Delays and possession

Under ordinary circumstances and particularly on a new construction project, the contractor might readily expect to commence work on a site in respect of which they have full possession and unimpeded access. However, the extent of possession or access may depend on the type of work to be executed and the contract may make specific provision with regard to possession or access restrictions. For example:

• under the JCT 2016 Standard Form of Building Contract, the employer is required to give 'possession of the site' (or the relevant part of the site, where sectional completion is used) (clause 2.4); and
• under the NEC3 2013 Engineering and Construction Contract, the wording used is that the 'Employer allows access to and use of each part of the Site to the Contractor which is necessary for the work included in this contract' (clause 33.1).

If the contract is silent as to the extent of possession or access to be given, the employer's implied obligation will be to give the contractor a sufficient degree of unimpeded possession to allow the contractor not only to execute the works by its own methods, but also in the timeframe provided for in the contract. The extent of possession required is necessarily a question of fact and degree in any given circumstances.

In Whittal Builders Ltd v Chester-le-Street District Council, involving a contract to modernise ninety dwellings, the court considered the meaning of the words 'possession of the site' as used in clause 21 of the JCT 1963 Form of Contract. It was concluded, with some hesitation, that since the words were unqualified, the phrase meant 'all ninety houses as well as the area on which Whittal's office was to stand'.

In the Canadian case of The Queen v Walter Cabott Construction Ltd, the Federal Court of Appeal (affirming the trial judge's decision on the relevant point by a majority) concluded that the employer was:

• in breach of contract by denying the contractor possession of a portion of the site (which was required to permit compliance with the contract); and
• in further breach of an implied term that the contractor should have a sufficient degree of uninterrupted and exclusive possession of the site to permit the carrying out of its works.

In the South African case of Imprefed (Pty) Ltd v National Transport Commission (13/91) [1993] ZASCA 36, it was held that under a clause requiring the employer to give possession of the site there was an initial obligation on the part of the employer to give the contractor possession and control of the whole site, but afterwards, any restriction of possession or access was in a different category and would depend on the degree of undisturbed possession or access which the employer was required to provide. In such circumstances, the contractor's entitlement (if any) would depend on the precise terms of the contract or a more generalised implied term against unreasonable interference with their working methods. In that case an instruction to cease work on a particular structure due to impending design changes was held not to be a breach of the primary possession obligation.

Nature of possession of site

Once the contractor has taken possession of the site and commenced works, their right to remain in possession is in the nature of a licence and does not amount to an interest in land. In essence, the contractor's licence to occupy the site is granted only to enable the works or the subject matter of the contract to be executed.

There is authority for the proposition that, during the carrying out of the works, the employer cannot revoke the contractor's licence to occupy. In Hounslow LBC v Twickenham Garden Developments Ltd [1971] Ch. 233, it was held that an interim injunction will not necessarily be granted to expel the contractor from the site when the employer seeks to revoke the licence and there is a genuine dispute as to whether the employer is entitled under the terms of the contract to expel the contractor.

However, it is thought that this decision is inconsistent with the proper application of the injunction principles subsequently set out by the House of Lords in American Cyanamid Co. v Ethicon Ltd, [1975] UKHL 1 (i.e. the balance of convenience is likely to favour expelling the contractor by way of an appropriate injunction on the footing that damages will be an adequate remedy). Therefore, it is suggested that the decision in Hounslow LBC is unlikely to be followed, and has been disapproved in Australia (Graham Roberts Ltd v Maurbeth Ltd [1974] 1 NSWLR 93) and New Zealand (Mayfield Holdings v Moana Reef [1973] 1 NZLR 309).

The contractor's right to remain in possession of the site is likely to be affected by the insolvency of either the contractor or the employer. This will be governed by the terms of the contract and the Insolvency Act 1986.