14 Time

Time is an extremely important issue in construction. It is a primary objective for most clients of construction and a major criterion by which the success of a project is judged. Prolonged project durations can be costly and frustrating for clients. Timely completion is of great interest to contractors. If they finish late they will incur extra cost and may suffer liability for delay damages unless the time for completion is extended by excusable events. The scope of this subject may be seen from clause 2.4 of JCT SBC 11, which states:

On the Date of Possession possession of the site or, in the case of a Section, possession of the relevant part of the site shall be given to the contractor who shall thereupon begin the construction of the Works or Section and regularly and diligently proceed with the same and shall complete the same on or before the Completion Date.

This identifies the three main time-related issues as commencement, progress and completion. There are two further issues: the contractor’s continuing obligations after completion, and the extensions of time which may be available to the contractor when the work is delayed by certain specified causes.

14.1COMMENCEMENT

The issues at the beginning of the contract involve giving possession of the site to the contractor, the timing of this possession and potential delays to the possession. Normally, possession should take place not more than two months after the successful contractor has been awarded the contract. Too speedy a start may cause extra work and delay, rather than hastening the construction period. This needs to be balanced against the needs of the client to avoid undue delay, which may cause extra costs (Joint Contracts Tribunal 2002).

14.1.1Possession of the site

An employer who fails to give the contractor possession of and access to the site may be liable to pay damages for breach of contract.1 This is so despite provisions in the contract for the contract administrator to postpone all or any part of the works, since it seems that such provisions may not be used to postpone the entire

1 Rapid Building Group Ltd v Ealing Family Housing Association Ltd (1984) 29 BLR 5, CA.

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project.2 However, the employer is not deemed to guarantee possession or access and will, therefore, not be liable if the contractor is prevented from gaining access by some third party over whose activities the employer has no control.3

Under JCT SBC 11 clause 2.4 and ICC 11 clause 42, the contractor is entitled to possession of the whole of the site, even though access to some parts may not be required until a later stage of the project. But there are exceptions to this default provisions. Under JCT SBC 11 clause 2.4, if the work is split into sections, the employer only has to give possession of the relevant sections to the contractor. Similarly, clause 42(1) of ICC 11 makes provision for access and possession to be prescribed explicitly, meaning that the parties can agree that only distinct portions of the site are to be handed over to the contractor at the beginning. In either case, what is given to the contractor must include not only the actual area to be built on, but also enough of the surrounding area to enable the work to be undertaken.

Under NEC3 ECC clause 33.1 the contractor is permitted access to and use of ‘each part of the site … which is necessary for the work included in this contract’ suggesting that the entire site might not be provided if the employer is not aware it is immediately required. Although under the FIDIC 1999 Red Book clause 2.1 the contractor is entitled to the entire site at commencement, the employer may withhold possession until the contractor provides a required performance guarantee or bond.

14.1.2Date for possession

Most building contracts will name a date on which the contractor is to be given possession of the site, after which the contractor may commence the works. If possession is not then given on the date specified, the employer will lose the right to recover liquidated damages from the contractor in the event of late completion.4 ICC 11 clause 41 gives the employer a little extra flexibility by providing that, if no date is specified from the outset, it is for the engineer to notify the contractor of the date for commencement of the works. This notice must be given in writing, and the date itself must be between 14 and 28 days of the award of the contract or, under FIDIC 1999 Red Book, 42 days.

If the contract contains no specific commencement provision, then the contractor must be given possession at such a time as will enable the work to be completed by the completion date.5 The contractor is not obliged to start work on the date for possession; however, a contractor who does not start reasonably quickly may be liable for not proceeding ‘regularly and diligently’ (JCT SBC 11, clause 2.4) or ‘with due expedition and without delay’ (ICC 11 clause 41(2), FIDIC 1999 Red Book clause 8.2).

2 Whittall Builders Co Ltd v Chester-le-Street DC (1987) 40 BLR 82.

3 LRE Engineering Services Ltd v Otto Simon Carves Ltd (1981) 24 BLR 127.

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

5 Freeman v Hensler (1900) 64 JP 260.

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14.1.3Deferred possession

Although the contract administrator’s power to order the postponement of any work cannot be used by the employer so as to justify delay in giving the contractor possession of the site, there are specific provisions in JCT SBC 11 clause 2.5 under which the employer may defer the date for possession by up to six weeks, if the relevant entry is made in the Contract Particulars.

14.2PROGRESS

Where a construction contract fixes a date for completion, but makes no provision as to the rate at which the works are to progress, it appears that the courts will not imply any such term. This is because, in the absence of any indication to the contrary, the contractor has absolute discretion as to how the work is planned and performed, provided only that it is completed on time.6 Furthermore, while many contracts require the contractor to submit a programme for the execution of the works, this in itself does not mean that there is a contractual obligation to keep to that programme.7 Indeed, it should be appreciated that, if there were such an obligation, it would apply to both parties. Thus the employer would have to ensure that the contractor was provided with all necessary information at such a time as to enable compliance with the programme.

From an employer’s point of view, it would be very inconvenient to have no control at all over the progress of the contract works. It is for this reason that most construction contracts require the contractor to maintain a satisfactory rate of progress throughout the project. For example, JCT SBC 11 clause 2.4 imposes an obligation on the contractor to proceed with the Works ‘regularly and diligently’, and JCT SBC 11 clause 8.4.1.2 makes failure to do so a ground on which the employer can terminate the contractor’s employment. Similarly, under ICC 11 clause 41(2) and FIDIC Red Book clause 8.1, the contractor is required to proceed with the works ‘with due expedition and without delay’.

The meaning of the phrase ‘regularly and diligently’ was considered by the Court of Appeal in West Faulkner Associates v Newham LBC.8 The court suggested that the word ‘regularly’ means that the contractor must attend on a daily basis with sufficient labour and materials to progress the works substantially in accordance with the contract. ‘Diligently’, it was said, refers to the need for the contractor to apply that physical capacity industriously and efficiently. Taken together, the contractor’s obligation is to proceed continuously, industriously and efficiently with appropriate physical resources so as to progress the works steadily towards completion substantially in accordance with the contractual requirements as to time, sequence and quality of work.

6 GLC v Cleveland Bridge and Engineering Co Ltd (1984) 34 BLR 50; Pigott Foundations Ltd v Shepherd Construction Ltd (1993) 67 BLR 48; Leander Construction Ltd v Mullaley and Company Ltd.

[2011] EWHC 3449 (TCC); [2012] BLR 152.

7 Kitsons Sheet Metal Ltd v Matthew Hall Mechanical and Electrical Engineers Ltd (1989) 47 BLR 82.

8 (1994) 71 BLR 1.

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Progress is important in sub-contracts, because of the need to coordinate the sub-contractor’s work with that of other sub-contractors and of the main contractor. In a case where a sub-contractor was expressly required to complete the work in reasonable accordance with the progress of the main contract, it was said that this did not mean compliance with every detail of the main contractor’s programme, However, it meant more than merely not unreasonably interfering with progress under the main contract, in that the sub-contractor must make all reasonable efforts to keep up with the actual progress of the works.9

14.3COMPLETION

Where a contract is found to be an ‘entire contract’, all of the work must be completed before the contract price can be claimed. In practice the courts do not insist on such a harsh position, having developed the doctrine of substantial performance.10 This is reflected also in today’s standard forms of building contract. The fact that building projects can be handed over in a less than perfect state is to the advantage of both parties. This is clear when the legal meaning of completion is considered.

14.3.1Meaning of completion

A contractor cannot truly be said to have totally performed the contract if a single item of work is missing or defective. From a practical point of view, however, to delay the handover of something as complex as a large building for a trivial breach would cause enormous inconvenience. As a result, most building contracts require the contractor to bring the works to a state described by such expressions as practical completion (JCT contracts) or substantial completion (ICC 11).

Whether or not a building is ‘complete’ in this sense is normally a decision for the contract administrator, based on the contract form involved, an inspection of the works and the exercise of judgement. As to precisely what is required, no definition is provided by JCT forms. Rulings handed down by the courts have ranged between two extremes. In Westminster CC v Jarvis & Sons Ltd,11 Salmon LJ in the Court of Appeal adopted a very functional (and liberal) approach. He defined practical completion as ‘completion for all practical purposes, that is to say for the purpose of allowing the employers to take possession of the works and use them as intended’. However, when Westminster v Jarvis was appealed to the House of Lords,12 Lord Dilhorne took the much stricter line that ‘what is meant is the completion of all the construction work that has to be done’.

Many in the construction industry would undoubtedly favour the first of these opinions as being the more practical. However, the current judicial view is much closer to that of Lord Dilhorne. It appears that a contract administrator may certify

9 Ascon Contracting Ltd v Alfred McAlpine Construction Isle of Man Ltd (2000) 66 Con LR 119.

10Hoenig v Isaacs [1952] 2 All E.R. 176; Smales v Lea [2011] EWCA Civ 1325.

11[1969] 3 All ER 1025.

12[1970] 1 All ER 942.

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practical completion notwithstanding that there are trivial defects or omissions in the works, but should not do so where there are any patent defects which go beyond what is merely trivial.13 This was confirmed recently in Walter Lilly & Co v MacKay14 where, at completion, there was a large list of snagging items to be resolved. A dispute arose as to whether practical completion had been achieved. Akenhead J said that practical completion means completion for all practical purposes and this depended upon the nature, scope and contractual definitions of the works, as amended by variations that had been instructed. Individual items of snagging should not bar the award of practical completion unless there were sufficient in combination that the effect was that the building in question could not be used for its intended purposes.

Some contract forms aim to define completion, perhaps with a view to avoiding reliance upon judicial views. The only JCT or ICE standard form contract which seeks to define practical completion, the ICE Minor Works form, adopts this approach (see clause 4.5(1) of ICE Minor Works 2001).

In NEC3, completion is defined under clause 11.2(2) as when the contractor has done all work necessary for the employer to use the works. The requirement to do all work means that the contractor’s work may not be only physical work on site but might include securing permits or approvals necessary for occupation, or even completing operation and maintenance manuals. Under NEC3, the employer also has the option of stating in the Works information precisely the work to be done in order for completion to be achieved and, again, that need not necessarily be limited to physical work. If that approach is adopted, the contractor must also have corrected notified defects but this is limited to those defects which would prevent the employer from using the works.

Under FIDIC Red Book 1999, clause 8.2, the contractor’s obligation is to complete the whole of the works including passing tests on completion and completing all work for the purposes of taking over. Details of the testing regime is set out in clauses 9.1 to 9.4, after which the taking over certificate is issued when work is completed, except for any minor outstanding work and defects which will not substantially affect the use of the Works or Section for their intended purpose.

14.3.2Date for completion

It is not essential for a building contract to specify a date for completion; if it does not, the contractor will have an implied obligation to complete the works within a reasonable time. To rely on such an obligation, however, is not very satisfactory, at least on a project of any appreciable size, for the client will normally need to have some degree of confidence about precisely when to expect completion. In addition, without a specific completion date there can be no provision for ‘liquidated damages’, that is a fixed sum to be paid by the contractor for every day or week of delay in achieving practical completion.

13HW Nevill (Sunblest) Ltd v William Press & Sons Ltd (1982) 20 BLR 78; Emson Eastern Ltd v EME Developments Ltd (1991) 55 BLR 114.

14[2012] EWHC 1773 (TCC).

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It is thus usual to name the date by which completion is required. In JCT SBC 11 this is done by means of an entry in the Contract Particulars. In ICC 11, it is done by inserting a time for completion in the Appendix to the Form of Tender. Moreover, even where no precise date has been included in the contract itself, a court may be persuaded to imply a term for completion by a certain date, on the ground that the parties must have intended this.15

JCT SBC 11 draws a distinction between the ‘Date for Completion’ and the ‘Completion Date’, both of which are defined in clause 1.1. The Date for Completion is defined as that date which is fixed and stated in the Contract Particulars. Thus, the Date for Completion can only be that date and no other. The Completion Date, on the other hand, is defined as the Date for Completion or any other date fixed under either clause 2.28 or by a Pre-agreed Adjustment (in the sense of clause 2.26.2). This means that, while the Completion Date can be changed, the Date for Completion cannot.

The practical result of this twin definition is that the contractor’s obligation is to complete the work on or before the Completion Date. Thus, if an extension of time has been granted under clause 2.28, the obligation is to complete on or before the new date. However, even where the Completion Date is moved forward in time (for example, where work has been omitted), clause 2.28.6.3 makes it clear that the contractor can never be obliged to complete before the original Date for Completion.

The JCT approach to time may be contrasted with that of ICC 11, under which the contractor inserts the time required to carry out the work in the appendix to the tender. The contractor’s obligation is then to complete the works within the stated time (as extended under clause 44, where this is appropriate), calculated from the ‘Works Commencement Date’.

14.3.3Delay in completion

The contractor’s obligation to complete the works by the completion date is, like all such obligations, backed up by legal sanctions. If the contract is one in which time is ‘of the essence’, any lateness in performance will entitle the other party to terminate the contract. This will be the case where the contract expressly says that time is of the essence, and also where it is impliedly so, as for example in a contract for the sale of perishable goods.

Time will seldom be impliedly of the essence in a construction contract. However, once the contractor is in breach of contract through delay, it is possible for the employer to make time of the essence by giving notice to the contractor to this effect. Such a notice, which cannot be served until the contractor is in breach of contract,16 must give a reasonable time for completion17 and state that, if the contractor does not comply with this, the employer reserves the right to terminate the contract.

15Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd (1989) 51 BLR 16.

16Shawton Engineering Ltd v DGP International Ltd [2006] BLR 1.

17North Eastern Properties Ltd v Damien Coleman [2010] EWCA Civ 277; [2010] BLR 579.

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Where late completion does not justify the employer in terminating the contract, the employer’s legal remedy will be an award of damages for breach of contract. As to how such damages are to be measured, it is of course perfectly possible for the contract to say nothing, and to leave the assessment of the employer’s loss (including any loss of profit) to an arbitrator or a court. However, it is standard practice in building and civil engineering contracts to state in advance what the damages shall be for delay, and this is usually done by specifying a fixed sum of money to be due for every day, week or month by which the contractor fails to meet the prescribed completion date. Such sums, which are called liquidated damages, liquidated and ascertained damages or LADs, are dealt with in Chapter 20.

14.3.4Sectional completion and partial possession

If the intention of the parties is that the contract work should be completed and handed over in phases, it is essential that the contract documents make proper provision for this. Most standard forms enable different Sections to be identified in the respective project-specific data section, each with its own time for completion and its own liquidated damages. For example, ICC 11 contains a provision to this purpose in its Appendix, NEC 3 has the Option X5 and JCT SBC 11 provides for this in its Contract Particulars (in particular in the Sixth Recital). In terms of JCT’s standard form, editions before 2005 contained no such provision, although there was a Sectional Completion Supplement.

Generally, a contractor is entitled to keep the possession of the site or, in the case of a section, possession of the relevant part, until the contract administrator has issued the Practical Completion Certificate or the relevant Section Completion Certificate. However, JCT SBC 11 clause 2.33 enables this right to be given up by the contractor. If the employer requests it and the contractor agrees (and there must not be an unreasonable refusal), the employer can take possession of those parts of the works that are ready. Where this is done, the contract administrator must issue a written statement identifying the parts taken over and, for most purposes, practical completion of those parts is deemed to have occurred. It should also be noted that, under clause 2.6.1, the employer may be permitted by the contractor to use parts of the site for storage or otherwise, provided that this will not prejudice the insurance position. Once again the contractor’s consent is not to be unreasonably withheld.

14.3.5Effects of completion

When the contract administrator certifies that the works have been completed, a number of consequences will follow. Precisely what these are will depend upon the terms of the contract concerned, but the following are typical:

The employer is entitled and obliged to take possession of the contract works.

The contractor’s responsibility (if any) for insuring the contract works comes to an end. This is often dealt with expressly, but it has also been held

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to apply by implication under JCT MW 80, notwithstanding an argument that the responsibility for insurance should last until the end of the Defects Liability Period.18

Any liability of the contractor to pay damages for late completion ceases. Moreover, this liability will not be revived if the work is later found to

contain defects, for such a discovery will not retrospectively invalidate the certificate.19

The contractor usually becomes entitled to the release of one-half of the accumulated retention money.

The Rectification Period or Defects Correction Period (see below) begins.

Under the Construction (Design and Management) Regulations 2015, on completion of the project the Principal Designer must hand over to the client the Health and Safety File for the building, explaining its significance and any obligations that arise from it.

14.4CONTRACTOR’S OBLIGATIONS AFTER COMPLETION

There are further obligations imposed on the contractor after completion. All standard forms provide for the idea that completion marks the start of a period in which any outstanding minor works are completed and defects remedied: see JCT SBC 11 clause 2.38, JCT IC 11 clause 2.30, ICC 11 clause 49, NEC clause 42 to 45 and FIDIC Red Book clauses 11.1 to 11.11. The regimes involved are broadly similar under the various forms.

Under the JCT contracts, the issue of the ‘Practical Completion Certificate’ marks the start of the ‘Rectification Period’, which is also known by its former name ‘Defects Liability Period’. It lasts six months if no other period is specified in the Contract Particulars. Any defects, shrinkages or other faults arising during this period due to defective materials or workmanship must be put right by the contractor at its own expense.

The contractual procedure for dealing with defects arising during the Rectification Period is that the contract administrator should issue a schedule of such defects to the contractor not later than fourteen days after the end of the defects liability period, and the contractor then has a reasonable time to put them right. Once this has been done, the contract administrator will issue a ‘Certificate of Making Good’ (JCT SBC 11 clause 2.39, JCT IC 11 clause 2.31), following which the contractor becomes entitled to the remaining part of the retention money. It may be noted that, if no schedule of defects is issued, the employer retains the right to claim damages for breach of contract.20 However, as will be seen below, the amount of those damages may be affected.

In the ICC form, the situation is similar, although the terminology is different. Here the issue of the ‘Certificate of Substantial Completion’ brings into operation the ‘Defects Correction Period’. There is a similar requirement for the engineer to

18TFW Printers Ltd v Interserve Project Services Ltd [2006] EWCA Civ 875.

19Westminster City Council v Jarvis & Sons Ltd [1970] 1 All ER 942.

20Pearce & High Ltd v Baxter [1999] BLR 101.