WHAT IF THE DELAY OF THE CONSTRUCTION WORKS is DUE TO THE FAULT OF THE EMPLOYER, CAN THE CONTRACTOR GET THE EXTENSION OF TIME AUTOMATICALLY WITHOUT GIVING NOTICE? - “PREVENTION PRINCIPLE”
Have you encountered the situation whereby the delay of the construction work is solely due to the delay of the project owner ‘’Employer? You as the contractor, do you need to apply for Extension of time though the delay is not due to your fault.
Under standard form of contract such as PAM Contract 2006/2018, under clause 23 and 24, notices are required for the application of extension of time (EOT) and loss and expenses whenever the contractor seek for the extension of time and loss and expenses. However, is the notice needed if the delay is due to no fault of the contractor? Let discuss here.
What is prevention principle?
The Prevention principle essentially refers to the principle whereby a party cannot insist on the performance of a contractual obligation by the other if it is itself the cause of non-performance. If the Employer has substantially delayed the progress the construction work, and the contract does not contain a mechanism or is silent for a contractor to claim Extension of time, time would be automatically extended, and the contractor will be given a reasonable period of time to complete the works. However, does the prevention principle apply in Malaysia?
In Australia, the court in the case of Gaymark Investment Pty Ltd v Walter Construction Group Ltd  NTSC 143, held that if the delay was caused by the employer, the failure to comply with the notice requirement will not automatically render the application fatal even if the notice requirement was regarded as a condition precedent. This is because, allowing the employer to impose liquidated damages would ultimately mean that the employer is benefitting from its own breach, which is prohibited.
In England, there is a case law namely Multiplex Construction (UK) Ltd v Honeywell Control Systems Ltd  Build LR 195 (TCC), whereby this case refused to follow the decision of the Australia case and held that if Gaymark was good law, then the contractor could deliberately ignore the contractual notice provisions, thereby setting time at large and effectively take away the employer’s right to claim liquidated damages. The contractor would then better off ignoring the notice requirements than complying with them. The Court considered that this situation would be unacceptable.
In Malaysia, the position has yet to be conclusively decided by the Courts and there would appear to be two different positions at the moment:-
- The Employer is not able to claim liquidated damages due to the prevention principle;
- The Employer is able to claim liquidated damage since a decision otherwise would enable the contractor to effectively ignore notice requirement.
Therefore, it is advisable for contractor to send in notice to request of EOT but mention the reason of application clearly.