Extension of Time Claims in Hong Kong

Introduction

Delay claims are one of the most common areas for disputes in Hong Kong within the construction industry. Despite this, there still appears to be uncertainty about:

1. what to claim;
2. when to claim; and
3. how to claim.

Delay claims, even the approach in the law, seem to be more theoretical than practical. The purpose of this paper is to set out a practical approach to these three questions. After a very brief overview of the legal background, I will identify the relevant provisions from two standard forms building contracts, commonly used in Hong Kong, which are the Hong Kong Government General Conditions of Contract for Building Works and the HKIA/RICS Building Contract. I will explain some of the main problems with extension of time claims, particularly issues of concurrency and causation and demonstrate how the two standard contracts deal with these issues in different ways.

A: What to Claim

The starting point is the contract and the extension of time clause itself. In this section, I want to emphasise two points:

1. The importance of clear drafting, which sounds obvious, but it is bad drafting that is the cause of so many problems.
2.  The second point is less obvious. Restricting the grounds for extensions of time in an extension of time clause may not be in your best interests.

Generally construction contracts have long complicated clauses dealing with extensions of time and dates for completion. The clause will specify either a precise date for completion or alternatively a length of time in which the Works must be completed. If no time is specified in the contract, the Contractor will be under an implied obligation to complete the contract works within a reasonable time. 1

Contracts also usually state that where the Contractor fails to complete the Works by the date for completion, he will be liable for liquidated damages. If the contract does not include a liquidated damages clause, an employer can still claim general damages for delay. The exact wording of the liquidated damages provision needs to be reviewed. Some contracts are written on the basis that liquidated damages are the only remedy and some are written on the basis that where general damages are higher, general damages could be claimed instead, subject to proof. Be careful when amending standard contracts, however. The case of Temloc v Errill Properties 2 is a warning.

In that case, the Employer was required to state the figure for liquidated damages for delay in the appendix to the standard form contract. The figure inserted in the appendix was nil. The Contractor was delayed in completing the works and there was a dispute. The court considered that on a proper construction of the contract, the parties had agreed that there should be no damages for delayed completion. It was held that as the contract stated that liquidated damages provided the only remedy for delay and the appendix was expressly completed to provide for nil liquidated damages, no damages were payable at all.

Where the Employer by its actions or omissions prevents the Contractor from completing the works by the date for completion and where the extension of time provision does not cover the delay, the Employer is unable to claim liquidated damages. This is, of course, the main reason for the inclusion of an extension of time clause within a construction contract. Its primary purpose is to allow the Employer to extend time for completion by the Contractor as a result of any of the delays listed in the extension of time clause, so that rights to claim liquidated damages are not defeated by the Employer’s own actions.

This principle that the Employer cannot rely upon liquidated damages clauses, if it has by its own actions prevented the contractor from completing the works as known as the Prevention or Peak principle 3. It is from the case of Peak v McKenney Foundation Ltd 4. The prevention principle is a simple concept and was summarized well by the Australian court in Turner Corp v Co-ordinated Industries 5.

“Essentially it is that a party to the contract has been prevented from fulfilling its contractual obligations by virtue of the conduct of the other party.”

In the Peak case, Peak was the head contractor and contracted with the Liverpool Corporation to carry out building works.McKenney was the nominated sub-contractor for the foundations. In early 1964, it was discovered that there was a fault in the building’s perimeter piles. Delays, mainly caused by the Liverpool Corporation meant that an expert was not engaged to review the problem until February 1965. The expert produced its report to the parties in May 1965. The next day, Peak wrote to the Liverpool Corporation asking for an instruction to carry out the work recommended by the expert. Peak heard nothing from the Liverpool Corporation and therefore wrote to them again in June. It was not until 30 July 1965 that the expert’s recommendations were approved by the Liverpool Corporation and Peak began remedial work on 12 August 1965. In total, the works were suspended for 58 weeks.

The Liverpool Corporation sought liquidated damages from Peak and Peak in turn sued McKenney for liquidated damages. The Court of Appeal held that the Liverpool Corporation was not entitled to recover liquidated damages from Peak because at least part of the 58 week delay was caused by the Liverpool Corporation itself. The extension of time clause in the head contract did not enable the Liverpool Corporation to extend time for its own delays. In fact, no attempt had been made by the Liverpool Corporation to extend time at all. Therefore, there was no date from when liquidated damages could commence. The court said:

“A clause giving the Employer liquidated damages as so much a week or month which elapses between the date fixed for completion and the actual date of completion is usually coupled, as in the present case, with an extension of time clause… If a failure to complete on time is due to the fault of both the employer and the contractor, in my view, the clause does not bite. I cannot see how, in the ordinary course, the employer can insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled”.6

For the prevention principle to apply, all that is required is the act or omission of the Employer (or its agents) preventing the Contractor from completing the Works by the specified time.

Even the ordering of a variation which prevented the Contractor from completing on time has been held to be an act of prevention, leading to the result that the employer could not claim liquidated damages. That is the Australian case SMK Cabinets v Hili Modern Electronics Pty Ltd.7

If the prevention principle applies, the date for completion will be set aside and time is said to be at large. What that means is that the contractor has a reasonable time to complete and that the liquidated damages provision will not apply. If the extension of time clause does not give the contractor the right to claim an extension of time for all possible causes of delays by the Employer, there is a risk that the right to claim liquidated damages will be set aside.

I want to demonstrate what I have said by reviewing the grounds upon which Contractors can claim extensions of time under two Hong Kong standard form contracts.

In an appendix to the written paper that I have prepared, I have set out the extension of time clauses in full. I will not go through each ground for an extension of time individually. That will take a few hours in itself. However, I will refer to the main provisions and raise issues for you to think about.

I will start with the Hong Kong Government Form General Conditions of Contract for Building Works – 1999 Edition. Clause 50(1)(b) sets out the grounds for an extension of time claim. There are 11 grounds altogether. I will mention only 6, which are:

1. Inclement weather and/or its consequences adversely affecting the progress of the Works;
2. variations under Clause 60;
3. a substantial increase in the quantity of any item of work;
4. not being given possession of the Site or subsequently being deprived of it:
5. a disturbance to the progress of the Works, for which the Employer or the Architect or Specialist Contractor is responsible; and
6. “any special circumstance of any kind whatsoever”.

The grounds upon which Contractors can claim extensions of time under this Government form are fairly extensive. As a result therefore, the Government is well protected against the possibility that an act of prevention might set aside its right to claim liquidated damages. However the wording is not without problems. For instance the ground for an extension of time for variations, only applies tovariations under Clause 60. The right to issue variations is not without limit. If it can be shown that the Contract Manager has exceeded his authority and as a result Clause 60 does not apply, then there is a strong argument that the extension of time clause also does not apply and the Employer cannot claim liquidated damages. The ground in sub clause (v) which allows an extension of time if there is a substantial increase in quantities comes partially to the assistance of the Government here.

Further, the last ground “any special circumstance of any kind whatsoever” seems very unclear. This wording reflects similar wording in the FIDIC and ICE contracts and surprisingly, there is very little legal authority as to what it might mean.

The word “special” implies “of a particular kind, not general or exceptional in amount degree or intensity”. Therefore any delay which is caused by something common will not be covered by this clause. Presumably the clause covers any special risks, which are accepted by the Government under Clause 84, but given that the terms ‘special circumstance’ is a different term than special risks, then it is likely to have a different perhaps wider meaning.

There is further confusion caused by Clause 50(1)(c). This seeks to confirm what the Contractor cannot claim an extension of time for. Specifically it states that the Contractor cannot claim for:

1. a suspension to the Works described in Clause 54(2)(a) to (d) – the most important of which is suspension caused by the default of the Contractor; or
2. a shortage of Constructional Plant or labour.

The problem with clauses which confirm what the Contractor cannot claim for is not what they say, but which they leave out. For instance, this clause confirms that the Contractor cannot claim an extension of time for shortage of Constructional Plant or labour, but there is no mention of whether or not the Contractor can claim an extension of time for a shortage of materials. Can a Contractor argue therefore that a shortage of materials was caused by a “special circumstance”, then he can claim an extension of time? Further if the materials are being imported and if as a consequence of inclement weather either in the country of origin or during transit, there is a delay to the progress of the works, can the contractor claim an extension of time?

The HKIA/RICS standard form of contract has very different wording. Clause 23 is the extension of time clause. It also sets out 11 grounds to claim an extension of time. Again I will mention 6 grounds.

• force majeure;

This is very unclear. This term is not at all defined in the contract and would encourage anyone using this form of contract to include a good definition of force majeure.

• inclement weather or the subsequent effects of such inclement weather – which is expressly defined;
• civil commotion, strikes and lockouts affecting any of the trades employed upon the Works;
• variations under the contract;

Again – note that only variations under the Contract allow an extension of time. Any additional work claims which are properly quantum meruit or outside the contract would set time at large.

• delays by the Architect in providing instructions, drawings, details or levels;
• delays by artists, tradesmen or others engaged by the Employer.

Unlike the Government form contract, there is no general provision which states that a default by the Employer will allow the Contractor to claim an extension of time. In my view, this is a mistake. Similarly, the clause allowing a Contractor to claim an extension of time as a result of delays by the Architect is very narrowly worded. This allows the Contractor to claim an extension of time only if it is not received in due time.

“necessary instructions, drawings, details or levels”

When reviewing this clause, it should be borne in mind that the extension of time provisions should be strictly interpreted.8 I can only presume that this clause was written in this way because it was assumed that when the contract was signed, the Contractor would have a full design and that the only elements of the design that he would still need would be details. However I have seen this clause used in a fast track design and build project, where the Contractor had extremely limited design details at the outset. It is clearly inapplicable in those circumstances.

It is not difficult to think of other things which the Architect has to provide which could be a cause of delay. For instance, would approvals be included? Possibly. How about an entire sub-contract specification? Bear in mind that the extension of time clause must be interpreted strictly.

Unfortunately case law does not provide answers to these questions. However the lesson to be learnt is that the clause should be clearer.

Invariably, Clause 23 is amended by consultants acting for the Employer. It is usually the case that the amendments restrict the grounds upon which a Contractor can claim an extension of time. Although Employers and their consultants see a benefit in restricting these grounds, it is important to take great care.

Ultimately, if the extension of time clause is not properly drafted and an act of prevention occurs, then the Employer will not be able to claim liquidated damages and the whole purpose of the extension of time clause will be lost.

B: When to Claim

Often, extension of time clauses require the Contractor to claim an extension of time within a specified period from the date that the cause of the delay arose. These contracts seek to prevent the Contractor from claiming an extension of time at all for a delay unless he claims within that specified time. These are called condition precedents. These clauses must be sufficiently clear to be enforceable.9

The case of Might Foundate Development Limited v CCECC (HK) Ltd 10 provides a lesson on amending contracts. In that case, the extension of time clause was amended by two separate Special Conditions, one of which was intended to impose a condition precedent on the Contractor. The arbitrator decided that these two special conditions were inconsistent and therefore on a contra proferentem reading of the contract, did not act to impose a condition precedent on the Contractor.

A good example of a well written condition precedent clause is Clause 45 of the KCRC Standard Conditions, which requires any Contractor claiming an extension of time to give notice of any delaying event within 28 days after commencement of the event. Clause 45.11 states that the Contractor as a condition precedent to being granted, extensions of time claims must strictly comply with this time limit.

However, even if the notification clause is not written as a condition precedent, contractors must claim within the times specified in the contract. The failure to do so is a breach of contract.11 Also there is an important practical point.

Your claim is only as good as the evidence that you have got to support. You could have the best contractual argument in the World, but without evidence, it is not worth anything. The MTRC and KCRC contracts require the provision of information within set time limits. This is clearly a good idea for both sides. If properly managed it should facilitate the early resolution of claims. The difficulty with some provisions is that they seem to add an administrative burden without there being any particular benefit. For instance the KCRCcontracts require update information to be provided every 28 days during long delays or where the delays are not ascertainable.

Obviously the starting point for this 28 day period will be different for each claim and if this provision is followed to its logical conclusion then the contractor will very shortly after the start of the project, be submitting updates on different claims every day. It would be much easier if the contract required the Contractor to provide all the updates for all claims in one document in table form at the end of each month. We have some success in persuading engineers to accept this.

Condition Precedents are very common in Hong Kong and abroad and attempts have been made to get round them. There have been two recent approaches.

1. Using the Prevention Principle

The Australian case of Gaymark Investments Property Ltd v Walter Construction Group 12 concerns a claim by the Contractor for an extension of time where the Contractor failed to comply with the condition precedents for making claims. In that case, the Contractor was required to construct a hotel, retail and office complex. The Employer delayed the Contractor.

The contract stated that the Contractor shall only be entitled to an extension of time for practical completion … where the Contractor has strictly complied … with its obligation to give notice in writing of a delaying event within 14 days after the cause of the delay first arising.

The Employer attempted to claim liquidated damages for the delay. The claim was first decided by an arbitrator and then ultimately ended up in the Northern Territories Court of Appeal. The Court decided that it was clearly wrong to allow the Employer to claim liquidated damages for its own delays and refused to allow the claim.

The Court of Appeal agreed with the arbitrator that:

The contract between the parties fails to provide for a situation where [the Employer] caused actual delays to [the Contractor] achieving practical completion coupled with the failure by [the Contractor] to comply with the notice provisions.

One key issue which appears to be at the heart of this decision is the fact that a clause which is common in Australian Contracts, which allows a contract manager to extend time, even without a claim from the contractor, was deleted from the contract.

2. The Penalty Argument

In the Scottish case of City Inn Ltd v Shephard Construction Ltd 13, the Contractor was delayed in reaching completion. The Contractor argued that it was entitled to an extension of time as a result of instructions given by the Architect. The Contractor set out a strict time limit for extension of time claims and clearly stated that the Contractor was not entitled to any extension of time if it does not claim in time.

The Contractor admitted that it failed to claim within the time frame but argued that the condition precedent acted as a penalty. In other words, the condition precedent set out a contractual provision that the contractor had breached. The result of the breach is a liability to liquidated damages, which is out of all proportion to the damage suffered by the Employer.

However the Court of Appeal in Scotland (the Outer Court of Session) did not accept that argument. They said that the Contractor’s liability for liquidated damages does not result from a failure to comply with the notification provision but from the failure to complete on time. The failure to comply with the notification provision does not itself require the contractor to pay liquidated damages but instead leads to the mere possibility that liquidated damages may become payable at a later date.

C: How to Claim

Causation

Now that the Contractor has made a claim, we now need to consider how extensions of time are to be assessed i.e. what is the period of delay. Again, there is a degree of obscurity because of the grant of extensions of time cannot be a precise science. There are difficulties of overlapping, accumulative and concurrent delays. Delays caused by variations could take place at the same time as delays caused by labour or material shortages.

I wish to deal with two main issues, which are:

1. issues of causation; and
2. court decisions which have commented on the approaches to assessing the extensions of time.

The starting point though is what is the legal test for causation? The leading case is not a construction case, but is in fact a case involving damage to a ship during the First World War. In Leyland Shipping v Norwich Union Fire Insurance Society 14, the House of Lords had to decide what caused a ship to sink. The facts were these:

1. On 30 January 1915, the ship was torpedoed by a German submarine. It was hit by two torpedoes. The crew abandoned the ship immediately believing that it was about to sink and boarded a tug boat.
2. However the ship did not sink. The tug boat was able to tow the ship into a nearby port of Havre. However, a storm began and the seas became rougher. The ship started hitting the side of the dock.
3. The Harbour Master fearing that the ship might sink, required it to be towed to outside the inner walls of the harbour. The ship was moored outside of the harbour near the break water.
4. During the next two days, the storm continued, during which time the ship ran aground and on high tide re-floated. After two days of this constant battering, the ship sank.
5. The owners of the ship made a claim on the insurance. The Insurers rejected the claim on the basis of an exclusion which excluded losses caused by war and hostilities.

The court had to decide the cause of the loss. There were several competing clauses. Taking them in date order, they were:

1. the torpedoes;
2. the ship hitting the side of the dock;
3. the decision of the Harbour Master to require the ship to be removed from the inner harbour;
4. the effect of two days of the ship hitting the ground; and
5. the storm.

One issue of fact found by the court was that had the ship remained in the port, i.e. if the Harbour Master, did not require the ship to be removed, then it would not have sunk. However, the court decided that the cause of the loss was the torpedoes.

All of the other potential competing clauses were taken to have flowed from the initial damage from the torpedoes. One crucial factor in that decision was that given the importance of Havre as a port during the war and the concern that the ship could have sunk, the Harbour Master’s decision could not be faulted.

In legal terms, it is said that the torpedoes were the “proximate” or “dominant” cause of the loss.

There has previously been some discussion about an English case, which doubted whether the dominant cause approach was the right approach for construction claims. In H Fairweather & Co Ltd v London Borough of Wandsworth 15, the court rejected the dominant cause approach as not being the correct approach without stating an alternative.

However, the recent decision of Laing Management (Scotland) Ltd v the John Doyle Construction 16 case has confirmed that normal principles of causation should be taken into account for construction claims. Before discussing the Doyle decision, I want to mention concurrency very briefly.

Concurrency and competing causes

There is often some confusion over the effect of competing causes and to what extent delays, which overlap, can be claimed. The complex relationship between various site activities makes the factual analysis very difficult. Again the starting point is the Contract.

Under the RICS Contract, the Architect can only award an extension of time to the extent that completion of the Works is delayed or is likely to be delayed by one of the grounds stated in that clause. Under the Government Form of Contract, delay to progress of the works is the key. The Contractor is not required to show that the completion date itself is affected, if he can show a delay to progress as a result of one of the grounds listed in Clause 50 (1).

In either case however the Contractor must show a causal link between the cause of the delay and the effect of the delay. The decision of Henry Boot v Malmaison 17 emphasised that delay is really a question of fact and that to show the time cause of the delay, you must show that the delay was on the critical path. To give a very simple example, if there is a 1 week delay because of a failure to give the Contractor the possession of the site and during the course of that week, there is a day of inclement weather which would have stopped work, the contractor cannot claim an extension of time for the inclement weather unless it adds to the delay. Quite simply the inclement weather has not caused any delay.18 Although you might say that as the contractor can claim anyway, it does not matter. However the entitlement to claim prolongation costs might depend upon the cause of the delay and therefore the real cause of the delay could be critical.

The Hong Kong contracts do not deal with issues of concurrency very well. This approach is in sharp contrast to Australia, where the standard forms give the contract manager an obligation to apportion delays to respect causes if there are overlapping delays.19

Global Claims

It is often difficult to separate the delay and costs incurred following any delaying event. This is because there can be overlapping causes, such as variations to one part of the works issued at the same time that there are delays in providing drawings for a related part. Both the variation and the delay could allow a claim for an extension of time, but the exact length of the delay from each might be difficult to assess. Further it might be difficult to assess the precise cost consequences of them.

The English case of Crosby v Portland UDC concerned a claim for an extension of time and disruption costs. The contractor argued that it was not possible to separate out the delay associated with each item but instead argued that they were entitled to the total effect of the delays.

The court agreed and acknowledged that in that case, the extra cost claims resulted from an extremely complex set of facts. As a result, it was difficult or even impossible to make an accurate apportionment between the several causes and that there was no need to make an artificial apportionment which had no basis in reality. In such cases, a single lump sum award was proper, provided there was no duplication.

Thus the concept of the global claim was borne and the approach was adopted in Mertan v Leach. It was thought following these cases that contractors could make global claims without the need to show that vital causal link that we have just discussed. However it was not the case. As Lord Oliver said in Wharf v Eric Cumine:

Those cases established no more than this, that in cases where the full extent of extra costs incurred through delay depend upon a complex interaction between the consequences of various events, so that it may be difficult to make an accurate apportionment of the total extra costs, it may be proper for an arbitrator to make individual financial awards in respect of claims which can conveniently be dealt with in isolation and a supplementary award in respect of the financial consequences of the remainder as a composite whole.

The recent decision of Laing v Doyle has paved the way for a common sense approach to global claims. In that case, the claimant was a works contractor and the defendant a management contractor. The works contractor brought a claim against the management contractor for delay and loss and expense. The management contractor sought to strike out the claim on the basis that it was global and that no proper cause and effect was shown.

Both parties agreed that it was not possible to show a link between cause and effect and its cost consequences. The court decided that to claim loss and expense:

1. generally the Contractor must show that there is an event for which the employer is responsible and a causal link to the loss and expense;
2. if the loss and expense results from a number of causes and the contractor can show that all of the causes are the responsibility of the employer, it is not necessary to show a causal link between individual events;
3. a global claim cannot succeed where any of the causes of the loss and expense are the fault of the Contractor; but
4. however – and this is the good news for the contractors – if the global claim does not succeed, then it does not mean that the contractor can claim nothing. It may be possible to group claims using the dominant cause approach. It may also be possible to apportion the loss between causes attributable to the contractor and to the employer.

The Laing v Doyle decision is a Scottish law decision. However it seems to me that the principles are equally applicable in Hong Kong.

Appendix: Extension of Time Clauses in Standard Construction Contracts In Hong Kong

The Hong Kong Government General Conditions of Contract for Building Works [1999] – Clause 50
(1) (a) As soon as practicable but in any event within 28 days after the cause of any delay to the progress of the Works or any Section thereof has arisen, the Contractor shall give notice in writing to the Architect of the cause and probable extent of the delay.

Provided that as soon as the Contractor can reasonably foresee that any order or instruction issued by the Architect is likely to cause a delay to the progress of the Works or any Section thereof the Contractor shall forthwith give notice in writing to the Architect and specify the probable effect and extent of such delay. Such notice shall not in any event be given later than 28 days after the Architect has issued the relevant order or instruction.

(b) If in the opinion of the Architect the cause of the delay is:

(i) inclement weather and/or its consequences adversely affecting the progress of the Works, or

(ii) the hoisting of tropical cyclone warning signal No. 8 or above, or

(iia) a Black Rainstorm Warning, or

(iii) an instruction issued by the Architect under Clause 5, or

(iv) a variation ordered under Clause 60, or

(v) a substantial increase in quantity of any item of work included in the Contract not resulting from any error in firm quantities or from a variation ordered under Clause 60, or

(vi) the Contractor not being given possession of the Site or any Portion or part thereof in accordance with the Contract or is subsequently deprived of it by the Employer, or

(vii) a disturbance to the progress of the Works for which the Employer or the Architect or a Specialist Contractor is responsible including but not restricted to any matter referred to in Clause 63, or

(viii) the Architect suspending the Works in accordance with Clause 54 in so far as the suspension is not occasioned by the circumstances described in Clause 54(2)(a) to (d), or

(ix) any utility undertaking or other duly constituted authority failing to commence or to carry out in due time any work directly affecting the execution of the Works, provided that the Contractor has taken all practical steps to cause the utility undertaking or duly constituted authority to commence or to proceed with such work, or

(x) delay on the part of any Nominated Sub-contractor for any reason specified in sub-clause (b)(i) to (ix) of this clause and which the Contractor has taken all reasonable steps to avoid or reduce, or

(xi) any special circumstance of any kind whatsoever,

then the Architect shall within a reasonable time consider whether the Contractor is fairly entitled to an extension of time for the completion of the Works or any Section thereof.

(c) Notwithstanding the powers of the Architect under the provisions of this Clause to decide whether the Contractor is fairly entitled to an extension of time the Contractor shall not be entitled to an extension of time for the completion of the Works or any section thereof if the cause of the delay is:

(i) a suspension occasioned by the circumstances described in Clause 54(2)(a) to (d), or

(ii) a shortage of Constructional Plant or labour.

(2) If in accordance with the sub-clause (1) of this Clause the Architect considers that the Contractor is fairly entitled to an extension of time for the completion of the works or any section thereof, the Architect shall within a reasonable time determine, grant and notify in writing to the Contractor such extension. If the Architect decides that the Contractor is not entitled to an extension, the Architect shall notify the Contractor in writing accordingly.

Provided that the Architect in determining any such extension shall take into account all the circumstances known to him at that time, including the effect o any omission of work or substantial decrease in quantity of any item of work.

Provided further that the Architect shall, if the Contractor shall so request in writing, make a subsequent review of the circumstances causing delay and determine whether any further extension of time for completion should be granted.

(2A) For the avoidance of doubt if the Architect grants an extension of time in respect of a cause of delay occurring after the Employer is entitled to recover liquidated damages in respect of the Works or any Section, the period of extension of time granted shall be added to the prescribed time or previously extended time for the completion of the Works or, as the case may be, the relevant section.

(3) For the purposes of determining whether or to what extent the Contractor may be entitled to an extension of time under sub-clause (1)(b) of this Clause the Architect may require the Contractor to submit full and detailed particulars of the cause and extent of the delay to the progress of the Works. Where such full and detailed particulars are required by the Architect, they shall be submitted in writing by the Contractor to the Architect as soon as practicable in order that the Contractor’s claim may be investigated at that time by the Architect. If the Contractor fails to comply with the provisions of this sub-clause, the Architect shall consider such extension only to the extent that the Architect is able on the information available.

(4) Whenever the Architect grants an extension of time for completion in accordance with this Clause, the Contractor shall revise the programme referred to in Clause 16 accordingly.

(5) Except as provided elsewhere in the Contract, any extension of time granted by the Architect to the Contractor shall be deemed to be in full compensation and satisfaction for any loss or injury sustained or sustainable by the Contractor in respect of any matter or thing in connection with which such extension shall have been granted and every extension shall exonerate the Contractor from any claim or demand on the part of the Employer for the delay during the period of such extension but not for any delay continued beyond such period.

(6) For the purpose of this Clause “Black Rainstorm Warning’ means a warning issued by the Director of Hong Kong Observatory of a heavy rainstorm in, or in the vicinity of, Hong Kong by the use of the heavy rainstorm signal commonly referred to as Black.

The HKIA/RICS Agreement and Schedule of Conditions of Building Contract (Without Quantities) (April 1998)

Upon it becoming reasonably apparent that the progress of the Works is delayed, the Main Contractor shall forthwith give written notice of the cause of the delay to the Architect, and if in the opinion of the Architect the Completion of the Works is likely to be or has been delayed beyond the Date for Completion stated in the appendix to these Conditions or beyond any extended time previously fixed under either this clause or clause 33(1)(c) of these Conditions.

(a) by force majeure, or

(b) by reason of inclement weather or the subsequent effects of such inclement weather; for the purpose of this sub-clause “inclement weather” is defined as rainfall in excess of twenty millimeters in a twenty-four hour period (midnight to midnight) as recorded at the Hong Kong Observatory or the hoisting of Typhoon Signal Number 8 or higher, or

(c) by reason of loss or damage occasioned by any one or more of the contingencies referred to in clause 20(A) or (B) of these Conditions, or

(d) by reason of civil commotion, local combination of workmen, strike or lockout affecting any of the trades employed upon the Works or any of the trades engaged in the preparation, manufacture or transportation of any of the goods or materials required for the Works, or

(e) by reason of Architect’s instructions issued under clauses 1(2), 11(1) or 21(2) of these Conditions, or

(f) by reason of the Main Contractor not having received in due time necessary instructions, drawings, details or levels from the Architect for which he specifically applied in writing on a date which having regard to the Date for Completion stated in the appendix to these Conditions or to any extension of time then fixed under this clause or clause 33(1)(c) of these Conditions was neither unreasonably distant from nor unreasonably close to the date on which it was necessary for him to receive the same, or

(g) by delay on the part of Nominated Sub-Contractors or Nominated suppliers which the Main Contractor has taken all practicable steps to avoid or reduce, or

(h) by delay on the part of artists, tradesmen or others engaged by the Employer in executing work not forming part of this Contract, or

(i) by reason of the opening up for inspection of any work covered up or of the testing of any of the work, materials or goods in accordance with clause 6(3) of these Conditions (including making good in consequence of such opening up or testing) unless the inspection or test showed that the work, materials or goods were not in accordance with this Contract, or

(j) (i) by the Main Contractor’s inability for reasons beyond his control and which he could not reasonably have foreseen at the date of this Contract to secure such labour as is essential to the proper carrying out of the Works, or

(ii) by the Main Contractor’s inability for reasons beyond his control and which he could not reasonably have foreseen at the date of this Contract to secure such goods and/or materials as are essential to the proper carrying out of the Works, or

(k) by reason of compliance with the provisions of clause 34 of these Conditions or with Architect’s instructions issued thereunder.

Then the Architect shall so soon as he is able to estimate the length of the delay beyond the date or time aforesaid make in writing a fair and reasonable extension of time for completion of the Works. Provided always that the Main Contractor shall use constantly his best endeavours to prevent delay and shall do all that may reasonably be required to the satisfaction of the Architect to proceed with the Works.

1. Charnock v Liverpool Corp [1968] 1 WLR 1498
2. [1987] 39 B.L.R.30
3. although the origins of the rule stem from Holme v Guppy (1838) 3 M & W 387
4. [1978] 1 BLR 111
5. (1995) 11 (3) BCL 2002
6. [1974] 1BLR 111 at 121
7. [1984] VR391
8. Peak v McKinney (1970) 1 BLR 111 per Salmon LJ
9. (footnote missing)
10. [2001] HKCFI 785 – 6 August 2001
11. although the Court of Session in City Inn Ltd v Shephard ([2003] SCLR 795) decided that a contractor would not be in breach of contract if after receipt of an instruction from the Architect, it executed work without first providing details of any claim, despite clear wording of the clause which on its face required the Contractor to provide that information before carrying out that work.
12. [2000] 16 BCL 449
13. [2003] SCLR 795
14. [1918] A C 350
15. 39 BLR 106
16. [2004] BLR 295
17. 70 Can LR 32
18. See Royal Brompton Hospital v Hammond (18 December 2000)
19. e.g. AS4902 clause 34.4

This article is only an overview and is not legal advice. If you are contemplating an extension of time claim, or any legal transaction, you should consult our solicitors, who can provide you with the advice that you need, for your specific circumstances:

Eddie Look Partner | E-mail

Tim Drew Partner | E-mail

Edmond Leung Partner | E-mail

River Stone Partner | E-mail

Pádraig Walsh Partner | E-mail

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

This was a talk given to the Hong Kong Institute of Construction Managers on 18 November 2004. It was updated in August 2006.