Forces of law

Multi-party building contract litigation where the parties sue each other and everyone in sight are still in vogue in Australia if the immensely lengthy and complex judgment in Mutual Community Ltd v Lorden Holdings Pty Ltd and Others [1993] APCLR 28 is anything to go by. The judgment is largely factual but is worth reading from for a number of reasons.

It has an excellent discussion of the concept of force majeure - a term which is commonly used in UK standard form extension of time clauses. In Mutual preliminary Heads of Agreement were said to conflict with the standard contract entered into subsequently. One term of the preliminary contract provided that 'extensions of time shall be allowed only on the basis of force majeure'. The standard term gave other grounds as well.

In ordinary usage, force majeure means 'superior force' or, as the Oxford English Dictionary puts it, 'irresistible force or overwhelming power'. The judge, Mr Justice Byrne, was firmly of the view that the term 'does not appear to have a special trade usage in relation to [building contracts] in the sense that the law will permit a departure from ordinary usage'.

I have no doubt that he is correct. The term is, I suspect, widely used because it is so imprecise. It has been imported from French law and is used not only in the industry but also in international sales contracts and shipping contracts. All the decisions underline the importance of interpreting the expression in the context in which it is found, often in the company of other related expressions.

The best known case is Matsoukis v Priestman [1951] 1 KB 681, where a shipbuilder was relieved from liquidated damages for late completion for 'only the cause of force majeure and/or strikes of workman where the vessel is being built, or the workshops where the machinery is being made, or at the works where steel is being manufactured for the steamer, or any works of any subcontractor'.

A great commercial judge, Mr Justice Bailhache, declined to treat the expression as meaning 'causes you cannot prevent and for which are not responsible'. He did not attempt any general definition - perhaps because definition is impossible - but he held that delays due to breakdown of machinery and accident were covered by the term. It did not cover bad weather, football matches or a funeral, because 'these are the usual incidents interrupting work, and the defendants in making their contract, no doubt took them into account'.

The term is used in Clause 25 of JCT 80 and in the invaluable Keating on Building Contracts, 5th edn., p576, the view is expressed that it 'has a restricted meaning because matters such as war, strikes, fire, weather and government action are expressly dealt with in the contract'. Keating cites another well-known case Lebeaupin v Crispin [1920] 2 KB 714, where it was said that 'any direct legislative or administrative interference would, of course, come within the term: for example, an embargo'.

In the Australian case, the discussion arose in the context of a claim against architects and solicitors for alleged bad advice. The complaint was not sustained, and the judge gave the term its ordinary meaning. He could not extract from the document in question whether or not the parties intended that the risk of any particular delays might be taken into accout by them. In his judgment, the use of the words force majeure 'is intended to permit an extension of the completion date where delay is caused by any event beyond the control of the builder and which by ordinary prudent management it could not have avoided, except matters for which it assumed responsibility under the agreement'.

Since the standard form contract alleged to conflict gave the builder a right to extension of time for 'any cause or causes beyond [its] control', the use of the technical words in the preliminary agreement gave the builder no greater rights to an extension than did the standard contract. The Australian standard building contracts seem to be as badly drafted and verbose as their English counterparts, as the quoted clause went on 'including any act (other than any instruction of the architect as to a variation) default or omission on the part of the Proprietor, the Architect, any separate sub-contractor, employee or agent of the proprietor in a manner which might reasonably be expected to result in a delay in the works reaching practical completion'.

Other points of interest in Mutual Community Ltd v Lorden Holdings include the fact that the court accepted the dual liability of an architect to his client in contract and in tort and the discussion based on the facts, of the extent of the architects' duties. In Australia, as in England, it is an implied term of an architect's retainer that the architect will exercise due care, skill and diligence appropriate for a reasonably competent architect in providing the advice or services he is asked to provide: Voli v Inglewood Shire Council (1963) 110 CLR 74.

In all respects save two - advice on air conditioning in a proposed building, and failure to specify certain items in sufficient detail or to include a PC sum for them - the architect concerned had met this standard and so was substantially off the hook.

Truth to tell, one's sympathies lie with the architect in this instance. The project was an extremely complex one and appears to have got off the ground with undue haste and the breaches established were comparatively minor ones, eg, finishes. The end result in money terms we do not know; the hearing was on liability only.