Regularly and diligently – discussion of its meaning when used in building contracts

Completing the Works in accordance with the contract

Construction contracts usually impose an express duty on the contractor to complete the works by a specified date or within a specified period. This is often taken to mean that the contractor has a free rein as to how he goes about constructing the works so long as he meets his contractual obligations as to what he is required to build by the date for completion. There is an element of truth in this, as it has been held that where a contract contains an express requirement to complete by a certain date, there will not be a further implied term that the contractor will proceed with due diligence. Without such an implied term, the employer who has genuine concerns about a contractor's performance during the course of the works, in relation either to quality or time, may have no redress until the contractor fails to meet his obligations as to the date for completion.

The JCT standard forms of contract address this potential problem by including an express obligation upon the contractor to proceed regularly and diligently with the works. For example, clause 23.1 of the JCT Private with Quantities Form 1998 Edition, provides that:

"On the Date of Possession, possession of the site shall be given to the Contractor who shall thereupon begin the Works, regularly and diligently proceed with the same and shall complete the same and or before the Completion Date."

It is difficult to see what remedy an employer would have if he could establish that the contractor was in breach of this clause alone. However the JCT forms give the obligation considerable force by providing that a failure by the contractor to comply entitles the employer to determine the contractor's employment (see, for example, clause 27.1.2 of the same JCT Form).

Judicial interpretations

In the light of the widespread use of the JCT forms of contract, the phrase "regularly and diligently" has become commonly used in the construction industry. However, when the phrase has come before the Courts, it has become evident that trying to define what it actually means in practice is by no means an easy task.

The earliest attempt at judicial interpretation of the phrase was made by Mr Justice Megarry (as he then was) in the case of London Borough of Hounslow v Twickenham Garden Developments (1971) when he noted that: "These are elusive words, on which the dictionaries help little. The words convey a sense of activity, of orderly progress, and of industry and perseverance: but such language provides little aid on the question of how much progress and so on is to be expected…All I can do is to say that I remain somewhat uncertain as to the concept enshrined in these words."

In that case, there was conflicting evidence as to what had occurred on site; the Judge went on to describe what was involved as "the application of an uncertain concept to disputed facts" and dismissed the claim.

A year earlier, the Supreme Court of the Northern Territory of Australia had considered the similar term "to proceed with the works with reasonable diligence", but had provided little further assistance. In that case, Mr Justice Blackburn had commented: "I think that a sensible commercial construction of the phrase is that the actual extent of the work completed is of some significance. 'Diligence' in this context means it seems to me, not only the personal industriousness of the Defendant himself but his efficiency and that of all those who worked for him…"

The leading authority on the term was given by the Court of Appeal in the case of West Faulkner Associates v London Borough of Newham (1994). Newham had engaged West Faulkner to act as architect for refurbishment works to several blocks of flats. Work proceeded, but only very slowly, resulting in a significant overrun by the contractor. The contractor had been employed on the 1977 Edition of the JCT Local Authority with Quantities contract, which included similar provisions for the determination of the contractor's employment for a failure to proceed regularly and diligently. The council repeatedly asked the architect to serve a determination notice on that basis. However the architect had refused, believing that because the contractor was turning up on site regularly and working towards a completion date, it was not in breach of its obligation.

The first point which the Court considered was whether a contractor was required to proceed both regularly and diligently in order to comply with the term, or whether he could comply by proceeding either regularly or diligently. In the lower Court, Judge Newey QC had held that the words 'regularly and diligently':

"should be construed together and that in essence they mean simply that contractors must go about their work in such a way as to achieve their contractual obligations. This requires them to plan their work, to lead and to manage their workforce, to provide proper and sufficient materials and to employ competent tradesman, so that the works are fully carried out to an acceptable standard and that all time, sequence and other provisions of the contract are fulfilled."

Lord Justice Simon Brown broadly agreed with this approach in that it linked the requirement to proceed regularly and diligently with attainment of contractual objectives. He then went on to set out his approach to the proper construction of the phrase.

He found that while the words 'regularly' and 'diligently' described separate requirements of the contractor, there was a measure of overlap between the two and as such, it was unhelpful to look at them individually. As regards the word 'regularly', this required the contractor to attend for work on a regular daily basis with sufficient in the way of men, materials and plant to have the physical capacity to progress the works substantially in accordance with his contractual obligations. The word 'diligently' imposed the need to apply that physical capacity industriously and efficiently. He concluded that:

"Taken together the obligation upon the contractor is essentially to proceed continuously, industriously and efficiently with appropriate physical resources so as to progress the works steadily towards completion substantially in accordance with the contractual requirements as to time, sequence and quality of work.

Beyond that I think it is impossible to provide useful guidance. These are after all plain English words and in reality the failure [to proceed regularly and diligently] is, like the elephant, far easier to recognise than to describe"

Recognising the elephant

There are a number of issues an employer should consider in deciding whether or not a contractor has breached its duty to proceed regularly and diligently.

Failure by the contractor to comply with a programme, such as the master programme, may provide evidence of a failure to meet its contractual obligations in this context, but it will not necessarily be conclusive. There may be reasons outside the contractor's control as to why progress is being delayed, and under the JCT contracts the programme is not contractually binding.

Nevertheless, it would seem that the employer is entitled to take a view as to whether the contractor is capable of completing the works substantially on time or as extended under the contract. If there appears to be no hope of the contractor completing as required, he may be failing to proceed regularly and diligently.

Similarly, if the work which the contractor is producing is consistently of a quality below that required by the contract, and he is failing to address adequately such quality issues, there may be a failure to proceed regularly and diligently. Other relevant factors may include the quality and quantity of labour, plant and equipment utilised on the site by the contractor.

Ultimately therefore, there is no easy answer. An employer who believes that the contractor is failing in his duty to proceed regularly and diligently should apply the guidance set out in the West Faulkner case to the particular circumstances in question, and be aware that should a dispute arise, a Court will do likewise.

For further information please contact Andrew Tobin at [email protected]