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THE PREVENTION PRINCIPLE AND MAKING THE CONTRACTOR PAY FOR EMPLOYER DELAY: IS ENGLISH LAW DEPARTING FROM ITS ROOTS? (PART 2)

International Construction Law Review

THE PREVENTION PRINCIPLE AND MAKING THE CONTRACTOR PAY FOR EMPLOYER DELAY: IS ENGLISH LAW DEPARTING FROM ITS ROOTS? (PART 2)

Tony Marshall

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 [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),1 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

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