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A BRIEF REVIEW OF THE CONCEPT OF TIME AT LARGE IN SOUTH AFRICAN CONSTRUCTION CONTRACTS

Time at Large is essentially an English Law concept which is not a legal term, but which describes the situation where, for various reasons, there is no identified date for the completion of the works by the Contractor.

by Alayne Meinesz, Senior Associate, Corporate Department: Construction & Engineering Practice Area

What is "Time at Large"?

Time at Large is essentially an English Law concept which is not a legal term, but which describes the situation where, for various reasons, there is no identified date for the completion of the works by the Contractor (see also “www.atkinson-law.com; “Delay and Disruption – Time at Large”, Daniel Atkinson 2002; 21 November 2002 for a succinct discussion of the English Law position).

The concept of “time at large” originated from the English law “prevention principle”.  The basic tenant of the “prevention principle” is that “no person can take advantage of the non-fulfilment of a condition, the performance of which has been hindered by himself” (per Vaughan Williams L.J. in Barque Quilpe Ltd v Brown [1904] 2 K.B.264 at 274) in simple terms, a person cannot benefit from their own wrong-doing.  For example where an employer causes a delay to the contractor’s completion of the works and there is no provision for a contractor to claim an extension of time as a result thereof, time will be deemed to be “at large” as alternatively the employer may be able to levy penalties for delay, thereby benefiting from his own wrong-doing.

The effect of time being at large is, in the normal course, that the contractor then has a common law obligation to complete the works within a reasonable period of time and the employer forfeits any right which it may otherwise have had to claim liquidated damages (for example delay damages) from the contractor and is instead faced with having to prove its claim for general/unliquidated damages against the contractor, provided of course that the delay is attributable to causes beyond the contractor’s control and he has neither acted negligently or unreasonably.

 

When does “Time at Large” apply?

A situation of time being at large may, for example, arise:

  • where the contract does not provide for a date for completion of the works;
  • where the contract does not make provision for an extension of time in certain situations which delay the completion of the works, including, as stated above, due to certain actions of prevention or even breach by the employer or as a result of variations ordered, resulting in the original date for completion no longer being reasonable; or
  • where the employer may have waived the obligation of the contractor to complete the contract by a specified period of time and does not thereafter provide the employer with notice that time is of the essence. An example of such waiver is where the employer may have waived an earlier breach of the contractor’s completion obligation or where the employer has elected to leave the contract on foot which might otherwise have been cancelled for such reason.  If time is of the essence and the contractor fails to perform a particular thing by the particular prescribed date (without of course having been granted an extension in terms of the contract) the employer may elect to immediately rescind the contract.  If time is not of the essence the employer may only rescind the contract after giving notice requiring performance within a specified time and after the contractor’s non-compliance with such notice (see Hudson’s Building and Engineering Contracts; JN Duncan Wallace, eleventh edition, vol 2, for further discussion in this regard).

The fourth situation set out above is the most relevant for construction contracts in South African law in that most standard form construction contracts used in South Africa contain contractual provisions providing for situations in which the contractor will be entitled to an extension of time (and in certain cases costs).

Examples of time being held to be at large in construction contracts in South Africa are not in abundance.  The leading case in this regard is the case of Group Five Building Ltd (“the Plaintiff”) v Minister of Community Development (“the Defendant”) (“the Group Five Case”) in which the Appellate Division considered the issue of when the concept of time at large could apply to a contract.

Pivotal to the Plaintiff’s claims in this case was the proposition that the contractual completion date had ceased to be of application due to the delay in completion which the plaintiff attributed to the Defendant, its employees or agents (ie. the employer).

Clause 17(ii) of the relevant contract provided that “if the works shall be delayed by cessation of work by any workmen, inclement weather, or by any omissions, additions, substitutions or variations of the works, or of any items of work, labour or material, or by any other causes beyond the contractor’s control then the contractor shall have the right within 21 days of any such cause of delay arising, to apply in writing to (the employer) through the engineer to extend the date of completion…”.

The Plaintiff contended that, but for their (the employers) interventions (by way of late variation orders and instructions and unauthorised suspension orders), the works would have been completed on the original date which it had programmed for completion, which was well in advance of theextended contractual completion date and the actual completion date.  Such interventions constituted, so it was alleged, breaches of the contract by the defendant or, if not, at the very least fell outside the ambit of the clause providing for extensions of time for completion and that therefore the contract instead was to have been completed “within a reasonable time”.

According to the Plaintiff’s counsel in this case, the proposition that the contractual completion date had ceased to be of application and that the contract instead was to have been completed within a reasonable time, was drafted into the present contract as an implied term in the sense of ’a standardised one, amounting to a rule of law . . .’ (per Corbett AJA in Alfred McAlpine). The rule of law, so it was submitted, is derived from English building cases such as Holme v Guppy (1838) 3 M & W 387 (150 ER 1195); Russell v Sa da Bandeira, (Viscount) (1862) 13 CB (NS) 149; Jones; Wells v Army & Navy Co-operative Society [1902] 86 LT 764 (“Wells case”) and Kelly and Hingle’s Trustees v Union Government (Minister of Public Works) 1928 TPD 272).

The sense of the English cases according to the court was the following:

  1. A contractor is bound to complete the work by the date stipulated in the contract for its completion.  If he fails to do so he will be liable, if so agreed, for liquidated damages to the employer.
  2. The employer will not, however, be entitled to liquidated damages if by his act or omission he prevented the contractor from completing the contract by the agreed date.
  3. The qualification of proposition 1 by proposition 2 is itself subject to the further qualification that the latter must yield to the express terms of the contract. One such express term would be the authority granted to a contractor to apply for an extension of time within which to complete the work, for example, where variation orders are issued or extra work is ordered which delay its completion.
  4. But, where the extension clause lists specific grounds on which the contractor may ask for an extension of time and adds the words ’or other causes beyond the contractor’s control’ the latter phrase must be interpreted narrowly and eiusdem generis with the preceding categories.  Wrongful conduct of the employer which caused delay would in particular be excluded, at any rate when, in terms of other provisions in the contract, the decision about extra time rests with the employer himself and is final (for otherwise, if not excluded, the employer becomes arbiter of, and gains an advantage from, his own wrong) (this proposition stems from the Wells case). Proposition 3 accordingly does not apply and proposition 2 does: Consequently the employer would not be entitled to enforce a claim for liquidated damages.

The court in the Group Five Case further stated that, “when parties agree that a contract is to be implemented by a fixed date, conduct by the employer which is authorised by the contract (for example, issuing variation orders or ordering extra work) surely cannot alter or nullify the agreed date for completion.  It is for that very reason that building contracts nowadays almost invariably contain express provisions making allowance for extensions of time.  When, on the other hand, the conduct of the employer is unlawful (and constitutes a breach of contract) the position may be different, for it stands to reason that a debtor is excused from performing an obligation on time if his creditor wrongfully prevented him from doing so (cf Van der Merwe, Van Huyssteen and Others, Contract at 271)”.

The court therefore found that “the words ‘or by any other causes beyond the contractor’s control’ in clause 17(ii) are wide enough to embrace wrongful conduct by the employer or his agent.  Such conduct would entitle the contractor to apply for an extension of time and if the application was refused, to have the matter tested in a court of law, the contractor could also recover any losses he suffered as a result of the owner’s wrongful conduct by way of an action for damages.  The express terms of the contract accordingly provide for the very eventuality which the plaintiff alleges occurred.  The plaintiff opted not to apply for an extension of time and now seeks to justify that omission by contending that it could not have done so since the defendant committed various breaches which prevented the plaintiff from completing the contract by the agreed date.”  According to the plaintiff the completion date in clause 17(i) no longer applied and should be disregarded. The plaintiff’s entire case was therefore founded on the premise that the express completion date was overtaken by a contrary implied term.  As an implied term can not co-exist with a contradictory express term the appeal was dismissed with costs.

 

Conclusion

Although therefore “time at large” can arise in a number of circumstances, the message in South African law is clear: where the contractor has a remedy in terms of its applicable contract, be it by way of an extension of time claim or otherwise, time will not be considered by the courts to be “at large” until such time as the contractor has exhausted its contractual remedies.  It is imperative therefore to ensure that extension of time provisions in contracts are clearly drafted and understood to prevent a situation arising where there is in effect no contractual right to an extension of time and the situation of time being at large arises.

 
 
   

 

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