THE PREVENTION PRINCIPLE AND MAKING THE CONTRACTOR PAY FOR EMPLOYER DELAY: IS ENGLISH LAW DEPARTING FROM ITS ROOTS? (PART 2)
Senior Counsel, Hogan Lovells’ Construction and Engineering Practice Group
[This is the continuation of a paper, Part 1 of which appears in ICLR Part 4 of 2020  ICLR 325
7. Professor Ian Duncan Wallace QC on the Gaymark judgment
As we saw in Part 1 of this paper, in Gaymark Investments Pty Ltd v Walter Construction Group Ltd (formerly Concrete Constructions Group Ltd
Bailey J (in the Supreme Court of the Northern Territory of Australia) held that where a contractor fails to give notice of a delay caused by the employer and the contract contains a notice-as-condition-precedent clause, the time for completion is set at large.
In “Prevention and Liquidated Damages: A Theory Too Far?”,2
Professor Ian Duncan Wallace QC, the then doyen of English construction law (for many years editor of Hudson on Building Contracts
) criticised Gaymark
on the following three grounds:
(1) The prevention theory was “based partly on an early judicial dislike of liquidated damages clauses (which now no longer exists) and partly on an earlier principle of law that a party cannot benefit from its own wrong”.
[In fact, the authoritative statements of the prevention principle from the early authorities set out in Part 1 of this paper, at Section 2, made no reference at all to liquidated damages as related to the development of this “theory”.]
(2) Bailey J was “unrealistic” to interpret the notice-as-condition-precedent requirement in the Gaymark contract as compelling the employer to reject an application for an extension, or preventing the employer from waiving the requirement for a notice; this involved, he wrote, “an artificial if not fanciful and legalistic interpretation”.
[Yet this is precisely the conclusion to which the authorities culminating in Peak v McKinney lead. They regard the extension of time provision as a means whereby the employer can rescue his right to liquidated damages when he causes delay.
Pt 1] Prevention Principle and Making Contractor Pay