-Overlap between (i) and (ii): Contractor's default and neutral delay.

If it is accepted that the Employer's responsibility should predominate over a

neutral delay, it may well be arguable that the Contractor's default should
likewise predominate over such neutral delays. To take an example: if the
Contractor claims that bad weather prevented him from completing certain
concrete foundations, the Employer's response might be that the Contractor was
not ready to proceed in any event due to the failure of the Contractor's
reinforcement subcontractor to have the necessary reinforcement on site and
ready for installation. The Contractor says that he could not have finished earlier
than he did because of the intervention of the weather. The Employer replies that
the weather did not cause him to be delayed as the subcontractor's default would
have prevented earlier execution of the foundations in any event. At this point,
the parties would probably immerse themselves in complex critical path
exercises in order to attempt to demonstrate that one of the delays was
"dominant" or "effective". If the bad weather lasted a day beyond the time that the
subcontractor was able to start or if the subcontractor had not delivered the steel
to the relevant part of the works for a day after the weather permitted work to
start, one party would then claim that the other delaying event was irrelevant. In
reality, of course, both events prevented the works from proceeding although one
of the events might have been solely responsible for some part of the delay.

As there is no question of the Contractor being compensated, the sole question

is whether the Employer should receive liquidated damages to compensate him
for the late receipt of the project. The Employer had accepted the risk in the
contract that if exceptionally bad weather should occur then he would receive no
such compensation. The receipt of liquidated damages would therefore be
something of a windfall for the Employer. The Contractor, on the other hand, will
have to pay for his own prolongation costs in any event. On broad principles of
fairness, it is therefore submitted that the Contractor should receive an extension
of time relieving him of liability for liquidated damages. Whilst this produces the
result that the Contractor "gets away with" his subcontractor's default, he has
nevertheless incurred irrecoverable prolongation costs. Better, in short, that the
losses should lie where they fall than that the Contractor should be penalised
twice, by liquidated damages as well as by prolongation costs.

-Overlap between (i) and (iii): Contractor's default and Employer's Default.

The problem is at its most acute when the Employer and the Contractor have
caused concurrent delays. To adapt the earlier example, the Contractor
complains that the Engineer has not provided him with necessary details and
drawings to execute the foundations; the Employer replies that the Contractor's
steelwork subcontractor has not supplied the necessary reinforcement to the site
or otherwise prepared himself to execute the works. The Contractor argues for
extension of time and reimbursement of costs and the Employer is seeking
liquidated damages. In these circumstances, it is submitted that the just result is
similar to that set out above. The Contractor should receive an extension of time

Page 146 of 265

relieving him from liquidated damages but should not receive reimbursement of
costs for prolongation which would have been experienced in any event. The
Employer should not be compensated for his inability to take possession of the
project on time when, due to his Engineer's default, such possession would not in
any event have been possible.

The question then arises whether the conditions steer the Engineer or an
arbitrator to particular conclusions or whether the conditions leave the Engineer
or arbitrator free to attempt to do justice on a case by case basis. Under the
current sub-clause, the governing criterion is that the event is "such as fairly to
entitle the Contractor to an extension". The formula used elsewhere in clauses
such as clause 6.4 (Delays and cost of delay of drawings), clause 27 (Fossils)
and clause 42.2 (Failure to give possession) is "if the Contractor suffers delay
and/or incurs costs from failure on the part of the Employer..." or "by reason of"
the failure or instructions. As far as time is concerned, these clauses invariably
refer to the "extension of time to which the Contractor is entitled under clause 44"
thereby invoking the Engineer's or arbitrator's opinion as to fairness. As to the
costs, the Contractor has an entitlement and the Engineer has an obligation to
determine if costs have been incurred from or by reason of the event. Therefore,
the Engineer is not being asked to consider fairness but merely to confine himself
to causation. Thus, in the second example given above where late drawings and
a defaulting subcontractor coincided, the principal costs incurred by the
Contractor would be prolongation costs. The Engineer would have to decide
whether those costs were incurred "by reason of" the late drawings. The just
result, it has been submitted, is for the Contractor to receive an extension of time
but no money in this situation. On the wording of the clauses granting time and
costs, it is difficult to see that the Engineer is empowered to grant an extension of
time without granting the consequential prolongation costs. It may be possible for
him to refuse extension of time while granting costs because of the fairness
qualification under clause 44 which applies only to time but it seems he cannot
grant time alone. Once the Engineer has decided that the event has caused
delay and thus cost, he is obliged to determine the costs even though he may still
apply the fairness test to the extension of time. So in the case of the late
drawings and subcontractor's default example, the Engineer would be obliged to
make an all-or-nothing decision: either the "failure or inability of the Engineer" to
provide the drawings caused the delay and costs or it did not. In those
circumstances, the Engineer is, regrettably, not entitled to produce an
intermediate, possibly more just, result.

With clauses such as clause 17 (Setting out) and clause 38.2 (Uncovering and
making openings) where cost but not extension of time is provided for, the result
is effectively the same. If, for example, certain foundations were delayed either
by amendments due to incorrect setting out data or by an instruction to reopen
properly executed work, at the same time as the Contractor's subcontractor was
in default or not ready to proceed with the next activity, the question again arises
as to whether the Engineer is free to award an extension of time but not
prolongation costs. In either case, an extension of time is available under clause
44. As to costs, both clauses oblige the Engineer to determine the Contractor's

Page 147 of 265

costs, by express reference to clause 52 (Valuation of Variations) in the case of
clause 17. It is submitted that this framework does not allow the Engineer to
grant an extension of time and determine the actual cost of executing the
additional work but to stop short of determining the consequential prolongation
costs. This is unfortunate as the Engineer must decide between unsatisfactory
alternatives.

If the Engineer refuses an extension of time, the payment of liquidated damages

is automatic under clause 47.1 (Liquidated damages for delay) and there is no
further exercise of discretion by the Engineer as is to be found in some
conditions. Of course, the Employer is at liberty to waive damages.

In summary, these conditions oblige Engineers and arbitrators to choose which

of the defaulting parties to reward and which to penalise. The middle road, by
which it is submitted a more just result may be achieved, seems to be closed to
them. As concurrent delays are a common occurence and as the lack of
provision exposes both parties to considerable risk, express terms addressing
the problem are highly to be recommended.

In the United States, the courts have been striving for what has been submitted is
the just result. Where the responsibility for delay is concurrent, each party is left
to absorb its own loss and an extension of time alone would be granted. See, for
example, Commerce International Company v United States 338 F2d 81, 90
(1964) and United States v United Engineering and Construction Co. 234 US 236
(1913). "The rule is well settled that where both parties are responsible for the
delay and completion of the contract and it is impossible to ascertain the true
balance by setting off one against the other, no... damages can be assessed":
Sun Ship Building Co. v United States 76 Ct. Cl.154, 188 (1932). "Where two
parties are delayed in the accomplishment of the construction objective, neither
party should be allowed to profit from the delays of the other": Blackhawk Heating
& Plumbing GSBCA No. 2432, 17-1 BCA 76-1 BCA No. 11, 649 at 55,577.

44.2 This clause raises the question whether a failure to give the requisite
notice would be fatal to a Contractor's application for extension of time. The
clause says that the Engineer "is not bound to make any determination" so it is
still open for him to do so if he so wishes. How the Engineer should exercise his
discretion in these circumstances is debatable. Clause 2.6 (Engineer to act
impartially) presumably applies so the Engineer has to act impartially to reconcile
the conflicting interests of Employer and Contractor. If he should grant the
extension if deserved, the notice procedure is rendered redundant. If not, the
preservation of the Engineer's power might be thought pointless. It is submitted
that the Engineer should exercise his discretion in the manner suggested by
clause 53 (Procedure for claims), namely to allow extensions which are verified
on contemporary records but disallow very late claims of which his team had no
knowledge and which the Contractor seeks to support by new or oral evidence
only. In short, the Engineer should have regard to the purpose of notice
provisions, namely to avoid surprises and "claims-by-ambush", and should not
allow valid claims to be ruled out on technicalities.

Page 148 of 265

If the delay was caused by the Employer, or the Engineer on his behalf, a refusal
of an extension of time on the grounds of lack of notice raises the issue of the
Employer benefitting in liquidated damages from his own breach. The answer
may be that it is the Contractor's breach of the notice provision from which he is
benefitting and not his own. If so, the damages bear no relationship to the gravity
of the Contractor's, perhaps immaterial, default and may be vulnerable to attack
as a penalty. It may also be possible to ask an arbitrator to grant an extension of
time by reviewing the Engineer's decision not to exercise his discretion under this
clause.

Under ICE 5th, an Engineer may extend "if he thinks fit in the absence of any
such claim". A similar discretion exists under ICE 6th.

It is unclear exactly when the Contractor's time for notifying the Engineer begins
to run. The first notice must be given "within 28 days after such event has first
arisen". "Such event" appears to be one of the listed matters "being such as
fairly to entitle the Contractor to an extension of time". Thus in a case where
additional work was ordered, then designed, supplied and installed over a period
of time, it may only be realised during the installation period that delay would
result. In such circumstances, it is not at all easy to identify the beginning of the
28-day period.

There is no specified form for the notice to be given by the Contractor and it may
be sufficient to point to correspondence or other documentation provided that the
formalities of sub-clause 44.2(a) and clause 68 (Notices) have been complied
with. As to the details to be provided, it would have been clearer to say "detailed
particulars in support of any extension of time" as the present wording indicates
only details of the extension of time required.

"In order that such submission may be investigated at the time". The statement
of the purpose of the sub-clause may well allow arbitrators to make common-
sense decisions as to whether to treat the clause as a condition precedent to an
extension of time. If the Engineer has been taken by surprise at the end of a
project by a claim for an extension of time and his ability to investigate the claim
is undermined, the arbitrator could rightly rely upon the condition precedent.

"Such other reasonable time as may be agreed by the Engineer". This

agreement need not take place before or during the 28-day period but could be
retrospective.

The application of this notice requirement to other clauses giving an entitlement

to extension of time is a difficult question. For example, clause 27.1 (Fossils)
provides for extension of time "under Clause 44" but also requires the Contractor
to acquaint the Engineer immediately. Is the present sub-clause redundant or
does it replace or supplement the terms of clause 27? It is submitted that this
clause is best interpreted as imposing a time limit where no other limit applies.

Page 149 of 265

44.3 "Where an event has a continuing effect". This does not mean that the
event has to be continuous. If an event, which may itself be shortlived, causes
knock-on consequences that continue over a period of time, it is often very
difficult to assess those consequences until the job is complete. A critical delay
will have a continuous effect in the sense that all dependant activities will be
delayed. This is not intended to be covered. In any event, it may be "practicable"
for the Contractor to submit particulars of such an event within four weeks.

It is doubtful whether it is practical to require a Contractor to provide interim

particulars every four weeks and for the Engineer to make an interim
determination on each occasion. The sub-clause might benefit from the
Engineer and the Contractor being given the ability to agree an alternative
period.

The ability to review determinations of extensions of time under this clause is

limited to continuing events in respect of which interim extensions have been
granted. Therefore, the prohibition on decreasing extensions of time is limited to
such continuing events. Strictly speaking, an Engineer may only reconsider a
determination under sub-clause 44.1 if he is asked for a decision under clause
67.1 (Engineer's decision). In reality, of course, engineers tend to be cautious
and conservative in granting extensions and contractors will endeavour to
persuade them to increase an extension of time granted. Such an increase, it is
submitted, is technically beyond the power of an Engineer except under this sub-
clause or clause 67.1. A decrease in extensions of time may always be achieved
by the Employer seeking the Engineer's decision on the grounds that an
excessive extension of time has been granted.

It is submitted that the prohibition in the final sentence of the sub-clause upon
decreases in extension of time does not bind either the Engineer when making a
decision under clause 67.1 or an arbitrator under clause 67.3 (Arbitration). The
prohibition applies only to the final review.

CLAUSE 45 : Working Hours

The Contractor is not entitled to work at night, at weekends or bank holidays

unless the contract or the Engineer allows him to do so or in an emergency of
which the Contractor immediately informs the Engineer or where it is customary
to carry out the work 24 hours per day.

This clause is not fundamentally changed from the 3rd Edition.

Where the circumstances of the project are such that day and night working
and/or working seven days a week is desired, Part II provides an alternative
clause.

In order to work extra hours, the Engineer's consent may be obtained under this
clause or, after a notice to accelerate, under clause 46.1 (Rate of progress).

Page 150 of 265