A recent TCC decision has considered whether an adjudicator can review, and reduce, a contemporaneous extension of time granted under a JCT contract during the course of the works. The court confirmed that such a decision is open to review, but that, consistent with the contractual regime, the assessment must be carried out prospectively: the decision-maker must “stand in the shoes” of the Employer/Agent as at the time the original assessment was due and ignore subsequent events. This appears to be the first time such a “stand in shoes” approach of this kind has been applied by the TCC. The case is likely to have significant implications for both contractors and employers in dealing with extension of time claims under the JCT form, as well as other forms of contract which provide for the assessment of extensions of time during the course of the works.
Introduction
Infrastructure, construction and energy disputes commonly involve issues which require delay to be assessed. Delay experts are often engaged by parties to prepare reports analysing the delays on a project. A range of delay analysis methodologies exist and there is broad consensus that no single methodology is to be preferred in all cases. The choice of methodology has both legal and factual aspects: it must meet the requirements of the legal issue under consideration, be consistent with the requirements of the contract and must also be appropriate to the evidence available and the factual characteristics of the project in question.
A broad distinction between delay analysis methodologies can be made between those which are “prospective” and those which are “retrospective”. Prospective methodologies (such as “time impact” or “impacted as-planned” analyses) involve assessing criticality and delay contemporaneously at the time the events in question occurred. By contrast, retrospective methodologies take into account subsequent events and attempt to establish whether the events in question actually caused delay to completion when the progress of the work as a whole is considered.
Is one to be preferred over the other?
The circumstances in which the law might prefer a prospective approach over a retrospective approach are unsettled. Insofar as extensions of time are concerned, the original version of the SCL Delay and Disruption Protocol had stated a preference for a prospective methodology in all cases, even where an analysis was to be carried out after the event by a judge, arbitrator or adjudicator. This had been criticised and the 2nd Edition of the Protocol now states that where an extension of time claim is being assessed at a time distant from the events in question, a “prospective analysis of delay … may no longer be appropriate”.
The contractual provisions dealing with extensions of time are important in this regard. Under the JCT form of contract, the Architect / Employer’s Agent is required to assess extensions of time applied for during the course of the Works “as he then estimates to be fair and reasonable” if completion of the Works “is likely” to be delayed beyond the relevant Completion Date (a “Contemporaneous EOT”). Whilst this is necessarily a prospective assessment, the Architect / Employer’s Agent is also required to carry out a final, “sweep-up” extension of time exercise after Practical Completion (a “Final EOT”), although at that time cannot reduce any previously awarded extension if a Contemporaneous EOT is thought to have overestimated the impact of any delay. The existence of this Final EOT assessment is often said to support a retrospective approach.
Other contracts, such as the NEC, contain language which at first glance would appear to require a prospective approach to extensions of time. However, an attempt to require a prospective approach to be taken to a claim for additional payment under the NEC failed in a Northern Ireland High Court decision (NIHE v Healthly Buildings (Ireland) Limited click here for our Legal Update on the case).
The Healthy Buildings decision relied in part on established case law in relation to the assessment of damages to the effect that assessments should be made with the benefit of full information. The colourful statement of the position given by Lord Macnaghten in the Bwllfa case in 1903 is often quoted in this respect: “Why should [the arbitrator] guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?”. Or as Lord Robertson put it, “estimate and conjecture are superseded by facts”. This case law usually requires a retrospective approach to be taken where claims for breach of contract rather than extension of time are concerned.
Consistently with the decision in Healthy Buildings, the TCC in Fluor v Shanghai Zhenhua Heavy Industry Co found that “some form of retrospective analysis [was] required” for a claim for delays arising from defective work (i.e. a breach of contract). However, the court noted that a prospective approach was “the correct approach when considering matters such as the award of an extension of time”.
Mace Construct Ltd v Baltic Investment Holdings Ltd
The present case concerned the refurbishment of the Baltic Exchange Building in London. A Contemporaneous EOT was awarded to Mace under an amended JCT Design and Build 2016 contract, totalling 7 weeks and 5 days for delays caused by design changes and the need for additional approvals and listed building consents.
Baltic subsequently concluded that the extension of time the Employer’s Agent had granted was excessive and referred the matter to adjudication. The adjudicator opened up and revised the Contemporaneous EOT, concluding that Mace had no entitlement and that the extension previously granted should be reduced to zero. The adjudicator’s decision was then referred to the TCC on the question (among others) of whether an adjudicator or the court has the power to review and reduce a Contemporaneous EOT , given the JCT’s restriction on reducing Contemporaneous EOTs in a Final EOT assessment.
The court confirmed that the Contemporaneous EOT assessment under the JCT form is a strictly prospective exercise: it is based on what is “likely” to delay completion at the time of assessment, must be carried out at the point at which the assessment was due, and the Employer is “fixed” with the extension unless there have been Relevant Omissions.
The contractor argued that an adjudicator or court could not review the extension of time assessment, because the reviewer “would never be in a position to carry out the prospective exercise required [for a Contemporaneous EOT] but would be looking at the matter retrospectively, knowing how matters had turned out.” The court disagreed. Drawing on the power in the Scheme for Construction Contracts to “open up, revise and review any decision taken or any certificate given”, the court held that Contemporaneous EOTs are reviewable in adjudication, but that the review must itself be prospective. The adjudicator must:
- “stand in the shoes” of the Employer’s Agent in carrying out a Contemporaneous EOT assessment;
- perform the same “prospective assessment in response to the notice and particulars submitted” during the course of the Works;
- “travel back to the time at which the notice and particulars were submitted” and “ignore what has happened since that date”.
Conclusions and implications
This decision appears to be the first time a strictly prospective, “stand in shoes”, approach to the assessment of extensions of time has been accepted by the TCC. Whilst the court had appeared to approve a prospective approach to Final EOT assessments in the Walter Lilly case, the prospective approach in that case had been “reality checked” against subsequent events leading the court to conclude that both prospective and retrospective approaches were likely to produce the same result. Such reality-checking would not appear to be contemplated by the court’s conclusions in the present case when dealing with Contemporaneous EOT assessments.
The court’s decision is likely to lead to a greater focus on the contractual provisions upon which extension of time claims are brought and may challenge the common perception that delay experts have complete flexibility regarding the appropriate methodology for assessing delay at the end of the works. The court’s approach has benefits: it provides certainty (prioritising dispute avoidance) over a more comprehensive analysis of the extent to which a contractor, with the benefit of hindsight, has been delayed. On the other hand, these benefits come at the cost of accuracy, meaning that some Contemporaneous EOTs will be unassailable even when shown by subsequent event to be overstated.
In practice, it seems likely that the court’s guidance will encourage contractors to make and pursue Contemporaneous EOT claims through adjudication during the course of the works, in order to take the potential benefit of the strictly prospective approach indicated by the court. Having obtained such extensions of time, contractors are likely to rely on the JCT provisions which do not permit Contemporaneous EOTs to be reduced in a Final EOT assessment (absent Relevant Omissions). In such circumstances, employers may seek to argue that provision of delay notices and particulars of delay strictly in accordance with the timescales provided by the contract are condition precedents to such claims.
The decision may also prompt further discussion over the precise ambit of the JCT’s restriction on the reduction of Contemporaneous EOTs. There is little caselaw on this topic, including whether the restriction applies to specific extension of time assessments or only to the net effect of a Final EOT assessment (i.e. so that it is only the net extension of time applicable after considering all Relevant Events which cannot fall below previous Contemporaneous EOTs).
References
Mace Construct Ltd v Baltic Investment Holdings Ltd [2026] EWHC 976 (TCC).
Fluor v Shanghai Zhenhua Heavy Industry Co, Ltd [2018] EWHC 1 (TCC).
Northern Ireland Housing Executive v Healthy Buildings (Ireland) Limited [2017] NIQB 43
