhesive; wash the

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wall once more; and (where necessary) fill and rub down the old plaster

surface until flat and smooth. However, when the wallpaper was removed,

it was found that underneath was only a very thin plaster coat, which had

been sprayed on. This made it impossible to achieve a truly flat and

smooth finish. Parts of the plaster were also live, and places plaster came

away with the wallpaper. In the event the architect required the contractor

to patch the existing defective plaster before redecorating but refused to

give an EOT on the basis that he thought he was asking the contractor to

do no more than to " render the old plaster surfaces flat and smooth"

before decorating which he maintained was as required by the bills

description. The judge is satisfied that Mr. Miller misdirected himself in not

finding the change in preparation of the plaster to be relevant event

saying: " In his witness statement, Mr. Miller said that the specification

required the wall surfaces to be filled and rubbed down until perfectly flat

and smooth, implying that there was no variation. The walls, when

prepared, were not perfectly smooth as the specification required, a point

confirmed by the defendant employer's project manager Mr. Baillie in his

written witness statement and in his oral evidence. The discovery of the

true condition of the plaster meant that the defendants, and the architect

on their behalf, were faced with a choice either to instruct extra works in

order to make achievement of the specification practicable or to authorize

some other solution to overcome the imperfections in the walls. They

chose to order a variation of the contract. Mr. Miller accordingly gave

instructions, on 26 August 1994, for the walls to be stripped, cross-lined

and re-papered. Mr. Miller accepted this item 7 as a relevant event and

allowed an extension of 3 days .It is not clear though how he arrived at the

figure of 3 days. It is the evidence of Mr. Downey; the contractor's site

agent who described the work involved and estimated that it took about 5

days per floor, although there would have been overlapping. The work

came at a late stage of the contract and involved interference with the

finishing trades. The time ultimately spent by the plasterers was

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approximately the same as the period allowed for in the contractor's

programme at the time of the acceleration agreement, but hold up was

caused by the delay in determining what was to be done. In any case this

did not affect Mr. Miller's total award because he considered that the

critical path was through the bathrooms and not through the corridors.

Mr. Miller subsequently admitted in cross-examination that if the contractor

did not have clear instructions how to deal with the walls before 20 July

1994 and the instructions on preparation were a relevant event, it would

be necessary to add to his extension of time assessment.

Based on all the above evidence the judge is satisfied that Mr. Miller's total

allowance of 3 days for items 7,8 and 27 bore no logical relation to the

delay caused by those items, except on the false premise that because

the contract provided for the walls to be filled and rubbed down until

perfectly flat and smooth, these items were not to be regarded as involving

any significant additional work. Moreover, Mr. Miller did not examine the

impact, which they had on the contractor's planned programme, coming

when they did. Had he done so, he could not have concluded that the

critical path lay simply through the bathroom.

(c) Items 29 and 5: Fire stopping

This work was provided by way of a provisional sum which was defined as

' Fire stopping bathroom riser ducts where they pass through floor slabs. '

The contractors did not contemplate the nature or magnitude of the work,

which was subsequently instructed to be done. The contract drawings

indicated more fire stopping, but insofar as the bills were erroneous or

deficient, any correction would be a deemed variation under clause 2.2.2.2

of the general conditions of contract.

The architect rejected an application for an EOT for the effect on time on

an increase in fire stopping (measured as a series of provisional sums in a

bill of quantities under JCT 80, from a provisional sum of 6,000 pound

sterling to a final cost of 35,000 pound sterling) on the grounds that as it

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was required by the Building Regulations, in conformity with which the

contractor was contractually obliged to build.

There were in theory various ways of achieving the required integrity of the

shaft wall. It was for the architect (in conjunction with the mechanical and

electrical consultants) to specify the necessary design. The changes,

which occurred after the acceleration agreement of 11 July 1994, were

variations or deemed variations, which on the evidence of Mr. Taylor, the

contractor's contracts manager had a delaying effect. They were then a

relevant event that Mr. Miller was required to take into account. Therefore,

Mr. Miller's rejection of item 29 as a relevant event on the ground that the

contractors had full knowledge of the requirements for maintaining the

one-hour integrity of the shaft wall shows an error of law in relation to the

respective responsibilities of the contractor and the employer (through the

design team).

Mr. Miller accepted item 5 as a relevant event and allowed 2 1/2 days,

because he estimated that at the time, which it would have taken Gerco

the specialist sub-contractor to do the work. It had to be done from the

inside the bathroom duct and was fiddly work. There were sixteen

bathrooms per floor. Mr. Taylor's evidence was that the work took Gerco

10 days, doing one floor per day. Mr. Miller said that his figure of 2 1/2

days would have been based on assuming the availability of a sufficient

team to complete the work at that time, but he could not recall what

assumption he had made about the size of the team.

(d) Judgment

The crux of the judgment of this case is when Mr. Recorder Toulson QC

sitting as an Official Referee said this:

'I accept that [the architect] believed, and believes, that he made a fair

assessment of the extension of time due to the Plaintiffs [contractor]. It is

fairly apparent that the Defendants were concerned by the overrun of the

contract in time and costs, and I have no doubt that [the architect] was

conscious of this, I believe also that he endeavoured to exercise his

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judgment independently. However, in my judgment his assessment of the

extension of time due to the Plaintiffs [contractor] was fundamentally

flawed in a number of respects, namely:

(1) [The architect] did not carry out a logical analysis in a methodical

way of the impact, which the relevant matters had or were likely to

have on the Plaintiffs' planned programme.

(2) He made a impressionistic, rather than a calculated, assessment of

the time, which he thought, was reasonable for the various items

individually and overall. (The Defendants themselves were aware of

the nature of [the architect's] assessment, but decided against

seeking to have any more detailed analysis of the Plaintiff's claim

carried out unless and until there was litigation.)

(3) [The architect] misapplied the contractual provisions, as more

particularly set out above. Because of the unfamiliarity with SMM 7

he did not pay sufficient attention of the content of the bills, which

was vital in the case of a JCT contract with quantities.

(4) Where [the architect] allowed time for relevant events, the

allowance, which he made in important instances (such as the

items relating to the walls or the cutting of pockets in the bathroom

screeds), bore no logical or reasonable relation to the delay caused.

I recognise that the assessment of a fair and reasonable extension

involves an exercise of judgment, but that judgment must be fairly and

rationally based.

All in all, I am satisfied that the Plaintiffs [contractor] have established that,

although there was no bad faith or excess of jurisdiction on the part of the

architect, his determination of the extension of time due to the Plaintiff was

not a fair determination, nor was it based on a proper application of the

provisions of the contract, and it was accordingly invalid. '

(e) Conclusions

The conclusions that can be drawn from this case are as follows: -

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(1) The architect is appointed as agent of the employer and he has an

obligation to act fairly in certifying extensions of time for delay.

(2) There can no longer be any reasonable doubt that it is not acceptable

for the architect to determine extensions of time by instinct alone.

They must be dealt with fairly and reasonably, with proper calculations

and logical analysis based on the contractual provisions. There was

cogent evidence that there were matters, which caused delay, and in

not taking them into account when granting his extension of time, the

architect failed to take into account relevant matters.

(3) The effect of delay to a float activity has changed it into a critical

activity. This came about when the contractor had programmed two

paths of construction sequence: one through the corridor

refurbishment and one through the bathroom refurbishment of a multi-

storey hotel. Originally, a path through the bathrooms was planned to

be the critical path, with the path through the corridors in float.

However, a delay in giving instructions as to what to do about repairs

of defective plaster, necessary before redecoration could commence,

between June 1994 and August 1994 had radically altered the

construction logic or sequence and delayed the corridors float path to

such an extent that by 12 July 1994 which was towards the end of the

contract, the redecorations to the corridors became critical activities

and all the work to the bathroom was then in float.

(4) For provisional sums for defined work the contractor will be deemed

to have made due allowance in programming the Works so that the

execution of work under this kind of provisional sum (provided it is

within the value of the provisional sum) can never provide grounds for

an EOT. If any of the information for such "defined" provisional sums

required by SMM7 rule 10.3 is not given in the bills, then a variation

instruction to correct that omission would be needed. The omission of

such information thus renders the sum an "undefined provisional sum"

and then by SMM7 rule 10.6, the contractor is deemed not to have

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made any allowance in programming, planning and pricing

preliminaries for that provisional sum irrespective of what it is called.

(f) Case application

The principles of law derived in the John Barker Construction case will

be applied to review whether the determination of extension of time by the

Architect or any Contract Administrator named in the contract is fair and

reasonable.

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