Committee Reports::Interim and Final Report - Appropriation Accounts 1938 - 1939::29 February, 1940::Appendix



Memorandum on the effect on building contracts procedure of the Judgment of Mr. Justice Hanna in the action “Owen Smith v. The Commissioners of Public Works” in relation to contract for the overhaul of hangars at Baldonnell Aerodrome.

1. The effect of the Judgment of Mr. Justice Hanna is that when a building contract contains a provision that the contract works shall be completed before a specified date, time being the essence of the contract, and the contract also contains a provision empowering the Building Owner to determine the contract in the event of the Contractor failing to exercise due diligence in carrying out the works, the power to determine the contract must be exercised before the date specified for completion.

2. The Commissioners of Public Works have had under consideration the question of the effect of the Judgment upon their building contracts and have taken the advice of the Finance Solicitor and Counsel in the matter. They are advised that no alteration of their existing standard forms of Contract Agreement is rendered necessary by the Judgment.

3. The procedure which the Commissioners, on the advice of the Finance Solicitor, have adopted subsequent to the Judgment, in relation to contracts for major works (£500 and upwards), which form the subject of an Agreement executed by the Commissioners under Seal, is to watch progress in every case, and where it appears that the Contractor is not likely to be in a position to complete the works within the time specified in the Agreement and the circumstances are such that an extension of the time for completion is considered to be the proper course, to extend the time for completion by agreement with the Contractor endorsed on the original Contract deed. On the advice of Counsel, the Commissioners propose to substitute the procedure of Supplemental Agreement, providing for extension of the time for completion, for that of endorsement on the original deed. Each case will, of course, continue to be dealt with on its merits and notice of determination will be served in advance of the date specified for completion where the circumstances so warrant.

4. The majority of the Commissioners’ building contracts are, however, for works of under £500 (many of them maintenance works under £100). The time required for completion of such contracts may be a matter of weeks only. The contracts do not form the subject of Agreements under Seal, but consist of a duly accepted Tender (with appropriate conditions attached). No special measures or alteration of the Commissioners’ existing practice or procedure in such cases is considered to be necessary.

5. Counsel has advised that in any case in which the time clause is waived by reason of the Commissioners permitting the Contractor to continue the works after the time specified for completion has expired, the contract then becomes a contract to complete the works within a reasonable time. What is a reasonable time is a question of fact depending on the circumstances of each particular case. Counsel has also advised that in such cases the Commissioners may:—

(a) serve a Notice on the Contractor requiring him to complete within a specified time (which must, of course, be a reasonable time);

(b) determine the contract, in the event of the contractor failing to complete within the reasonable time specified in such Notice.

This procedure can be adopted by the Commissioners in appropriate cases where the circumstances may so warrant.

(Signed) J. CONNOLLY,

Accounting Officer.

Oifig na nOibreacha Poiblidhe,

Baile Atha Cliath,

23 Mi na Nodlag, 1939.