Two questions that can arise on almost every amended JCT project came before the Technology and Construction Court earlier this year. First, when bespoke documents such as a schedule of derogations are bolted onto a JCT form, do they survive the standard "priority of documents" wording? Second, once an Employer’s Agent has granted an extension of time (EOT) during the works, can an adjudicator later take it away and, if so, on what basis?
In summary, the court’s answers were as follows:
- The Schedule of Derogations remained fully effective despite the priority of documents wording
- An adjudicator can open up and reduce a contemporaneously granted EOT, even to zero. However, the adjudicator must stand in the shoes of the Employer’s Agent and should not apply the benefit of hindsight.
The background
Mace Construct was engaged by Baltic Investment Holdings under an amended JCT Design and Build Contract 2016, dated 15 December 2023, to refurbish the Baltic Exchange Building at 38 St Mary Axe in the City of London, which was a listed building ("the Contract"). The Contract Documents included the Employer’s Requirements and the Contractor’s Proposals, the latter incorporating a tender queries document, a programme and a schedule of derogations ("the Schedule of Derogations"). The Schedule of Derogations (1) identified design items for which Mace was “unable to take design responsibility” until an initial design development period ended on 2 February 2024, and (2) provided that Mace would take responsibility for those items once the derogations had been concluded, approval obtained from all parties and a formal instruction received.
The Contract also provided that, until 28 February 2024, Mace was only entitled to carry out a defined “Initial Scope of Works”, essentially site set-up, surveys and completion of the design activities in a Derogations Programme.
In late 2024, Mace made claims for EOTs in relation to the works. The Employer’s Agent granted Mace EOTs totalling seven weeks and five days on the basis that the delays flowed from changes to the design in the Employer’s Requirements and the need to obtain further planning approvals and listed building consents, none of which fell within Mace’s contractual responsibility. Baltic considered the award excessive and referred it to adjudication. The adjudicator decided that the Employer’s Agent’s assessment did not bind him. He reviewed it afresh and reduced Mace’s entitlement to nil. Mace responded by initiating Part 8 proceedings, seeking declarations on the proper construction of the Contract.
The schedule of derogations
It was common ground that the Schedule of Derogations had been incorporated into the Contract. However, the parties disputed whether the entire Schedule of Derogations was effective given the wording of clause 1.3 of the Contract which stated that "Nothing contained in any other Contract Document or any Framework Agreement, irrespective of their terms, shall override or modify the Agreement or these Conditions or the Schedule of Amendments".
Baltic’s case was that the effect of clause 1.3 was that Mace bore full design responsibility from 2 February 2024 regardless of whether the second qualification about a formal instruction from Baltic had been satisfied. Mace argued that the Schedule of Derogations should be given full contractual effect.
The Deputy Judge applied established principles of contractual interpretation, which included seeking to give effect to every part of the agreement. He concluded that it would have been an odd result to uphold the Schedule of Derogations and disregard the sentence specifying when responsibility transferred. The commercial machinery pointed to the same conclusion, as the Derogations Programme set out, item by item, a sequence of design meetings, revised drawings and approvals, culminating in each case in an instruction to Mace.
In relation to clause 1.3, the court held as follows:
- Wording of this kind has appeared in JCT forms since at least 1939, and the courts have generally still given effect to the entirety of the Contract Documents. The court was therefore entitled to view “with some initial scepticism” the suggestion that carefully agreed bespoke provisions should not operate as the parties appeared to have intended.
- The Schedule of Derogations neither overrode nor modified the Conditions. Applying the ordinary meaning of “modify”, the Schedule did not do either of those things but instead “explains and supplements” the Conditions by spelling out how Mace was to perform its design obligations for the listed items. The prohibition therefore had nothing to bite on.
- Even if there had been a discrepancy, Baltic’s argument would still have failed. Clause 1.3 of the Schedule of Amendments prevailed in the event of a discrepancy, but it was the Schedule of Amendments itself that gave the Schedule of Derogations its role, by making the derogated design activities part of the Initial Scope of Works. Relying on the Schedule of Amendments, therefore, led straight back to the Schedule of Derogations. In any event, clause 1.3 also expressly gave the Schedule of Derogations priority over the Employer’s Requirements.
Accordingly, the court upheld Mace's request for a declaration that the Schedule of Derogations formed part of the Contract and that Mace did not assume design responsibility for the derogations items until the derogations had been concluded, approvals obtained and a formal instruction issued.
Extensions of time
The most significant part of the judgment concerned whether the adjudicator had the power to open up and reduce the EOTs awarded by the Employer's Agent.
Mace primarily argued that the adjudicator did not have the power to reduce the EOT awarded, as the wording of clause 2.25 of the Contract required a prospective assessment. Further, an EOT may be increased if the original assessment was too low but the completion date could not be brought forward except to reflect instructions omitting relevant works. Both propositions derived from the wording of clause 2.25, and the court accepted them as orthodox.
From that, Mace advanced what the judge described as a “bold” further submission: an extension granted under clause 2.25.1, however incorrect, could not be reviewed at all because an adjudicator or court examining it later would inevitably know how matters had turned out and could therefore never genuinely perform the prospective exercise.
The court refused Mace's request for a declaration that an adjudicator and/or the court does not have the power to fix a completion date which is earlier than that which has previously been fixed by the Employer's Agent. It held that it was common ground that the Scheme for Construction Contracts applied, and paragraph 20(a) empowers an adjudicator to “open up, revise and review any decision taken or any certificate given” unless the contract states that it is final and conclusive. This Contract did not do so.
Accepting Baltic’s submission, the Court held that, in exercising that power, the adjudicator must stand in the shoes of the Employer’s Agent and carry out the task required by clause 2.25.1, namely a prospective assessment in response to the notice and particulars submitted under clause 2.24. The court acknowledged the difficulty this presents, as the adjudicator must “travel back to the time at which the notice and particulars were submitted” and “ignore what has happened since that date”. However, those were questions of evidence and procedure for the adjudicator to address, not objections of principle to the reviewing function under paragraph 20 of the Scheme.
Practical implications
On the first issue, the decision confirms that bespoke schedules of derogations and similar clarification documents are likely to be given effect according to their terms, and will not readily be displaced by standard override wording. In addition, where the transfer of design responsibility is conditional on approvals or instructions, those conditions must actually be satisfied. Parties should take care when negotiating "priority of documents" clauses alongside bespoke schedules, as this case shows that the court will hold them to what those documents actually say.
When considering the second issue, the judgment demonstrates that there can be some tension between a prospective assessment required by the JCT D&B wording and a review carried out with the benefit of hindsight.
This decision removes any suggestion that a generous contemporaneous award of an EOT is untouchable. Employers are able to use adjudication as a means of correcting an over-assessment. However, for contractors, the decision confirms that in such circumstances the review remains prospective: the adjudicator must assess the claim based on the position when the notice and particulars were submitted and disregard subsequent events. A properly evidenced contemporaneous claim may therefore be more difficult to challenge because the adjudicator cannot rely on hindsight. An EOT should not, on the court's approach, be reduced merely because subsequent events show that the actual delay was shorter than expected, although it may still be revised if the contemporaneous material shows that the original assessment was incorrect. The consequence is that the quality of delay notices and supporting particulars becomes decisive.
The judgment also provides some guidance in relation to the approach taken for delay analysis - where a tribunal is reviewing an EOT that the contract required to be assessed prospectively, the assessment may need to be based on the information available when the notice and particulars were submitted i.e. from the same prospective standpoint, rather than on an as-built analysis carried out after completion. The appropriate from of delay analysis will nevertheless depend on the contractual provisions and remains fact specific.
Mace Construct Ltd v Baltic Investment Holdings Ltd [2026] EWHC 976 (TCC)
