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Time to change “time at large”?

Most of us are only too familiar with the argument (so beloved of contractors) that “time is at large”. We also know that it is rarely successful. The principle by which time becomes at large was recently commented on by Ramsey J in Bluewater Energy Services BV v Mercon Steel Structures BV and others:

“The principle is of some antiquity and has a surprising effect on the contractual obligations as to the time for completion. As I have found that there is an extension of time mechanism for acts of prevention and I am able… to determine the appropriate adjustments to the… Key Dates, this is not the opportunity to consider the underlying basis for the principle.”

This comment follows on from a lecture which Ramsey J gave to the Society of Construction Law on the same topic in April 2012. It is perhaps a sign that at least one member of the TCC judiciary thinks the time has come to review this long-standing principle of law. But is he right?

The principle of time at large

In short, the common law principle of “time at large” is this: if a delay event occurs that is the employer’s fault and the contract does not allow the completion date to be extended in that event, the original completion date, and any liquidated damages regime, fall away and time is put “at large”. This means that the contractor has a reasonable time to complete the works and the employer is no longer entitled to claim liquidated damages for delay (although it may still be able to claim general damages). It is an application of the “prevention principle”, that a party may not insist on compliance with a contractual obligation in circumstances where it has itself prevented such compliance.

Old, but is it outdated?

The principle is arguably less relevant in modern construction disputes. The standard form contracts all now contain adequate extension of time provisions; this was not the case in some of the older cases when the principle was first established (see Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd [1970] 1 BLR 111).

Despite this, disputes as to whether “time is at large” continue to occupy the courts. Contractors regularly argue that the standard form provisions are unworkable because the contract machinery for awarding extension of time has broken down (for example, Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd) or has been administered incorrectly or not at all. However, these arguments rarely succeed. The courts typically strive to give effect to contractual provisions that extend the date for completion and are reluctant to find that time is at large.

Perhaps the reason for this is that, although designed to prevent injustice, the application of the time at large principle can be draconian. A contractually legitimate act on the part of the employer (for example, a variation instruction) can fundamentally change the rights and obligations that the parties have negotiated and agreed, in the absence of workable provisions for extending time.

Judicial thinking

In his 2012 lecture, Ramsey J commented that in circumstances where an employer’s delay event occurs and the contract does not make provision for that delay “perhaps the time and liquidated damages provisions should remain, with the contractor not being liable for the delay caused by the employer.”

As I see it, the only way in which a court can uphold the contractual completion date (and liquidated damages regime) in this event is by implying an extension of time provision into the contract. This may involve the court having to explore which party was, in fact, at fault and the extent of delay attributable to that fault, which would require active intervention by the courts.

In addition, how would this interventionist approach sit with established rules of contractual interpretation? In practice the courts are generally reluctant to imply terms into a contract, especially where the express terms are detailed and comprehensive, have been commercially negotiated and are unambiguous.

Perhaps the key difficulty with this approach is that an implied term already exists to cover this very situation. The essence of the prevention principle is the implied term of “non-prevention”, which is commonly implied into construction contracts on the basis that it reflects the parties’ intention or the objective meaning of the contract. It seems that some people regard the extent of the relief – that the original completion date and liquidated damages provisions fall away – as a step too far in the other direction.

However, even if the TCC is given the opportunity to re-evaluate this principle, it is difficult to see how it could distinguish over a century’s worth of case law. The genesis of the “time at large” principle is Holme v Guppy (1838) 3 M&W 387 and its finding that “the plaintiffs were therefore left at large and consequently are not to forfeit anything for the delay”. There is a large body of case law which has subsequently applied this principle, not least Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601, where the House of Lords affirmed previous authority that an act of prevention puts time at large. Lord Denning in the Court of Appeal said that:

“It is well settled that in building contracts – and in other contracts too – when there is a stipulation for work to be done in a limited time, if one party by his conduct – it may be quite legitimate conduct, such as ordering extra work – renders it impossible or impracticable for the other party to do his work within the stipulated time, then the one whose conduct caused the trouble can no longer insist upon strict adherence to the time stated. He cannot claim any penalties or liquidated damages for non-completion in that time.”

So, while some members of the judiciary may think the time at large principle is antiquated and in need of review, it looks as though it is here to stay, unless the Supreme Court has an opportunity (and the inclination) to overturn its previous decisions or Parliament legislates to the contrary. In short, despite the heavy hints from Ramsey J, I expect that any change to the principle will be slow in coming.

5 thoughts on “Time to change “time at large”?

  1. Great article. I would suspect that its to the contractors detriment that they be put in a general damages position if the contract reverts to “time at large”. Typically contractors like LDs because this caps their liability for delay. Now the Contractor would be caused to be delayed by the Company and then their total liability would be uncapped (or at least up to overall contractual liability cap if there is one). Seems like a double wammy of unfairness!

    1. Enlighten me on this please:

      It is an interesting point that when time is put at large, since LD is no longer applicable, general damages kick in. However, the rational behind LD not being applicable is that one cannot benefit from another by preventing the latter from fulfilling its duties. In such cases, surely Employer cannot claim general damages in lieu of LD – under the same notion of prevention principle?

      If so, when does this general damages application become relevant?

  2. Kyle’s interesting point about uncapped liability is to some extent mitigated because any general damages which the employer is able to recover are likely to be limited to the level of any liquidated damages negotiated and agreed under the contract, or so the general consensus seems to be. However, this is equally a point where confirmation from the courts would be welcome.

  3. Interesting article. Looking at the number of times that Holme & Guppy has been considered but not applied I suspect that the principle that any EoT clause should be construed in favour of the Contractor gives the Court enough wiggle room to get round the principle provided that some ambiguity can be found.

    On the question of whether you could imply a term granting an EoT (as suggested by Denning in Trollope & Colls but rejected by the HL) I can see no reason why a brave Judge could not imply such a term. After all, the HL rejected Denning’s implied term argument on the facts (Lord Pearson rejecting the idea that parties might have overlooked the possibility of delay). I suspect that the current judiciary is probably much more willing to fix the parties’ contract for them than it was back in 1973. A Judge might perhaps apply the Trollope & Colls test and conclude that it could imply a term granting an EoT.

    Perhaps this is an area ripe for its own Walter Lilley moment…

  4. When time becomes at large, the contractor is only required to complete within reasonable time. The employer now has to prove that it was not completed within reasonable time and has to prove that it has incurred general damages. Logic dictates that the general damages should not exceed the cap for liquidated damages, based on the principle that the party cannot profit from its own fault (in this case the employer causing time at large which invalidates the imposition of LDs).

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