Possession and loss

The recent protest atop the British Airways “London Eye” millennium wheel on the South Bank got me thinking about the obligation on building employers to give contractors sufficient possession to permit the execution of the works unimpeded by others, and the limitations on this rule.

The legal position is quite straightforward. The common thread uniting the obligations of the employer to its contractor is to be found in the “prevention principle”, which implies a term into a building contract to the effect that neither party shall do anything to hinder the other from performing it.

It is an implied term of every building contract that the employer will give possession of the site to the contractor in sufficient time to enable it to complete the works. Indeed, the failure by the employer to give possession on the date named is a breach of contract, which may in certain circumstances enable a contractor to treat that contract as repudiated and sue for damages.

We know from the seminal case of Hounslow Borough Council vs Twickenham Garden Development Ltd that the right to possession of the site on the date stated in the appendix to the contract is usually an absolute one. It requires the employer to give the contractor such possession, occupation and use as is necessary to enable the contractor to perform the stipulated works.

Of course, the sufficiency of that possession is a question of fact peculiar to each case, and it is easy to think of permutations. The contractor may be denied occupation before it starts work, or it may find its activities are interfered with after starting work, as was the case with the contractors on the Millennium Wheel, who had only just raised it to the vertical.

Some of these events may be within the control, contractual or otherwise, of the employer, and others may not. For instance, the employer controls artists and tradesmen that it has retained to undertake discrete works on a project, but it has no control over the likes of trespassers, third parties, Basque activists, picketers, neighbours making claims for unwarranted injunctions and even statutory undertakers.

One must look to the contract and examine the circumstances to see whether the event in question is at the contractor’s risk, for example as part of his obligation to use best endeavours. On the other hand, it may be a due, care obligation on the employer’s part. Which brings me back to our friends on the millennium wheel.

It would have been different if BA had the ability to take effective legal action. However, no order of the English courts would cut much mustard with foreign gentlemen at 450 ft

There can be no doubt that the chaps who scaled the wheel were not the agents of BA. It would follow that any delay or disruption that these activities might have had on the contractors should not have constituted a breach of the employer’s obligation to give sufficient possession, as the law does not regard the employer as being responsible for the extremists.

The situation would have been different if BA had the ability to rectify the situation, for example by taking effective legal action.

I suspect, however, that no order of the English courts would cut much mustard with foreign gentlemen at 450 ft.

Equally, it would be different if the contract expressed the implied obligation of the employer to give full unencumbered possession as was found by the Court of Appeal in the later case of Rapid Building Ltd vs Ealing Family Housing Association [1984] 29 BLR.

There is comparatively little reported case law dealing with these type of interferences. But under the JCT and ICE regimes the position seems to be that the employer must ensure the contractor has uninterrupted possession of the whole of the site during the contract to enable it to commence and proceed with the works unless there is interference by third parties over whom the employer has no control.