One of the fun things about the High Court (well, fun or not, I suppose, depending on how things turn out) is that they publish transcripts of special leave applications. So, even though the court says precious little by way of reasons, it is possible to see what was said in argument.

Most of my work is, by its nature, confidential, and so I can say nothing about what happens in mediation, DRBs, arbitrations and the like, however interesting those proceedings may be.  To be in a public court is a bit of rarity for me, these days.

Anyway, for those who might be interested, the transcript in the Yuanda case is thus: Continue reading →

I am pleased to say that I prevailed this afternoon in the High Court in the special leave application made by Façade Design International against my clients Yuanda. The application was dismissed with costs on the basis that the appeal did not enjoy sufficient prospects of success.

As foreshadowed, the hearing was heard remotely. I was at my desk in Myponga Beach. My excellent junior Laura Mills was in Melbourne. The bench – Justices Keane, Gordon and Edelman – were in Canberra. As to my opponents, I presume that Brett Walker SC was in Sydney and Michael Roberts QC was in Melbourne, but really they could have been anywhere. My helpful instructing solicitors, Fusion Legal, were in Sydney. It is a weird way of doing things, for sure, but it works rather better than one might imagine. Even after the Covid thing goes away, I suspect we will never go back to the days when we would fly interstate for relatively inconsequential hearings, such as for directions. Hopefully, we will get back to being in court in person for proper argument. Continue reading →

These emails, obtained in the UK under freedom of information provisions, offer an interesting insight into how the administration of law is handed at the top level.

It is notable that they are not averse to a spot of backdating, when that is seen to be convenient!

Emails relating to Lord Sumption’s resignation from the supplementary panel:

Email from Lord Sumption to Lord Reed, 30/1/2021:

Dear Robert,

I am, as you know, still on the supplementary list of justices available to hear cases in the Supreme Court. I have not sat since the spring of 2019 and in September 2019 I asked Brenda not to be listed to hear appeals in view of public criticisms which I was making of the government. I very much doubt whether it will be appropriate for me to sit again at any time in the next three years which remain before I reach the age of 75. Unless you disagree, I think that the time has come for me to withdraw from the supplementary list.

(Line removed from email because it does not relate to this FOI request)

Jonathan

Response from Lord Reed to Lord Sumption, 30/1/2021:

Dear Jonathan,

I think that is the right decision, given your high public profile in relation to controversial questions of public policy.

(Several sentences removed from email as they do not relate to the FOI request).

Best wishes,

Robert

Email forwarded by Lord Reed to Vicky Fox, Chief Executive and Lord Hodge, Deputy President on 30/1/2021: Continue reading →

I mentioned the other day the pending application for leave to appeal from Bensons Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69, due to be heard shortly.

Until the Benson decision, the law as to whether the prevention principle is a rule of law, or a mere implied term (susceptible to be trampled over by casual express provision) had been usefully summarised in Hera Project Pty Ltd v Bisognin (No3) [2017] VSC 268, affirmed by the Victorian Court of Appeal as Bisognin v Hera at [2108] VSCA 93. I set out that summary below, as extracted for my book Extra-Contractual Recoveries for Construction and Engineering Work (now with the publishers).[1] In short, the answer was that it is a rule of law, and not merely an implied term. Benson, ignoring much authority, came to the opposite conclusion.

Meanwhile, Tony Marshall has kindly made available his further discussion of this vital issue, which had been excised from his paper in ICLR for reasons of length. So, with his further kind permission, I set out that further discussion below.[2]

The importance of the point can be bluntly stated: consider the position where an owner (or head contractor) prevents the contractor (or subcontractor) from doing the contracted work on time, by ordering extra work, or by not giving possession of the site, or some other act of prevention. The prevention might or might not be permitted by the contract, or a breach of contract. The contractor (or subcontractor) is not, for one reason or another, entitled to an extension of time, and so is inevitably in breach of the obligation to complete by the stipulated date, by no fault of his own.  The contract contains some weasel words which say there are no implied terms. Is the owner (or head contractor) entitled to liquidated or other damages for the failure of the contractor (or subcontractor) to complete on time? Even more starkly, does the law permit, “I Delay, You Pay” arrangements? If so, what, if any, are the constraints?[3]

Continue reading →

In late March of this year^[1], the Court of Appeal in Victoria handed down its decision in Bensons Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69.  The principal interest in the case lies in what the court had to say about the prevention principle. There is considerable authority at the highest level that the prevention principle is a rule of law, but nevertheless the Court of Appeal of Victoria considered that it was merely a matter of implication, which gives way to the express terms of the contract. The key passage is perhaps at paragraph 114:

Given that the prevention principle is commonly a reflection of the obligation on the parties to a contract not to hinder or prevent one another from enjoying the benefit of the contract, and generally the source of the obligation is an implied term that is found in most contracts, it is unsurprising that little time was spent analysing the jurisprudential nature of the obligation.  The prevalence of the obligation means that generally the focus will be on the consequences of the impugned conduct for the performance of the contract.  That is what occurred here.  It might also be thought that where the consequence is established (one party has prevented the other from enjoying the bargain) there will inevitably be an antecedent breach.  In our opinion, however, it is an error to consider the prevention principle divorced from the terms of the contract and it is a breach of a contractual term that gives rise to the potential application of the principle.

The implications of this approach to the construction industry are profound.  If this approach is to be followed, it means that an owner (or head contractor), if savvy enough with its conditions of contract, can prevent the contractor (or subcontractor) from executing the work for lengthy periods, and then claim damages from the head contractor (or subcontractor) for failing to complete the work on time. On any sensible, or even half sensible, commercial approach to the law, this should be an anathema. Arguably, on this approach, a mere “entire agreement” clause is sufficient to prevent time being set at large, however much owner (or head contractor) has been the cause of the preventing delay.

Unsurprisingly, KIA is seeking to appeal that decision to the High Court, and the special leave application is due to be heard in just over a month’s time, on 5th November.

Relatively little authority was referred to by the Victorian Court of Appeal on this point.  But there is in fact a great deal of authority on it, and it is carefully and convincingly marshalled^[2] in Tony Marshall’s pair of articles The Prevention Principle and Making the Contractor pay for Employer Delay:  is  English Law departing from its Roots? published in the International Construction Law Review^[3], but which perhaps have not obtained the attention that they deserve. With the kind permission of Tony Marshall^[4], I set out the paper below. It is to be hoped that the High Court will be persuaded of its essence, which is that:

• it is very firmly established by the highest authority that the prevention principle is a principle of law, not a mere matter of implied term and,
• that there are very good reasons why it should remain so.

The Prevention Principle and Making the Contractor pay for Employer Delay:  is  English Law departing from its Roots?

(Part 1)

“If the failure to complete on time is due to the fault of the employer and the contractor, in my view the (liquidated damages) 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”[5]

1. Introduction

It has been understood in English law for centuries that, where a contractor undertaking work is prevented by his employer from completing his work by the agreed completion date, the agreed completion date ceases to apply and, the date having “gone”, an obligation to complete within a reasonable time is substituted. Any right on the part of the employer to damages for failure to achieve the original date also falls away; the employer is left to his remedy in general damages for any failure to complete within a reasonable time.

The expression which came to be used to describe this situation, in the early nineteenth century cases, was that the contractor was, as a result, “left at large”, both as to the time for completion and as to any damages payable (time and damages were “at large” in the sense of   being “no longer fixed; unconfined”).  Hence the expression so often on the lips of the construction lawyer (not to mention the enthusiastic claims consultant) – “time is at large”.

Those consequences flow from the application of the time-hallowed “prevention principle” of the common law. According to that principle, he who prevents the performance of his contractual counterparty cannot seek recompense for the resulting failure of the counterparty to perform. Continue reading →