S. Magintharan-The Prevention Principle and The Contractors Remedies

The prevention principle and the contractor's remedies, Const. L.J.
2017, 33(8), 455-489
For educational use only

The prevention principle and the contractor's remedies
S. Magintharan*
Table of Contents
1) Introduction
2) The essence of the prevention principle
3) Acts of prevention
4) Sources for the remedies to the contractor resulting from the employer’s prevention
5) Conclusion
Journal Article
Construction Law Journal
Const. L.J. 2017, 33(8), 455-489
Subject
Construction law
Keywords
Construction disputes; Contractors; Defences; Prevention principle; Remedies
Cases cited
Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] A.C. 689 (HL)
Legislation cited
Unfair Contract Terms Act 1977 (c.50)
Consumer Law 2010 (Australia) s.18, s.20, s.21, Sch.2
*Const. L.J. 455 1) Introduction

The prevention principle1 has been dispensing justice2 for more than 100 years3 in the construction industry in common
law countries4 where the rife undesirable practise is using the grinding legal process to subject and to choke the contractor,
*Const. L.J. 456 who had carried out construction works, of his "lifeblood"—cash flow.5 Worst of all, it is common for the
contractor, despite having incurred costs and provided construction services, to be faced with substantial claims for liquidated
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The prevention principle and the contractor's remedies, Const. L.J. 2017, 33(8), 455-489
and unliquidated damages, calling of its performance bonds and claims by the employer seeking to extinguish or in diminution
of payment due to the contractor6 rather conveniently in the final claim certified by the architect or superintendent in favour
of the employer.
Lord Denning MR in Modern Engineering 7 proverbially highlighted this undesirable practice in the construction industry and
its dire consequences to the contractor in practical and "vivid"8 terms.
Although Lord Denning MR’s concerns were not accepted by the House of Lords in Gilbert-Ash,9 its practical wisdom was
recently reiterated and accepted by the Singapore Court of Appeal in WY Steel Construction. *Const. L.J. 457 10
Unfortunately, despite its overreaching, flexible and equitable availability,11 much of what is written12 and acknowledged about
the prevention principle is limited only to its effect in respect of the contractor’s remedy in defence to liquidated damages
claimed by the employer.
This article seeks to pull and gather all the essential strings of the versatility and far reaching use of the prevention principle
in the construction industry in providing substantial remedies to the contractor for damages, defences and set-off available to
the contractor as the result of the employer’s acts of prevention.
2) The essence of the prevention principle

The "essence of the prevention principle" is "that a party cannot insist on the performance of a contractual obligation by the other
party if it is itself the cause of the non-performance".13 The general effect of the prevention principle in favour of a contractor,
prevented from carrying out his contractual obligations, was stated by Chitty LJ in Dodd 14 in the following terms:
"The law in the subject is well settled … that, where performance of a condition has been rendered impossible by the act of
the grantee himself, the grantor is exonerated from performance of it … This principle is applicable not to building contract
only, but to all contracts". (emphasis added) *Const. L.J. 458
The prevention principle is a substantive "rule of law"15 and operates as a term to be implied in law16 on the contracting parties
to co-operate, not to hinder/prevent the other party from completing its contractual obligation and to prevent one party from
benefitting from its own wrongful conduct.17
3) Acts of prevention
Acts of prevention by the employer include18:
1) any act *Const. L.J. 459 by the employer which operates to prevent, impede or otherwise makes it more difficult
for a contractor to complete the works by the stipulated time-line in the contract19;
2) any act by the employer or his agents (including the architect or superintendent) which improperly interferes in the
carrying out of the works20; and
3) an act of prevention will include acts which are, in fact, authorised and contemplated by the contract, such as
ordering of extra works.21
The Singapore Court of Appeal in Teknikal dan Kejurutetran 22 referred to the "general obligation on the part of the employer
not to prevent the performance of the contract by the contractor" including the "obligation to give possession of the site at the time
provided by the contract" and not to interfere with the contractor’s right to "carry out his work in the order he chooses". There
is no requirement for the acts of the employer to amount to any breach of contract or engaging in any "morally blameworthy
behaviour" to "trigger the prevention principle".23

4) Sources for the remedies to the contractor resulting from the employer’s prevention
Prevention has crippling and dire consequences to the finances and resources of the contractor. Hence in practice, it "remains
fertile grounds for contractual dispute".24 The essential sources for the contractor to claim his remedies or defences arising from
the employer’s prevention are three-fold, namely:
the com *Const. L.J. 460 mon law;

the contract; and
statutory rights and defences.
(a) The common law source of remedy for prevention

The origin of the prevention principle is the common law which has, over 100 years, crystallised into a substantial "rule of law"
to be implied into construction contracts thereby giving the contractor relief.25 However, like most common law remedies in
respect of contractual obligations, the prevention principle itself is subject to be modified, varied and even excluded by express
terms agreed by the parties.26 This eventuality arises due to the common law’s perception, until recently,27 of commercial
parties’ equal bargaining position28 and its refusal to interfere to "rewrite"29 the terms agreed by the parties—notwithstanding
its onerous nature—and subjects the contractor to serious financial consequences.
The main common law causes of action and defences available to the contractor arising from the employer’s preventive conduct
can be subdivided and summarised as follows:
the common law principles of contract;

equitable rights and defences; and
the common law principles of tort.
(i) Contractor’s rights *Const. L.J. 461 in common law principles of contract law for employer’s prevention
In Gilbert-Ash, Lord Diplock30 defined the nature of a construction contract as "an entire contract for the sale of good and
works and labour for a lump sum price payable by instalments as the goods delivered and the work is done".
The contractor’s rights for prevention therefore predominately arise from common law principles of contract law. The prevention
principle, however, is not generally relevant to formation of the contract and is not a vitiating factor31 in the law of contract in
common law countries except, arguably, in Australia and New Zealand where the contractor may seek to invoke the doctrine
of unconscionable conduct and the statutory concept of misleading or deceptive conduct in Australia to rescind the contract.32
The prevention principle is relevant to the contractor in establishing conduct that amounts to a breach33 of the contract on the part
of the employer and which gives rise to the common law rights or causes of action to the contractor summarised34 as follows:
the right to claim damages against the employer for breach of contract under the existing construction contract;
the right of election by the contractor, in common law, to terminate the contract for prevention amounting to wrongful
repudiation of contract and the ri *Const. L.J. 462 ght to claim damages (including loss of expectation loss of profit
reliance costs and restitutionary—quantum meruit) against the employer;
a right to claim for extension of time to complete the contracted works under common law or the contract;
a right to claim interest on all monies due and owing to the contractor from the time the payment is due and payable;
a right to obtain the equitable remedy of specific performance against the employer to enforce the employer’s
performance of his or her contractual obligations; and

a right to seek for a mandatory or prohibitive injunction to enforce the employer’s contractual obligations.
The prevention principle does not operate only as a common law contractual cause of action for the contractor aggrieved by the
employer’s conduct. The prevention principle provides the contractor with formidable defences against any contractual claim
(justified or unjustified) commenced or instituted by the employer, where the employer’s preventive conduct is in issue and is
relied upon by the contractor, particularly the following:
a right to defend the employer’s claim alleging breach or wrongful repudiation by the contractor;
a right to defend against the set-off and forfeiture of retention monies held by the employer belonging to the contractor;
a right to defend a claim for forfeiture of any performance bond provided by the contractor pursuant to the security
requirement under the contract;
a right to defend any claim for forfeiture and imposition of liquidated damages for non-completion under the contract,
unless expressly excluded by the terms of the contract; and
a right to the defence of set-off and counterclaim against the employer.
Contractor’s right to damages in common law for breach of contract by prevention

Lord Diplock in Photo Production 35 defined a breach and its consequences in the following clear terms:
"Every failure to perform a primary obligation is a breach of contract. The secondary obligation on the part of the contract
breaker to which it gives rise by implication of the common is to pay monetary compensation to the other party for the loss
sustained by him in consequence of the breach."
The prevention principle operates as a "primary obligation" under the common law contract law either as an express term
(if so expressly stated in the contract) or by necessary implication of the law or facts in every construction contract,
unless expressly and clearly excluded by agreement, to not prevent/hinder the contractor from carrying out its contractual
obligations.36 Consequently, the employer’s conduct *Const. L.J. 463 in preventing the contractor from performing its
contractual obligations will constitute, in common law, a breach of contract and will give rise to the "secondary obligation" on
the part of the employer to compensate the contractor for "loss sustained by him in consequence of the breach".37
The contractor is in law required to specifically plead38 and prove,39 on a balance of probabilities,40 the "primary obligation"—
the facts giving rise to the primary obligation on the employer of non-prevention—and the breach by the employer causing41
the contractor damages, failing which the contractor will fail in its claim and the court is precluded from giving the contractor
any redress for any prevention.
The contractor is entitled under contract law, on proof of the employer’s prevention, to damages
"such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such
breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time
they made the contract, as the probable result of the breach of it".42
The object for awar *Const. L.J. 464 ding damages is to compensate the contractor for the employer’s breach of contract and
to place the contractor "in the same situation, with respect to damages, as if the contract had been performed"43 subject to the
law of remoteness44 and contractor’s duty to take reasonable steps to mitigate his loss.45
Where there is prevention by the employer, the contractor is entitled to damages for breach of contract even if the contractor
himself in already in breach of the contract.46 The construction contract continues to exist notwithstanding the employer’s
prevention, and the contractor is bound to complete its contractual obligation unless the prevention amounts to a breach of a
"condition" or a breach that "goes to the root of the contract" or "substantially deprived the injured party of a substantial part
of the benefit" amounting to a wrongful repudiation of the contract by the employer and the contractor elects to terminate the

contract.47 The contractor is not, in law, entitled to terminate the contract for a mere breach of contract and the consequence for
such conduct may by itself amount to a wrongful repudiation on the part of the contractor and will lead to serious construction
dispute *Const. L.J. 465 s which are replete in case law.48 Kelly CB in Roberts 49 summarised the law as follows:
"[I]t is a principle very well established in common law, that no person can take advantage of the non-fulfilment of a condition
the performance of which had been hindered by himself … and also that he cannot sue for a breach of contract occasioned by
his own breach of contract, so that any damages he would otherwise have been entitled to for the breach of contract to him
would immediately be recoverable back as damage arising from his own breach of contract …".
The Australian High Court in Koompahtoo Local Aboriginal Land Council emphasised that there is "no right of termination"
of a contract if there is no wrongful repudiation and the serious consequence in emphatic terms.50
In the case of the contractor’s claim for mere breach of contract (not amounting to wrongful repudiation) arising from the
employer’s prevention, the contractor is only entitled, under the existing contract, to damages caused by the breach and is not
entitled to claim damages for the expectation or consequential loss flowing from the loss of the benefit of the contract51 or costs
incurred in reliance of the contract52 or quantum meruit.53 Hence, in practice, the real and substantial battle ground of contractual
disputes in a contractor’s claim for prevention is invariably not limited to mere breaches of contract but also an assertion that
the prevention amounted to wrongful repudiation and a claim for full damages flowing from the wrongful repudiation.54
Contractor’s right to damages for wrongful repudiation of contract by prevention

In Heyman,55 Lord Wright held that a party repudiates a contract "where the party by words or conduct evinces an intention
no longer to be bound and the other party accepts the repudiation and rescinds the contract". The Australian High Court in
Koompahtoo Local Aboriginal Land Council 56 set out the "test" for wrongful repudiation as follows:
"The test is whether *Const. L.J. 466 the conduct of one party is such to convey to a reasonable person, in the situation of the
other party, renunciation either of the contract as a whole or of a fundamental obligation under the contract." 57
It is trite law that conduct of the employer or his agents which impedes and prevents the contractor from carrying out his
works under the contract amounts to a wrongful repudiation of the construction contract if it amounts to "conduct evincing
an unwillingness or an inability to render substantial performance of the contract".58 Hudson 59 identified a non-exhaustive
"list of specific obligations" and which, it is submitted, would amount to prevention and wrongful repudiation by the employer,
including:
the employer’s failure to act fairly, properly in the administration of the employer’s obligations under the contract;
the employer’s failure to give possession of the site;
the employer’s failure to fairly and properly give information and instructions required under the contract; and
the employer’s failure to permit the contractor to carry out the whole of the work.
In each case, the essential question of mixed law and facts for the court is whether the conduct of the employer’s prevention
would "convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of
a fundamental obligation under the contract".60
In Lodder 61 Lord Davey reiterated the prevention principle and its consequences.
The employer’s wrongful repudiation, arising from the prevention, gives the contractor the following substantial remedies
against the employer:
the contractor is i *Const. L.J. 467 n common law62 entitled to elect63 to accept64 the employer’s wrongful
repudiation, terminate the contract and be lawfully discharged65 from its further obligations under the contract in
addition to the contractor’s right to obtain substantial damages for wrongful repudiation;

the contractor is entitled to elect to affirm the contract, treat the contract as continuing, and continue with its contractual
obligation whilst reserving its rights to claim damages66 for the employer’s wrongful repudiation; or
the defence to off-set its damages in defence, set-off and counterclaim against any claim of damages commenced by
the employer against the contractor notwithstanding the employer’s act of prevention.67
In the event the contractor elects to affirm the contract despite the employer’s prevention amounting to wrongful repudiation,
the contractor is entitled to damages for the "additional costs of performing the contract incurred by the Contractor as the result
of the Employer’s breach".68 In the case where the contractor elects to terminate the contract as the result of the employer’s
prevention amounting to wrongful repudiation, the contractor will be entitled to
"the full contract value of the work done up to that time, less sum previously paid and possibly also (although subject to a
number of important factual reservations) a sum for profit lost on the remaining work"
and "any increased *Const. L.J. 468 cost of work already done caused by earlier breach of the Employer prior to termination"69
or alternatively, to a claim for reliance costs incurred by the contractor70 or, a claim for reasonable remuneration for all work
and services rendered under the terminated contract based on the restitutionary claim of quantum meruit.71 In addition, the
contractor is also entitled to claim all outstanding payments due and owing to the contractor for all work done and services
rendered prior to the wrongful repudiation by the employer, for which payments are outstanding and unpaid, and for the return
of any retention sum withheld by the employer under the contract—as a debt.72
Contractor’s right to damages and time for delay caused by the employer’s prevention
In common law, an act of prevention by the employer which causes delay to the critical path of the project and prevents the
contractor from complying with the contracted completion date will, unless excluded or modified by the contract, "release"73
the contractor from complying with the contracted completion date, and entitles the contractor to the remedy of reasonable
extension of time to complete the project and damages for the delay.74
Lord Denning MR in T *Const. L.J. 469 rollope & Colls *Const. L.J. 469 aptly summarised the common law position in
relation to the act of prevention by the employer and the effect on the time for completion.75
The English Court of Appeal in Peak Construction 76 reiterated the law on the effect of the acts of prevention, delay and its
effect on the liquidated damages, summarised as follows77:
that a liquidated damages clause is "inserted by the employer for his own protection"78 and hence "must be construed
strictly contra proferentum" against the employer;
any act of prevention causing delay to the critical path of the contractor’s work by the employer or his agents and79
the employer’s or his agent’s failure to grant a reasonable extension of time will render the contracted completion date
invalid, set the time for completion "at large" and the contractor is entitled to an extension of time to complete the
contracted works within a reasonable time, unless such right is modified by a contractual "extension of time clause"
for the "postponement of the completion date on account of the delay caused by some breach or fault on the part of
the employer"; and
unless there is a clear "extension of time clause" in the contract to account for any delay caused by the employer or his
agents, any contractual liquidated damages "will not bite", the employer is not entitled to impose any liquidated damages
and will only be entitled, if any, to claim for any unliquidated damages for any delay caused by the contractor.80
In common law, a valid extension of time clause which provides for a mechanism for the extension of time for the employer’s
or his agent’s acts of prevention will therefore preclude the operation of the prevention principle and the contractor’s claim f
*Const. L.J. 470 or extension of time for delay caused by the employer’s preventive acts.81 Where there is a valid extension of
time clause for the employer’s prevention, the contractor’s right to an extension of time for acts of prevention by the employer
causing delay to the contractor’s works is subject to the contractor’s strict compliance of the terms of the extension of time
clause conditions failing which the contractor would forfeit his right to the remedy for extension of time.82

In summary therefore, unless modified or varied by the contract in an extension of time clause, the contractor has the following
substantial remedies against the employer if he is prevented from complying with the contracted completion date:
to a reasonable83 extension of time, taking all relevant circumstances into consideration, to complete the contracted
work if the contractor does not rely on the employer’s act of prevention as wrongful repudiation or elects to affirm the
contract and to continue with the contract notwithstanding the employer’s wrongful repudiation;
damages for all increased costs84 arising from the delay caused by the employer’s prevention incurred by the contractor
to complete the works on the reasonably extended time; and
the right to defence, set-off and counterclaim on such right to damages and extension of time against any claim made
by the employer, despite the employer’s prevention.85
Contractor’s right to interest on all mo *Const. L.J. 471 nies and damages resulting from the employer’s prevention
In Sempra Metal 86 the English House of Lords held that
"the court has a common law jurisdiction to award interest, simple and compound, as damages on claims for non-payment of
debts as well as on other claims for breach of contract and in tort"
if such a claim is "specifically pleaded and proved" and subject to the rules of "remoteness and failure to mitigate".
The contractor is therefore entitled to, in common law, interest on all non-payment of monies due to the contractor, damages
for breach of contract and tort as stipulated at the rate under the contract. If there is no contracted interest then the contractor is
entitled to interest (simple or compound) based on the interest of judgment or awards or any rates set out in statute.87
The contractor is also in common law entitled to claim additional finance charges incurred by them as the result of the employer’s
non-payment or late payment on monies due to the contractor, if such loss can be proved by the contractor.88
Contractor’s claim for specific performance of the contract

The remedy of specific performance is for the contractor to seek an order from the court to "compel" the employer, who by his
hindrance/preventive acts, is "not performing an obligation under a contract, to carry out that obligation".89
Unlike the contractor’s right90 to damages in common law, the remedy of specific performance is equitable, discretionary (not
a right) and is, as Hudson observes,91 subject to two very "important" principles that
"[1] the court will not order specific performance of a contract of services and [2] the court will not make an order where
continuous supervision will be required".
In Major, Alderman & Burgess 92 Romer LJ reiterated the "general rule" that "the court will not enforce specific performance
of a building contract" subject to "one exception" requiring "three things" to be established namely: [1]
1) "the building work of which he seeks to enforce performance, is defined by the contract";
2) "the plaintiff has a substantial int *Const. L.J. 472 erest in having the contract performed which is of such a nature
that he cannot adequately be compensated for breach of contract by damages"; and
3) "the defendant has by the contract obtained possession of the land on which the work is contracted to be done".

Although the courts are reluctant to grant specific performance of a contract against an employer to enforce a building contract
which the employer himself is preventing, the court may in the "unusual case"93 grant an order to enforce a contract when it
is just to do so and when damages are an inadequate remedy.
Contractor’s claim for injunction

An injunction is an order of court requiring a party who is
"committing, (or threatening to commit) a legal wrong to refrain from doing something (a prohibitory injunction), or requiring
a defendant to do a positive act (a mandatory injunction)" 94
on a temporary basis until trial (interim or interlocutory injunction) or on a final injunction granted after trial (final injunction).
An order for injunction is also an equitable remedy, is discretionary and the contractor must prove:
1) there is a serious question to be tried;

2) that damages are not an adequate remedy; and
3) the "balance of convenience" (circumstances of the case) is in favour of granting the injunction.95
The contractor is, in the discretion of the court, entitled to seek an injunction as a remedy to prevent a serious breach of contract
by the employer and in furtherance of the employer’s acts of prevention, particularly in the following situations96:
to prevent the employer’s act of prevention by taking over property belonging to the contractor and taking out the
contracted works from the contractor, unless allowed to do so under express terms of the contract97;
injunctions preventing specific acts of obstruction by the employer and his servants of the contractor’s works;
injunction to require the employer to comply with specific "mechanisms of the contract *Const. L.J. 473 ";
injunction to require the employer to comply with his contractual obligations and to set aside the retention monies in
a trust account98;
injunction ordering the issue of certificates when it is being deliberately withheld by the employer and its agents in
breach of contract99; and
injunction restraining100 the employer from fraudulently, unconscionably or acting in bad faith in seeking to call upon
the contractor’s performance bond where the employer is itself in breach of contract and had committed an act of
prevention.101
(ii) Contractor’s defences in common law arising from acts of prevention by the employer
The prevention principle as defence to employer’s claim for damages

The prevention principle provides the contractor with a formidable defence to any purported claim by the employer that the
contractor was in breach or in wrongful repudiation of the contract—which is often the subject matter of substantial contractual
disputes in practice.
The prevention principle operates as a defence against any claim for damages by the employer in the following ways.
Firstly, it operates as a matter of law, to prevent the employer from relying on his own acts of prevention or conduct,
as evidence to allege breach of contract or wrongful repudiation against the contractor.102
Secondly, it operates to discredit and rebut the employer’s claim that the contractor was in breach of the contract. On
the contrary, if prevention by the employer is proven by the contractor, it is the employer who is in breach or wrongful

repudiation of the contract and will be liable for damages, set-off and/counterclaim from the contractor.103 Kelly CB in
Roberts 104 reiterated the prevention principle as "well established in common law" *Const. L.J. 474 that if prevention
is established, the employer "cannot sue for a breach of contract occasioned by his own breach of contract".
Thirdly, the prevention principle also operates to break the chain of causation in the employer’s claim for breach and
the alleged damages suffered. Acts of prevention on the part of the employer rebuts the employer’s claim that the
contractor’s breach or wrongful repudiation was the "real and effective cause" of the employer’s damages.105
The prevention principle as defence to employer’s set-off and forfeiture of the retention monies withheld under the
contract
Retention involves an owner retaining a proportion of an amount due to the contractor from a progress payment, as security for
the performance by the contractor of its contractual obligations (including, but not usually limited to, obligations concerning
the quality of work performed by the contractor).106 The owner is not entitled to deduct any retention from the contractor’s
progress payments unless there is an express agreement to do so.107
The retention, as is quite often conveniently forgotten by the employer in practice, belongs in law to the contractor108 being part
of the gross amount of work carried out by the contractor and is held by the employer on trust for the contractor.109 The employer
is bound to keep the retention sum separately, not to treat the retention sum as part of the employer’s own working capital
unless the contract allows the employer to do so.110 The contractor has the remedy of seeking a mandatory injunction against
the employer to place the retention money into a separate trust account if the employer refuses to comply with such a request.111
Significantly, if the contract is terminated either by way of contractual termination or an election to terminate pursuant to
wrongful repudiation by either the employer or the contractor, the contractor is discharged from its further contractual obligations
and the employer is bound to return all withheld retention amounts to the contractor unless the contract provides otherwise,
because the right to withhold retention of mo *Const. L.J. 475 nies is "predicated on the continuing existence of a subcontract"
and the employer has no continuing right to withhold the retention,112 subject however to all accrued rights of the employer
prior to termination.113
Sir Anthony May P explained the "logic" of the contractor’s entitlement to the release of the retention money upon the employer’s
termination in the following terms in Cleveland Bridge 114:
"The logic of Multiplex’s position was, I think plain. Their entitlement to deduct retention had accrued while the subcontract
subsisted: see Bank of Boston v European Grain …"(emphasis added).
Acts of prevention by the employer entitles the contractor, in common law, to terminate the contract and therefore there is
"no continued existence" of the construction contract which entitles the employer to continue to withhold the retention subject
however only to any clear liquidated115 set-off accrued to the employer prior to the termination. Therefore the contractor has
the right to claim the whole retention withheld by the employer if the contractor elects to terminate the contract as the result of
the employer’s wrongful repudiation arising out of the acts of prevention and a valid defence against the employer’s attempt to
forfeit the withheld retention on specious claims against the contractor.116
Further, the employer’s attempt to forfeit any retention monies withheld by the employer as security for performance of the
contract gives the contractor the remedy of challenging such forfeiture and obtaining an mandatory injunction against the
employer on the ground that the forfeited amount is a penalty for the contractor’s breach of contract and unenforceable in
law. The UK Supreme Court in the recent decision of Cavendish Square 117 reiterated that the penalty rule in common law
is applicable also to cases where a sum is withheld by a party "as a deposit, in the sense of some sort of security for the first
party’s contractual performance" and the forfeiture of the sum withheld for a breach of contract amounts to a penalty and will
be unenforceable in law if the said sum is "out of proportion to any legitimate interest of the innocent party".

In Australia, the High Court had in Andrews 118 extended the penalty rule to include not only a case where a stipulated sum
is imposed in a contract for a breach of contract (primary obligation), but also includes cases where a sum is imposed, or it is
submitted forfeited, *Const. L.J. 476 in cases where there is no breach of contract which:
"as a matter of substance, it is collateral (or accessory) to a primary stipulation in favour of a second party and that collateral
stipulation, upon the failure of the primary stipulation, imposes on the first party an additional detriment, to the benefit of the
second party".
Although, the UK Supreme Court in Cavendish Square 119 disapproved the penalty rule approach taken in Andrews, the
Australian High Court had recently in Pacciocoo 120 acknowledged the "difference" in view between England and Australia
but affirmed the views expressed in Andrews as the "common law of Australia".121 It is submitted that the contractor is in
common law entitled to raise the defence that the employer’s forfeiture of the retention withheld for alleged non-compliance or
breach of contract by the contractor is a penalty, unconscionable and therefore not enforceable. The contractor has the remedy
to seek a mandatory injunction to restrain the employer from setting-off and forfeiting the retention monies due and owing to
the contractor.
The prevention principle as defence to employer’s calling and forfeiture of the contractor’s performance or on-demand
bond
In construction and engineering, it is usual for the contractor to be bound by the construction contract to provide the employer
a performance or on-demand bond from banks or other financial institutions "undertaking to make payment" to the employer
(beneficiary) of "the instrument in certain circumstances" for the contractor’s due performance of the contract.122 Calls made
by the employer on the performance bonds and on-demand bonds have dire financial ramifications on the contractor who would
be liable to indemnify the financial institutions or bank, which provided and paid under the facility by way of the bank’s right
of subrogation, the full amount paid by the bank or financial institution.123
Unlawful calls made by employers of the bond will therefore have crippling effects on the contractor. In England and Hong
Kong,124 the "only exception" available for the contractor to seek an injunction against and to restrain an employer from calling
of the performance bond/guarantee is "fraud" although there is now a "second exception" being developed where "it has been
clearly established that the beneficiary is precluded from making a call by the terms of the contract".125 On the other hand,
Australia, Singapore, Mal *Const. L.J. 477 aysia and New Zealand126 recognise "unconscionable conduct" as an additional
exception available to restrain the calling of payment of performance. In Australia, the contractor is arguably also able to rely on
the unconscionable conduct of the employer under s.20 of the Australian Consumer Law to restrain the employer from calling
the performance bond resulting from the employer’s own prevention amounting to unconscionable conduct.127
The conduct of the employer, in making a call for the performance bond or demand bond when the employer itself is in wrongful
breach or wrongful repudiation of the contract by its acts of prevention, amounts to fraud and unconscionable conduct for the
following reasons.
It is submitted that making a demand on a bond knowing that the contractor was not in breach of the contract but was
being prevented by the employer’s own preventive conduct, as well as alleging that the payment under the bond was
due and payable, is fraudulent conduct and will justify the court in restraining the calling of the performance bond.128
In Balfour Beatty 129 the court stated the consideration for fraud was that "when the demand was made the persons
acting on behalf of the plaintiffs knew that the sum claimed was not due from Leadrail, and dishonestly made a demand
despite that knowledge".
It is submitted that for the same reason, the prevention principle will render the employer’s attempt to take advantage
of its own wrongful conduct, conduct which "shocks the conscience, something which is harsh or oppressive in that
it involves taking advantage of another’s special disability or disadvantage",130 and will *Const. L.J. 478 amount to
unconscionable conduct both under the common law131 and also under s.20 of the Australian Consumer Law.132
Further, the contractor has the remedy in common law of showing that the forfeiture of the performance bond by the employer
relying on its own acts of prevention is unconscionable and amounts to "out of all proportion to any legitimate interest" of
the employer, infringes the penalty rule and is therefore unenforceable under the principles stated by the UK Supreme Court

in Cavendish Square 133 or the Australian High Court in Andrews,134 and the employer is restrained from calling on the
performance bond provided by the contractor under the contract.135
The prevention principle as defence to employer’s claim for liquidated damages

Lord Dunedin in Dunlop Pneumatic Tyre Co 136 defined liquidated damages in essence as being "a genuine pre-estimate of
damages" and is enforceable if it is not "out of proportion to any legitimate interest of the innocent party in the enforcement of the
primary obligation".137. Julian Bailey138 summarised the nature of a liquidated damages provision in a construction contract as
"an express agreement that a sum of money, pre-defined or ascertainable in amount, and representing a genuine pre-estimate of
probable loss or damage, is to be paid by one party to the other in the event of the former being in breach of contract".
The employer’s attempt to impose, deduct and set-off liquidated damages against monies due and payable to the contractor
has dire consequences and hence will in "reality", as Matthew Bell correctly observed,139 cause the contractor to "naturally"
resist such deductions. In the context of construction-related activities, liquidated damages are most commonly provided for
delayed completion by the contractor.140
A liquidated damages clause for delay in a contract is rendered inoperative and "does not bite" if the delay is in anyway (even
*Const. L.J. 479 partly) caused by the employer unless there is an express extension of time mechanism in the contract.141
Salmon LJ in Peak Construction 142 reiterated the principle that
"if the failure to complete on time is due to the fault of both the employer and the contractor, in my view the clause does not
bite. I cannot see how, in the ordinary course, the employer can insist on compliance with a condition if it is partly his own
fault that it cannot be fulfilled."
The effect of the act of prevention by the employer is to "release"143 the contractor from the imposition of the liquidated damages
and the employer "cannot claim any penalties or liquidated damages for non-completion in that time".144
Further, the contractor has the remedy of challenging the employer’s imposition of liquidated damages for delay—breach
of contract of a primary obligation145 or "collateral (or accessory) to a primary obligation"146 —as a penalty, which is not
enforceable in law and not a reasonable amount to protect the "legitimate interest" of the employer. As Lord Denning MR stated
in Trollope & Colls 147 the employer "cannot claim any penalties or liquidated damages" caused by his own prevention.148
The prevention principle as defence of set-off and counterclaim to employer’s claim for damages
It is a "well settled principle of law" that a party sued for breach of contract is entitled to raise the defence of set-off and
counterclaim in "diminution or extinguish" of the claim unless said right of set-off was by clear words excluded by the parties.
Lord Salmon in Gilbert-Ash 149 reiterated the "well established principle of law" that
"when a claim is made for the price of goods sold and delivered or work and labour done, the defendant is entitled to set-off or
set up against the amount claimed any damages which he has suffered as a result of the plaintiff’s breach of the contract under
which the goods were sold and achieved or the work and labour were done." (emphasis added).
Morris LJ in Hanak 150 summarised the three types of set-off as a substantial defence in law151 to defeat the plaintiff’s claim
in law as follows:
"The position *Const. L.J. 480 is, therefore, that since the Judicature Acts there may be [1] as set-off of mutual debts; [2] in
certain cases a setting-up of matters of complaint which, if established, reduce or even extinguish the claim and [3] reliance
upon equitable set-off and reliance as a matter of defence upon matter of equity …"
The prevention principle provides the contractor with the substantive remedy, arising from the employer’s acts of prevention,
to reduce or extinguish the employer’s claim and also to counterclaim and to obtain net-judgment152 against the employer
for damages suffered by the contractor as the result of the employer’s wrongful repudiation, which exceeded the employer’s

claim. The clearest statement of this substantial remedy of set-off and counterclaim is contained in the judgment of Kelly CB
in Roberts.153
The contractor’s counterclaim for the employer’s breach and wrongful repudiation of contract for acts of prevention will include
payments due and outstanding to the contractor, amounts wrongfully deducted from the contractor, monies belonging to the
contractor which is wrongfully forfeited by the employer (liquidated damages and performance bond) and also loss of profits or
reliance costs or quantum meruit for all works carried out under the contract until the wrongful repudiation of the employer. The
total damages counterclaimed by the contractor arising from the employer’s act of prevention and wrongful repudiation will
serve as the defence of set-off in diminution of or to extinguish the employer’s claim and as a counterclaim against the employer’s
claim for all amounts in excess of the employer’s claim.154 The contractor, if it succeeds in its set-off and counterclaim against
any claim commenced by the employer will be entitled to net-judgment155 in the contractor’s favour and, at the discretion of
the court, the contractor’s legal costs. The employer’s attempt to exclude the contractor’s right to set-off in the contract may
also be subject to the test of reasonableness under the Unfair Contract Terms Act.
The principle on the award of legal cost is that it is at the discretion of the court but the general principle in common law is
that "costs follows the event" i.e., the party that succeeds in prosecuting or defending the claim will be awarded costs, unless
the successful party had in any way acted unreasonably in prosecution of its claim. Nourse LJ in Re Elgindata (No.2,) 156 aptly
summarised the general principles for award of costs.
In the event of the contractor *Const. L.J. 481 successfully defending and succeeding in its set-off and counterclaim in an
action for damages by the employer despite the employer’s acts of prevention, the contractor is entitled to two sets of costs and
a net judgment namely, one set of legal costs for successfully defending the employer’s claim by its set-off for damages and the
second set of legal costs for succeeding in its set-off and counterclaim which exceeded the employer’s damages claim because
the net effect is that it is the contractor who succeeded in its action resulting157 from the employer’s acts of prevention.
(b) Contractor’s essential rights under the contract for employer’s prevention
In Gilbert Ash,158 Lord Diplock and Lord Salmon reiterated that the law governing a construction and building contract is
the general law of contract and the contracting parties are entitled to incorporate any term, unless prohibited by the law, in
"extinguishing, curtailing or enlarging" any common law right.
The contractor’s rights to remedies, including the rights arising from the prevention principle,159 are therefore limited to the
express terms of the contract. If there is no written contract between the parties, their rights are subject to the general principles
of contract law. Most building and construction contracts are Standard Forms of Contract160 and expressly extinguish, entail
and enlarge the parties’ rights intended by the parties.
In the context of the preventive principle the following contractual provisions give rise to the important rights, obligation and
remedies to the contractor:
the provision establishing an extension of time mechanism for the contractor to be entitled to extension of time for the
employer’s or his authorised agents’ delay or prevention; and
the provision dealing with the contractor—employer’s rights to terminate the contract and "termination by convenience
clauses".161
(i) Prevention principle and contractor’s contractual right to extension of time for employer’s acts of prevention
In Peak Constructi *Const. L.J. 482 on *Const. L.J. 482 162 the English Court of Appeal held that the prevention principle in
common law can be excluded and the employer is entitled to charge liquidated damages, notwithstanding his acts of prevention,
if there was a clear and express extension of time clause or mechanism in the contract—which itself will be construed contra
proferentum. I.N. Duncan Wallace observed163 that following the decision of the Court of Appeal, contractors and their advisors
"swiftly fastened on the Peak v McKinney principle as a potential avenue of escape from the liquidated damages provisions".
Most standard forms of contract thereby incorporated an express extension of time mechanism with conditions to be complied

by the contractor, seeking to oust the preventive principle even where there were overt and clear acts of prevention by the
employer and his agents.164
To be entitled to an extension of time, the contractor is required to comply with the conditions and apply for an extension of
time within the conditions provided for any acts of prevention by the employer or his agents. If the contractor fails to comply
with the express conditions and timelines set in the contractual term for an extension of time, the contractor is deemed to have
waived its right to extension of time and to have caused its own delay, and the preventive principle will not apply.165
Cole J in the Supreme Court of New South Wales in Turner Corp 166 explained that when a contractor failed to exercise the
contractual extension of time mechanism, the prevention principle has no application because it is the contractor who had failed
to "exercise his contractual right".
Although the Supreme Court of Northern Territory of Australia in Gaymark Investments 167 did not accept the principles stated
in Turner Corp, it was observed in Hudson’s 168 that "[a]ll the indications are that the English Court will not adopt the reasoning
in Gaymark and are more likely to follow the two Turner cases" and in fact the English and Scottish courts have expressed
disapproval of the Gaymark decision.169
However, if the contractor complies with the terms of the application for extension of time, the employer or the architect is
bound to consider the contractor’s application independently, impartially and the prevention principle is re-activated, time is
set at large and the contractor is *Const. L.J. 483 entitled to reasonable extension of time if the employer or his agent acted
improperly and unreasonably failed to grant any extension of time.170
In Australia, the courts have developed a further remedy, referred to as the "Peninsula Balmain principle" arising from the
decision of Hodgson JA in Peninsula Balmain,171 that the employer would be liable to the contractor for breach of contract and
liable for extension of time if the contract expressly gave the superintendent power172 to grant the contractor an extension of
time and the superintendent, as agent of the employer, fails to exercise the power "honestly and impartially".173
Furthermore, the contractor has the remedy of waiver for any of his failure to comply with any strict timeline or condition
precedents and to apply for the contractual remedy for extension of time. The employer and his agent, if duly authorised,174
may be deemed by their conduct to have waived any strict compliance of timelines or conditions and the contractor will be
entitled to extension of time notwithstanding the contractor’s failure to comply with the strict timelines or condition precedents
set out in the contract. Lord Bingham in Millar 175 defined a waiver in the following terms:
"In most litigation situations the expression ‘waiver’ is used to describe a voluntary, informed and unequivocal election by a
party not to claim a right or raise an objection which it is open to that party to claim or raise."
The employer and his authorised agents may by their conduct be deemed to have waived the strict compliance of any conditions
precedent to the contractor’s right to extension of time. Lord Coleridge CJ in Blackford & Sons 176 alluded that the employer
and his authorised agents may, by their conduct, held to have impliedly waived compliance of any condition precedent.
The contractor therefore has the contractual right to make a claim for an extension of time if there is a no express mechanism
p *Const. L.J. 484 rovided in the contract, and the prevention principle will apply, time will be set at large, the contractor
will be entitled to reasonable extension of time and the liquidated damages clause "will not bite". Even if there is a written
mechanism which requires the contractor to comply with strict timelines and conditions in the application for extension of time,
such conditions are subject to the contractor’s claim (and proof) of wavier by the employer and his authorised agents which
will not preclude the application for extension of time, notwithstanding the contractor’s non-compliance of the express pre-
conditions. Finally, the prevention principle will be re-activated if the employer and his authorised agents improperly refuse to
grant any extension if the contractor makes an application for extension of time.
(ii) Prevention principle and the employer’s contractual right to terminate the contract resulting from the employer’s
own acts of prevention

Construction contracts "often" make provisions giving parties the right to terminate the employment either based on the other
party’s breach or under termination of convenience clauses.177 The rights of parties and their common law rights are therefore
circumscribed by the clear express terms of such clauses and parties must comply strictly with the pre-conditions and terms of
compliance and obligations expressly agreed in the contract.
Notwithstanding, the prevention principle plays an important part in providing relief and remedies to the contractor if the
employer seeks to exercise its contractual right to terminate by relying on his own acts of prevention, in the following manner.
Firstly, even if the contract gives the employer the right to terminate the contract on grounds of breach or non-
performance by the contractor, the prevention principles prevents the employer from relying on its own preventive acts
as basis of invoking the employer’s contractual right to terminate.178 The employer’s conduct in invoking its contractual
termination in such a case will amount to wrongful repudiation by the employer and the contractor is entitled to either
invoke its contractual right to terminate the contract, or to invoke its common law right to terminate the contract as
the result of the employer’s wrongful repudiation and to claim all damages flowing from the said wrongful repudiation
and wrongful termination.179
Secondly, even if the contract gives the employer discretion to terminate the contract, the employer is in common
law bound to exercise such a subjective discretion with "honesty, good faith, and genuineness, and the need for the
absence of arbitrariness, capriciousness, perversity and irrationality".180 In Australia, the employer is also subject to
the general implied duty of *Const. L.J. 485 good faith and fair dealing.181 An employer’s attempt to rely on its own
acts of prevention to exercise his contractual discretion and to terminate the contract, it is submitted, will clearly be
in breach of the employer’s duty to exercise his discretion in good faith and amount to wrongful repudiation on the
part of the employer, giving rise to the contractor’s remedy for wrongful repudiation and termination under common
law or the contract.
Finally, even in cases where the contract contains a "termination of convenience" clause giving the employer the right
to terminate the contract for any reason, such a right may also be subject to the duty on the part of the employer to be
exercised in good faith and subject to fair dealing.182 An employer’s attempt to rely on its own acts of prevention to
exercise its contractual right to termination of convenience, it is submitted, will clearly be in breach of the employer’s
duty of good faith and amount to wrongful repudiation on the part of the employer, giving rise to the contractor’s
remedy for wrongful repudiation and termination under the common law or the contract unless the duty to act in good
faith and fair dealing is expressly excluded under the contract.
(c) Contractor’s essential rights under the Statute for Employer’s Prevention
As seen above,183 the prevention principle is a common law principle which is capable of being extinguished or curtailed by
the parties, especially in standard form contracts utilised by employers to restrict and even exclude the contractor’s right against
the employer’s own act of prevention. This is particularly so in the case of standard forms of contract containing conditions
precedent and conditions restricting and even excluding the contractor’s rights to seek extension of time for the employer’s
acts of prevention.184
The contractor is provided essential remedies under the following statutes with regard to the employer’s attempt to rely on any
express term in the contract intended to deprive, exclude or restrict the contractor’s rights to its remedies for the employer’s
own acts of prevention:
The Unfair Contract Terms Act 185;

Schedule 2 of the Australian Consumer law, Pt 2.1—misleading or deceptive con *Const. L.J. 486 duct and Pt 2.2.
—unconscionable conduct186; and
Statutory Adjudication.187

(i) Acts of prevention and the Unfair Contract Terms Act (UCTA)
UCTA renders a "written standard term of business" in a contract unenforceable when the party himself is "in breach of contract"
and seeks to "exclude or restrict any liability of his in respect of the breach" or "exclude any remedy" available to the other party
under the contract unless the party relying on such a term proves that the term was "reasonable". This includes, it is submitted,
the party’s attempt to exclude or restrict the other party’s right to set-off.188
The English courts have interpreted a "written standard term of business" as terms put forward habitually to be regarded by
that party as its standard terms,189 when the terms are ordinarily put in writing before contractual negotiations which occurred
with little opportunity to negotiate the terms, and standard terms of contract used by one party "may be regarded as a party’s
standard terms for the purposes of the Unfair Contract Terms where they are used habitually by that party".190 Lord Hodge
recently in Makdessi 191 recognised the "significant imbalances in negotiating power" between "a main-contractor a *Const.
L.J. 487 nd a sub-contractor in the construction industry". It is submitted that such recognition of "significant imbalance" will
also be available to the contractor under UCTA to render any restriction, exclusion or limitation of the contractor’s rights by
way of conditions imposed by the employer in the contract to prevent the contractor from seeking its rights, and remedy the
employer’s acts of prevention and breach of the contract.
The court is mandated under UCTA 192 to consider inter alia, all circumstances of the case including the strength of bargaining
positions of the parties relative to each other, "whether the contract in question was entered into at arm’s length, and whether
there was an opportunity for the party presented with the terms to consider or negotiate those terms".193
It is submitted that it is arguable by the contractor that the employer’s attempt to rely on any express term in its "standard terms
of business" to restrict, exclude or limit the contractor’s rights and remedies arising from the employer’s own acts of prevention
and breach is unfair, unreasonable, would be unenforceable, void under UCTA and is thereby not binding on the contractor.
(ii) Acts of prevention and Part 2.1 and 2.2 Schedule 2 of the Australian Consumer Law
It is arguable and submitted that in Australia, Pt 2.1 s.18 of Australian Consumer Law can be invoked by the contractor to
seek damages and remedies against employers for their acts of prevention amounting to "misleading or deceptive conduct".194
Further, it is also arguable and submitted, that in Australia the contractor can usually, further and alternatively to a claim for
"misleading or deceptive conduct", also invoke its statutory remedy under Pt 2.2, ss.20 and 21 of the Australian Consumer Law,
arising from the employer’s attempts to rely on its own act of prevention to forfeit any rights or remedies that the common
law provided to the contractor for the employer’s "unconscionable conduct" in taking "advantage of another party’s special
disadvantage".195
(iii) Acts of pre *Const. L.J. 488 vention and statutory adjudications
The genesis of statutory adjudication in common law was the Latham Report,196 which introduced a "speedy mechanism for
settling disputes in construction contracts on a provisional interim basis", and for the "decision of Adjudicators to be enforced
pending the final determination of disputes by arbitration, litigation or agreement"—giving rise to the "rubric of pay now, argue
later"197 and the passing of Housing Grants, Construction and Regeneration Act.198
Statutory Adjudication gives the contractor a statutory right to progress payments for all work carried out and precludes the
employer from raising any set-off or defences which is not contained in the statutory withholding notice, payment schedule or
payment response199. Statutory adjudication also outlaws terms in the construction contract which subjects progress payments
due and payable to contractors for works carried out to "pay-when-paid" clauses and other conditional payment clauses.200
The contractor is therefore provided a "speedy mechanism" and a statutory right for payment for all works, notwithstanding the
employer’s acts of prevention, carried out under the construction agreement, including the right to claim for extension of time
and for any dispute relating to the progress payment to be adjudicated in accordance with the principle of "pay now, argue later".
(d) Contractor’s concurrent right under tort for employer’s acts of prevention

The prevention principle is a common law contractual principle based on the implied term of non-prevention and co-operation
which is necessarily implied into construction contracts by the court.201 The prevention principle also aids the contractor in
its alternative claim for damages in the tort of negligence and gives rise to a concurrent claim in both contract and tort against
the employer.202
In *Const. L.J. 489 a claim for damages in the tort of negligence, the contractor is required to prove that:
the employer owed the contractor a duty of care;

the employer breached the duty of care by failing to exercise reasonable care; and
as the consequence, the contractor suffered loss or damages.203
It is trite law that the duty of care owed by the employer to the contractor would arise from the contract.204 In the premises, it is
arguable by the contractor that the employer breached its duty of care owed under the contract (implied term of non-prevention)
by its acts of prevention and thereby caused the contractor damages, including economic loss which satisfied the elements of
the tort of negligence.
5) Conclusion
In construction law, the prevention principle is a very flexible, versatile and formidable doctrine based on principles of justice. It
arms the contractor with substantial rights and remedies, and prevents the employer from seeking to rely on its own wrongdoing
or breach (acts of prevention) to make any claim or forfeit any monies properly due and owing to the contractor.
S. Magintharan
Footnotes
1 N. Dennys and R. Clay,

Hudson’s Building and
Engineering Contracts, 13th
edn (Sweet & Maxwell, 2015),
p.475, para.3-127 identifies
the prevention principle as
one of the "common thread[s]
uniting all the obligations of
the Employer" and succinctly
defines it as "neither party
shall do anything to hinder
the other from performing
the contract". See the most
recent and succinct summary
of the prevention principle in
the construction law context
by His Honour Fraser J in
North Midland Building Ltd
v Cyden Homes Ltd [2017]
EWHC 2414 (TCC) at [11]
"Essentially the prevention
principle is something that
arises where something
occurs, for which it is said
the employer is responsible,
that prevents the contractor
from complying with his
obligations, usually the
obligation to complete the

works by the completion

date". See also S. Furst
and V. Ramsay, Keating on
Construction Contracts, 10th
edn (Sweet & Maxwell, 2016),
pp.226–230, paras 6.080–
6.090; J. Bailey, Construction
Law, Vol. 1, 2nd edn (Informa
Law, 2016), pp.209–211,
paras 3.140–3.141); D.
Cremean, M. Whitton and
M. Sharkey, Brooking on
Building Contracts, 5th
edn (LexisNexis, 2014),
para.6.8; I. Bailey and M. Bell,
Construction Law in Australia,
3rd edn (Thomson Reuters,
2011), p.256, para.9.66.
2 The prevention principle is a
common law remedy based
on the legal maxim that "no
man shall take advantage of
his own wrongdoing". See
Holme v Guppy 150 E.R.
1195; (1838) 3 M & W 387
at 389, per Parke B. See also
Dodd v Churton [1897] 1
Q.B. 562 at 566, per Esher
LJ, at 567–569, per Lopes
LJ and at 568, per Chitty LJ;
Roberts v Bury Improvement
Commissioners (1869–70) L.R.
5 C.P. 310 at 326 and 329, per
Kelly B; Panamena Europea
Navegacion Compania
Limitada v Federick Leyland
[1947] A.C. 428; (1947)
80 Ll. L. Rep. 205; [1947]
L.J.R 716 at 437, per Lord
Thankerton; Amalgamated
Building Contractors Ltd v
Waltham Holy Cross Urban
DC [1952] 2 All E.R. 452;
[1952] 2 T.L.R. 269; 50 L.G.R.
667 at 455; Trollope & Colls
Ltd v North West Metropolitan
Regional Hospital Board
[1973] 1 W.L.R. 601; [1973]
2 All E.R. 260; 9 B.L.R. 60 at
608, per Lord Pearson; Peak
Construction (Liverpool) Ltd
v McKinney Foundations Ltd
1 B.L.R. 111; 69 L.G.R. 1 at
121, per Salmon LJ; Rapid
Building v Ealing Family
Housing 29 B.L.R. 5, per
Lloyd LJ, and recently in
Multiplex Construction (UK)
Ltd v Honeywell Control
Systems Ltd [2007] EWHC
447 (TCC); [2007] B.L.R.
195; 111 Con. L.R. 78 at [56]–
[57], per Jackson J; North
Midland [2017] EWHC 2414
(TCC) at [11], per Fraser J.
Contra, Cremean, Whitton and
Sharkey, Brooking on Building
Contracts (2014), p.104 is
of the view it is "not entirely
clear" what is the "juridical
basis" of the prevention

principle but denotes it to "a

term" to be "generally implied
into contracts requiring co-
operation between parties or
… it may be a principle of its
own right derived from notions
of fairness or justice". See also
Bailey and Bell, Construction
Law in Australia (2011), p.966
expressing similar views;
M. Bell, "Scaling the Peak:
The Prevention Principle
in Australia Construction
Contracting" (2006) 33
I.C.L.R. 318, 344-345
highlighting the "ongoing
debate as to whether, in fact, it
applies to all contracts".
3 In Dodd [1897] 1 Q.B. 562
at 566 Lord Esher MR cited
Holme (1838) 3 M & W 387
as the "beginning" of the "well
recognised rule". See also
Chitty LJ in Dodd [1897] 1
Q.B. 562 at 566.
4 In this article the law of the
prevention principle discussed
is the common law of England
(the source of common
law), Australia, Canada,
Hong Kong, Malaysia,
New Zealand, Singapore
and Scotland—collectively
referred to as "common law".
The prevention principle is
well established in Australia
—Codelfa Construction
v State Rail Authority of
New South Wales (1982) 56
A.L.J.R 459; Commissioners
of the State Savings Bank of
Victoria v Costain Australia
Ltd (1983) 2 ACLR 1 at 5–8;
SMK Cabinets v Hili Modern
Electrics Pty Ltd [1984]
VR 391 at 394–395, 399–
400; Singapore—Lian Soon
Construction Pte Ltd v Guan
Qian Realty Ltd [1999] 3 SLR
518 at [18], per Warren Khoo
J; Yap Boon Keng Sonny v
Pacific Prince International
Pte Ltd [2009] 1 SLR 385 at
[34], per Judith Prakash J; Lim
Chin San Contractors Pte Ltd
v LW Infrastructure Pte Ltd
(No.1) [2011] SGHC 162 at
[28]; Chua Tian Chu v Chin
Bay Ching [2011] SGHC 126
at [62], per Andrew Ang J;
Malaysia—Sim Chio Huat v
Wong Ted Fui [1983] 1 MLJ
151; New Zealand—Murdoch
v Lockie (1897) 15 NZLR 296;
Meyer v Gilmer (1899) 18
NZLR 129.
5 See dicta of Lord Denning
MR in Modern Engineering
(Bristol) Ltd v Gilbert-Ash
(Northern Ltd) [1973] 71
L.G.R. 162 CA at 167 echoing

his previous concern raised in

Dawnays Ltd v FG Minter Ltd
and Trollope & Colls [1971]
2 All E.R. 1389; [1971] 2
Lloyd’s Rep. 192 at 1209–
1210.
6 See the egregious case in
construction law practice
in Singapore, in which the
author acted as counsel in
the arbitration proceedings,
where a large financial
developer colluded with
their architects, engineers,
consultants and supervisors
to "build a case" against their
contractor, engaged in the
unjust conduct of issuing
architect’s instructions and
preventive actions, wrongfully
repudiated the contract, set-up
rather specious and exorbitant
set-offs and counterclaim
merely to delay due payments
and dragged payment for more
than 7 years until judgment
was affirmed in favour of the
contractor by the Singapore
Court of Appeal in Soh
Beng Tee & Co v Fairmount
Development Pte Ltd [2007] 3
SLR 86.
7 Modern Engineering (Bristol)
Ltd v Gilbert-Ash (Northern
Ltd) [1973] 71 L.G.R. CA
162 CA at 167, in the context
of the finality of the interim
certificate which precluded
set-off and counterclaims as
defences for non-payment
—"This is in accord with
the needs of business. There
must be ‘cash flow’ in the
building trade. It is the very
lifeblood of the enterprise. The
sub-contractor has to expend
money on steel work and
labour. His is out of pocket.
He probably has an overdraft
at the bank. He cannot go on
unless he is paid for what he
does as he does it …" (Lord
Denning MR) (emphasis
added). See also similar dicta
by Lord Denning MR earlier
in Dawnays [1971] 2 All E.R.
1389; [1971] 2 Lloyd’s Rep.
192 at 1209.
8 Lord Diplock in Gilbert-Ash
(Northern Ltd) v Modern
Engineering (Bristol) Ltd
[1974] A.C. 689; [1973] 3
W.L.R. 421; [1973] 3 All E.R.
195 at 718 described Lord
Denning MR’s concern as
"vivid" but noted that such
was the similar concern of
the "village grocer" too. The
House of Lords, on appeal, in
Gilbert-Ash [1974] A.C. 689;
[1973] 3 W.L.R. 421; [1973]

3 All E.R. 195 overruled the

principles set by the Court of
Appeal in, inter alia, Modern
Engineering [1973] 71 L.G.R.
162 CA and Dawnays [1971]
2 All E.R. 1389; [1971]
2 Lloyd’s Rep. 192, that
there was a presumption in
construction contracts that
the interim certificates were
final and precluded uncertified
set-offs and counterclaims as
defences to payment claims
based on interim certificates.
9 In particular Lord Diplock in
[1973] 3 W.L.R. 421; [1973] 3
All E.R. 195 at 718.
10 Menon CJ in WY Steel
Construction Pte Ltd v Osko
Pte Ltd [2013] 3 SLR 380
at [20]–[21] albeit made in
the context of the employer
being precluded from raising
set-off and counterclaims
under s.15(3) of the Building
and Construction Security
of Payment Act—"Lord
Denning’s articulation of the
importance of preserving
a contractor’s cash flow
remains valid in principle
…"(emphasis added). The
"principle", it is respectfully
submitted, is equally
applicable generally in all
construction claims made
by a contractor. See also S.
Magintharan, Ch.18 in A.
Burr (ed.), International
Contractual and Statutory
Adjudication (Informa Law
from Routledge, 2017), p.281
(fn.4), and p.325 highlighting
the "undesirable" practice in
the construction industry in
Singapore.
11 Chitty LJ in Dodd [1897] 1
Q.B. 562 at 568 expressly
held that the prevention
principle "is applicable not
for building contracts only,
but to all contracts". See also
Gillard J expressing similar
views in Kilpatrick Green
Pty Ltd v Leading Synthetics
Pty Ltd unreported 5 June
1988 Victorian Supreme
Court at [31] referred to
in Bell, "Scaling the Peak:
I.C.L. Rev. 318, 319
(fn.7) but alluding to the
"unresolved debate about
the jurisprudential basis of
the prevention principle and,
therefore, its application
outside of construction
contracts" apparently in

Australia. In England, the

prevention principle has been
recognised and applied in
cases outside construction
contracts. See Chitty on
Contracts, edited by H.G.
Beale, 31st edn (London:
Sweet & Maxwell, 2012),
Vol.1, paras 13-013 and
24-033 dealing with the
prevention principle and cases
as part of the implied term
in law. See also Panamena
Europea Navigacion (1947)
80 Ll. L. Rep. 205; [1947]
L.J.R 716 at 435–436, per
Lord Thankerton, where the
prevention principle was
applied to a ship building
contract; Russell v Viscount
Sa da Bandeira 143 E.R. 59;
(1862) 13 C.B. N.S. 149; the
seminal charter-party case of
Hongkong Fir Shipping Co Ltd
v Kawasaki Kisen Kaisha Ltd
(The Hongkong Fir) [1962]
2 Q.B. 26; [1962] 2 W.L.R.
474; [1962] 1 All E.R. 474 at
66, per Diplock LJ; and Sales
of goods case—Mackay v
Dick (1880-1881) L.R. 6 App.
Case.251, HL at 263, per Lord
Blackburn; Built Environs Pty
Ltd v Tali Engineering Pty
Ltd [2013] SASC 84; Techikal
dan Kejuruteraan Pte Ltd v
Resources Development Corp
(Pte) Ltd [1994] 2 SLR 556
(contract for quarry works);
the recent Singapore Court of
Appeal decision in ACTAtek
Inc v Tembusu Growth Fund
Ltd [2016] 5 SLR 335 where
the prevention principle
was applied in respect of a
convertible loan agreement.
12 I. Bailey "Concurrency,
Causation, Common sense
and Compensation (Part
2)" (2010) I.C.L. Rev. 197;
P. Marshall, "Delay, Progress
and Programming" (2010) 27
I.C.L. Rev. 137; C. Winser
"Shutting Pandora’s Box:
After Multiplex v Honeywell
(2007) 23 Const. L.J. 511;
E. Baker, J. Bremen and A.
Lavers, "The Development
of the Prevention Principle
in English and Australian
jurisdiction" (2005) 22
I.C.L. Rev. 197; I.N. Duncan
Wallace, "Prevention and
Liquidated Damages; A
Theory too far?" (2002)
18 B.C.L. 82; I.N. Duncan
Wallace, "Liquidated Damages
Down under: Prevention by
whom?" (2002) 7 C. & E.L.
23; See also Bell, "Scaling the

Peak: The Prevention Principle

Contracting" (2006) 23 I.C.L.
Rev. 318, 319 (fn 5) referring
to the following articles - R.
Mulheron, "Nine Lives for a
Contractor to Avoid or Reduce
Liquidated Damages" (1998)
61 Australian Construction
Law Newsletter 18; G.
Smith, "The ‘Prevention
Principle’ and Conditions
Precedent: Recent Australian
Development" (2002) 19
I.C.L. Rev. 397 and A.
Fletcher, "Key Issues in Time
Extension Clauses" [1989] 4
BCL 193, 200.
13 Dennys and Clay, Hudson’s
Building and Engineering
Contracts (2015), pp.737-738,
para.6-025 referring to
Winser, "Shutting Pandora’s
Box: The Prevention
Principle After Multiplex v
Honeywell" (2007) 23 Const.
L.J. 511. See fn.1-2 above.
14 Dodd [1897] 1 Q.B. 562 at
568.
15 See Holme 150 E.R. 1195;
(1838) 3 M & W 387 at 389,
per Parke B; Dodd [1897] 1
Q.B. 562 at 566, per Esher LJ,
562, 567–568, per Lopes LJ,
568, per Chitty LJ; Roberts
(1869–70) L.R. 5 C.P. 310
at 326 and 329, per Kelly
B; Amalgamated Building
Contractors [1952] 2 T.L.R.
269; 50 L.G.R. 667 at 455;
Trollope & Colls [1973] 2
All E.R. 260; 9 B.L.R. 60
at 608, per Lord Pearson;
Peak Construction 1 B.L.R.
111; 69 L.G.R. 1 at 121, per
Salmon LJ; Rapid Building
29 B.L.R. 5, per Lloyd LJ;
Multiplex Construction [2007]
B.L.R. 195; 111 Con. L.R. 78
at 447, per Jackson J; SMK
Cabinets [1984] VR 391 at
399–400, per Brooking J;
Spiers Earthworks Pty Ltd v
Landtec Projects Corp Pty
Ltd (No.2) [2012] WASCA
53 at 288–236 [41]–[50], per
McLure P. Contra statements
by Cremean, Whitton and
Contracts (2014), p.104
that it is "not entirely clear"
what the "juridical basis"
of the prevention principle
is. See also Bailey and
Bell, Construction Law in
Australia (2011), p.966
expressing similar view and
Bell, "Scaling the Peak:


Rev. 318, 344–345.
16 Lord Denning MR in the Court
of Appeal in Trollope & Colls
v North West Metropolitan
[1973] 2 All E.R. 260; 9
B.L.R. 60, interpreted the "rule
of law"—prevention principle
—in "another approach …
It is by way of an implied
term" as observed by Lord
Person in the House of Lords,
Trollope & Colls Ltd v North
West Metropolitan Regional
Hospital Board (1973) 1
W.L.R. 601, 608. See dicta
of Vaughan Williams LJ in
Barque Quilpe Ltd v Brown
[1904] 2 K.B. 264 at 274
referring to the prevention
principle as an implied term
in contract; Secured Income
Real Estate (Australia) Ltd
v St Martins Investments Pty
Ltd (1979) 144 CLR 596 at
607, per Mason J. See also
Dennys and Clay, Hudson’s
(2015), pp. 41–42, para.1-043
read with the view that the
terms of co-operation and
prevention set out in pp.475–
501, paras 3-127–3-151
as an implied term of law;
Brooking on Construction
Contracts, above fn.1, p.60;
J. Bailey, Construction Law
(2016), Vol.I, pp.209–213,
paras 3.140–3.144. See
also Menhennitt J in Aurel
Forras Ltd v Graham Karp
Developments Pty Ltd [1975]
VR 202; BAE Systems v
Cubic Defence NZ [2011]
F.C.A. 1434; Group Fire
Building Ltd v Minister of
Community Developments
[2012] WASCA 53; Spiers
Earthworks [2012] WASCA
53; views expressed by Sir P.
Garland, "Contract Policy for
Time" in J. Uff and P. Capper
(eds), Construction Contract
Policy: Improved Policy and
Procedures (Construction
Law Press: 1989), pp.191
and194–195 and J. Dorter,
"Delay and Disruption" (2001)
17 BCL 372, 376 as being
"proponents" of the "implied
terms" approach referred to
in Bell, "Scaling the Peak:
Rev. 318, 345 (fn.152). It
is submitted that concerns
about the "unclear" juridical
basis for the prevention
principle expressed in

Cremean, Whitton and

Contracts (2014), p.104,
Bailey and Bell, Construction
Law in Australia (2011), p.966
and Bell, "Scaling the Peak:
I.C.L. Rev. 318, 344–345
(fn.152) can be explained and
reconciled if it is accepted
that the prevention principle
is in fact a substantive rule of
law which, unless expressly
excluded by the parties, is
implied in law into contract.
It is submitted that the
prevention principle is also to
be implied on the facts into
a contract, unless expressly
excluded by the parties, for
it is certainly a term which
is necessary and of business
efficacy thereby satisfying
the test set out for implication
on the facts in the recent
decision of the UK Supreme
Court in Marks & Spencer
Plc v BNP Paribas Securities
Services Trust Co (Jersey)
Ltd [2015] UKSC 72; [2016]
A.C. 742; [2015] 3 W.L.R.
1843 at [14]–[21], per Lord
Neuberger; Arnold v Britton
[2015] UKSC 36; [2015] A.C.
1619; [2015] 2 W.L.R. 1593;
Wood v Capita Insurance
Services Ltd [2017] UKSC
24; [2017] 2 W.L.R. 1095;
171 Con. L.R. 1 at [8]–[15].
See also the Singapore Court
of Appeal decisions of Foo
Jong Peng v Phua Kiah Mai
[2012] 4 SLR 1267; SembCorp
Marine Ltd v PPL Holdings
Pte Ltd [2013] 4 SLR 193 on
the law of implication of terms
in Singapore—considered by
the English Supreme Court in
Marks & Spencer [2016] A.C.
742; [2015] 3 W.L.R. 1843 at
[43], per Lord Neuberger.
17 As per Blackburn J in Roberts
(1869–70) L.R. 5 C.P. 310 at
329, per Kelly CB. See also
para.30-127.
Contracts (2015), p.478–502,
paras 3-129–3-151 provides
a very helpful "list of specific
obligations", the breach
of which by the employer
would in law and on the facts
amount to prevention. See also
Furst and Ramsay, Keating
on Construction Contracts

(2016), p.214, para.6-085;

(2016), Vol.I, pp.209–214,
para.3.140. See also Baker,
Bremen and Lavers, "The
development of the prevention
principle in English and
Australian jurisdiction" (2005)
22 I.C.L. Rev. 197, 198–
202, fn.4 categorising acts of
prevention into 5 categories
namely: 1) where there is
moral blameworthiness on
the part of the employer or
his agents; 2) other breach of
contract by the employer or
his agents; 3) other conduct
not amounting to breach;
4) actions of the employer
within the contract, e.g.
variations; and 5) actions of
other contractors for which
the principal is responsible.
See also Bell, "Scaling the
Peak: The Prevention Principle
Rev. 318, 328, 329, fn.52
submitting that "modern
formulation" of acts of
prevention "extends, therefore,
well beyond the concepts of
default on which Peak was
based …".
19 See the Singapore High Court
in Yap Boon Keng Sonny
[2009] 1 SLR 385 at [34]; Lim
Chin San Contractors [2011]
SGHC 162 and Chua Tian Chu
[2011] SGHC 126.
20 In this article the term
"employer" is used as a
generic term to include
owners, developers or
contractors who employ an
independent contractor to
carry out construction works.
Further, in this article the
acts of the agents, including
architect and superintendent,
duly appointed by the
employer are treated as duly
authorised agents of the
employer and acting within
their authority. Further it is
clear law that the architect
or superintendent, although
appointed by the owners,
when exercising their duty
as a certifier under the
construction contract they
will be treated as acting for
both the employer and the
contractor, and must exercise
their duty "independently and
impartially", and certificates
issued will be held invalid
if the employer had by its
act of prevention caused the
architect or superintendent
not to carry out their duties

independently or impartially.
The employer will be
held to be in breach of its
implied term and in wrongful
repudiation of the contract
if the contractor proves that
the employer caused the
architect or superintendent’s
non-certification, under-
certification or late
certification. See Sutcliffe
v Thackrah [1974] A.C.
727; [1974] 2 W.L.R. 295;
[1974] 1 All E.R. 859 at 737,
per Lord Reid; Panamena
80 Ll. L. Rep. 205; [1947]
L.J.R 716 at 435–436, per
Lord Thankerton; Russell
143 E.R. 59; (1862) 13 C.B.
N.S. 149; Roberts (1869–
70) L.R. 5 C.P. 310; Wells v
Army & Navy Co-Operative
Society (1902) 86 L.T. 764;
(1902) H.B.C. (4th Edn) Vol
2, pp. 346, CA; Trollope &
Colls [1973] 2 All E.R. 260; 9
B.L.R. 60; Peak Construction
1 B.L.R. 111; 69 L.G.R. 1;
SMK Cabinets [1984] VR 391;
Peninsula Balmain Pty Ltd
v Abigroup Contractors Pty
Ltd [2002] NSWCA 211 at
[50]–[51], per Hodgson JA;
Kane Constructions v Sopov
[2005] VSC 237 at [604]–
[626], per Warren CJ; Lian
Soon Construction [1999] 3
SLR 518.
21 See Dennys and Clay,
Engineering Contracts (2015),
p. 738, para.6-026 relying on
the judgment of Lord Denning
MR which was approved by
Lord Pearson in the House
of Lords in Trollope & Colls
Ltd v North West Metropolitan
(1973) 1 W.L.R. 601 at 608.
See also Baker, Bremen and
Lavers, "The development
of the prevention principle
in English and Australian
jurisdiction" (2005) 22 I.C.L.
Rev. 197, 198–102, Multiplex
Construction [2007] B.L.R.
195; 111 Con. L.R. 78 at [56],
per Jackson J, approved and
applied recently in North
(TCC) at [13]–[17], per Fraser
J.
22 Teknikal dan Kejuruteraan
[1994] 2 SLR 556 at [71]–[76].
23 As noted in Dennys and
Clay, Hudson’s Building
and Engineering Contract
(2015),p.738, para.6-026
relying on the judgment of
Lord Denning MR which was

approved by Lord Pearson in

the House of Lords in Trollope
& Colls[1973] 2 All E.R. 260;
9 B.L.R. 60 at 608. See also
B.L.R. 195; 111 Con. L.R. 78
at [56], per Jackson J approved
and applied recently in North
J.
24 See Bell, "Scaling the Peak:
I.C.L. Rev. 318, 320–321
referring to the "reality" of
liquidated damages dispute but
prevention surfaces as a basis
for claim by the contractor in
most construction claims, in
practice, not only limited to
issues relating to liquidated
damages.
25 See discussions at pp.455-459
above.
26 See Lord Diplock in Gilbert-
Ash [1974] A.C. 689; [1973]
3 W.L.R. 421; [1973] 3 All
E.R. 195 at 718; Salmon
LJ in the seminal English
Court of Appeal decision of
Peak Construction 1 B.L.R.
111; 69 L.G.R. 1 at 121 in
the context of a liquidated
damages claim: "I cannot see
how, in my view the employer
can insist on compliance
with a condition if it is partly
his own fault that it cannot
be fulfilled … [unless] the
contract expresses a contrary
intention, the employer, in the
circumstances postulated, is
left to his ordinary remedy;
that is to say, to recover such
damages as he can prove
flow from the contractor’s
breach" (emphasis added). See
the recent decision of Fraser
J in North Midland [2017]
EWHC 2414 (TCC) at [20]–
[22] rejecting the arguments
that the prevention principle
cannot be excluded by clear
words in the contract.
27 In the recent UK Supreme
Court decision of Makdessi v
Cavendish Square Holding BV
[2015] UKSC 67; [2016] A.C.
1172; [2015] 2 C.L.C. 686 at
[262], Lord Hodge, recognised
the "significant imbalances
in negotiating power in the
commercial world. Small
businesses often contract with
large commercial entities and
have little say as to the terms
of the contract. Examples
such as the relationship
between a main contractor

and a sub-contractor in the

construction industry and that
between a large retail chain
and a small supplier spring to
mind" (emphasis added).
28 The common law having
rejected the doctrine of
"inequality of bargaining
power" in National
Westminster Bank Plc v
Morgan [1985] A.C. 686;
[1985] 2 W.L.R. 588; (1985)
17 H.L.R. 360 at 708, per
Lord Scarman, the doctrine
of "unconscionable bargains"
and the implied terms of
"good faith" in commercial
contracts save in cases where
the contract expressly provides
for such good faith and when
it deals with contracts of
good faith (uberrimae fidei
contracts, e.g. insurance] or
where the court has recognised
exceptions (e.g. employment
contract). See Walford v Miles
[1992] 2 A.C. 128; [1992] 2
W.L.R. 174; [1992] 1 All E.R.
453; (1992) 64 P. & C.R. 166,
per Lord Ackner (England);
Royal Botanic Gardens and
Domain Trust v South Sydney
City Council [2002] H.C.A. 5
(Australia) and Ng Giap Hon
v Westcomb Securities Pte Ltd
[2009] 3 SLR 518 (Singapore).
29 See clear dicta of Lord
Pearson in Trollope & Colls
[1973] 2 All E.R. 260; 9
B.L.R. 60 at 608; Photo
Production Ltd v Securicor
Transport Ltd [1980] A.C.
827; [1980] 2 W.L.R. 283;
[1980] 1 All E.R. 556 at 848,
per Lord Diplock; Chitty on
Contracts, edited by Beale
(2012), Vol.1, pp.20–34,
paras 1-027–1-1041 attributes
this to the two "fundamental
principles of contract law"—
1) Freedom of Contract;
and 2) the binding force of
contract. See also J. Bailey,
Construction Law (2016),
Vol.I, pp.129–130, paras
3.01–3.02 which reinforces
the fundamental principle
of freedom of contract
"constrained by statute or any
specific legal doctrine which
impacts on their agreement".
See also dicta of Lord Denning
MR in Dawnays [1971] 2 All
E.R. 1389; [1971] 2 Lloyd’s
Rep. 192 at 1209-1210;
[1973] 3 W.L.R. 421; [1973] 3
All E.R. 195 at 717, per Lord
Diplock.

30 Gilbert-Ash [1974] A.C. 689;

[1973] 3 W.L.R. 421; [1973] 3
All E.R. 195.
31 A factor in contract law which
invalidates the formation of
the contract and therefore
renders the contract void ab
initio (e.g. common mistake,
mutual mistake, unilateral
mistake, illegality under
common law or statute) or
renders the contract voidable
at the option of the innocent
part to rescind the contract
for misrepresentation in
common law. Contra the
concept of misleading or
deceptive conduct in Australia
now contained in s.18 of
the Australian Competition
and Consumer Act 2010
(Commonwealth), Sch.2
—"ACL", the concept of
"unconscionable conduct"
under the principles set out in
Commercial Bank of Australia
v Amadia [1983] 151 CLR 447
at 462 Australian Competition
and Consumer Commission
v CG Beratis Holdings Pty
Ltd [2003] 214 CLR 51 and
now contained in s.20 of the
ACL in the Australian context
which is also adopted by New
Zealand (Gustav and Co Ltd
v Macfield Ltd [2007] NZCA
205 at [30]; see also United
States Uniform Commercial
Code 20302(1)).
32 See L. Willmott, S.
Christensen, D. Butler and B.
Dixon, Contract Law, 4th edn
(Oxford: OUP, 2013), Ch.13,
pp.456–555, 612-634 dealing
with the "vitiating factors"
and "unconscionable conduct"
in contract law in Australia;
(2016), Vol.I, pp.113–129
refers to these vitiating factors
as "matters affecting the
existence or enforceability
of a contract"; Bailey and
Bell, Construction Law in
Australia (2011), paras 3.13–
3.19 dealing with misleading
or deceptive conduct (s.18
ACL) and "unconscionable
conduct" (ss.20–22) of the
ACL. It is submitted that if the
contractor can prove on the
balance of probabilities that
the employer had at the outset
of the contract fraudulently,
negligently and even
innocently misrepresented the
contractor and induced the
contractor to enter into the
contract with the intention to
defraud the contractor from
the time of the formation of

the contract, the contract is

susceptible to being rendered
invalid under ss.20–22 ACL.
See also Chitty on Contracts,
edited by Beale (2012), Vol.1,
pp.571– 668, paras 6-001–
6-73 on the law relating to
misrepresentation; Dennys and
Clay, Hudson’s Building and
pp.73–88, paras 1-074–1-087;
(2016), Vol.I, pp.113–125,
paras 2.148–2.176 referring
to "Common law fraud is
a crime" but presumably
(not expressly) dealing with
the misrepresentation under
"unconscionability" (para.2.157)
and "fraud and
illegality" (para.2.163).
See Chitty on Contracts,
edited by Beale (2012), Vol.1,
pp.571–668, paras 6-001–
6-73 on the law relating to
misrepresentation; Dennys and
pp.13–88, paras 1-074–1-087;
contra, J. Bailey, Construction
Law (2016), Vol.I, p.118 where
it is argued that "there is little
room for the application of
notions of unconscionability
in relation to the entering into
of a project agreement" in
construction and engineering
projects because "commercial
business operating in the
construction industry will
not usually be taken to be
labouring under a "special
disadvantage", in the sense
that expression is understood
in equity, so as to invoke the
doctrine of conscionability".
33 J. Bailey, Construction Law
(2016), Vol.I, p.758, para.9.01
defines a "breach" as a
"failure by a party to fulfil its
contractual promise" and it
is a question of "mixed fact
and law" as to whether there
is a breach, to be determined
by the court. See Chitty on
Contracts, edited by Beale
(2012), Vol.1, pp.1551–1552,
para.21-001; Margaronis
Navigation Agency Ltd v
Henry W Peabody & Co of
London Ltd [1965] 1 Q.B.
300; [1964] 3 W.L.R. 111;
[1964] 2 All E.R. 296 at 318;
Albright & Wilson UK Ltd v
Biachem Ltd [2002] UKHL
37; [2002] 2 All E.R. (Comm)
753; [2003] 1 C.L.C. 637.
34 See discussions in pp.462-484
below.

35 Photo Production [1980] 2

W.L.R. 283; [1980] 1 All E.R.
556 at 849.
above.
37 As in Photo Production
[1980] 2 W.L.R. 283; [1980] 1
Diplock.
38 See Civil Procedure Rules
7.4 and 16.4 (England);
UCPR Rule 15(1) (Australia);
RHC Order 18 Rule 12
(Hong Kong) and Rules of
Court, Order 18 Rules 8, 12
(Singapore) failing which the
court is precluded from giving
the contractor any relief. See
Blay v Pollard [1930] 1 K.B.
628 at 634, per Scrutton LJ;
Janagi v Ong Boon C Kiat
[1971] 2 MLJ 196; Pacific
Forest Industries Sdn Bhd v
Lin Wen-Chih [2009] 6 MLJ
293 (Malaysia); Multi-Park
Singapore Pte Ltd v Intraco
Ltd [1992] 2 SLR 382; RDC
Concrete Pte Ltd v Sato Kogyo
(S) Pte Ltd [2007] 4 SLR 413
at [52]; The Ohm Mariana ex
Poeny [1993] 2 SLR 113. See
also J. Bailey, Construction
Law (2016), Vol.III, pp.2115–
2124, paras 26.63–26.77.
39 The legal burden of proof is
on the contractor to prove the
employer’s prevention under
the principle that "he who
asserts must prove"—Imperial
Smelting Corp Ltd v Joseph
Constantine Steamship Line
Ltd [1942] A.C. 154; [1941]
2 All E.R. 165; (1941) 70
Ll. L. Rep. 1 at 192; Cook’s
Construction Pty Ltd v SFS
007.298.633 Pty Ltd [2009]
QCA 75 at [43], per Keane JA.
See J. Bailey, Construction
Law (2016), Vol.III, pp.2208–
2209, paras 26.236–26.237.
40 Claims of prevention in
construction contract arise out
of the obligation under the
common law and are civil in
nature. In the premises, the
standard of proof imposed
on the contractor to prove
prevention on the part of the
employer is the civil standard
of balance of probabilities
and this includes proof of
common law fraud in the
contract to vitiate the same.
See Hornal v Neuberger
Products [1957] 1 Q.B. 247;
[1956] 3 W.L.R. 1034; [1956]
3 All E.R. 970 at 258, per Lord
Denning MR; Plaza West Pty
Ltd v Simon’s Earthworks
(NSW) Pty Ltd [2010] 1426
at [41], per (Tamberlin AJ);

Tang Yoke Kheng (t/a Nillex

Supply Co) v Lek Benedict
[2005] 3 SLR 263 at [10],
[13] and [14]; Wee Chiaw Sek
Anna v Ng Li-Ann Geneieve
[2013] SGCA 36 at [30]; Ting
Siew May v Boon Lay Choo
[2014] SGCA 28 at [41]. See
(2016), Vol.I, pp.323–325,
paras 4.156–4.160 and Vol.III,
pp.22092221, paras 25.238–
26.239.
41 The contractor is required in
the law of contract to establish
"causation" between the
prevention and the damages
suffered by him, namely
that the prevention was the
"effective or predominant
cause" and "real and effective
cause" of the contractor’s
damages. See Yorkshire Dale
Steamship Co Ltd v Minister
of War Transport [1942] A.C.
691; [1942] 2 All E.R. 6;
(1942) 73 Ll. L. Rep. 1 at 698–
706, per Viscount Simmons
LC and Lord Wright; Beoco
Ltd v Alfa Laval Co Ltd [1995]
QB 137; [1994] 3 W.L.R.
1179; [1994] C.L.C. 111;
Plaza West Pty Ltd v Simon’s
Earth-worths (NSW) Pty Ltd
[2010] NSWSC 1426. See
Contracts (2015), pp.819–
822, paras 7-001–7-002;
see J. Bailey, Construction
Law (2016), Vol.II, pp.758–
762, paras 9.01–9.08. See
also the important principle
in construction law that the
contractor must establish the
"causation of fact" between the
employer’s prevention and the
delay caused to the project in
order to be entitled to claim an
extension of time or that "time
is at large" reiterated in Adyard
Abu Dhabi v SD Marine
Services [2011] EWHC 848
(Comm); [2011] B.L.R. 384;
136 Con. L.R. 190 at [257]–
[292], per Hamblen J; Jerram
Falkus Construction Ltd v
Fenice Investments Inc [2011]
EWHC 1935 (TCC); [2011]
B.L.R. 644; 138 Con. L.R.
21 at [50], per Coulson J and
recently in North Midland
[2017] EWHC 2414 (TCC),
per Fraser J.
42 As per Alderson B in the
seminal case of Hadley v
Baxendale 156 E.R. 145;
(1854) 9 Ex. 341 at 354–
355 applied in all common
law countries. See Victoria
Laundry (Windsor) v Newman

Industries [1949] 2 K.B.

528; [1949] 1 All E.R. 997;
65 T.L.R. 274; Koufas v C
Czarnikow Ltd (The Heron
II) [1969] 1 A.C. 350; [1967]
3 W.L.R. 1491; [1967] 3 All
E.R. 686; Transfied Shipping
Inc v Mercator Shipping
Inc (The Archilleas) [2008]
UKHL 48; [2009] 1 A.C.
61; [2008] Bus. L.R. 1395;
Stuart Pty Ltd v Condor
Commercial Insulation Pty Ltd
[2006] NSWCA 334; Cripps
v G and M Dawson Pty Ltd
[2006] NSWCA 334; McRae
v Commonwealth Disposals
Commission 84 C.L.R. 377;
Robertson Quay Investment
Pte Ltd v Steen Consultants
Pte Ltd [2008] 2 SLR 623. See
(2016), Vol.II, pp.1175–1181.
43 Robinson v Harman 154.
E.R. 363; (1848) 1 Ex.
850 at 855, per Parke B;
Johnson v Agnew [1980]
A.C. 367; [1979] 2 W.L.R.
487; (1979) 38 P. & C.R.
424; Tab Corp Holdings Ltd
v Bowen Investment Pty Ltd
[2009] HCA 8 at [14] where
the Australian High Court
referred to this principle as the
ruling principle"; Hunderford
v Walker [1989] 63 ALJR 210
at 215; Koompahtoo Local
Aboriginal Land Council
v Sanpine Pty Ltd [2007]
233 CLR 115 at [46]; MFM
Restaurants Pte Ltd v Fish &
Co Restaurants Pte Ltd [2010]
SGCA 36 at [54]–[56]. See
(2016), Vol.II, pp.1127–1128.
44 Hadley 156 E.R. 145; (1854) 9
Ex. 341, 145; Victoria Laundry
[1949] 1 All E.R. 997; 65
T.L.R. 274; Koufas [1967]
3 W.L.R. 1491; [1967] 3 All
E.R. 686; Transfied Shipping
[2009] 1 A.C. 61; [2008]
Bus. L.R. 1395; Stuart [2006]
NSWCA 334, Cripps [2006]
NSWCA 334; McRae 84 C.L.R.
377; Burns v MAN Automotive
(Aus) Pty Ltd [1986] 161 CLR
653 at 667; Swick Nominee Pty
Ltd v Norncott Pty Ltd (No.3)
[2013] WSCA 171 at [173];
Robertson Quay Investment
[2008] 2 SLR 623. See J.
Bailey, Construction Law
(2016), Vol.II, pp.1175–1181;
Contracts (2015), pp.823–827.
45 British Westinghouse Electric
& Manufacturing Co Ltd
v Underground Electric
Railways Co of London Ltd

(No.2) [1912] A.C. 673 at 689;

White & Carter (Councils)
Ltd v McGregor [1962]
A.C. 413; [1962] 2 W.L.R.
17; 1962 S.C. (H.L.) 1; The
Asia Star [2010] 2 Lloyd’s
Rep 121 at [32]; Payzu Ltd
v Saunders [1919] 2 K.B.
581; Swynson Ltd v Lowick
Rose LLP (In Liquidation)
(formerly Hurst Morrison
Thomson LLP) [2017] UKSC
32; [2017] 2 W.L.R. 1161;
[2017] P.N.L.R. 18; Fulton
Shipping Inc of Panama v
Globalia Business Travel SAU
(formerly Travelplan SAU)
of Spain [2017] UKSC 43;
[2017] 1 W.L.R. 2581; [2017]
2 Lloyd’s Rep. 177; Bacciottini
v Gotalee& Goldsmith (A
Firm) [2016] EWCA Civ
170; [2016] 4 W.L.R. 98;
[2016] P.N.L.R. 22; GIB
Automation Pte Ltd v Deluge
Fire Protection (SEA) Pte
Ltd [2007] SGHC 48 at [98];
Gabriel v Seas & Retaining
Wall Construction Pty Ltd
[1986] 3 BCL 162 at 168; TCN
Channel 9 Pty Ltd v Hayden
Enterprises Pte Ltd [1989]
16 NSWLR 130 at 158. See
Contracts (2015),pp.842–844;
(2016), Vol.II, pp.1182–1185.
46 See Lord Macmillian in
Heyman v Darwins Ltd
[1942] A.C. 356; [1942] 1
All E.R. 337; (1942) 72 Ll.
L. Rep. 65 at 373; Raineiri
v Miles [1981] A.C. 1050;
[1980] 2 W.L.R. 847; (1981)
41 P. & C.R. 71 at 868, per
Lord Fraser; Koompahtoo
Local Aboriginal Land
Council[2007] 233 CLR 115
at [46]; RDC Concrete [2007]
4 SLR 413 at [40] and [114]
where the Singapore Court of
Appeal held that every breach
gives rise to "claim damages
as of right for loss resulting
from the breach (or breaches)
of contract" (emphasis by
the court). See also Sports
Connection Pte Ltd v Deuter
Sports GmbH [2009] 3 SLR
883 at [90] and [91]; Alliance
Concrete Singapore Pte Ltd
v Comfort Resources Pte Ltd
[2009] SGCA 34 at [58] and
[59].
47 See The Hongkong Fir
[1961] 2 W.L.R. 474; [1962]
1 All E.R. 474 at 493, per
Diplock J; Buckley J in
Decro-Wall International SA
v Practitioners in Marketing

Ltd [1971] 1 W.L.R. 361;

[1971] 2 All E.R. 216;
(1970) 115 S.J. 171 at 380
which was approved and
applied by the majority
(Gleeson CJ, Gummow,
Heydon and Crennan JJ) of
the Australian High Court as
part of the "mainstream law"
in Australia in Koompahtoo
Local Aboriginal Land
Council [2007] 233 CLR
115 at [46]–[71] but the
categories re-classified as
"essential" (condition), "non-
essential" (warranties) and
"innominate" or intermediate
terms.
48 The necessary question is one
of mixed law and fact for the
court to decide—which party
is in wrongful repudiation and
liable to damages? See Forster
v Frasetto [1998] NSWSC
793, per Rolfe J. See the
instructive words of Kirby J in
Koompahtoo Local Aboriginal
Land Council [2007] 233 CLR
115 at [74]: "The principle
that parties should ordinarily
fulfil their contractual
obligation underpins the law
of contract, but comprises a
basic assumption on which
our society and its economy
and well-being depends.
It would be destructive of
that assumption if one of
the parties to an agreement
could terminate it with relative
ease. It is for that reason
that strong grounds are
needed to support unilateral
termination of a contract".
See also Lodder v Slowey
[1904] A.C. 442; Brooks
Robinson Pty Ltd v Rothfield
[1951] VLR 405; Sapov v
Kane Construction Pty Ltd
(No.2) (2009) 24 VSCA 141;
Renard Construction (UE)
Pty Ltd v Minister for Public
Works [1992] 26 NSWLR 234.
49 Roberts (1869–70) L.R. 5 C.P.
310 at 326.
50 Koompahtoo Local Aboriginal
115 at [46] and [54].
886; J. Bailey, Construction
Law (2016), Vol.II, pp.1130–
1148; Lodder [1904] A.C. 442;
Carr v JA Berriman Pty Ltd
(1953) 89 CLR 327 at 352;
RDC Concrete [2007] 4 SLR
413.
Engineering Contracts

(2015), pp.860–862; J. Bailey,

Vol.II, pp.1130–1148; Anglia
Television Ltd v Reed [1972] 1
Q.B. 60; [1971] 3 W.L.R. 528;
[1971] 3 All E.R. 690; Bowlay
Logging v Dolmar [1978] 4
W.W.R. 105; Commonwealth
v Amman Aviation Pty Ltd
[1991] 174 CLR 64; Georges
v Davies [2007] NSWSC 1284
at [45]; RDC Concrete [2007]
4 SLR 413.
53 Lodder [1904] A.C. 442;
Supov (Cole) v Keane
Construction Pty Ltd (No.2)
[2009] VSCA 141. See Dennys
and Clay, Hudson’s Building
and Engineering Contracts
(2015), pp.860–862; J. Bailey,
Vol.II, pp.817–820.
p.908, para.8-005 and p.971,
para. 8-062.
55 Heyman [1942] 1 All E.R.
337; (1942) 72 Ll. L. Rep. 65
at 379.
56 Koompahtoo Local Aboriginal
115 at [44].
57 In Singapore, the Court
of Appeal in Concrete Pte
Ltd v Sato Kogyo (S) Pte
Ltd [[2007] 4 SLR 413 at
[90]–[101], per Andrew
Phang JA, had categorised
acts amounting to wrongful
repudiation and which give
rise to a right to the innocent
party to elect to terminate
the contract on the following
3 "situations": 1) where a
party, by his words or conduct,
clearly conveyed to the other
party that it would not perform
its contractual obligation at all;
2) where there was a breach of
a term which the parties had
designated as so important that
any breach of it would entitle
the innocent party to terminate
the contract; and 3) where
the breach in question would
deprive the innocent party of
substantially the whole benefit
of the contract. Applied in
Sports Connection [2009]
3 SLR 883 and recently in
Alliance Concrete Singapore
Pte Ltd v Sato Kogyo (S) Pte
Ltd [2014] 3 SLR 857.
58 Cremean, Whitton and
Contracts (2014), p.203. See
also Mersey Steel & Iron Co
Ltd v Naylor Benzon & Co
(1883) 9 App. Cas. 434; Carr
(1953) 89 CLR 327; Adam v

Quasar Management Services

[2002] QSC 223; Kennedy v
Collings Construction Co Pty
Ltd [1989] 7 BCL 25 at [39],
per Giles J; Koompahtoo Local
[2007] 233 CLR 115 at [44];
413; Sports Connection [2009]
3 SLR 883; Alliance Concrete
Singapore Pte Ltd v Sato
Kogyo (S) Pte Ltd [2014]
3 SLR 857. It is submitted
that the employer’s request
for additional and variation
works under the contract and
which prevents the contactor
from completing the work
by the contracted completion
date, although amounting to
acts of prevention, does not
per se amount to wrongful
repudiation of the construction
conduct if such conduct
are not serious enough and
do not amount to "conduct
evincing an unwillingness
or an inability to render
substantial performance of the
contract".
Contracts (2015), pp.478–502,
paras 3-129–3-151 provides
a very helpful "list of specific
obligations" and breach
of which by the employer
would in law and on the facts
amount to prevention. See also
Furst and Ramsay, Keating
on Construction Contracts
(2016), p.214, para.6-085;
J. Bailey, Construction
Law (2016), Vol.I, pp.209–
214, para.3.140 and Vol.II.,
pp.771–779, paras 9.31–9.41;
See also the decision of the
Singapore Court of Appeal
in Teknikal dan Kejuruteraan
[1994] 2 SLR 556 at [71] and
[76].
60 See the "test" for wrongful
repudiation set out by the
Australian High Court in
115 at [44].
61 Lodder [1904] A.C. 442 at
452–453, per Lord Davey:
"Their Lordships hold that
a party to a contract for
execution of works cannot
justify the exercise of power
re-entry and seizure of
works in progress when the
alleged default or delay of the
contractor had been brought
about by the acts of the default
of the party himself or his
agent … Their Lordships also
agree with the Learned Judge

as to the measure of damages,

or (more accurately) as to
the right of the respondent
to treat the contract as at an
end and sue for work and
labour done instead of suing
for damages for breach of
contract." See also Dennys and
pp.908–912.
62 Succinctly summarised by
Lord Ackner in Fercometal
Sarl v Mediterranean Shipping
Co SA (The Simona) [1989]
AC 788; [1988] 3 W.L.R.
200; [1988] 2 All E.R. 742
at 797–799; see also Heyman
[1942] 1 All E.R. 337; (1942)
72 Ll. L. Rep. 65 at 379;
115 at [44].
63 The contractor must, in
common law, make "a clear
and prompt election". See
Construction Law, see fn.1
above, pp.912-915; Felton
v Wharrie [1905], Hudson,
Contracts, 4th edn Vol.2,
pp.398; Kamlee Construction
v Town of Oakville [1961]
26 DLR 166; Brown &
Doherty v Whangarei County
[1988] 1 N.Z.L.R. 33; Pigot
Construction Ltd v WJ Crowe
Ltd [1961] 27 DLR 258
(Canada).
64 The contractor, must in
common law, elect to accept
the employer’s wrongful
repudiation, communicate the
election and acceptance to
the employer for the right to
terminate to accrue because
an uncommunicated and
unaccepted repudiation is in
law "a thing writ in water and
no value to anybody; it confers
no legal rights of any sort or
kind" as in Howard v Pickford
Tool Co. Ltd [1951] 1 K.B.
417; (1951) 95 S.J. 44; (1951)
95 S.J. 553 at 421, per Asquith
LJ; Heyman [1942] 1 All E.R.
337; (1942) 72 Ll. L. Rep. 65
at 374; Vitol SA v Norelf Ltd
(The Santa Clara) [1994] 1
W.L.R. 1390; [1994] 4 All
E.R. 109; [1993] 2 Lloyd’s
Rep. 301 at 114; Carr (1953)
89 CLR 327 at 351–352;
Land Council [2007] 233
CLR 115 at [44]; Building &
Engineering Construction
(Aus) Ltd v Property Securities
No.1 Pty Ltd [1960] VR
673 at 680; Association of

Professional Engineers,
Scientists and Managers
Australia (APESMA) v Skilled
Engineering Pty Ltd [1994]
122 ALR 471 at 479; See
914; Cremean, Whitton
and Sharkey, Brooking on
Building Contracts (2014),
pp.264–266.65. See also Photo
Production [1980] 2 W.L.R.
283; [1980] 1 All E.R. 556;
Johnson [1979] 2 W.L.R. 487;
(1979) 38 P. & C.R. 424 at 396
applying the dicta of Dixon
CJ in McDonald v Denny &
Lascelles Ltd [1933] 48 CLR
457 at 476–467; See Dennys
(2015), pp.922–923.
pp.922–923, para.8.016;
Cremean, Whitton and
266.65. Heyman [1942] 1 All
E.R. 337; (1942) 72 Ll. L. Rep.
65; Photo Production [1980]
2 W.L.R. 283; [1980] 1 All
E.R. 556; Koompahtoo Local
[2007] 233 CLR 115 at [44];
413; Sports Connection [2009]
3 SLR 883; Alliance Concrete
Singapore Pte Ltd v Sato
Kogyo (S) Pte Ltd [2014] 3
SLR 857.
66 See White [1962] 2 W.L.R.
17; 1962 S.C. (H.L.) 1 at 444–
445, per Lord Hodgson. See
also Hudson’s Building and
Engineering Contracts, fn.1
above, pp.1068-1091.
below.
Contracts (2015), pp.870.
Hudson’s refers to such a claim
as a "partial prevention" claim
—i.e. where the "contract
continues until completion".
These damages will include
the contractor’s claim for
delay costs caused by the
employer’s prevention which
includes "[1] increased
head office overheads [2]
increased site overheads
[3] increased costs of plant
and labour resulting from
delay or disruption to planned
progress of individual work
activities and [4] acceleration
costs"—see Dennys and


(2015), pp800–817; Vitex
Manufacturing Corp v
Crabtree Corp, 377F (2d)
95 (1967); Taylor-Woodrow
International v Minister of
Health [1978] S.A.S.R. 1.
871. See also J. Bailey,
Vol.II, pp.1130–1135. Hudson’s
refers to such a claim as
"total prevention"—"where a
contract has been discontinued
as a result of Employer’s
breach". These damages may
include the contractor’s claim
for delay costs caused by the
employer’s prevention until
the termination and would
also include "[1] increased
head office overheads [2]
increased site overheads
[3] increased costs of plant
and labour resulting from
delay or disruption to planned
progress of individual work
activities and [4] acceleration
costs"—see Dennys and
(2015), pp.800–817. See also
Gabriel [1987] 3 BCL 162
at 167, per Lusher J; Foley
Bros v McIlwee [1918] 44
DLR 5 at 7; Chaplin v Hicks
[1911] 2 K.B. 786 at 792; Fink
v Fink [1946] CLR 127 at
143; Poseidon Ltd v Adelaide
Petroleum WL [1994] 68
ALJR 313 at 320 referred
to in Cremean, Whitton and
Contracts (2014), p.282.
(2015), pp.860–862; J. Bailey,
Vol.II, pp.1131, 1136–1137.
The claim for reliance costs
or "wasted expenditure" is
generally an alternative to the
claim of loss of profit claim
for wrongful repudiation and
the contractor must elect at
trial as to whether he intends
make a claim for loss of profit
or base his claim for damages
for reliance costs unless it
is just to allow recovery of
both. See Anglia Television
[1971] 3 W.L.R. 528; [1971]
3 All E.R. 690 at 63–64, per
Lord Denning MR; Bridge
UK.com Ltd (t/a Bridge
Communication) v Abbey
Pynford Plc [2007] EWHC

728 (TCC); (2009) 25 Const.

L.J. 150; [2007] C.I.L.L. 2465
at [132], per Ramsey J; Kwik
Fit Insurance Services Ltd v
Bull Information Systems Ltd
[2000] EWHC 88 (TCC) per
Recorder Reese QC at [69]-
[80]; Commonwealth v Amann
Aviation [1991] 174 CLR 64
at [127], per Dean J; RJ Grills
Pty Ltd v Dellios [1988] VR
136 at [139], per Murray J. See
Contracts (2015), pp.926–928;
(2016), Vol.II, pp.817–819
and cases cited therein. The
contractor is also required to
elect whether he is seeking a
claim for consequential loss or
making a restitutionary claim
of quantum meruit based on
work and services rendered
under the terminated contract
and is not entitled to make
both a claim for consequential
loss and a quantum meruit
claim. See also Planche v
Colburn (1831) 8 Bing 14;
Lodder [1904] A.C. 442 at
453; Pavey and Matthews
Pty Ltd v Paul [1986] CLR
162 at 221; Sopov v Kane
Construction Pty Ltd (No.2)
(2009) 257 ALR 182; Brook
Robinson [1951] VLR 405, at
409; Carr (1953) 89 CLR 327
at 353; Chandler Bros Ltd v
Boswell (1936) 3 All ER 179;
Gabriel [1986] 3 BCL 162 at
167. See Cremean, Whitton
and Sharkey, Brooking on
Building Contracts (2014),
p.268.
71 Lodder [1904] A.C. 442;
Supov [2009] VSCA 141. See
Contracts (2015), pp.860–862;
(2016), Vol.II, pp.81–-820.
72 See Young v Queensland
Trustees Ltd (1956) 99 CLR
560 at 567; Pavey & Matthews
Pty Ltd v Paul [1986] CLR
162 at 731–733 and 243,
per Brennan J, at 265, per
Dawson J; Edwards v ASIC
[2009] NSWCA 424 at [80],
per Macfarlan JA, cited
in J. Bailey, Construction
Law (2016), Vol.I, p.611,
para.6.363; J. Bailey,
Vol.II, pp.820, para.9.121.
Contracts (2015), pp.737–746,
paras 6-025–6-030 aptly refers
to "release by prevention" in

the context of "release" from

the contractor’s liability for
liquidated damages which
is equally applicable in
common law to "release" the
contractor from his contractual
obligation, unless modified by
the contract.
(2015), pp.702–817; J. Bailey,
Vol.II, pp.948, 973–1018,
1205, 1206, paras 11.13,
11.63–11.159, 13.165–13.167.
75 Referred to by Lord Pearson
in the House of Lords in
Trollope & Colls [1973] 2
All E.R. 260; 9 B.L.R. 60 at
608: —"It is settled law that
in building contracts —as in
other contracts too—when
there is a stipulation for work
to be done in a limited time;
if one party by his conduct
—it may be quite legitimate
conduct, such as ordering extra
work—renders it impossible
or impracticable for the other
party to do his work within
the stipulated time, then the
one whose conduct caused the
trouble can no longer insist
upon strict adherence to the
time stated. He cannot claim
any penalties or liquidated
damages for non-completion
in that time. The time becomes
at large. The work must be
done within a reasonable
time—that is, as a rule, the
stipulated time plus reasonable
extension for the delay caused
by his conduct" (emphasis
added).
76 Peak Construction 1 B.L.R.
111; 69 L.G.R. 1.
77 See Judgment of Salmon
LJ in Peak Construction
1 B.L.R. 111; 69 L.G.R. 1
at 121. See also Multiplex
195; 111 Con. L.R. 78 at [56]–
[57], per Jackson J approved
and applied in North Midland
[2017] EWHC 2414 (TCC) at
[12]-[17], per Fraser J.
78 See Bell, "Scaling the Peak:
I.C.L.R. 318, 321, 344-345
where it is convincingly
argued that liquidated damages
"have the potential to benefit
both the principal and the
contractor".
79 In North Midland [2017]
EWHC 2414 (TCC) at [23]–
[29], Fraser J reiterated that

the contractor must prove

"causation fact" that the
prevention by the employer
in "actual fact" caused the
delay to entitle the contractor
to extension of time or for
time to "be at large" approving
and applying the principles
stated in Adyard Abu Dhabi
[2011] B.L.R. 384; 136 Con.
L.R. 190, per Hamblen J and
Jerram Falkus Construction
[2011] B.L.R. 644; 138 Con.
L.R. 21, per Coulson J. See
also Bell, "Scaling the Peak:
I.C.L.R. 318, 321 referring
to these "two limbs" of the
principals set out in Peak
Construction 1 B.L.R. 111; 69
L.G.R. 1 at 121.
80 See the clear statement of
these essential principles on
the effect of the prevention
principle on extension of
time and "time at large" by
Fraser J in North Midland
[2017] EWHC 2414 (TCC) at
[11]. His Honour at [17]–[21]
rejected the submissions that
the prevention principle cannot
be excluded by clear express
words in the contract. See also
discussions at pp.478-479,
481-484 below.
81 The common law principle
stated in Peak Construction
1 B.L.R. 111; 69 L.G.R. 1 at
121 has been applied in many
Commonwealth countries. See
Rapid Building 29 B.L.R. 5;
Balfour Beatty Building Ltd
v Chestermount Properties
Ltd 62 B.L.R. 1; 2 Con. L.R.
139; (1993) 9 Const. L.J.
117 (England); Multiplex
195; 111 Con. L.R. 78 at
[56], per Jackson J, North
J; SMK Cabinets [1984]
VR 391; Turner Corp Ltd v
Coordinated Industries Pty Ltd
[1995] 12 B.C.L. 33; Turner
Corp Ltd v Austotel Pty Ltd
[1994] 13 B.C.L. 378; Spiers
Earthworks [2012] WASCA 53
—Australia; Elsley v Collins
Insurance Agencies Ltd
(1978) 2 S.C.R. 916 (Canada);
Sim Chio Huat [1983] 1
MLJ 151 (Malaysia); Lian
Soon Construction [1999]
3 SLR 518 (Singapore) and
Fernbrook Trading Co Ltd
v Taggart (1979) 1 N.Z.L.R.
556 (New Zealand). See


Contracts (2015), pp.737–746,
paras 6-025–6-030; J. Bailey,
Vol.II, pp.1197–1206, paras
13.151–13.167.
82 See Multiplex Constructions
[2007] B.L.R. 195; 111
Con. L.R. 78; City Inn Ltd
v Sheppard Ltd [2010]
B.L.R. 437; North Midland
[2017] EWHC 2414 (TCC)
at [12]–[21], per Fraser J;
Steria Ltd v Sigma Wireless
Communications Ltd [2008]
B.L.R. 79; 118 Con. L.R. 177;
[2008] C.I.L.L. 2544; Turner
Corp v Austotel [1994] 13
BCL 378 (NSWSC); Turner
Corp Ltd v Co-ordinated
Industries [1997] BCL
378; Peninsula Balmain
v Abigroup Contractors
(2002) 18 B.C.L. 322; Spiers
Earthworks [2012] WASCA
53; Group Five Building Ltd
v Minister of Community
Development [1993] 3 S.A.
629; Hsin Chong Construction
(Asia) Ltd v Henble Ltd
[2006] HKCFI 965 at [135];
contra the controversial
Australian decision of
Gaymark Investments Pty Ltd
v Walter Construction Group
Ltd (2000) 16 B.C.L. 449
which held that the contractor
was not bound to comply
with the conditions of the
extension of time clause where
there is an act of prevention
by the employer and which
has been criticised and not
applied in notably the English
and Australian cases referred
to hereinbefore. See also
Contracts (2015), pp.748–753,
Vol.II, p.1201, para.13.167.
83 See Astea (UK) Ltd v Time
Group Ltd [2003] EWHC
725 (TCC) at [144], per
HHJ Seymour QC on the
non-exhaustive matters to
be taken into consideration
by the court in establishing
what is "reasonable time"
and Brennan J in Perri v
Coolangatta Investments
Pty Ltd (1982) 149 C.L.R.
537; Woolcock Engineering
Pty Ltd v SWF Hoists Ltd
[2001] 17 B.C.L. 28; in North
Midland [2017] EWHC
2414 (TCC) at [11], Fraser J
clarified that the successful
invocation of the prevention
principle does not mean that

the employer is not entitled

to his actual loss, which "is to
be assessed differently" and
that "time at large does not
mean that the contractor has
an indefinite time to complete
the works. See Dennys and
pp.792–797, paras 6-063–
6-065; J. Bailey, Construction
Law (2016), Vol.II, pp.949–
950, paras 11.14–11.18.
84 Increased costs include1)
prolongation costs; 2)
increased head office
overheads; 3) increased site
overheads; 4) increased costs
of plant and labour resulting
from delay or disruption to
planned progress of individual
work activities; and 5)
acceleration costs. See Dennys
(2015), pp.800–817; J. Bailey,
11.125–11.159.
below.
86 Sempra Metals Ltd
(formerly Metallgesellschaft
Ltd) v Inland Revenue
Commissioners [2007] UKHL
34[2008] 1 A.C. 561; [2007] 3
W.L.R. 354 at [100], per Lord
Nicholls.
pp.879–867, paras 7-050–
7-062. See also J. Bailey,
Vol.II, p.1138, paras 13.29–
13.31.
88 FG Minter v Welsh
Health Technical Services
Organisation 13 B.L.R. 1; Rees
& Kirby Ltd v Swansea City
Council 30 B.L.R. 1; 5 Con.
L.R. 34; (1985) 1 Const. L.J.
378; Ogilvie Builders Ltd v
Glasgow DC [1995] S.L.T.
15; [1994] S.C.L.R. 546;
Hunderfords Walker [1989]
63 A.L.J.R. 210. See also
Contracts (2015), pp.883–885,
Vol.II, p.1138, para.13.31.
Contracts (2015), pp.888,
891–896, paras 7-065, 7-069–
7-084. See also J. Bailey,
9.629.63.


Contracts (2015),, p.888,
para.7-065.
para.7-065.
92 Wolverhampton Corp v
Emmins [1901] 1 Q.B. 515
at 524 and 525, per Romer
LJ, at 524 applied by Dean
J in Hewett v Court [1983]
57 ALJR 211 at 219. See
also dicta of Mellish LJ
in Wilkinson v Clements
(1872) L.R. 8 Ch. App. 96 at
112. See also Scandinavian
Trading Tanker Co AB v
Flota Petrolera Ecuatoriana
(Scaptrade) [1983] 2 A.C.
694; [1983] 3 W.L.R. 203;
[1983] 2 All E.R. 763 at 703.
p.895, para.7-074; J. Bailey,
9.62–9.63. See Hounslow
LBC v Twickenham Garden
Developments Ltd [1971]
Ch. 233; [1970] 3 W.L.R.
538; [1970] 3 All E.R. 326 at
251, per Megarry J; Crouch
Developments Pty Ltd v
D&M (Australia) Pty Ltd
[2008] WASC 151 at [20];
Robert Salzer Constructions
Ltd v Elmbee Ltd [1991] 10
A.C.L.R. 64.
para.7-064.
95 Principles set out in the case
of American Cyanamid Co
v Ethicon Ltd (No.1) [1975]
A.C. 396; [1975] 2 W.L.R.
316; [1975] 1 All E.R. 50
with regard to an injunction
pending trial but which
is equally applicable for
consideration for the issuance
of a final injunction at trial.
In Australia the principles
for the grant of interlocutory
injunction are those set
out by the High Court in
Beecham Group Ltd v Bristol
Laboratories Pty Ltd [1968]
118 CLR 618 at 622–623,
per Kitto, Taylor, Menzies
and Owen JJ namely that the
contractor must establish 1) a
prima facie case; and 2) that
the balance of convenience
was in favour of granting
the interlocutory injunction.
Insofar as the conflict in
the principles between the

American Cyanamid principles

that those set out by the High
Court of Australia in Beecham
Group Ltd, the High Court
of Australian recently in
Broadcasting Corp v O’Neill
[2006] 227 CLR 57 at [71],
per Gleeson CJ, Gummow,
Kirby, Hayne, Heydon and
Crennan JJ held that the
Beecham Group Ltd principles
are to apply in Australia.
Contracts (2015), pp.896–901,
paras 7-075–7-084.
97 Garrett v Salisbury and Dorset
Railway (1866) L.R. 2 Eq.
358; DG Whelan Rentals
Pty Ltd v Australia Building
Construction Employees and
Builders Labourers Federation
[1983] 46 ALR 339.
98 Rayack Construction Ltd
v Lampeter Meat Co Ltd
12 B.L.R. 30; Henry Boot
Building v Croydon Hotel
& Leisure Co 36 B.L.R.
41; (1986) 2 Const. L.J.
183; Wates Construction v
Franthom Property Ltd (1991)
53 B.L.R. 23; (1991) 7 Const.
L.J. 243 (CA).
99 Croudace v Lambeth LBC
(1984) 33 B.L.R. 20; (1984)
1 Const. L.J. 128; (1984)
C.I.L.L. 136.
100 See J. Bailey, Construction
Law (2016), Vol.II, pp.1081–
1089, paras 12.67–12.93;
1168, paras 10-53–10-063.
101 See Lord Jauncey in
Alghussein Establishment v
Eton College [1988] 1 W.L.R.
587; [1991] 1 All E.R. 267;
[1988] E.G. 69 (C.S.) at 273
applied in Doosan Babcock
Ltd v Comercializadora de
Equipos y Materials Mabe Lda
(formerly Mabe Chile Lda)
[2013] EWHC 3201 (TCC);
[2014] B.L.R. 33 at [33]–[40],
per Edwards-Stuart J; Simon
Carves Ltd v Ensus UK Ltd
[2011] EWHC 657 (TCC);
[2011] B.L.R. 340; 135 Con.
L.R. 96, per Akenhead J.
102 This is the very essence of
the prevention principle and
a formidable hurdle for any
claim by the employer against
the contractor if substantiated,
because it is based on the legal
maxim that "no man shall
take advantage of his own
wrongdoing". See Holme 150
E.R. 1195; (1838) 3 M & W
387 at 387–389 (Parke B);

Dodd [1897] 1 QB 562 at

566, per Esher LJ, at 567–568,
per Lopes LJ and at 568, per
Chitty LJ; Roberts (1860–70)
L.R. 5 C.P. 310 at 326 and 329,
per Kelly B; Lodder [1904]
A.C. 442 at 453; Panamena
80 Ll. L. Rep. 205; [1947]
L.J.R 716 at 437, per Lord
Thankerton; Amalgamated
Building Contractors [1952]
2 T.L.R. 269; 50 L.G.R. 667 at
455; Trollope & Colls [1973]
2 All E.R. 260; 9 B.L.R. 60 at
608, per Lord Pearson; Peak
Construction 1 B.L.R. 111; 69
L.G.R. 1 at 121, per Salmon
LJ; Rapid Building 29 B.L.R.
5, per Lloyd LJ; Multiplex
195; 111 Con. L.R. 78, per
Jackson J; North Midland
[2017] EWHC 2414 (TCC) at
[11], per Fraser J.
103 See Roberts (1869–70) L.R. 5
C.P. 310 at 326, per Kelly B.
104 Roberts (1869–70) L.R. 5 C.P.
310 at 326.
105 Yorkshire Dale Steamship Co
[1942] 2 All E.R. 6; (1942)
73 Ll. L. Rep. 1 at 698, per
Viscount Simmons LC and at
796, per Lord Wright; Beoco
[1994] 3 W.L.R. 1179; [1994]
C.L.C. 111 and Plaza West
[2010] NSWSC 1426. See
822, paras 7-001–7-002; See
(2016), Vol.II, pp.758–762,
paras 9.01–9.08.
(2016), Vol.II, pp.1040–1046,
paras 12.03–12.14. See also
para.7-080.
107 Wates Construction (1991) 53
B.L.R. 23 at 31, per Belham
LJ; Ballast Wiltshier Plc
v Thomas Barnes & Sons
[1998] EWHC 306 (TCC), per
HHJ Bowsher QC); Re Pan
Interiors Ltd [2005] EWHC
3241 (Ch) at [54], per Warren
J; Chun Lee Engineering Co
Ltd v Aoki Corp [1991] HKCA
297; J. Bailey, Construction
Law (2016), Vol.II, p.895,
para.12.04.
B.L.R. 23 at 31, per Beldam
LJ; Ballast Wiltshier [1998]
EWHC 306 (TCC) at [26], per
HHJ Bowsher QC.
109 Rayack 12 B.L.R. 30; Henry
Boot 36 B.L.R. 41; (1986)

2 Const. L.J. 183 at 46, per

Nourse LJ; GPT Realisations
Ltd (In Liquidation) v
Panatown Ltd 61 B.L.R. 88;
31 Con. L.R. 16 at 96–97, per
Judge Bowsher QC; Qimonda
Malaysia Sdn Bhd v Sidiabena
Sdn Bhd [2012] BLR 65.
B.L.R. 23 at 31, per Beldam
LJ; J. Bailey, Construction
Law (2016), Vol.II, p.1042,
paras1.07; Longyuan-Arrk
(Macao) Pte Ltd v Show
and Tell Production Pte Ltd
[2013] SGHC 160 at [123],
per Belinda Ang J.
111 Rayack 12 B.L.R. 30 at 34;
Concorde Construction
Co Ltd v Colgan Co Ltd
(1984) 29 B.L.R. 120; KBH
Constructions Pty Ltd v Lidco
Aluminium Products Pty Ltd
(1990) 7 BCL 183; Henry
Boot 36 B.L.R. 41; (1986)
2 Const. L.J. 183 at 46, per
Nourse LJ; Wates Construction
(1991) 53 B.L.R. 23 at 36–
37, per Beldham LJ; J. Bailey,
Vol.II, p.1043, para.12.09;
para.7-080.
112 As in Cleveland Bridge UK
Ltd v Multiplex Constructions
(UK) Ltd [2010] EWCA
Civ 139 at [202] per Sir
Anthony May P. See also
Magintharan, Ch.18 in
International Contractual and
Statutory Adjudication (2017),
p.287. Contra J. Bailey,
Vol.II, p.1045, para.12.13,
where it is submitted that the
employer is entitled to "retain
and utilize retention money
for the purpose of funding the
completion of the remaining
works" if the contract is
terminated by the employer on
the ground of the contractor’s
wrongful repudiation.
113 Bank of Boston Connecticut
(formerly Colonial Bank) v
European Grain & Shipping
Ltd (The Dominique) [1989]
A.C. 1056; [1989] 2 W.L.R.
440; [1989] 1 All E.R. 545 at,
1098–1099, per Lord Brandon,
applied in Cleveland Bridge
[2010] EWCA Civ 139 at
[202], per Sir Anthony May P.
114 Cleveland Bridge [2010]
EWCA Civ 139 at [202].
115 Concorde Construction (1984)
29 B.L.R. 120 at 133; JF
Finnegan Ltd v Ford Sellar
Morris Developments Ltd

53 B.L.R. 38 at 52–53; GPT

Realisations 61 B.L.R. 88; 31
Con. L.R. 16 at 97; J. Bailey,
Vol.II, p.1041, para.12.05.
116 Cleveland Bridge [2010]
EWCA Civ 139 at [202];
Witney Town Council v Beam
Construction (Cheltenham)
Ltd [2011] EWHC 2332
(TCC); [2011] B.L.R. 707;
[2011] T.C.L.R. 8 at [40(n)],
per Akenhead J; J. Bailey,
Vol.II, p.1045, para.12.13;
Magintharan, Ch.18 in
International Contractual and
Statutory Adjudication (2017),
p. 287.
117 Makdessi [2015] UKSC 67;
[2016] A.C. 1172; [2015] 2
C.L.C. 686 at [ [16], [32] and
[40]–[42], per Lord Neuberger.
118 Andrews v ANZ Banking
Group Ltd [2012] 247 CLR
205 at [10], per French CJ,
Gummow, Keifel and Bell JJ.
[2016] A.C. 1172; [2015] 2
C.L.C. 686 at [40]–[42], per
Lord Neuberger
120 Paciocco v Australian and
New Zealand Group Ltd
[2016] HCA 28, per French
CJ; Kiefel, Gageler, Keane and
Nettle JJ.
121 Paciocco [2016] HCA 28 at
[9], per French CJ.
(2016), Vol.II, pp.1061–1089,
paras 12.50–12.93; Dennys
(2015), pp.1124–1166, paras
10-31–10-61.
123 Edward Owen Engineering Ltd
v Barclay Bank International
Ltd [1978] Q.B. 159; [1977]
3 W.L.R. 764; [1978] 1 All
E.R. 976 at 165–169; Hortico
(Australia) Pty Ltd v Energy
Equipment (Australia) Pty
Ltd [1985] 1 N.S.W.L.R 545;
Saipem Australia Pty Ltd
v GLNG Operations Pty
Ltd [2014] QSC 310; Duro
Flguera [2015] WASC 484;
Sugar Australia Pty Ltd v Lend
Lease Services Pty Ltd [2015]
VSCA 98.
(2016), Vol.II, pp.1073–
1082, para.12.69; Dennys
(2015), pp.1158–1166, paras
10-54–10-58; RD Harbottle
(Merchantable) Ltd v National
Westminster Bank Ltd [1978]
QB 146; Edward Owen
Engineering [1977] 3 W.L.R.

764; [1978] 1 All E.R. 976;

Bolivinter Oil SA v Chase
Manhattan Bank NA [1984] 1
W.L.R. 392; [1984] 1 All E.R.
351; [1984] 1 Lloyd’s Rep.
251.
125 As per Stuart-Smith J in MW
High Tech Projects UK Ltd v
Biffa Waste Service Ltd [2015]
EWHC 949 (TCC); [2015] 1
C.L.C. 449 applying dicta of
Ramsey J in Permasteelisa
Japan KK v Bouyguesstroi
[2007] EWHC 3508 (QB); See
para.10-57.
126 Commercial Bank of Australia
Ltd v Amadio (1983) 151
CLR 447; Robert Salzer
Constructions [1991] 10
A.C.L.R. 64; GEC Marconi
Systems Pty Ltd v BHP
Information Technology
Pty Ltd (2003) 128 FCR 1
at [718], per Finn J;, Boral
Formwork v Action Makers
[2003] NSWSC 713; Clough
Engineering Ltd v Oil &
Natural Gas Corp [2008]
FCAFC 1; Saipem Australia
Pty Ltd v GLNG Operations
Pty Ltd [2014] QSC 310;
Duro Flguera Australia
Pty Ltd v Samsung C & T
Corp [2015] WASC 484;
Sugar Australia Pty Ltd v
Lend Lease Services Pty Ltd
[2015] VSCA 98 — Australia;
Sumatec Engineering and
Construction Sdn Bhd v
Malaysian Refining Co Sdn
Bhd [2012] 3 C.L.J. 401 —
Malaysia; Gustav [2007]
NZCA 205 at [30]; Graham H
Roberts Pty Ltd v Maurbeth
Investments Pty Ltd [1974] 1
N.S.W.L.R. 93 —New Zealand;
GHL Pte Ltd v Unitrack
Building Construction Pte Ltd
[1999] 4 SLR 604; Leighton
Contractors (Singapore) Pte
Ltd v J-Power Systems Corp
[2009] SGHC 7; BS Mount
Sophia Pte Ltd v Join-Aim
Pte Ltd [2012] SGCA 28 —
Singapore. See Dennys and
pp.1157—1161, paras 10-54–
Law (2016), Vol.II, pp.1074–
1075, para.12.69.
127 Competition and Consumer
Act 2010 (Cth), Sch.2,
ss.20, 21; see Olex Focas
Pty Ltd v Skoda Export Co
Ltd [1998] 3 VR 380; Boral
Formwork [2003] NSWSC
713; Alstom Power Ltd v

Yokogawa Australia Pty Ltd

(No.4) [2006] SASC 298 at
[21]; Kane Constructions
[2005] VSC 237. See J.
(2016), Vol.II, pp.1076–1077,
para.12.72.
128 Alghussein Establishment
[1991] 1 All E.R. 267; [1988]
E.G. 69 (C.S.) at 273, per
Lord Jauncey; Simon Carves
[2011] B.L.R. 340; 135 Con.
L.R. 96 at 343, per Akenhead
J; Doosan Babcock Ltd
v Commercializadora de
Equipos y Materiales Mabe
Lda (formerly Mabe Chile
Lda) [2013] EWHC 3010
(TCC); [2014] 1 Lloyd’s
Rep. 464 at [33] and [44],
per Edwards-Stuart J; Potton
Homes Ltd v Coleman
Contractors (Overseas) Ltd 28
B.L.R. 19; (1984) 81 L.S.G.
1044; (1984) 128 S.J. 282 at
30, per Everleigh J; Balfour
Beatty v Technical General
Guarantee C Ltd [2000]
C.L.C. 252; 68 Con. L.R. 180;
Uzinterimpex JSC v Standard
Bank Plc [2007] EWHC 1151
(Comm); [2007] 2 Lloyd’s
Rep. 187 at [107], per David
Steel J; Reed Construction
Services Pty Ltd v Keng
Seng (Australia) Ltd (1999)
15 BCL 158; See J. Bailey,
Vol.II, p.1075, para.12.70;
1160, para.10-56.
129 Balfour Beatty v Technical
General Guarantee Co
Ltd [2000] C.L.C. 252; 68
Con. L.R. 180 applied in
Uzinterimpex JSC [2007] 2
Lloyd’s Rep. 187 at 107, per
David Steel J.
130 Sir A. Mason, "The impact of
Equitable Doctrine on the Law
of Contract" (1998) 27 Anglo-
American Law Review 1, 12;
see J. Bailey, Construction
Law (2016), Vol.II, p.1077,
para.12.72.
131 Alghussein [1991] 1 All E.R.
267; [1988] E.G. 69 (C.S.) at
273, per Lord Jauncey; Simon
Carves [2011] B.L.R. 340;
135 Con. L.R. 96 at, 343, per
Akenhead J; Doosan Babcock
[2013] EWHC 3010 (TCC);
[2014] 1 Lloyd’s Rep. 464 at
[33] and [44], per Edwards-
Stuart J; Potton Homes 28
B.L.R. 19; (1984) 81 L.S.G.
1044; (1984) 128 S.J. 282 at
30, per Everleigh J; Balfour
Beatty v Technical General

Guarantee Co Ltd [2000]

C.L.C. 252; 68 Con. L.R. 180;
Uzinterimpex JSC [2007] 2
Lloyd’s Rep. 187 at [107], per
David Steel J; Commercial
Bank of Australia [1983] 151
CLR 447 at 462 and 474; CG
Berbatis Holdings Pty Ltd
[2003] 214 CLR 51; Reed
Construction (1999) 15 BCL
158; CKR Contract Services
Pte Ltd v Asplenium Land
Pte Ltd [2015] SGCA 24 at
[40]; Gammon Pte Ltd v JBE
Properties Pte Ltd [2010]
SGHC 10 at [11]; New Tech
Engineering Construction
Pte Ltd v BKB Engineering
Constructions Pte Ltd [2003]
4 SLR 73 at [27]; Royal
Design Studio Pte Ltd v Chang
Development Pte Ltd [1991]
2 MLJ 229; Gustav [2007]
NZCA 205 at [30]; J. Bailey,
Vol.II, p.1075, para.12.70;
1160, para.10-56.
132 See Olex Focas [1998] 3 VR
380; Boral Formwork [2003]
NSWSC 713; Alstom Power
[2006] SASC 298 at [21]. See
(2016), Vol.II, pp.1076, 1077,
para.12.72.
[2016] A.C. 1172; [2015] 2
C.L.C. 686 at [16]–[32], per
Lord Neuberger.
[2012] 247 CLR 205 at [10],
per French CJ, Gummow,
Keifel and Bell JJ, approved
and applied recently by the
Australia High Court in
Paciocco [2016] HCA 28.
above and 478-479, 482-484
below.
136 Dunlop Pneumatic Tyre Co Ltd
v New Garage & Motor Co
Ltd [1915] A.C. 79 at 86.
137 As per Lord Neuberger in the
recent English Supreme Court
decision of Makdessi [2015]
UKSC 67; [2016] A.C. 1172;
[2015] 2 C.L.C. 686 at [32].
138 J. Bailey, Construction
Law (2016), Vol.II, p.1185,
para.13.129.
139 Bell, "Scaling the Peak:
Rev. 318, 322.
140 As per Dennys and Clay,
p.730, para.6-022.


(2016), Vol.II, pp.1197–1206,
paras 13.151–13.167; Dennys
(2015), pp.737–746, paras
6-025–6-030.
111; 69 L.G.R. 1 at 121.
Contracts (2015), pp.737,
para.6-025.
144 As per Lord Denning MR
which was approved by Lord
Pearson in the House of Lords
in Trollope & Colls [1973]
2 All E.R. 260; 9 B.L.R.
60 at 608. Note however,
that as Fraser J in North
(TCC) at [11] clarified, the
prevention principle does
not mean that the employer
is not entitled to his actual
loss as "damages" which are
"assessed differently" and
that "time at large" does "not
mean that the contractor has an
indefinite time to complete the
works".
[2016] A.C. 1172; [2015] 2
C.L.C. 686 at [16]–[32], per
Lord Neuberger.
[2012] 247 CLR 205 at [10],
per French CJ, Gummow,
Keifel and Bell JJ. See also
Paciocco [2016] HCA 28.
147 As per Lord Denning MR
which was approved by Lord
Pearson in the House of Lords
in Trollope & Colls [1973] 2
All E.R. 260; 9 B.L.R. 60 at
608.
148 See discussions on the law
of penalties in paragraphs
pp.476-479 above.
149 Gilbert-Ash [1974] A.C. 689;
[1973] 3 W.L.R. 421; [1973]
3 All E.R. 195 at 722–723.
See also Lord Diplock in Gill
& Duffus SA v Berger & Co
Inc [1984] A.C 382; [1984] 2
W.L.R. 95; [1984] 1 All E.R.
438 at 380; Mondel v Steel
151 E.R. 1288; (1841) 8 M.
& W. 858; Bellgrove v Elridge
(1954) 90 CLR 613; Westpoint
Management Ltd v Chocolate
Factory Apartment Ltd;
Chocolate Factory Apartments
v Westpoint Finance [2007]
NSWCA 253.
150 Hanak v Green [1958] 2
Q.B. 9; [1958] 2 W.L.R. 755;
[1958] 2 All E.R. 141 at 23,
per Morris LJ.
151 See Gilbert-Ash [1974] A.C.
689; [1973] 3 W.L.R. 421;

[1973] 3 All E.R. 195 at 717,

per Lord Diplock, confirming
that set-off is a substantial
defence in law. The Singapore
Court of Appeal in Pacific
Rim Investment Pte Ltd v Lam
Seng Tiong [1995] 2 SLR 643
at [23]–[37] also confirmed
that set-off was a substantial
defence and not merely a
procedural defence. See also
Compania Sud Americana de
Vapores v Shipmair BV; The
Tena [1977] 2 Lloyd’s Rep 269
at 277, per Parker J; Federal
Commerce & Navigation Co
Ltd v Molena Alpha Inc (The
Nanfri) [1978] Q.B. 927;
[1978] 3 W.L.R. 309; [1978] 3
Denning MR.
152 Hanak [1958] 2 W.L.R. 755;
[1958] 2 All E.R. 141 at 26,
per Morris LJ.
153 Roberts (1869–70) L.R. 5
C.P. 310 at 326: "[I]t is a
principle very well established
at common law, that no person
can take advantage of the non-
fulfilment of a condition the
performance of which has
been hindered by himself
… and also that he cannot
sue for a breach of contract
occasioned to for the breach
of the contract, so that any
damages he would otherwise
have been entitled to for
the breach of contract to
him would immediately be
recoverable back as damages
arising from his own breach of
contract."
154 See Hanak [1958] 2 W.L.R.
755; [1958] 2 All E.R. 141 at
5–27, per Morris LJ. Hence
the common legal expression
in practice—all set-off are
counterclaims but not all
counterclaims are set-offs.
155 Hanak [1958] 2 W.L.R. 755;
[1958] 2 All E.R. 141 at 26,
per Morris LJ.
156 Re Elgindata (No.2) [1992]
1 WLR 1207 at 1214: "The
principles are these (i) Costs
are in the discretion of the
court (ii) They should follow
the event, except when it
appears to the court that
in the circumstances of
the case some other order
should be made (iii) The
general rule does not cease
to apply simply because
the successful party raises
issues or makes allegations
on which he fails, but where
that has caused a significant
increase in the length or costs
of the proceedings he may

be deprived of the whole or

part of his costs (iv) Where
the successful party raised
issues or make allegations
improperly or unreasonably,
the court may not only deprive
him of his costs but may order
him to pay the whole or a part
of the unsuccessful party’s
costs". (emphasis added). See
Singapore Court of Appeal in
Tullio Plaenta v Maoro Andrea
G [1992] 2 SLR 501 at [23]
and [24]; Re Shankar Alan s/
o Anant Kulkarni [2007] 2
SLR 95; Oshlack v Richmon
River Council (1998) 193 CLR
72 at [63]–[67], per McHugh
J; Pollard v Baulderstone
Hornibrook Engineering Pty
Ltd (No.2) [2007] NSWSC 486
at [5]–[19], per Allsop J; See
(2016), Vol.III, pp.2217–2246,
paras 26.251–26.304.
157 See Hanak [1958] 2 W.L.R.
755; [1958] 2 All E.R. 141 at
26, per Hodgson LJ, at 27, per
Morris LJ, at 31, per Seller LJ.
158 Gilbert-Ash [1974] A.C. 689;
[1973] 3 W.L.R. 421; [1973]
3 All E.R. 195 at 717–718, per
Lord Diplock, at 722–723, per
Lord Salmon.
159 See Gilbert-Ash[1974] A.C.
689; [1973] 3 W.L.R. 421;
[1973] 3 All E.R. 195 at 718,
per Lord Diplock; Salmon
LJ in Peak Construction 1
B.L.R. 111; 69 L.G.R. 1 at 121;
B.L.R. 195; 111 Con. L.R. 78
at [56]–[57], per Jackson J;
North Midland [2017] EWHC
2414 (TCC) at [13]–[17], per
Fraser J.
160 See for example AIA
Standard Form of Building
Contract, 1997 (A20/97);
FIDIC Conditions of
Contract for Building and
Engineering Works, 1998
(FIDIC 98); Australian
Standard Conditions of
Contract 4th edn,1992;
Edition, 2000 Revision (AS
2124); Singapore Institute
of Architects Lump Sum
Contract, 1980 (SIA Terms).
pp.928–962, paras 8-022–
Law (2016), Vol.II, pp.789–
829, paras 9.64–9.141.
111; 69 L.G.R. 1 at 121. See
also Multiplex Construction
[2007] B.L.R. 195; 111 Con.
L.R. 78 at [56]–[57], per

Jackson J approved and

applied in North Midland
[2017] EWHC 2414 (TCC) at
[13]–[22], per Fraser J.
163 Duncan Wallace in
"Prevention and Liquidated
Damages: A Theory too
Far?" (2002) 18 B.C.L. 82.
164 See for example, cl.20.1
FIDIC Standard Form;
Cl.61.3 NEC 3 (England);
cl.35.5 AS 2124-1992; cl.34.3
AS4000-1997; cl.LI.1 ABIC
MW-1003; cl.10.5 PC-1 1998
(Australia); cl.23(1) & (2)
SIA Condition of Contract
(Singapore).
Contracts (2015), pp.747–758,
13.156–13.168. See Multiplex
195; 111 Con. L.R. 78 at [56]–
[57], per Jackson J approved
and applied in North Midland
[2017] EWHC 2414 (TCC) at
[13]–[22], per Fraser J.
166 Turner Corp v Austotel
(1994) 13 B.C.L. 384 at 385
approved and applied in
Turner Corp v Co-ordinated
Industries (1997) B.C.L. 378
and Peninsula Balmain (2002)
18 B.C.L. 322; See also the
decision of Brooking J in SMK
Cabinets [1984] VR 391 at
395–396.
167 Gaymark Investments (2000)
16 B.C.L. 449 [53], per Bailey
J.
para.6-032.
169 In Multiplex Construction
[2007] B.L.R. 195; 111 Con.
L.R. 78 at 499, per Jackson J;
Steria Ltd v Sigma Wireless
Communications Ltd [2007]
EWHC 3454 (TCC); [2008]
B.L.R. 79, per Stephen Davies
J; Scottish Court in City Inn
Ltd v Shepherd Construction
Ltd 2003 S.L.T. 885; 2003
S.C.L.R. 795; [2003] B.L.R.
468, per Lord McFadyen;
para.6-032.
170 Lian Soon [1999] 3 SLR 518 at
[18], per Warren Khoo J. This
relates to the "second limb" of
the Peak Construction 1 B.L.R.
111; 69 L.G.R. 1 at 121, per
Salmon LJ, that the employer
and the employer’s agent, the
superintendent or architect,

must grant an extension of

time in order to exclude the
preventive principle. See
Bell, "Scaling the Peak:
Rev. 318, 325.
171 Peninsula Balmain Pty Ltd
Ltd [2002] NSWCA 211 at
[79]–[81], per Hodgson JA,
applied by Warren CJ in Kane
Construction Pty Ltd v Sopov
[2006] 22 BCL 92 at [660]
and recently by Osbourne J
in 620 Collins Street Pty Ltd
Ltd (No: 2) [2006] VSC 491
[19]–[38]. See Doug Jones,
Building & Construction
Claim and Disputes (1996),
s.4.3.5.1 referred to and
applied by Hodgson JA in
Peninsula Balmain [2002]
NSWCA 211 at [71]; Dorter
and Sharkey, Building and
Construction Contracts in
Australia (Sydney: Thomson
Reuters); A. Bellmore "Must
a Superintendent Extend
Time?" (2002) 19 BCL 281;
A. Baron "Role of the contract
administrator; breathing
new life into the preventive
principle" (2003) 10 BCL 334.
172 In Havey Bay (JV) Pty Ltd v
Civil Mining and Construction
Pty Ltd [2008] QSC 58
at [33]–[37], McMurdo J
distinguished and held that the
"Peninsula Balmain principle"
would not apply if the contract
expressly provided that
the superintendent power
was to be exercised at the
"absolute discretion" of the
superintendent.
173 See Warren CJ in Kane
Construction Pty Ltd v Sopov
[2006] 22 BCL 92 at [660]
—"Furthermore, under cl.35.3,
the superintendent was obliged
to certify an extension of time
for the plaintiff where it may
be fair and reasonable to do so,
notwithstanding a plaintiff’s
failure to make a claim or
non-compliance with the
relevant timing requirement
for an extension of time claim:
see Abigroup v Peninsula
Balmain."
174 The right to waive such a
condition is ordinarily the right
of the employer personally
unless the contract expressly
authorises the agent (i.e.
architect or superintendent)
to waive such a condition
precedent. See Blackford &

Sons (Calne) Ltd v Borough of

Christchurch [1962] 1 Lloyd’s
Rep 349. See Dennys and
pp.89–95, paras 1-088–1-091;
(2016), Vol.II, pp.986–987,
para.11.91.
175 Millar v Dickson [2002] 1
W.L.R. 1651, at 1629, [3].
See J. Bailey, Construction
Law (2016), Vol.II, p.1281,
para.13.186, and Vol.III,
pp.1152–1555, paras 20.87–
20.92 for principles on the law
on, inter alia, waiver.
176 Blackford & Sons [1962] 1
Lloyd’s Rep 349; See also
Laidlaw v Hasting Pier
Company (1874) Hudson’s,
Building Contracts (4th edn,
Vol.2) pp.13 and 16 referred
to J. Bailey, Construction
Law (2016), Vol.II, p.1281,
para.13.186.
(2016), Vol.II, pp.792–813,
paras 9.70–9.109.
178 Lodder [1904] A.C. 442 at
452–453, per Lord Davey;
Gibraltar Residential
Properties Ltd v Gibralcon
2004 SA [2015] EWHC 3067
(TCC) at [29], per Edward-
Stuart J., See J. Bailey,
Vol.II, p.794, para.9.72.
179 Lodder [1904] A.C. 442 at
452–453, per Lord Davey;
Gibraltar Residential
Properties Ltd v Gilbralcon
2004 SA [2015] EWHC
3067 (TCC) at [29], per
Edward-Stuart J; J. Bailey,
Vol.II, p.794, para.9.72;
Architectural Installation
Services Ltd v James Gibbons
Windows Ltd 46 B.L.R. 91; 16
Con. L.R. 68; [1989] E.G. 90
(C.S.) at 99–100, per Bowsher
QC; J. Bailey, Construction
Law (2016), Vol.II, p.811,
para.9.106.
180 As per Rix LJ in Socimer
International Bank Ltd (In
liquidation) v Standard Bank
London Ltd [2008] EWCA
Civ 116; [2008] Bus. L.R.
1304; [2008] 1 Lloyd’s Rep.
558 applied Bluewater Energy
Services BV v Mercon Steel
Structures BV [2014] EWHC
2132 (TCC); [2008] Bus. L.R.
1304; [2008] 1 Lloyd’s Rep.
558 at [49]–[51], per Ramsey
J; Portsmouth City Council v
Ensign Highways Ltd [2015]
EWHC 1969 (TCC); [2015]
B.L.R. 675; 161 Con. L.R. 7

at [95]–[96], [103]–[113], per

Edwards-Stuart J; J. Bailey,
Vol.II, p.805, para.9.94.
181 GEC Marconi Systems (2003)
128 FCR 1 at [753], per Finn
J; Kellogg Brown & Root Pty
Ltd v Australian Aerospace
Ltd [2007] VSC 200; See J.
(2016), Vol.II, pp.806–809,
paras 9.96–9.101; Actatek
[2016] 5 SLR 335. See also
Tackaberry, "Termination
for convenience; not as
easy as it sounds" (2013)
29 BCL 122; Monichino,
"Termination for convenience:
good faith and other possible
restrictions" (2015) 31 BCL
68.
182 See Olex Focas [1998] 3 VR
380; Boral Formwork [2003]
NSWSC 713; Alstom Power
[2006] SASC 298 at [21];
(2016), Vol.II, pp.1076–1077,
para.12.72.
above.
above.
185 Unfair Contract Terms Act
1977 —England which
is pari materia to Unfair
Contract Terms Act (Cap
396) Singapore; Control of
Exemption Clauses Ordinance
Cap 71—Hong Kong and
similar in context to ss.23–
28 of Sch.2. Part 2.3 of the
Australian Consumer Law—
Australia, collectively referred
to in this research paper as
"UCTA". See also J. Bailey,
13.197–13.218; Dennys and
pp.198–207, paras 1-220–
1-230. It must be noted that
UCTA in Australia is only
applicable and limited to
"consumer contracts" and
"small business" defined by
s.24 ACL. See S.G. Corones,
The Australian Consumer Law
(Thomson Reuters, 2011), Pt B
Ch.6, pp.188–209, paras 6.60–
6.180.
186 "Misleading or deceptive
conduct" is provided in s.18
of Pt 2-1 of the Australian
Consumer Law which is
contained in Sch.2 of the
Competition and Consumer
Act 2010 (Cth) whilst
"unconscionable conduct" is
provided in ss.21, 22 of Pt
2-2 of Sch.2 of the Australian

Consumer Law. The remedies

for such breaches are provided
for in Ch.5 of the ACL,
including damages and
injunctions namely, s.232
(injunctions) Pt 5-2 and s.236
(damages). See Corones, The
Australian Consumer Law
(2011), Ch.4.
187 Statutory Adjudication
under Act of Parliaments
in the common law
countries—Housing Grants,
Construction and Regeneration
Act 1996 (HGCRA)—
England; Building and
Construction Industry
(Security of Payment)
Act of Australian Capital
Territory (2009), Building
and Construction Industry
(Security of Payment) Act
New South Wales (1999
as amended in 2002),
Construction Contracts
(Security) Act 2004 (NT),
Building and Construction
Industry Payment Act
2004 Queensland, Building
South Australia (2011),
Building and Construction
Industry (Security of Payment)
Act Tasmania (2009 as
amended in 2015), Building
Victoria (2002 as amended
in 2006) and Construction
Contracts (Security of
Payments) Act Western
Australia [2004]—"SOPA
—Australia"; Building
Ordinance (Cap 123)—"SOPA
Hong Kong"; Construction
Industry Payment and
Adjudication Act (2012)
—"CIPAA Malaysia";
Construction Contracts
Act (2002 as amended
in 2015)—"SOPA New
Zealand" and Building and
Construction Industry Security
of Payment Act (2004)
—"SOPA Singapore"—
collectively referred to
in this research paper as
"Statutory Adjudication". See
Andrew Burr, International
Contractual and Statutory
Adjudication (2017) Informa
Law; Dennys and Clay,
paras 11.001–11-101; J.
(2016), Vol.III.
188 As per Lord Donaldson MR
in Stewart Gill Ltd v Horatio
Myer & Co Ltd [1992] Q.B.

600; [1992] 2 W.L.R. 721;

[1992] 2 All E.R. 257 at
605–606 interpretation of
the English UCTA approved
and applied by the Singapore
Court of Appeal in Koh Yin
Yee v Terrestrial Pte Ltd
[2015] 2 SLR 497 at [15]–
[17]. See also AXA Sun Life
Services Plc v Campbell
Martin Ltd [2011] EWCA Civ
133; [2011] 2 Lloyd’s Rep
1; Chester Grosvenor Hotel
Co Ltd v Alfred McAlpine
Management Ltd (1990) 58
B.L.R. 115 at 133, per Stannard
J; Oval (717) Ltd v Aegon
Insurance Co (UK) Ltd 85
B.L.R. 97 at 136–137, per
Recorder Reese QC; Director
of Consumer Affairs Victoria
v APPT Limited [2006]
VCAT 1493;See J. Bailey,
Vol.II, p.1227, para.13.203;
Corones, The Australian
Consumer Law (2011),
pp.188–209, paras 6.60–
6.180.
189 Hadley Design Associates Ltd
v Westminster City Council
[2003] EWHC 1617 (TCC);
[2004] T.C.L.R. 1, at T34-
T35, at 78, per Seymour
QC; Yuanda (UK) Co Ltd v
WW Gear Construction Ltd
[2010] EWHC 720 (TCC);
[2011] 1 All E.R. (Comm)
550; [2010] B.L.R. 435 at 440,
[20]–[22], per Edwards-Stuart
J and the Singapore Court
of Appeal in Koh Lin Yee v
Terrestrial Pte Ltd [2015]
2 SLR 497 [24] referred to
in J. Bailey, Construction
Law (2016), Vol.II, p.1227,
para.13.203. See also Mance
J (as his Lordship then was)
in Skipskredittforiningen v
Emperor Navigation [1998] 1
Lloyd’s Rep. 66 at [76].
190 J. Bailey, Construction
Law (2016), Vol.II, p.1227,
para.13.203, referring to
British Fermentation Products
Ltd v Compair Reavell Ltd
[1999] B.L.R. 352 at 361, [46],
per HHJ Bowsher QC.
[2016] A.C. 1172; [2015] 2
C.L.C. 686 at [262], per Lord
Hodge. See also Robertson,
"The Limits of Voluntariness
in Contract" (2006) 29
Melbourne University Law
Review 179, 180–181;
Paterson, "The Australian
Unfair Contract Terms
Law: Rise of Substantive
Unfairness as a Ground
for Review of Standard

Form Contracts" (2009)

33 Melbourne University
Law Review 934, 937–
939; Clapperton and
Corones, "Unfair Terms
in ‘clickwrap’ and Other
Electronic Contracts" (2007)
35 Australian Business
Law Review 152; See
S.G. Corones, The
Australian Consumer Law,
above n185, Chapter 6,
181-184[6.05-6.15]. See
Consumer Law (2011), Ch.4,
pp.97–143.
192 Unfair Contract Terms Act
1977 (UK) Sch.2; Control of
Exemption Clauses Ordinance
(Cap 71) (HK) Sch.2; Unfair
Contract Terms Act (Cap 396)
(Singapore) Sch.2 referred
to in J. Bailey, Construction
Law (2016), Vol.II, pp.1228–
1231, paras 13.204–13.207;
see also Sch. 2, Pt 2.3 - s.24(1)
Australian Consumer Law.
(2016), Vol.II, pp.1228–1231,
paras 13.204–13.207. See
also Lord Donaldson MR in
Stewart Gill Ltd v Horatio
Myer and Co Ltd [1992]
Q.B. 600; [1992] 2 W.L.R.
721; [1992] 2 All E.R. 257 at
605–606 interpretation of the
English UCTA, approved and
applied by the Singapore Court
of Appeal in Koh Yin Yee v
Terrestrial Pte Ltd [2015] 2
SLR 497 at [15]–[17]. See also
AXA Sun Life Services Plc v
Campbell Martin Ltd [2011]
EWCA Civ 133; [2012] Bus.
L.R. 203; [2011] 2 Lloyd’s
Rep. 1. See also J. Bailey,
Vol.1, pp.430–431, para.5.193.
See Miller & Associates
Insurance Broking Pty Ltd v
BMW Australia Finance Ltd
[2010] HCA 31; Australian
Competition and Consumer
Commission v TPG Internet
Pty Ltd [2013] HCA 54;
Fraser v NRMA Holdings Ltd
[1995] 55 FCR 454 at 467,
468; Addenbrooke Pty Ltd v
Duncan (No.2) [2017] FCAFC
76.
194 See Olex Focas [1998] 3
VR 380; Boral Formwork
[2003] NSWSC 713; Alstom
Power 2006] SASC 298
at [21] referred to in J.
(2016), Vol.II, pp.1076–
1077, para.12.72; see also
Brewarrina Shire Council v
Beckhaus Civil Pty Ltd [2005]
NSWCA 248; Peninsula

Balmain [2002] NSWCA 211

at [47]–[74], per Hodgson JA;
Kane Constructions [2005]
VSC 237 at [604]–[626], per
Warren CJ, on "misleading
and deceptive conduct" under
the previous s.51 of the Trade
Practices Act which, it is
submitted, similarly applicable
under s.18 of the ACL. See
Consumer Law (2011), Ch.4,
pp.97–143.
195 Commonwealth Bank of
Australia v Amadio (1983) 151
CLR 447 at 474, per Deane J;
CG Beratis Holdings Pty Ltd
[2003] 214 CLR 51. J. Bailey,
Vol.I, pp.118–119, paras
2.157–2.159. See Corones,
The Australian Consumer Law
(2011), Ch.4, pp.97–143.
196 HMSO, Michael Latham
Report: Constructing the
Team, Final Report July 1994.
197 See the seminal decision
of Dyson J in Macob Civil
Engineering Ltd v Morrison
Construction Ltd [1999]
C.L.C. 739; [1999] B.L.R.
93 at 97; (1999) 1 T.C.L.R.
113 approved in Bouyges
(UK) Ltd v Dahl-Jensen Ltd
[2000] B.L.R. 522 at 524
and Pegram Shopfitters Ltd v
Tally Weiji (UK) Ltd [2003]
EWCA Civ 1750; [2004] 1
W.L.R. 2082; [2004] 1 All
E.R. 818 at 1750. Dennys and
paras 1186–1187, paras
11-00111-002 attributes the
legal "rubric of pay now, argue
later" to the speech of Lord
Ackner during the course of
debate of the Housing Grants,
Construction and Regeneration
Bill, Hansard, HL Vol.571
cols 989–990. The genesis
of the "rubric of pay now,
argue later" in fact is found in
[1973] 3 W.L.R. 421; [1973] 3
Salmon, where His Lordship
referred to the defendant’s
right of set-off and the court
not being able to deprive the
right of set-off and say to
the defendant: "Pay up now
and litigate or arbitrate the
dispute later". See also Dennys
(2015), pp.1186–1271, paras
11-001–11-074; Burr (ed.),
International Contractual
and Statutory Adjudication
(2017), Chs 1 and 2; J. Bailey,


Vol.III, Ch.24.
198 Housing Grants, Construction
and Regeneration Act 1996
(HGCRA) as amended by the
Local Democracy, Economic
Development and Construction
Act 2009 (LDEDCA).
199 See Magintharan, Ch.18 in
International Contractual
and Statutory Adjudication
(2017), p.291, fn.35 on
the draconian effect on the
defendant due to the failure
to comply with the strict
time to file his withholding
schedule, payment schedule or
payment response in England,
Australia and Singapore.
See also S. Magintharan,
"Setting aside payment claims
and jurisdictional issues in
Singapore—The Sungdo
Principles" (2011) 27 Const.
L.J. 506, 507–508.
200 See s.113 (1) HGCRA as
amended by the LDEDCA;
s.37 CIPAA Malaysia; s.9(1)
SOPA Singapore; s.13 SOPA
Australia (Vic), s.12 SOPA
(NSW) and s.18I SOPA New
Zealand.
above.
202 See Henderson v Merrett
Syndicates Ltd (No.1) [1995]
2 A.C. 145; [1994] 3 W.L.R.
761; [1994] 3 All E.R. 506
at 184–194, per Lord Goff;
Astely v Austrust Ltd (1999)
161 A.L.R. 155; Pullen v
Gutteridge [1993] V.R. 27;
Rowlands v Collow [1992] 1
N.Z.L.R. 178; Central Property
Trust Ltd v Rafuse [1986]
2 S.C.R. 147 at 204–205,
per Le Dain J, referred to in
Contracts (2015), pp.155–196,
Vol.II, Ch.10.
203 The Australian High Court
succinctly set out the
elements of negligence in
Commonwealth v Cornwell
[2007] HCA 16 at [5]—"To
show the existence of a
completely constituted cause
of action for negligence, a
plaintiff must be able to show
duty, breach and damage
caused by the breach", per
Gleeson CJ, Gummow, Kirby,
Hayne, Heydon and Crennan
JJ. See J. Bailey, Construction
Law (2016), Vol.II, pp.840–
841, paras 10.01–10.152.
204 See Hedley Byrne & Co Ltd
v Heller & Partners Ltd

[1964] A.C. 465; Henderson

v Merrett[1994] 3 W.L.R.
761; [1994] 3 All E.R. 506
at 184–194, per Lord Goff;
Murphy v Brentwood DC
[1991] 1 A.C. 398; [1990] 3
W.L.R. 414; [1990] 2 All E.R.
908; (1990) 22 H.L.R. 502;
Astely v Austrust Ltd (1999)
161 A.L.R. 155; Sullivan v
Moody (2001) 207 CLR 562;
Spandeck Engineerng (S) Pte
Ltd v Defence Science and
Technology Agency [2007]
4 SLR 100; See Dennys and
fn.1 above, pp.129-150,
paras 1.148–1.68; J. Bailey,
10.01–10-111.

S. Magintharan-The Prevention Principle and The Contractors Remedies

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The prevention principle and the contractor's remedies, Const. L.J.

2017, 33(8), 455-489

For educational use only

2) The essence of the prevention principle

Construction Law Journal

Const. L.J. 2017, 33(8), 455-489

*Const. L.J. 455 1) Introduction

© 2021 Thomson Reuters. 1

2) The essence of the prevention principle

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the com *Const. L.J. 460 mon law;

(a) The common law source of remedy for prevention

the common law principles of contract;

© 2021 Thomson Reuters. 3

Contractor’s right to damages in common law for breach of contract by prevention

© 2021 Thomson Reuters. 4

Contractor’s right to damages for wrongful repudiation of contract by prevention

© 2021 Thomson Reuters. 5

© 2021 Thomson Reuters. 6

Contractor’s claim for specific performance of the contract

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Contractor’s claim for injunction

1) there is a serious question to be tried;

The prevention principle as defence to employer’s claim for damages

© 2021 Thomson Reuters. 8

© 2021 Thomson Reuters. 9

© 2021 Thomson Reuters. 10

The prevention principle as defence to employer’s claim for liquidated damages

© 2021 Thomson Reuters. 11

© 2021 Thomson Reuters. 12

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The Unfair Contract Terms Act 185;

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the employer owed the contractor a duty of care;

as the consequence, the contractor suffered loss or damages.203

1 N. Dennys and R. Clay,

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works by the completion

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principle but denotes it to "a

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his previous concern raised in

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3 All E.R. 195 overruled the

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Australia. In England, the

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Peak: The Prevention Principle

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Contracting" (2006) 23 I.C.L.

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Cremean, Whitton and

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(2016), p.214, para.6-085;

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© 2021 Thomson Reuters. 26

approved by Lord Pearson in

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and a sub-contractor in the

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30 Gilbert-Ash [1974] A.C. 689;

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