N.A. Brown, Partner
One of the many ways in which MTR Corporation Limited's current
Conditions of Contract for Civil Engineering and Building Works
Construction (the MTR Conditions) differ from other conditions of contract for civil engineer works in Hong Kong concerns the existence of an express qualification of the Contractor's right to an extension of time (EOT) for preventative acts or omissions of the
Employer or the Engineer, by reference to the reasonable foreseeability of the resulting delay (the unforeseeability wording).
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This article examines the approach of the MTR Conditions in this respect, in light of salient principles of Hong Kong law, through a series of five points that culminate with a prediction as to how an
Engineer might not approach the exercise of his power to extend the time for achieving the Completion Obligation having regard to the uncertain efficacy of the unforeseeability wording.
Reasonable foreseeability is relevant to the fifteen incidents of
Employer prevention that are scattered throughout the MTR
Conditions, and summarized herein at Figure 1 . It is relevant in this sense: if the relevant delay is ' greater than that which the
Contractor could reasonably have foreseen at the date of the Letter of Clarification' then the Engineer must 'take such delay into account in determining any extension of time to which the
Contractor is entitled under Clause 68.1'. Figure 2 contains an extract of Clause 68.1.
Clause 79.2 (Ordered Variation of Change to be in writing) offers a convenient example of the way the unforeseeability wording is being employed. It reads (so far as relevant):-
' … to the extent that any Variation causes the Contractor to suffer delay greater than that which the Contractor could reasonably have foreseen at the date of the Letter of Clarification the Engineer shall take such delay into account in determining any extension of time to which the Contractor is entitled under Clause 68.1.'
One may be forgiven for inferring from this wording, and from that of the other fourteen similar provisions, that there can be no EOT under Clause 68.1 if (and not merely to the extent) 'the Contractor could reasonably have foreseen' the relevant delay – although that is less than clear. On the force of this language, could it really be construed as a condition precedent?
Whatever intention would be attributed to these provisions, the first concrete point that may be made about the unforeseeability wording is that it is unusual. The notoriously allusive 2 concept of reasonable foresight has for decades been a feature of EOT provisions concerned with 'adverse physical conditions', 3 and the
'forces of nature'; 4 however, outside Hong Kong, perhaps for good reason, it remains an uncommon 5 element in an EOT clauses concerned with Employer prevention. Rather, the criterion of
‘reasonable foreseeability’ is more commonly used in connection with a right to an adjustment of the contract price on account of additional costs occasioned by certain 'compensable events'.
Secondly, if the intention to be imputed to these provisions really is to create a condition precedent to an EOT then this very real question arises: Is the Employer free to hold the Contractor to the relevant Completion Obligation if an act or omission of the
Employer (or Engineer) has prevented the Contractor from achieving that Completion Obligation, just because the delay was reasonably foreseeable?
This is open to question because provisions imposing liquidated damages for delayed completion are susceptible to a doctrine of law known (among other tags) as the ‘doctrine of prevention', the existence and operation of which has been recognized in a handful of decisions of the Court of First Instance, 6 and the awards of arbitral tribunals applying Hong Kong law. More recently, the Court of Final Appeal in the Ying Ho Company Limited & Ors. v. The
Secretary for Justice case 7 took the opportunity to confirm the existence and scope of the doctrine.
1 The Government of the Hong Kong Special Administrative Region General Conditions of Contract for Civil Engineering Works (1999 Edition) contain no corresponding qualification. The Kowloon-Canton
Railway Corporation's General Conditions of Contract referred to delay ' which the Contractor did not and had no reason to anticipate'.
2 Commenting on Sub-clause 12(2) of the I.C.E. Conditions of Contract, published in 1955, the late Ian Duncan Wallace, QC, remarked that the expression ' could not have been reasonably foreseen by an experienced contractor' contained therein 'probably gives rise to the most frequent disputes of fact which come before engineering arbitrators. The word "reasonable" introduces an element of degree but, even apart from this, the application of the words to a given set of circumstances can be extraordinarily difficult.' See Building and Civil Engineering Standard Forms, London, Sweet & Maxwell, 1969, at page
319. The Institution of Civil Engineers was undeterred by criticism of this kind and the formulation has remained a feature of its standard form conditions of contract. In his commentary on sub-Clause 12(1) of the ICE Form of Contract, 7th edition, published in September 1999, Dr John Uff, CBE., QC, B.Sc (Eng.), Ph.D. expresses the view that ' Determining whether a condition could "reasonably" have been foreseen habitually gives rise to the greatest difficulty of interpretation in civil engineering arbitration. The words of the sub-clause seem to defy precise analysis and it is thought that little is to be gained from analysing the words in terms of probability.' See Keating on Construction Contract, Eighth Edition, London, Sweet & Maxwell, 2006, at ¶ 20-074.
3 Ibid.
4 See for example ¶ (h) of Sub-Clause 17.3 [Employer's Risks] of the International Federation of Consulting Engineer's Conditions of Contract for Construction (First Edition 1999) and Conditions of Contract for
Plant and Design-Build (First Edition 1999), which, in conjunction with Sub-Clause 17.4 [Consequences of Employer's Risks] thereof, establishes an entitlement to and extension of time for delay occasioned by the rectification of loss or damage to the Works, Goods or Contractor's Documents resulting from any operation of the forces of nature which is (inter alia) 'Unforeseeable'.
5 But not absolutely unique, see paragraph (d) of Sub-Clause 8.4 [Extension of Time for Completion] of the International Federation of Consulting Engineer's Conditions of Contract for Construction (First Edition
1999) and Conditions of Contract for Plant and Design-Build (First Edition 1999), to the extent that the Employer is the very government whose actions have caused the 'Unforeseeable shortages in the availability of personnel or Goods'.
6 For example, Hong Kong Institute of Education and Aoki Corporation, HCCT 109/2003, Hon. Reyes J, at ¶ 62 and Hsing Chong Construction (Asia) Ltd. v Henble [2006] HKCFI 9 at ¶ 21 (Hon. Reyes J).
7 Final Appeal No. 17 of 2003 (Civil) dated 23 September 2004 (Ying Ho).
Continued overleaf

In the leading judgment of the Court, 8 Mr Justice Ribeiro PJ defined this common law doctrine, in so far as it has a role in Hong Kong, in the following terms:
' where a contract does not have a mechanism for certified extensions of time, the contract, construed contra proferentem against the employer, cannot, in the absence of clear words, be taken to mean that the employer is entitled to charge the contractor with liquidated damages accruing on a daily or periodic basis when it is the employer’s own conduct which has resulted in part of the relevant delay…' (emphasis supplied)
The reference in this passage to ‘a mechanism for certified extensions of time’ leads to a third point, suggested in the above quotation – namely, that employer’s prevention will not disable a liquidated damages provision if the contract provides for an EOT in respect of those events.
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Does the reference to delay in excess of what was reasonably foreseeable at the date of the Letter of Clarification – if it is indeed a condition precedent – clearly evince a common intention – the
‘ clear words’ referred to in the above passage – that the employer will be entitled to charge the contractor with liquidated damages notwithstanding that it is the employer’s own conduct which has resulted in at least part of the relevant delay?
In relation to the requirement of clarity in this very context, in the well known decision of the English Court of Appeal in Dodd v.
Churton, 10 The Right Honourable Lord Justice Chitty observed that:
‘ It would require very clear language to show that a man had undertaken a responsibility which very few men would undertake with their eyes open.’
Beyond pronouncements of this sort, there is limited, if any, authoritative guidance as to the permissible forms which such ‘clear words’ may take. Arguably, the overseas cases that uphold the strict efficacy of other forms of express conditions precedent – ie, notice provisions – in circumstances of employer prevention, 11 are confined to a situation where the Contractor has failed to take a step necessary to activate the EOT mechanism. Moreover, these case should be viewed in a wider policy setting that increasingly views strict notice provisions as legitimate.
Fifthly, even as a matter of modern contractual interpretation, it may be hard to mount an argument that there is sufficient clarity in the language of the MTR Conditions on this point to warrant a deprivation the right under Clause 68.1 to an EOT nor of access to the doctrine of prevention. This is particularly so given the existence of the Engineer’s power under Clause 68.4 to finally review all the relevant events which may have occurred and of which particulars shall have been given to him, upon the issue of a
Certificate of Completion, and to ‘grant and certify to the
Contractor such further extension of time (if any) for the achievement of the relevant Completion Obligation or Obligations as in the opinion of the Engineer may be justified.’ Arguably this
‘final determination power’ is not touched by the unforeseeability wording.
Having regard to the foregoing remarks, it remains to be seen whether the wording of the unforeseeable condition satisfies the traditional degree of clarity necessary to curtail the Contractor's right to an EOT or reasonable time for the achievement of the
Completion Obligation. As such, and in the meantime, it should perhaps come as no surprise if an Engineer appointed under the
MTR Conditions feels a profound sense of reluctance to invoke the unforeseeability wording.
8 Ying Ho at ¶ 144, with whose reasons on this point Justices Bokhary PJ and Chan PJ, and Sir Derek Con NPJ agreed, at ¶¶ 4, 20 and 184 respectively, and Sir Ivor Richardson NPJ saw no occasion to address.
9 In this regard, the reference to a ‘ contra proferentum’ interpretation must be treated with care. There is no room for such an interpretative presumption where the language of the EOT clause is unambiguous; but where there is a true ambiguity, an interpretation that permits the contractor to recover appropriate extensions of time in respect of events causing delay will be commended. See for example Multiplex
Constructions (UK) v. Honeywell Control Systems, Queen's Bench Division (Technology and Construction Court), [2007] BLR 195, 111 ConLR 78, at ¶¶ 58-59 and Steria Ltd v. Sigma Wireless Communications
Ltd , Queen's Bench Division (Technology and Construction Court), [2008] BLR 79, 118 ConLR, at ¶¶ 86-89;
10 (1897) 1 QB 562 (English Court of Appeal).
11 Namely, Turner Corporation Limited (in liq) v Co-ordinated Industries Pty Ltd (1994) 11 BCL 202, Turner Corporation Pty Limited (Receiver & Manager Appointed) v Austotel Pty Ltd (1994) 13 BCL 378,
Peninsula Balmain Pty. Limited v Abigroup Contractors Pty. Limited [2002] NSWCA 211, City Inn v. Shepherd Construction Ltd [2003] ScotCS 146 (20 May 2003), Beckhaus v Brewarrina No 2 [2004] NSWSC
1160.
Continued overleaf

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vi.
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xii.
xiii.
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xv.
An Engineer’s instruction to resolve an ambiguity and/or discrepancy in the documents forming the Contract, or requiring the Contractor to put forward proposals for Approval whereby they may be resolved, which causes the Contractor to suffer delay (Clause 6.2) [Engineer to Explain Ambiguities].
A failure or inability of the Engineer to issue at a time reasonable in all the circumstances drawings, specifications or instructions requested by the Contract and considered necessary by the Engineer in accordance with Clause 7.3 (and which it is not the responsibility of the Contractor to provide pursuant to Clause 10), which causes the Contractor to suffer delay (Clause 7.4 [Delay in Information].
An unreasonable delay in the Engineer’s Approval or in any other acts to be performed by the Engineer pursuant to the
Design Approval Process (Clause 9.7 [Delay in Approval of Design Data].
An unreasonable delay in the Engineer’s consent to the proposed methods of manufacture, construction or installation, in consequence of which the Contractor suffer delay (Clause 16.4 [Late Consent: Delay/Cost]).
Requirements of the Engineer pursuant to Clause 16.2 could not reasonably have been foreseen by the Contractor at the date of the Letter of Clarification, in consequence of which the Contractor suffer delay (Clause 16.4 [Late Consent:
Delay/Cost]).
A withdrawal of consent to a method of construction or installation to which consent has previously been given, followed by the taking of steps by the Contractor as may be necessary to obtain the Engineer’s consent to a changed method of construction or installation, in consequence of which the Contractor suffers delay (Clause 16.5 [Changes in Methods of
Construction: Delay/Cost]).
A requirement of the Engineer that the Contractor permit the use of Site of his Contractor’s Equipment and labout by utility companies, Government Departments and other contractors employed by the Employer and their respective workmen and the workmen of the Employer who may be engaged in the execution on or near the Site of any work ancillary to the Works but not included in the Contract, as a result of the compliance with which, the Contractor suffers delay (Clause 37.2 [Use of
Contractor’s Equipment and Labour]).
The activities of any Designated Contractor or Interfacing Contractor are such that the Contractor is unable to proceed with the
Execution of the Works with due dispatch in accordance with the Master Programme, the ABWF Programme and/or the Coordinated Installation Programme, because of which the Contractor suffers delay (Clause 46.7 [Designated and Other
Contractors: Delay]).
The Contractor’s affording of all reasonable opportunities for carrying out their work to utility companies, Government
Departments, any other contractors employed by the Employer and their workmen, any workmen of the Employer who may be engaged in the execution on or near the Site of any work ancillary to the Works but not included in the Contract, in accordance with the requirements of the Engineer, which involves the Contractor in delay (Clause 46.7 [Designated and Other Contractors:
Delay]).
The Contractor’s co-ordination of his own work under the Contract with that of Designated Contractors and Interfacing
Contractors under the respective contracts with the Employer and with that of the Employer’s own workmen at the times stated in the Specification or at such other times, in accordance with the requirements of the Engineer, which involves the
Contractor in delay (Clause 46.7 [Designated and Other Contractors: Delay]).
The Contractor’s taking of reasonable steps to ensure that the Execution of the Works in co-ordinated and integrated with the works of Designated and Interfacing Contractors, and compliance with any directions which the Engineer has given for the integration and/or co-ordination of the Execution of the works with the execution of the works of any Designated or
Interfacing Contractor, which involves the Contractor in delay (Clause 46.7 [Designated and Other Contractors: Delay]).
A failure on the part of the Employer to give possession in accordance with the terms of Clause 65.1, as a result of which the Contractor suffers delay (Clause 65.2 [Delay to Contractor]).
A written order of the Engineer to suspend the progress of the Works or any part or Section thereof which is (a) not otherwise provided for in the Contract, (b) not necessary for the proper Execution of the Works or by reason of weather conditions unavoidably affecting the safety or quality of the Works or by reason of some default on the part of the Contractor, and (c) not necessary for the safety of the Works or any part thereof, and which causes the Contractor to suffer delay (Clause 72.2
[Suspension of Works]).
A written requirement of the Engineer for the Contractor to search for the cause of any defect, imperfection or fault (for which the Contractor is not liable under the Contract) under the direction of the Engineer, in the undertaking of which the
Contractor suffers delay (Clause 77.1 [Contractors to Search for Defects]).
A Variation which causes the Contractor to suffer delay (Clause 79.2 [Ordered Variation or Change to be in writing]).
Continued overleaf

(b)
(c)
(d)
(e)
(f)
(g)
(h)
If the Contractor is or is likely to be delayed in achieving a Completion Obligation by reason of:
(a)
(i)
( j) delay by the Employer or the Engineer in providing information or giving Approval at the times agreed under any programme Approved pursuant to Clause 15, or in providing the Contractor with parts of the Site in accordance with Clause
65.1; or any Variation under Clause 79; or delay by the Engineer in providing drawings or specifications or instructions pursuant to Clause 7.4; or delay by, or any unreasonable requirement of, the Engineer in giving consent or withdrawing consent previously given to the Contractor's proposed methods of manufacture, construction or installation as referred to in Clause 16; or delay resulting from any Excepted Risk, as referred to in Clause 22.6; or encountering physical conditions or artificial obstructions as provided in Clause 38.3; or delay of a kind referred to in Clauses 6.2, 9.7, 19.2, 37.2, 46.7, 46.8, 51.2, 57.12, 60.3, 65.2, 74.4, 74.6, 77.1 or 99.1; or any delay occasioned by a suspension ordered under Clause 72 unless the suspension order was the result of a breach of
Contract or other default of the Contractor or those for whom the Contractor is responsible under the Contract; or delay caused by the hoisting of a typhoon signal of number 8 or above but not for other weather conditions or circumstances arising from weather conditions; or any disturbance to the progress of the Works for which the Employer or the Engineer is responsible other than disturbances of the kinds mentioned in (a) to (i) above
And whether such delay occurs before or after the time or extended time fixed for achieving such Completion Obligations then as soon as is reasonable after receipt by the Engineer of particulars in accordance with Clause 68.3, and subject to Clause 68.4 and to the Clause 69, either prospectively or retrospectively the time for achieving such Completion Obligation shall be extended by such period as in the opinion of the Engineer may be justified and the date set out in the Contract for achieving such Completion
Obligation shall be amended accordingly by the Engineer who shall notify the Contractor in writing of the amended date.
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This note does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered.
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