Balfour Beatty Building Ltd v Chestermount Properties Ltd
Citation: 62 B.L.R. 1; 32 Con. L.R. 139; (1993) 9 Const. L.J. 117
Nature of case:
Chestermount engaged Balfour Beatty to construct an office block under the JCT standard form of contract. The works were not completed by the contract due date (9 May 1989), and the architect issued a non-completion certificate in accordance with cl.24.1. In February 1990, the parties agreed a variation to the contract to include fit-out works. The original contract works were completed on 12 October 1990, and the varied contract works were completed on 25 February 1991. The architect later granted extensions of time to 24 November 1989, and issued a final non-completion certificate.
In reliance upon the final non-completion certificate, Chestermount claimed for £3.84 million in liquidated and ascertained damages. Balfour Beatty disputed the applicability of the architect’s extended completion date. They argued that the architect had no scope to include any variation in his calculation of extensions of time, and that therefore the ordering of such a variation had the effect of setting aside the provisions in the original contract dealing with completion, extension and liquidated damages. Alternatively, Balfour Beatty argued that the date of completion following variation ought to have been calculated by adding the time required to complete the varied works on to the date on which these works were constructed (the “gross” basis).
The Court rejected these arguments. On its true construction, the contract did allow the architect to take account of events occurring after the contract date for completion as extended. Further, under the contract there was to be equivalence between the delay caused by a relevant event, and the extension granted as a result of it. The “gross” basis would not reflect this. As such the “net” approach was to be preferred, i.e. the architect should “start with the existing completion date and postpone it to the extent which he considered as fair and reasonable having regard to the delay caused by the requirement to execute the variation instructions.”
