Extensions of time matter: A Primer on Time Being at Large and Acceleration
June 1, 2013 by Matthew Swanson and Grant Mayovsky
Construction contracts between owners and contractors invariably require the contractor to complete its work by a specified date. Further, it is often agreed that the failure of a contractor to meet its deadline will result in a claim by the owner, often in an amount that has already been agreed upon (i.e. liquidated damages). Certain delays, however, may be excusable and may allow for extensions of time. Where owners and contractors have agreed that certain excusable delays will give rise to an extension, it is expected that extensions will be granted in a timely manner. This does not always occur and, when it does not, a contractor may be entitled to treat time as being “at large” or be entitled to claim acceleration costs against the owner.
Time at large
Where a contract requires an owner to extend the completion date due to certain excusable delays, (often owner-caused delays) the contractor is entitled to have such an extension determined in a prompt manner so it can plan its work to meet the new deadline. A lengthy delay in providing an extension may result in time being “at large.”
To say that time is “at large” generally means a contractor is no longer required to complete its work by a specified date. Instead, the contractor must complete its work within a reasonable period of time. This occurred in the case of Hawl-Mac Construction Ltd v Campbell River (District) (1985), 10 CLR 177 (BCSC).
In the Hawl-Mac case, the contractor encountered a delay caused by the owner’s engineer and, as a result, the contractor requested a time extension. While an extension was eventually granted, it was not granted until after the original completion date, and, even with the extension, the contractor was unable to complete “on time.” In these circumstances, the owner sought liquidated damages.
The Court in the Hawl-Mac case held that a new completion date should have been determined within a reasonable time after the request for an extension was made. Because it was not, the Court held that the new completion date was invalid, that time was at large and, as a result, the liquidated damages provisions in the contract could not be enforced.
The delay of an owner in granting an extension in a timely manner, or at all, may also give rise to a claim by a contractor for constructive acceleration. Acceleration is “constructive” when it occurs in the absence of owner-directed acceleration. For example, in Morrison-Knudsen Company v BC Hydro & Power Authority (1978), 4 WWR 193 (BCCA), the Court held if an owner decides against an extension of time in a clear case of owner-caused delay, the result is that the contractor remains legally bound to complete by the contract dates. If the contractor is required to accelerate its work to overcome the delay, fair treatment may require the owner to pay the extra cost.
Claims for constructive acceleration are more likely to succeed where certain conditions are met. First and foremost, the contractor must experience an excusable delay under the contract. If there has been an excusable delay, the contractor must then notify the owner of the delay and make a request for an extension in a timely manner. The failure to give proper notice may be a complete bar to a claim and, for this reason, it is essential that the contractor familiarizes itself with the notice requirements in the contract and provide notice as and when required.
Assuming proper notice is given, the matter then stands in the hands of the owner. If the owner grants an extension of time, as required, there can be no claim. However, if the owner fails or refuses to grant an extension in a reasonable period of time, or at all, and makes it clear that the contractor must complete “on time,” the contractor may have a legitimate claim, provided it has accelerated its work and incurred increased costs.
Be familiar with the contract
It’s clear the failure to reasonably respond to a delay event or a request for an extension can have implications. For this reason, owners and contractors should understand their contractual rights and obligations and be familiar with the process for seeking and granting extensions even before a delay arises. Failure to do so may result in the loss of a claim against the opposite contracting party, or worse, give rise to a claim by that opposite party.
This article is for information purposes only and may not be relied on for legal advice. Matthew Swanson and Grant Mayovsky are lawyers at Borden Ladner Gervais LLP. Matthew and Grant both practice in the area of commercial litigation with an emphasis on contract and construction disputes.
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