Carillion Construction Ltd v Emcor Engineering Services Ltd & Anor, Court of Appeal - Civil Division, February 10, 2017, [2017] EWCA Civ 65

Resolution Date:February 10, 2017
Issuing Organization:Civil Division
Actores:Carillion Construction Ltd v Emcor Engineering Services Ltd & Anor
 
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Case No: A1/2016/2252

Neutral Citation Number: [2017] EWCA Civ 65

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM High Court, QBD, Technology and Construction Court

Miss Recorder Jefford QC

HT2014000117

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 10/02/2017

Before :

LORD JUSTICE JACKSON

LORD JUSTICE SIMON

and

LORD JUSTICE FLAUX

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Between :

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Paul Reed QC & Edmund Neuberger (instructed by Reynolds Porter Chamberlain LLP) for the Appellant

Paul Cowan & Simon Hale (instructed by White & Case LLP) for the 3rd & 4th Respondents

Hearing date : Thursday 2nd February 2017

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JudgmentLord Justice Jackson :

  1. This judgment is in five parts, namely:

    Part 1 - Introduction

  2. This is an appeal by a main contractor against a decision on preliminary issues concerning delay and extension of time. The central issue is whether any extension of time granted under the standard ``DOM/2'' form of sub-contract must commence on what was previously the due date for completion. The question is of some importance for the construction industry.

  3. The main contractor in this case and claimant in the proceedings is Carillion Construction Limited, to which I shall refer as ``Carillion''. The relevant sub-contractor, which is third Defendant in the proceedings, is Emcor Engineering Limited. I shall refer to it as ``Emcor''. Emcor (UK) Limited, which is the fourth defendant, provided a parent company guarantee in respect of Emcor.

  4. The employer under the main contract is Rolls Development UK Limited, to which I shall refer as ``Rolls''. Another sub-contractor which will feature in the narrative is AECOM Limited. I shall refer to that company as ``AECOM''.

  5. In this judgment I shall use the following abbreviations:

    ``LAD'' means liquidated and ascertained damages.

    ``M+E'' means mechanical and electrical.

    ``TCC'' means Technology and Construction Court.

  6. The building which is the subject of this litigation is the Rolls Building in Fetter Lane, London EC4. That is where the Commercial Court, the Chancery Division and the TCC now sit.

  7. Both the parties and the judge at first instance have used the word ``contiguous'' to describe an extension of time which starts on what was previously the due date for completion. I shall do the same. I will use the word ``non-contiguous'' to describe an extension of time which starts on some later date.

  8. After these introductory remarks, I must now turn to the facts.

    Part 2 - The Facts

  9. By a written building contract dated 14th June 2007, Rolls employed Carillion to develop the Rolls Building in Fetter Lane for use as offices and courtrooms. The contract was on the JCT Standard Form of Contract with Contractor's Design, 1998 edition, incorporating amendment 1(1999), amendment 2(2001) and amendment 4(2002).

  10. Clause 23 of the building contract required Carillion to complete each section of the work by a specified completion date. The sections of the works were redefined and the specified completion dates were revised by subsequent agreements between the parties. The final position was as follows: Carillion were required to complete section B (court fit-out) and section C (fifth floor fit-out) by 28th January 2011. LAD were agreed at the rate of £86,000 per week for delay on section B and £18,000 per week for delay on section C. Completion dates and rates of LAD for other sections of the works are not relevant to this appeal.

  11. Clause 25.2 of the conditions of the building contract required Carillion to give written notice to the employer of any event delaying or likely to delay completion. Clause 25.3 provided:

    ``25.3 .1 If

    .1 .1 any of the events which are stated by the Contractor to be the cause of the delay is a Relevant Event and

    .1 .2 the completion of such Section is likely to be delayed thereby beyond the Completion Date for such Section,

    the Employer upon receipt of any notice, particulars and estimate under clauses 25.2.1, 25.2.2 and 25.2.3 shall make in writing to the Contractor such extension of time, if any, for completion of such Section beyond the Completion Date for such Section as is then fair and reasonable, by fixing a later date as the Completion Date for such Section.''

  12. I turn now to the sub-contracts. Carillion engaged AECOM as sub-contractor for the provision of various M+E services and Emcor as sub-contractor for the provision of other M+E services.

  13. Emcor's sub-contract was dated 18th July 2008. It incorporated the standard form of Domestic Sub-Contract known as ``DOM/2'', 1981 edition. That sub-contract, although earlier in time, is intended to be used with the 1998 JCT contract.

  14. Clause 11.2 of the sub-contract conditions requires the sub-contractor to give notice of delay or likely delay. Clause 11.3 provides as follows:

    ``11.3 If on receipt of any notice, particulars and estimate under clause 11.2 the Contractor properly considers that:

    .1 any of the causes of the delay is an act, omission or default of the Contractor, his servants or agents or his sub-contractors, their servants or agents (other than the Sub-Contractor, his servants or agents) or is the occurrence of a Relevant Event; and

    .2 the completion of the Sub-Contract Works is likely to be delayed thereby beyond the period or periods stated in the Appendix, part 4, or any revised such period or periods,

    then the Contractor shall, in writing, give an extension of time to the Sub-Contractor by fixing such revised or further revised period or periods for the completion of the Sub-Contract Works as the Contractor then estimates to be reasonable.''

  15. It is necessary to read that provision in context. I therefore attach as an appendix to this judgment the whole of clauses 11 and 12 of the sub-contract conditions. These are taken from the standard DOM/2 form, but include certain amendments made by the parties.

  16. As can be seen from clause 11 of the conditions, Emcor were required to complete their works in accordance with the details set out in part 4 of the appendix to the sub-contract. As a result of subsequent agreements between the parties, part 4 of the appendix underwent successive amendments. The final position was that Emcor were required to commence their section B works (court fit-out) on 5th October 2009 and complete them in 68.57 weeks. Emcor were required to commence their section C works (fifth floor fit-out) on 11th January 2010 and to complete them in 54.57 weeks. The consequence of these provisions was that Emcor were required to complete both the section B and section C works by 28th January 2011. That was also the revised contractual completion date under the main contract.

  17. Unfortunately delays occurred. Carillion did not achieve practical completion under the main contract until 29th July 2011. That was 182 days late. Carillion blamed its sub-contractors for causing delays. The sub-contractors blamed each other and Carillion for causing delays. In those circumstances, perhaps unsurprisingly, litigation followed.

    Part 3 - The Litigation

  18. By a claim form issued in the TCC on the 28th November 2014, Carillion claimed relief against AECOM, Emcor and other parties involved in the project.

  19. On 8th March 2016, Carr J ordered the trial of two preliminary issues. Issue 1 was formulated as follows (using ``CCL'' as an abbreviation for Carillion):

    ``1. On the assumption that EMCOR is entitled to an extension of time pursuant to clause 11.3 of the EMCOR Sub-Contract (as amended) by fixing such revised or further revised period or periods for the completion of its Sub-Contract Works, does the EMCOR Sub-Contract (as amended) require:

    (a) that such revised or further revised periods are added contiguously to the end of the current period, so as to provide an aggregate period within which EMCOR''s Sub-Contract Works should be completed (as contended for by EMCOR); or

    (b) that such revised or further period or periods are fixed in which EMCOR can undertake its Sub-Contract Works, which are not necessarily contiguous but which reflect the period for which EMCOR has in fact been delayed and is entitled to an extension of time (as contended for by CCL).''

  20. Issue 2 concerned other contractual disputes between Carillion, Emcor and AECOM. Issue 2 does not feature in the present appeal.

  21. The trial of the preliminary issues took place before Miss Recorder Nerys Jefford QC, as she then was, on 6th April 2016. I shall refer to her as ``the judge''.

  22. The judge handed down her reserved judgment on 28th April 2016. Her decision on preliminary issue 1 was as follows:

    ``...on the assumption that EMCOR is entitled to an extension of time pursuant to clause 11.3 of the EMCOR Sub-Contract (as amended) by fixing such revised or further revised period or periods for the completion of its Sub-Contract Works, the EMCOR...

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