Effect of omissions on extension of time

It is a given that contract administrators may issue omissions for contracted works. Of course, any such omission issued must be made bona fide, and not issued for purpose of appointing a third party contractor who may turn out to be cheaper.

When omissions are issued, that means the contractor has a reduced scope of work. What implication does that have for the contract period?

Generally, the law provides that a contract administrator cannot reduce the contract period even if he has drastically reduced the scope of works. In other words, omissions cannot be a back-door acceleration programme because a contractor cannot be compelled to complete the contract earlier than stipulated (Glenlion Construction Ltd v The Guinness Trust).

This position seems reasonable bearing in mind that the contract may have committed to other works elsewhere and hence would not be in a position to mobilise his workers even if his scope of works have been reduced.

However, that does not mean that omissions have no impact whatsoever on extensions of time. A contract administrator can take into consideration previous omissions of work when the contract applies for extension of time to complete. The caveat is that any new completion period must not be earlier than the contracted one.

Kheng Hoe Advocates
Building contract and construction contract dispute lawyers

PS: If you have any building contract and construction contract related issues, I invite you to take advantage of my free one-to-one consultation to explore your next steps. There is totally no obligation on your part, and regardless whether you engage me or not, I guarantee that you will walk away with a clear idea as to where your case stands and how to take your case forward. To schedule an appointment, e-mail me with a brief description of your issue at khenghoe@khenghoe.com.

Three approaches to deal with concurrent delays in construction disputes

If a contractor delays, then he may be subject to pay LAD. If an employer is in default, on the other hand, then the contractor would be entitled to an extension of time, or otherwise time would be made at large.

But what happens when both employers and contractors have some part to play in the delay? For example, the contractor may be slow in its progress of works, but at the same time the employer may have also delayed in handing over the site. Such concurrent delays may lead to construction disputes.

The major issue when there are concurrent delays is to establish how much extension of time the contractor is entitled to. To resolve this problem, there can be a number of approaches.

One approach is called the “Dominant Cause Approach”. For this approach, one must determine what is the dominant cause of the delay, and grant extension of time according to the dominant cause. This “Dominant Cause Approach” was accepted by the Court in Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd.

However, this approach has not been accepted all the time. The Court in H Fairweather & Co Ltd v London Borough of Wandsworth rejected it.

A second approach to deal with concurrent delays is the “but for” approach. In other words, “but for” the delay by the contractor, would an extension of time nevertheless be required? This was the preferred approach in Quinn v Burch Bros (Builders) Ltd.

A third approach is to use the apportionment approach, to apportion the extension of time required between the employer and the contractor based on their responsibility for the delay. This was the preferred approach in Tennant Radian Heat v Warrington Development Corporation.

It would seem therefore that there is no uniform approach. At the end of the day, the construction court is merely seeking, using the best of their ability, to ascertain how much extension of time would be fair based on the factual matrix of the case.

And in construction cases, it is not what are the real facts on site that would ultimately count, but what has been properly documented. Herein lies the biggest challenge for construction companies across the board.

Kheng Hoe Advocates

Building contract and construction contract dispute lawyers
PS: If you have any building contract and construction contract related issues, I invite you to take advantage of my free one-to-one consultation to explore your next steps. There is totally no obligation on your part, and regardless whether you engage me or not, I guarantee that you will walk away with a clear idea as to where your case stands and how to take your case forward. To schedule an appointment, e-mail me with a brief description of your issue at khenghoe@khenghoe.com.

The difference between a prospective and retrospective extension of time

Time is money.

More so in the area of construction contracts, where delays are penalised by LAD. It is no wonder then that extensions of time can become thorny issues of dispute in construction.

Extensions of time are usually (and ideally) made prospectively. This means that when an extension is required, the contractor would comply with the contract requirements to make a formal application for extension of time. Based on the application made, the contract administrator would decide whether an extension of time is justified. The contract administrator will further decide how much time can be extended based on the reasons put forward by the contractor.

However, ideal situations seldom prevail on the site. And many a time, the contractor applies for an extension of time on a retrospective basis (i.e. after completion of the contract).

Whether an extension of time can be granted retrospectively very much depends on the terms of the contract itself. Some contracts stipulate very strict pre-conditions for any extension of time to be granted. In other contracts, the provision and power of extension of time are drafted in more general terms, permitting a retrospective extension of time to be granted.

Courts would apply the provisions of the contract to determine whether retrospective extensions are permissible. However, in the event of ambiguity, it is likely for the courts to favour an interpretation that benefits the contractor (Amalgamated Building Contractors Ltd v Waltham Holy Cross UDC).

That is an approach that makes sense because:

  1. It is usually the employer who dictates the terms of the contract; and
  2. Bearing in mind the unequal bargaining power between the parties.

When it is the employer who is seeking an extension of time (in order to reduce LAD payable), Courts would take a far stricter approach (Balfour Beatty Building Ltd v Chestermount Properties Ltd).

However, even when the contractual provisions are strict, the Courts will still allow a retrospective extension of time if that is the only option available bearing in mind the factual circumstances (for example, it may be impossible to compute the extension of time required until after completion) (see case of Engineering Construction Pte Ltd v AG).

Kheng Hoe Advocates

Building contract and construction contract dispute lawyers
PS: If you have any building contract and construction contract related issues, I invite you to take advantage of my free one-to-one consultation to explore your next steps. There is totally no obligation on your part, and regardless whether you engage me or not, I guarantee that you will walk away with a clear idea as to where your case stands and how to take your case forward. To schedule an appointment, e-mail me with a brief description of your issue at khenghoe@khenghoe.com.