Jerram Falkus Construction v Fenice Investments
Technology and Construction Court, July 2011
Jerram was employed by Fenice under a JCT design and build contract to construct a development in Camden, north London. The contract contained some amendments, including deletion of the extension of time clauses permitting the employer to grant further time to the contractor resulting from any impediment, prevention or default by the employer and work or failure to carry out work by statutory bodies.
Other amendments sought to make the final account and adjudicator’s decisions conclusive in certain circumstances, including where the dispute was referred to adjudication after the final account submission. Here, it required a challenge to the decision by litigation or arbitration within 28 days to prevent the decision becoming binding.
The original contract completion date was 25 May 2009, but under the remaining extension of time provisions that had been extended to 15 June 2009. In fact, practical completion was not achieved until 9 September 2009.
Jerram’s view was that Fenice was responsible for the delay and as such included a claim for loss and expense in its final account, alleging a balance was due of £311,393.78. Fenice disagreed and levied liquidated damages for the delay.
In September 2010 Fenice referred the dispute to adjudication in which it sought a declaration that Jerram was not entitled to any further extension of time. Jerram said the delay was due to the employer delaying decisions, issuing late instructions and delays caused by EDF and British Gas. As the clauses permitting the employer to extend the completion date for such acts had been deleted, Jerram claimed Fenice could no longer extend time and as such time was at large.
In October 2010 the adjudicator decided in favour of Fenice. Jerram, unhappy with the decision, sought to litigate the matter, but did not issue proceedings until March 2011, more than 28 days after the adjudicator’s decision.
In court, along with responsibility for the delay and its associated costs or damages, Fenice also alleged the adjudicator’s decision was conclusive, preventing the court from considering the matters.
The court concluded that under this contract, where adjudication was started after submitting the final account, a challenge to an adjudicator’s decision was required within 28 days of that date. Jerram had not done so and so the decision was conclusive. Jerram was employed by Fenice under a JCT design and build contract to construct a development in Camden, north London. The contract contained some amendments, including deletion of the extension of time clauses permitting the employer to grant further time to the contractor resulting from any impediment, prevention or default by the employer and work or failure to carry out work by statutory bodies.
Other amendments sought to make the final account and adjudicator’s decisions conclusive in certain circumstances, including where the dispute was referred to adjudication after the final account submission. Here, it required a challenge to the decision by litigation or arbitration within 28 days to prevent the decision becoming binding.
The original contract completion date was 25 May 2009, but under the remaining extension of time provisions that had been extended to 15 June 2009. In fact, practical completion was not achieved until 9 September 2009.
Jerram’s view was that Fenice was responsible for the delay and as such included a claim for loss and expense in its final account, alleging a balance was due of £311,393.78. Fenice disagreed and levied liquidated damages for the delay.
In September 2010 Fenice referred the dispute to adjudication in which it sought a declaration that Jerram was not entitled to any further extension of time. Jerram said the delay was due to the employer delaying decisions, issuing late instructions and delays caused by EDF and British Gas. As the clauses permitting the employer to extend the completion date for such acts had been deleted, Jerram claimed Fenice could no longer extend time and as such time was at large.
In October 2010 the adjudicator decided in favour of Fenice. Jerram, unhappy with the decision, sought to litigate the matter, but did not issue proceedings until March 2011, more than 28 days after the adjudicator’s decision.
In court, along with responsibility for the delay and its associated costs or damages, Fenice also alleged the adjudicator’s decision was conclusive, preventing the court from considering the matters.
The court concluded that under this contract, where adjudication was started after submitting the final account, a challenge to an adjudicator’s decision was required within 28 days of that date. Jerram had not done so and so the decision was conclusive.
Garry Winter’s analysis
This case provides useful guidance on several matters. Regarding conclusiveness, while ordinarily adjudicator’s decisions are only temporarily binding until resolved by litigation, arbitration or agreement, as this case shows there is nothing preventing such decisions from becoming conclusive in certain circumstances.
This case also highlights the potential pitfalls in amending extension of time provisions. Contrary to common belief, extension of time clauses are for the benefit of the employer by permitting the contractor more time to complete for events which occur which are the employer’s responsibility.
Without such clauses, the employer cannot hold the contractor to the completion date if by their own act or omission they have prevented this. In such circumstances time becomes “at large”, meaning the contractor is no longer bound by the completion date or the liquidated damages provisions and their duty is to complete within a reasonable period.
Had the relevant event contract clauses not been deleted Jerram would have been unable to forward the time at large allegation and avoid the consequences even if it was correct on the cause of delay.
The court has clarified that if there are concurrent delays for which the contractor is responsible, a claim for time being at large will be unsuccessful.
