Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (No. 2)

This judgment is in eight parts, namely: Part 1 Introduction; Part 2 The Facts; Part 3 The Present Proceedings; Part 4 The Construction Point; Part 5 The Operational Point; Part 6 The Gaymark Point; Part 7 The Effect of the Settlement Agreement; Part 8 Conclusion.

This litigation has been brought in order to determine whether time has been set at large under one of the sub-contracts for the Wembley Stadium project. The claimant in this action is Multiplex Constructions (UK) Limited, to which I shall refer as "Multiplex". The defendant is Honeywell Control Systems Limited, to which I shall refer as "Honeywell".

Multiplex is the main contractor constructing the New National Stadium at Wembley. Honeywell is one of the sub-contractors. The employer under the main contract is Wembley National Stadium Limited, to which I shall refer as "WNSL". WNSL is a wholly owned subsidiary of the Football Association.

This is the sixth judgment which I have given since June of last year in various actions concerning the Wembley project. It is worth repeating some observations which I made in the first of those judgments. Multiplex, its designers and its sub-contractors are engaged upon producing a world-class sports stadium. Practical completion is now imminent. The stadium will have a capacity of about 90,000 seats. It will be used for football, rugby and all types of concerts. It will have extensive, high quality, corporate hospitality facilities and a state of the art communications system (installed by Honeywell). Long after the present legal difficulties have been forgotten all parties will justifiably take pride in what they have created.

The central issue in the present action is whether time has been set at large under Honeywell's Sub-Contract. Honeywell contends, but Multiplex denies, that this is the case. By "time at large", Honeywell means that its contractual obligation to complete within 60 weeks (subject to any grant of extension of time) has fallen away. Instead, Honeywell's only obligation in this regard is to complete within a reasonable time and/or reasonably in accordance with the progress of the main contract works.

Having identified the central issue in this action, I must now outline the facts.

By a contract dated 26th September 2002 made between (i) WNSL, (ii) Multiplex and (iii) Multiplex's Australian parent company as guarantor, Multiplex agreed to design and construct the New National Stadium at Wembley. I refer to this as "the main contract".

Having entered into the main contract, Multiplex proceeded with the project. Multiplex engaged a number of different sub-contractors to design, construct and install the different elements of the stadium. I am told by counsel that the entirety of the works is being executed by sub-contractors.

Multiplex entrusted to Honeywell the design, supply and installation of various electronic systems for communication and control of the building. These comprise nine separate systems as follows: 1. The building management system ("BMS"); 2. The fire detection and alarm system; 3. The public address and voice alarm; 4. The communications network; 5. The access system; 6. The stewards’ and emergency telephones; 7. The MATV system; 8. The CCTV system; 9. The commissioning management systems. Most of these systems are self-explanatory. I should, however, briefly explain items 1, 4 and 7.

Item 1, the BMS, is a computerised control system for all the mechanical and electrical services such as heating, cooling, ventilation, in addition to the other Honeywell systems mentioned. The BMS control system is connected to 35,000 separate points throughout the stadium, each of which may have several individual control settings.

Item 4, the communications network, is a high speed data network which transfers communications between systems. For example, it reports faults from the various systems back to the head end of the BMS system; it allows third party broadcasters, such as television channels, to transfer data from the stadium direct to their own individual systems; it also provides linkage for the CCTV system to the external police systems, to enable remote control and monitoring for security purposes. The main spine of the communications network is a fibre optic cable.

Item 7 is the MATV system. There are many television screens distributed throughout the stadium which can accept and broadcast a variety of different input signals.

By way of shorthand, I shall refer to all of the above systems as "the electronic systems".

The sub-contract made between Multiplex and Honeywell was dated 27th May 2004. The sub-contract documents in order of precedence were as follows: (1) the Articles of Agreement; (2) the appendix; (3) the conditions; (4) the special conditions; (5) the numbered documents.

By the Articles of Agreement, Honeywell agreed to carry out and complete the Sub-Contract Works for the sum of £13.4 million or such other sum as should become payable in accordance with the Sub-Contract. The appendix to the Sub-Contract was divided into 16 parts. Part 4 of the appendix provided that Honeywell should commence the Sub-Contract Works on 5th April 2004 and should complete those works within 60 weeks. Part 16 set out a number of amendments to the Sub-Contract Conditions. I shall incorporate those amendments without further mention when reading out extracts from the Conditions.

Clause 4.2 of the Conditions provides:

Clause 4.6 of the Sub-Contract Conditions provides:

Clause 4.7 of the Sub-Contract conditions provides:

Clause 11 of the Sub-Contract Conditions provides:

Clause 12 of the Sub-Contract Conditions provides:

Clause 38A of the Sub-Contract Provisions provides for the resolution of any disputes by adjudication. Clause 38A provides:

Clause 38C provides for litigation as the final method of dispute resolution in the event that either party does not accept the adjudicator's decision.

Clause 38C .2 provides:

Clause 46 of the Sub-Contract Conditions provides:

One of the numbered documents which forms part of the Sub-Contract is the General Preliminaries section of the Sub-Contract package. Section 7 of the General Preliminaries deals with programming and it includes the following provisions:

Section 7.6 of the General Preliminaries sets out certain programmes which the Sub-Contractor must prepare. Section 11.2 of the General Preliminaries sets out the Sub-Contractor's obligation to prepare fortnightly progress reports.

Volume 2 of the Sub-Contract Communications Package, which is also part of the numbered documents, includes the following provisions:

Having entered into the Sub-Contract, Honeywell proceeded with the design and installation of the electronic systems at the stadium. Unfortunately by the time that Honeywell entered into the Sub-Contract, substantial delays to the project had already occurred. For example, there were lengthy delays in erecting the structural steelwork for reasons which are in dispute between Multiplex and the steelworks Sub-Contractor: See Multiplex Constructions (UK) Limited v Cleveland Bridge Limited [2006] EWHC 1341 (TCC).

Delays to the construction of the stadium and to the installation of the electronic systems continued to occur after Honeywell had commenced work. Honeywell is strongly critical of Multiplex's organisation and programming of the works since the summer of 2004. Honeywell maintains that Multiplex and those for whom Multiplex is responsible have caused the delay during this period. Multiplex, on the other hand, is strongly critical of Honeywell's performance and blames Honeywell for much of the delay since the summer of 2004.

During 2005 Multiplex issued three revised programmes to Honeywell. On 10th February 2005 Multiplex issued programme CB7E, which showed a completion date of 31st December 2005. On 18th July 2005 Multiplex issued programme FO15, which showed a completion date of 31st March 2006. On 24th November 2005 Multiplex issued programme DC10, which also showed a completion date of 31st March 2006. Multiplex issued each of these programmes in the form of a direction under clause 4.2 of the Sub-Contract Conditions.

The proposed completion date of 31st March 2006 passed without completion being achieved either of the electronic systems or of a number of other trades. I am told by Multiplex's counsel that as at 31st March 2006 Honeywell had done approximately 60% of its installation work and approximately 5% of its commissioning work. I was given this information by way of background only. It is not a subject on which there is evidence before the court and I make no finding about the matter (although I had the advantage of visiting the stadium in March 2006 and being shown the work which was then in progress).

Multiplex did not issue any further Sub-Contract programmes after DC10. Multiplex did, however, issue a number of "look ahead" programmes which covered limited periods into the future. The adequacy of Multiplex's various programmes is a matter of substantial controversy between the parties.

Honeywell maintained that by reason of the issue of programmes CB7E, FO15 and DC10 it was entitled to recover prolongation costs and other financial relief. Honeywell commenced two adjudications concerning the effect and financial consequences of those three programmes. Mr. E.J. Mouzer was the adjudicator in both of those adjudications. Mr. Mouzer gave his decision in the first adjudication on 13th January 2006. In that decision Mr. Mouzer held that programme CB7E, FO15 and DC10 were issued as directions pursuant to clause 4.2 of the Sub-Contract Conditions; that Honeywell was obliged to comply with those programmes; and that each of those programmes constituted a variation under the terms of the Sub-Contract.

Mr. Mouzer gave his decision in the second adjudication on 28th April 2006. In that decision Mr. Mouzer awarded to Honeywell certain prolongation costs in respect of the period 1st October 2005 to 31st March 2006. Neither party has challenged Mr. Mouzer's decisions by litigation. Therefore, at least for the time being, those two decisions are binding on the parties pursuant to clause 38A.7 of the Sub-Contract Conditions.

A separate dispute developed between the parties as to whether Multiplex by its conduct had put time at large under Honeywell's Sub-Contract. Honeywell contended that time was at large; Multiplex contended that it was not. This dispute was the subject of a third adjudication. In this instance Mr. David Miles was appointed adjudicator. In a decision dated 6th July 2006, Mr. Miles held that time had been put at large under the Sub-Contract because (a) programmes CB7E, FO15 and DC10 had been issued under clause 4.2 and (b) clause 11 of the Sub-Contract Conditions did not contain any mechanism for extending time in respect of delay caused by a direction under clause 4.2. Mr. Miles dismissed a separate argument advanced by Honeywell to the effect that Multiplex's failure to issue programmes after DC10 was also a matter which put time at large.

Multiplex was aggrieved by Mr. Miles' decision. Accordingly, in order to obtain a declaration that time was not at large under the Sub-Contract, Multiplex commenced the present proceedings.

By a claim form issued in the Technology and Construction Court on 18th July 2006, Multiplex claimed against Honeywell the following three declarations:

Despite various amendments to the pleadings, these remain the three declarations which Multiplex is seeking.

Honeywell by its defence asserts that the adjudicator was correct in his conclusion that any direction under clause 4.2, which affects the completion date, puts time at large. Accordingly, Multiplex is not entitled to the declaration sought. This issue between the parties turns on the correct construction of the Sub-Contract Conditions. It is referred to in the pleadings as "the construction point." I shall adopt that terminology.

In case Honeywell should lose the construction point, Honeywell also advances three further arguments as to why time has been put at large. The first argument is that Multiplex has by its conduct made the extension of time machinery inoperable. This issue is referred to in the pleadings as "the operational point." I shall adopt the same terminology. Honeywell's second argument is that, even if (contrary to Honeywell's case on the operational point) the clause 11 mechanism can still be operated, nevertheless Honeywell's non-compliance with the condition precedent in clause 11.1.3 puts time at large. This argument is based upon the decision of the Supreme Court of the Northern Territory of Australia in Gaymark Investments PTY Limited v Walter Construction Group Limited [1999] NTSC 143; (2005) 21 Construction Law Journal 71. This argument is referred to by counsel as "the Gaymark point" and I shall adopt the same terminology.

More recently Honeywell has added to its pleadings a third argument, namely that the settlement agreement negotiated between Multiplex and WNSL in October 2006 also puts time at large. On the basis of its various arguments Honeywell counterclaims for the following declarations:

Declarations (1) and (2) reflect Honeywell's case on the construction point. Declarations (3) and (4) reflect Honeywell's case on the operational point. Declaration (5) reflects Honeywell's case on the Gaymark point. Declaration (6) represents Honeywell's case on the settlement agreement between WSNL and Multiplex.

Multiplex has elected not to adduce any factual evidence in support of its case beyond putting before the court the relevant contractual documents. Honeywell relies upon the evidence of two witnesses, namely Mr. Angus Pearson and Mr. Craig Walter. Mr. Pearson is a quantity surveyor who has been acting for Honeywell in relation to the Wembley project. Mr. Walter is Honeywell's senior project manager at Wembley. Mr. Pearson and Mr. Walter have each made two witness statements. Multiplex has not required either witness to attend for cross-examination and does not challenge their evidence for the purposes of this action. Nevertheless, Multiplex has made it clear that the witness statements of Mr. Pearson and Mr. Walter are substantially disputed and that their evidence will be challenged in future proceedings. The essence of Multiplex's case in the present action is that, even if one accepts all of Honeywell's evidence, nevertheless, as a matter of law, time is not at large.

This action was originally listed for trial in the week of 9th October 2006. On the first day of that trial counsel informed me that their respective clients were minded to settle this litigation. Accordingly, by consent I made an order standing the case out of the list. Subsequently the settlement negotiations foundered and this matter was relisted for trial in February 2007.

The trial of this action duly commenced on Tuesday, 27th February 2007. It took the form of submissions made by counsel on the basis of the contractual documents and Honeywell's factual evidence and the authorities. Counsel's submissions lasted for three days and concluded on Thursday afternoon, 1st March. I have had the opportunity to consider those submissions since last Thursday.

I shall now deal with the issues in the following order: the construction point, the operational point, the Gaymark point and the effect of the settlement agreement.

The construction point turns upon the operation of the prevention principle in the context of the present Sub-Contract. The essence of the prevention principle is that the promisee cannot insist upon the performance of an obligation which he has prevented the promisor from performing.

In the field of construction law, one consequence of the prevention principle is that the employer cannot hold the contractor to a specified completion date, if the employer has by act or omission prevented the contractor from completing by that date. Instead, time becomes at large and the obligation to complete by the specified date is replaced by an implied obligation to complete within a reasonable time. The same principle applies as between main contractor and sub-contractor.

It is in order to avoid the operation of the prevention principle that many construction contracts and sub-contracts include provisions for extension of time. Thus, it can be seen that extension of time clauses exist for the protection of both parties to a construction contract or sub-contract.

Before tackling the present problem I must first review some authorities on the operation of the prevention principle in the construction context. In Holme v Guppy (1838) 3 M&W 387, the plaintiff builders agreed to carry out carpentry and joinery work forming part of a new brewery in Liverpool for £1,700. The contract specified a completion date of 31st August 1836 and provided for liquidated damages at the rate of £40 per week in the event of delay beyond that date. Delay occurred. The defendant employers withheld certain payments. The plaintiffs brought an action in assumpsit for the balance of the contract price. Evidence called at the Liverpool Assizes established that the defendant failed to give possession of the site for four weeks following execution of the contract. Other causes of delay established were certain defaults on the part of the plaintiffs and also certain defaults on the part of other contractors engaged by the defendant. Coltman J awarded £200 to the plaintiffs. That award was challenged by the defendants but upheld by the Court of Exchequer.

Parke B, delivering the judgment of the Court of Exchequer, said this:

In Dodd v Churton [1897] 1 QB 566, the plaintiff agreed to carry out construction work for the defendant for £664. The Contract specified a completion date of 1st June 1892 with liquidated damages of £2 per week for delay thereafter. Clause 4 of the Contract empowered the architect to order additional works or different works by way of variation. Pursuant to that clause the architect ordered additional works to the value of £22. 8s. 8d. which caused completion to be delayed beyond 1st June 1892. In the event the works were not completed until 5th December 1892. The plaintiff sued for the balance of the contract price and the defendant counterclaimed for £50 as liquidated damages for late completion. At trial in the Shropshire County Court the judge held that by ordering extra work the defendant had waived his entitlement to liquidated damages for non-completion by 1st June. That county court judgment was reviewed by the Divisional Court where the two judges differed, but on further appeal the county court judgment was upheld by the Court of Appeal. At page 566, Lord Esher MR said this:

In Peak Construction (Liverpool) Limited v McKinney Foundations Limited [1970] 1 BLR 111, the plaintiffs contracted with the Liverpool Corporation to construct a block of flats within a period of 24 months. Delays were caused partly by the defaults of a nominated sub-contractor and partly by the actions of the employer. The Court of Appeal allowed the contractor's appeal against an award of liquidated damages. At pages 121-122 Salmon LJ said:

The effect of Dodd v Churton was considered both by the Court of Appeal and by the House of Lords in Trollope & Colls Limited v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601. In the Court of Appeal Lord Denning MR said this:

In the House of Lords, Lord Pearson agreed with that section of Lord Denning's judgment (see 607 E-H). Lord Guest, Lord Diplock and Lord Cross agreed with the speech of Lord Pearson.

From this review of authority I derive three propositions:

The third proposition must be treated with care. It seems to me that, in so far as an extension of time clause is ambiguous, the court should lean in favour of a construction which permits the contractor to recover appropriate extensions of time in respect of events causing delay. This approach also accords with the principle of construction set out by Lewison in "The Interpretation of Contracts" (3rd edition, 2004). That principle reads as follows:

That principle is supported by a line of authority as set out in paragraph 7.14 and is encapsulated in the Latin maxim verba ita sunt intelligenda, ut res magis valeat quam pereat.

With those principles in mind, let me now turn to the extension of time clause in the present Sub-Contract. Clause 11.10 identifies a number of relevant events in respect of which the contractor may award an extension of time to the Sub-Contractor. These include a variation instruction under clause 4.6 and a postponement instruction under clause 46. There is no express reference to directions issued under clause 4.2.

Mr. Bowdery contends that the absence from clause 11.10 of any express reference to a direction under clause 4.2 means that the Contractor has no power under clause 11 to extend time in respect of a clause 4.2 direction which affects the completion date. Mr. Bowdery points out in paragraph 30 of his skeleton argument that Multiplex has the right to issue directions and variation instructions under clause 4.2 and Multiplex has the right to compel Honeywell to comply with those directions. Mr. Bowdery submits that such instructions lawfully given could not be an act of prevention within the meaning of clause 11.10.7.

I am not persuaded by these submissions. The correct analysis is that directions under clause 4.2 do not automatically qualify for consideration under clause 11. Many directions issued under clause 4.2 will have no effect at all upon the duration of the works. Contractors or sub-contractors frequently seek or receive directions when matters of doubt arise in the course of their works. Nevertheless, if Multiplex issues a direction under clause 4.2 which constitutes a variation and which leads to completion on a later date, then such variation prevents Honeywell from completing on the due date. Thus, such a direction constitutes an act of prevention within the meaning of clause 11.10.7. The fact that such a direction is permitted by the contract does not prevent it being an act of prevention (see Dodd v Churton and Trollope & Colls Limited v North West Metropolitan Hospital Board).

Mr. Bowdery submits that a direction causing delay is at most an act of hindrance, not prevention, and this falls outside clause 11.10.7. Again, I am not persuaded. If a variation instruction affects the date upon which Honeywell is going to complete by a small period, one may say that this is a hindrance; it does not in any sense make the installation of the electronic systems impossible. On the other hand, that matter does prevent completion on the due date and it should be characterised as "prevention".

If a direction issued by Multiplex pursuant to clause 4.2 requires Honeywell to postpone the execution of any work, such a direction may be characterised as a postponement instruction. In that event the consequences flowing from clause 46 and clause 11.10.5.1 may follow.

Let me now turn to the facts of the present case. Pursuant to clause 4.2 of the Sub-Contract Conditions Multiplex issued to Honeywell programmes CB7, FO15 and DC10. The issue of these programmes has been held to constitute variation instructions.

In my judgment, the fact that these programmes were issued under clause 4.2 rather than clause 4.6 does not prevent Multiplex from awarding such extension of time as may be appropriate. In so far as Honeywell can demonstrate that any extension of time would be appropriate in consequence of those programmes, such an extension of time can be awarded pursuant to clause 11. The issue of those programmes should be characterised as acts of prevention for the purpose of 11.10.7, or alternatively as postponement instructions under clause 46 for the purposes of clause 11.10.5.1.

Let me now draw the threads together. For the reasons set out above, I do not agree with the first decision reached by the Adjudicator in Adjudication Number 3. Multiplex's directions under clause 4.2 issuing programmes CB7E, FO 15 and DC 10 are Relevant Events entitling Honeywell to such extensions of time, if any, as may be appropriate under clause 11. Accordingly, the issues of those directions did not set time at large, as held by the Adjudicator. Subject to debate about the precise wording, Multiplex is entitled to the declarations which it seeks in respect of the construction point.

Honeywell contends that Multiplex, by its conduct, has made the extension of time machinery inoperable. Accordingly, time has been put at large. Honeywell pleads that Multiplex was in breach of its obligations in respect of programming as follows in the reamended defence and counterclaim:

Honeywell goes on to allege that in breach of contract Multiplex has failed to award any extension of time; alternatively, by failing to operate the extension of time mechanism, Multiplex has put time at large under the Sub-Contract. Furthermore, Multiplex's failure to provide proper programming information to Honeywell has made it impossible for Honeywell to comply with the notification requirements of clause 11, with the consequence that time must be at large.

The last of those points is the one upon which Mr. Bowdery has concentrated in argument. Mr. Bowdery submits that, in the absence of updated programmes and proper programming information from Multiplex, it has been quite impossible for Honeywell to comply with the condition precedent in clause 11.1.3 of the Sub-Contract Conditions. In support of this argument Mr. Bowdery relies on the witness statements of Mr. Pearson and Mr. Walter. He also points to the correspondence between Multiplex and Honeywell during 2005 and 2006.

Mr. Thomas, for Multiplex, submits that Honeywell's case on the operational point has a fatal flaw. Clause 11.1.3 does not impose upon the sub-contractor an obligation to provide anything further by way of notices and particulars than he is able to provide.

Thus, it can be seen that the court's first task in relation to the operational point is to determine the correct interpretation of clause 11.1.3 and its inter-relationship with the surrounding sub-clauses.

Clause 11.1.3 states that it is a condition precedent of the sub-contractor's entitlement to an extension of time that he shall have timeously "served all necessary notices", and "provided all necessary supporting information". Clause 11.1.3 does not state what the "necessary notices" are. Nor does clause 11.1.3 state what the "necessary supporting information" is, although it does state what that information includes.

Mr. Thomas submits that the word "necessary" in clause 11.1.3 is a signpost to clause 11.2. The reader must turn to clause 11.2 in order to see what notices are necessary and what supporting information is necessary.

In the course of argument I asked Mr. Bowdery what, on his case, the word "necessary" in clause 11.1.3 means. In response to this question Mr. Bowdery made precisely the same submission as Mr. Thomas. Mr. Bowdery asserts that the necessary notices are those required by clause 11.2.1, and that the necessary information is that required by clause 11.2.2.

The principal difference between Mr. Bowdery and Mr. Thomas concerns the effect of the words in clause 11.1.3 "including but not limited to causation and effect programmes, labour, plant and materials resource schedules and critical path analysis programmes and the like". These words were the subject of close scrutiny and much debate during the hearing. In order to assist that process, we all underlined those words in red in our respective copies. Those words were referred to at the hearing by way of shorthand as "the red words". I shall continue to use that expression.

Mr. Bowdery submits that the red words set out what the contractor's information must include. Mr. Thomas, on the other hand, submits that the red words are merely words of guidance; they do not require the sub-contractor to provide any detailed information which is not available.

I shall approach this delicate issue from the firm foothold of what is common ground. I agree with both counsel that the word "necessary", which appears twice in clause 11.1.3, is a signpost to clause 11.2. It therefore follows that the necessary notices are those which clause 11.2.1 says are necessary. The necessary information is information which clause 11.2.2 says is necessary.

Clause 11.2.1 contains some important qualifications. Clause 11.2.1 does not require the sub-contractor to serve notices immediately when any delay is caused, but rather to serve notices when such delay becomes or should have become "apparent". The sub-contractor's obligation to notify the causes of a delay is not an absolute obligation but rather an obligation to do so "insofar as the sub-contractor is able".

Let me turn to clause 11.2.2. This clause does not require the sub-contractor to provide information which is not available to him at the time of the notice, or indeed at any later time. Clause 11.2.2 requires the sub-contractor to provide the specified information "if practicable" in his notice or otherwise "as soon as possible".

Standing back for a moment from the various sub-sub-clauses, I construe clause 11.2 as requiring the sub-contractor to do his best as soon as he reasonably can. I do not read clause 11.2 as requiring the sub-contractor to serve notices or to provide supporting details which go beyond the knowledge and information available to him.

Against that background, I turn to the effect of the red words. These words are a gloss upon the phrase "all necessary supporting information", which phrase is defined in clause 11.2. When clause 11.1.3 is considered in its context, it is impossible to construe the red words as imposing an absolute obligation. The matters set out in the red words should only be included in the sub-contractor's notice and supporting information "if practicable". Thereafter, the sub-contractor's obligation to furnish these details only arises when it becomes "possible" to do so. If the reds words are not construed in this way, then clauses 11.1.3 and 11.2 become mutually inconsistent.

In the result, therefore, on this particular issue, I prefer the submissions of Mr. Thomas to those of Mr. Bowdery. The obligation set out in clause 11.1.3 as a condition precedent does not comprise or include any absolute obligation to serve notices or supporting information. The obligation imposed upon the sub-contractor is an obligation to do his best as soon as he reasonably can.

Let me now turn to Honeywell's evidence in support of its case on the operational point. Mr. Pearson sets out in his statement the steps which Honeywell has taken to comply with its obligations under clause 11.1.3. Mr. Pearson states that Honeywell has undertaken regular surveys in order to identify all events which it must notify. Honeywell has regularly served delay notices as events causing delay have occurred. Honeywell could not identify the critical delay resulting because of Multiplex's failure to provide updated sub-contract programmes. At paragraph 21, Mr. Pearson says this:

In his witness statement Mr. Pearson continues to go through the difficulties caused by Multiplex's breaches of contract. In paragraph 23 Mr. Pearson discusses Multiplex's changes of priority in relation to sequencing works. By way of example, he says that Multiplex switched emphasis from ceilings to communication rooms and plant rooms. At the end of paragraph 23 Mr. Pearson says this:

In paragraph 25 Mr. Pearson explains that he gave notice of delay in respect of certain matters, delaying progress in the communication rooms. He continues to the effect that Honeywell could not ascertain the precise consequences in terms of delay at that stage, but would do so when possible at a later date.

It seems to me that the passages which I have referred to in Mr. Pearson's evidence (if true) demonstrate compliance with clause 11.1.3 rather than the opposite. I will not go through the rest of Mr. Pearson's witness statement because it continues in the same vein. The gist of Mr. Pearson's evidence is that Honeywell has done its best to comply with clause 11.1.3, Honeywell has served such delay notices as it properly could serve and it has provided such supporting information as was available. Honeywell intends to furnish the remaining details about causes of delay as identified in clauses 11.1.3 and 11.2, when it becomes possible to do so. In my judgment, Mr. Pearson's evidence (which is unchallenged for the purposes of the present trial) demonstrates that the clause 11 machinery is both operable and being operated.

Let me turn to Mr. Walter's witness statement. Mr. Walter is strongly critical of Multiplex's programming and organisation. He maintains that Multiplex has caused delay by its acts and omissions. Mr. Walter points to Multiplex's failure to provide updated or proper programmes; Multiplex's failure to provide primary containment; the delayed access to certain areas; directions issued by Multiplex which are causative of delay, and so forth. In the present litigation Mr. Walter's evidence is unchallenged, although I understand that that evidence will be substantially disputed in the substantive litigation which lies ahead.

For present purposes, I accept Mr. Walter's evidence and treat it as correct. The matters which Mr. Walter sets out as causative of delay are all relevant events within clause 11.10 of the Sub-Contract Conditions. Accordingly, those events entitle Honeywell to an extension of time under clause 11. What those events do not do is demonstrate that the extension of time machinery has broken down.

Both Mr. Pearson and Mr. Walter have served short supplemental statements. Those supplemental statements are along the same lines as their main statements and they do not lead to any different conclusion.

In relation to the operational point, Mr. Thomas has put forward a number of alternative arguments to justify Multiplex's position based upon the operation of clause 11.7, clause 38A and clause 38C. In my judgment, we do not reach the situation in which those arguments arise for decision.

For the reasons set out above, the extension of time machinery set out in clauses 11.1, 11.2 and 11.3 remains fully operational. Honeywell is entitled to receive an appropriate extension of time through the operation of those provisions.

Before parting with this issue I should refer to the correspondence. In numerous letters Multiplex rejects Honeywell's notices of delay and asserts that Honeywell has failed to comply with the requirements of clause 11. Although Multiplex's letters are written in robust terms, they do not go so far as to assert that the last sentence of clause 11.1.3 has been triggered. In other words, Multiplex has not argued that Honeywell has waived its right to any extension of time that might otherwise be due.

As Mr. Thomas points out in his submissions, it is the function of this court to determine the correct legal position. If Multiplex have sent letters which overstate their case or put it in robust terms concerning the effect of clause 11, that correspondence cannot affect the correct legal analysis.

Let me now draw the threads together. For reasons set out above, even accepting Honeywell's factual evidence in full, I am quite satisfied that the clause 11 machinery remains operational and is indeed being operated. I agree with the adjudicator’s decision on this issue. Accordingly, Honeywell is not entitled to the relief which it seeks in respect of the operational point.

Honeywell contends that, even if compliance with clause 11 remained possible, nevertheless Honeywell's failure to comply with that clause was sufficient to put time at large. If it were otherwise, says Honeywell, then Multiplex would be able to recover damages for a period of delay which Multiplex had caused. The legal basis for this argument is the Australian decision in Gaymark Investments Pty Limited v Walter Construction Group Limited [1999] NTSC 143; (2005) 21 Construction Law Journal 71.

I must therefore begin by reviewing the Gaymark decision. In that case the employer claimed liquidated damages against the contractor for delay in constructing an hotel in Darwin. Clause 19.1 of the Special Conditions of Contract imposed conditions in respect of giving notice of delay. Clause 19.2 of the Special Conditions provided:

The Arbitrator made the following findings:

The Supreme Court of the Northern Territory of Australia refused leave to appeal and upheld the Arbitrator's award. Bailey J said this at paragraphs 69-71 of his judgment:

In reaching this conclusion Bailey J took a different view from that expressed obiter by Cole J in Turner Corporation Limited (Receiver and Manager Appointed) v Austotel Pty Limited (2nd June 1994); 1997 13 BCL 378 at 12. In that earlier judgment Cole J had said:

The correctness of the Gaymark decision has been a matter of some debate. The editors of Keating on Building Contracts (8th edition 2006) note that there is no English authority on the matter but incline to the view that Gaymark was correctly decided (see paragraph 9-025). The editor of Hudson on Building Contracts, the late Ian Duncan Wallace QC, argues that Gaymark was wrongly decided (see paragraph 10.026 of the first supplement to the 11th edition of Hudson). Professor Wallace (a formidable commentator on construction law, who is now sadly missed) also wrote a trenchant article on this subject. See "Prevention and Liquidated Damages: a Theory Too Far" (2002) 18 Building and Construction Law, 82. In that article Professor Wallace refers to the Turner case, which I have previously mentioned, and certain other authorities. He points out the useful practical purpose which contractual provisions requiring a contractor to give notice of delay serve. Professor Wallace argues that both the arbitrator and the judge came to the wrong conclusion in Gaymark. In Professor Wallace’s view, Gaymark extends the prevention theory too far.

In Peninsula Balmain Pty. Limited v Abigroup Contractors Pty. Limited [2002[ NSWCA 211, the New South Wales Court of Appeal declined to follow Gaymark and preferred the reasoning of Professor Wallace. Hodgson JA gave the leading judgment with which other members of the court agreed. At paragraph 78 Hodgson JA said this:

A year after Peninsula, the Second Division of the Inner House of the Court of Session gave judgment in City Inn Limited v Shepard Construction Limited 2003 SLT 885. In that case the employer contended that the contractor was not entitled to any extension of time, because the Contractor had not complied with clause 13.8 of the contract in relation to notices. The court held that the contractor could not obtain an extension of time if it did not comply with that provision (see paragraph 23 of the Opinion of the court). It appears, however, that the Australian cases were not cited.

I am bound to say that I see considerable force in Professor Wallace' criticisms of Gaymark. I also see considerable force in the reasoning of the Australian courts in Turner and in Peninsula and in the reasoning of the Inner House in City Inn. Whatever may be the law of the Northern Territory of Australia, I have considerable doubt that Gaymark represents the law of England. Contractual terms requiring a contractor to give prompt notice of delay serve a valuable purpose; such notice enables matters to be investigated while they are still current. Furthermore, such notice sometimes gives the employer the opportunity to withdraw instructions when the financial consequences become apparent. If Gaymark is good law, then a contractor could disregard with impunity any provision making proper notice a condition precedent. At his option the contractor could set time at large.

Although I have considerable doubts that Gaymark represents the law of England, nevertheless that is not a question which I am required finally to decide. This is because Gaymark should readily be distinguished from the present case. In Gaymark non-compliance with the notice clause exposed the contractor to an automatic liability for liquidated damages (if the liquidated damages clause were upheld). In the present case, non-compliance with clause 11.1.3 has no such automatic consequences. Even if (contrary to Mr. Thomas' submissions) Honeywell forfeits any entitlement to extension of time, that does not automatically make Honeywell liable to pay damages for delay. Under clause 12 of the Sub-Contract Conditions, Multiplex can only recover in respect of loss or damage "caused by the failure of the Sub-Contractor". If in reality the relevant delay was caused by Multiplex, not Honeywell, then (whatever the position under clause 11) Multiplex cannot recover against Honeywell under clause 12.

Let me now draw the threads together. If the facts are that it was possible to comply with clause 11.1.3 but Honeywell simply failed to do so (whether or not deliberately), then those facts do not set time at large. Honeywell is not entitled to the relief which it seeks in respect of the Gaymark point.

It is a matter of public knowledge that WNSL and Multiplex were in dispute about delays to the construction of Wembley Stadium and the financial consequences of those delays. Indeed, some of the issues in that dispute were ventilated in litigation in this court in Action HT-06-271.

It is also a matter of public knowledge that the dispute between WNSL and Multiplex was the subject of a negotiated settlement in October 2006. The press release issued by the parties following that settlement reads as follows:

On the basis of information in the public domain Honeywell amended its pleadings to allege that the settlement agreement was a further reason why, under the sub-contract, time was now at large. In paragraph 81I of its reamended defence and counterclaim Honeywell asserted as follows:

This is the argument upon which Mr. Bowdery has concentrated in the present trial. Mr. Bowdery's argument runs as follows. Assume that variations were instigated by WNSL which caused substantial delays. These variations would entitle Multiplex to a substantial extension of time under the main contract and would entitle Honeywell to a substantial extension of time under the sub-contract. Assume also the settlement agreement is a commercial deal under which Multiplex has abandoned its entitlement to an extension of time in respect of those variations. The consequence of that commercial deal is that the guillotine contained in the proviso to clause 4.6.2.2 of the Sub-Contract Conditions comes down. The Contractor does not "receive" the extension of time to which he is entitled. Accordingly, the Sub-Contractor is unable to claim the extension of time which the Sub-Contractor should receive in respect of those variations. Thus, the abandonment of the mechanism for extension of time under the main contract prevents the mechanism for extension of time under the Sub-Contract from operating properly.

On behalf of Multiplex, Mr. Thomas submits that that line of argument is flawed. If the mechanism for extending time under the main contract has been abandoned or replaced by the settlement agreement, then the cap or the guillotine imposed by the proviso to clause 4.6.2.2 falls away.

In my judgment, Mr. Thomas' argument is correct. If Multiplex has entered into a settlement agreement with WNSL under which Multiplex waives its right to extension of time, then Multiplex cannot rely upon that fact to deprive Honeywell of extensions of time otherwise due. The last sentence of clause 4.6.2.2 of the Sub-Contract Conditions cannot apply to a situation in which the relevant main contract provisions have been abandoned and Multiplex has voluntarily foregone extensions of time which would be due.

Having listened to counsel's submissions about the effect of the settlement agreement, both at this trial and at earlier hearings, it seems to me that, whatever the terms of the settlement agreement may be, Multiplex cannot rely upon those terms in order to deprive Honeywell of its rights under the Sub-Contract. Furthermore, Multiplex has expressly disclaimed any intention of doing so. I conclude that the settlement agreement between Multiplex and WNSL does not set time at large under the Sub-Contract.

Everything which I have said so far has been based upon what is in the public domain concerning that settlement agreement and Honeywell's submissions about that matter. The actual terms of the settlement agreement between Multiplex and WNSL are confidential. I was persuaded by counsel that it was appropriate for the court to sit in private when the settlement agreement was produced and its detailed terms were examined and debated. Having seen those detailed terms, I remain of the view that the confidentiality of that document should be maintained.

Nevertheless, I am not prepared to give any part of this judgment in private, since the construction of the New National Stadium at Wembley is a matter of legitimate public interest. Furthermore, it is in the interests of justice that, so far as possible, all judicial decisions should be given openly and that the proceedings of this court should be scrutinised by all who have an interest in the outcome.

I shall therefore deal with the terms of the settlement agreement in this way. Having examined those confidential terms with the assistance of counsel, I see nothing in the settlement agreement which displaces the conclusions reached earlier and which I have set out above. The terms of the settlement agreement between WNSL and Multiplex cannot and do not set time at large under the Sub-Contract.

Let me now draw the threads together. For the reasons set out above, Honeywell is not entitled to declaration 6 as formulated in its counterclaim.

For reasons set out in Parts 4, 5, 6 and 7 of this judgment, I conclude that time is not at large under the Sub-Contract. The mechanisms of clause 11 remain effective and operational.

I reach these conclusions by reference to what might be called the primary contractual provisions. It has not been necessary to examine Mr. Thomas' alternative arguments based on clause 11.7, clause 38A and clause 38C.

I should, however, place on record certain submissions which Mr. Thomas has made about those provisions. In relation to clause 11.7, Mr. Thomas stated Multiplex's position on instructions and in clear terms. Multiplex accepts that, following practical completion, it will be under a duty to grant such extensions of time to Honeywell as may be fair and reasonable having regard to any relevant events. Multiplex will not at that stage be constrained by any deficiency in the notices or supporting information served by Honeywell pursuant to clauses 11.1 and 11.2. I welcome that submission or concession made by Multiplex, which represents a responsible approach to its duties as main Contractor. It is also based upon a fair reading of clause 11 as a whole.

In relation to clauses 38A and 38C, Mr. Thomas submits that neither the adjudicator nor the court will be constrained by any deficiency in Honeywell's notices and supporting information. Instead the adjudicator or the court, as the case may be, should allow such extension of time as is fair and reasonable having regard to any relevant events. Again I welcome this approach which is beneficial to Honeywell and no doubt to other sub-contractors as well. Also, this approach seems to me to be based upon a fair reading of clauses 38A and 38C of the Sub-Contract.

Having noted Multiplex's position in relation to clauses 11.7, 38A and 38C, I do not base my judgment upon those matters. The rationale of this judgment is as set out in Parts 4, 5, 6 and 7 above.

Finally, I thank the solicitors on both sides for their efficient conduct of this litigation. I thank counsel on both sides for the excellence of their oral and written submissions. I invite counsel to agree the precise wording of the declarations to which Multiplex is entitled in respect of the construction point. Honeywell's counterclaim for declarations in respect of the other issues is dismissed.

This is an application for permission to appeal. Mr. Clay puts the application for permission on both of the limbs identified in CPR Part 52, namely real prospect of success and some other compelling reason. So far as real prospect of success is concerned, Mr. Clay points out that the operational point is perhaps the principal arm of Honeywell's case. Mr. Clay points out that this court's interpretation and construction of clause 11.1.3 and clause 11.2 play a crucial role in the reasoning process. Mr. Clay submits, courteously and moderately, that a different view might be taken on that point of construction by the Court of Appeal and if the Court of Appeal does take a different view that really is the key which unlocks the door to success for Honeywell.

I agree with Mr. Clay that the interpretation of clauses 11.1.3 and 11.2 do play a crucial part in the reasoning process of Part 5 of this court's judgment. However, it seems to me that, when the provisions of clause 11.1.3 and 11.2 are examined with care, it is unlikely that another court will arrive at a different interpretation. I say that because it seems to me that the interpretation of those clauses which counsel for Honeywell urged upon me, attractively though the submissions were put, was an interpretation which would make clause 11.1.3 inconsistent with clause 11.2.

I agree with Mr. Clay that construing those clauses is not an easy exercise. I agree with Mr. Clay that the interpretation of the red words is a crucial matter in that exercise. However, it also seems to me that one has to construe the contractual provisions in a manner which makes them mutually consistent. One has also got to construe them in a commercially sensible way which makes sense, rather than in a destructive way which renders them useless for all practical purposes.

Accordingly, I am not persuaded that Honeywell has crossed the threshold of demonstrating real prospect of success in the Court of Appeal.

I come now to the second limb of this application. Mr. Clay points out that there are some 30 Sub-Contracts in a similar form to Honeywell's Sub-Contract. Some Sub-Contractors other than Honeywell are likely to be in dispute with Multiplex and those disputes will involve a resolution of similar issues to those which have arisen between Multiplex and Honeywell in this case.

For my part I can understand that the outcome of this case will be of importance to some other Sub-Contractors at Wembley. On the other hand, it is not suggested that the provisions of this particular Sub-Contract, which have given rise to difficulty, are in any wider use. The Wembley project is now drawing to a close. I do not consider that the wider interest or the public interest that there may be in the correct interpretation of the provisions scrutinised in this litigation is such that the second test for giving permission to appeal has been surmounted. I do not think that there is "some other compelling reason" why the proposed appeal should be allowed to go forward. It goes without saying that, although I refuse permission, it is, of course, open to Honeywell to apply to the Court of Appeal and then it will be a matter for that court to decide whether permission should be granted on either or both of the limbs set out in Part 52.

The fact that an application for permission to appeal has been made triggers the obligations of this court set out in paragraph 4.3A of the Practice Direction supplementing Part 52. That paragraph requires the judge to answer four questions:

My answer to those four questions is as follows: The judgment or order made by this court today is final. As to question (2), an appeal does lie from that judgment or order, namely to the Court of Appeal. As to question (3), the answer is that this court does not give permission to appeal. As to question (4), the answer is that the appropriate appeal court to which any further application for permission may be made is the Court of Appeal.

I am sure that the solicitors drawing up the order of this court from today's hearing will bear in mind the provisions of rule 40.2(4) of the Civil Procedure Rules. That rule requires those same four matters to be set out in the order of the court, bearing in mind the fact that an application for permission has been made.