Commercial Property ~ Spring 2006


ASBO Not Conclusive
The issuing of an Anti-Social Behaviour Order (ASBO) against a tenant or a member of a tenant’s family is strong evidence that the tenant has failed to do enough to retain entitlement to possession of the property. ASBOs are only issued when anti-social behaviour is both persistent and serious. Where such behaviour is serious enough to warrant forfeiture of the tenant’s right of possession, the authority may apply to the court for a possession order. However, the issuing of an ASBO is not conclusive evidence that a repossession order is appropriate.
A tenant who is able to persuade the court that there is a reasonable basis for the belief that his, or his family’s, anti-social behaviour will stop has a good chance of retaining possession. The ultimate test is whether the possession order would represent a fair balance between the rights of the tenant and those of his or her neighbours.
In a recent case, which involved a mother whose 13-year-old son had a long history of vandalism and ‘appalling misbehaviour’, the continuing dreadful behaviour of the child who was subject to the ASBO, coupled with the absence of any signs of remorse or any reason to expect an improvement, meant that the tenant had forfeited her right to remain in the premises.
Blow for Landlords as Councils Reveal Property Licence Charges
Landlords offering homes for multiple occupation will have been aware for some time that the 2004 Housing Act (HA) introduces a licensing requirement for landlords which is effective from April 2006. However, the scale of charges for the five-year compulsory licences has come as a shock to many, especially those in the ‘buy to let’ market, with some councils demanding over £1,000 for a licence.
Under the HA, a landlord who lets an entire home to three or more tenants who form two or more households and who share a kitchen, bathroom or toilet is required to register for a licence with the local council. The rules also apply to converted buildings containing self-contained flats if more than a third of the flats are let on short-term tenancies and the conversion did not meet the standards of the 1991 Building Regulations. However, councils have the ability to alter these requirements to insist that all landlords obtain a licence. There is a three-month period of grace for registration, but failure to register by 6 July 2006 is a criminal offence punishable by a fine of up to £20,000.
Under the new rules, licences will only be granted to ‘fit and proper’ people. A separate licence is needed for each property, which must comply with fire safety regulations and meet specified standards of accommodation.
Further information can be found at
If you rent out a property which is caught by the new law and have not yet applied for a licence, time is running out. If you would like further advice on this or any other property-related matter, please contact us.
Gypsies – No Right to Occupy Land
The House of Lords has ruled on a benchmark case involving a family of travellers who sought to have their eviction from public land quashed on the grounds that it was a breach of their right to respect for the home as guaranteed under Article 8 of the European Convention on Human Rights.
The land near Wakefield on which the Maloney family encamped was a recreation ground and not a site set aside for travellers. Other travellers had encamped on the site, but had moved on when possession proceedings were issued against them and ‘persons unknown’. The Maloneys had been on the site for only two days when the proceedings were issued, but they were the only family to remain in occupation and the only people to appear in court to contest the proceedings. They later went to live on an authorised site for gypsies, but continued to contest their eviction, arguing that the site was their home.
The family argued that Leeds City Council was in clear breach of its obligation to provide sufficient sites for travellers, as its sites were full, they all had waiting lists and twenty per cent of the travellers in that area were forced to stay on unauthorised sites. The Council had declined to authorise further sites. The Maloneys argued that the Council did not have a homelessness policy which dealt with travellers and did not have a race relations strategy which took account of the needs of the gypsy/traveller community. They also argued that they were a special case, since they had been evicted fifty times in the past year, and had as a family a variety of significant health problems.
The Law Lords were unanimous in rejecting the claim and backed the right of landowners to obtain possession of their land if it is occupied without their authority. Lord Bingham said that it was ‘all but unarguable that the recreation ground…was ever their home’.
Says <<CONTACT DETAILS>>,“In the view of the Lords, in only the rarest case could someone who never had the right to occupy land in the first place be successful with such an argument, provided the landowner acts promptly to evict them. The most sensible thing for any landowner who finds their land occupied by people without legal authority is to commence proceedings for possession as soon as practicable.”
Landlord Must Act to Preserve Right to Rent
Landlords and their tenants frequently arrange to surrender leases by agreement during a tenancy. Surrendering a lease is normally done by deed, but legally a lease will also be treated as surrendered when both sides act as if the tenancy has been terminated.
In a recent case, a tenant who clearly had little time for her landlord failed to pay any rent on her business premises and sent the landlord a letter stating that she did not wish to deal with him. She then moved out of the premises. The landlord waited a year before issuing proceedings for the unpaid rent. The tenant had originally intended to defend the action on the basis of misrepresentations made by the landlord; however, in the lower court the judge offered her a new way out.
In the judge’s view, there was a clear intention on the part of the tenant to surrender the lease. The decision then turned on whether the landlord had, by his actions, consented to the termination of the lease. The court considered the actions of the landlord. He had failed to exercise his right of re-entry to the property after the tenant had failed to pay the rent for a considerable period. Nor did he issue a demand for rent as soon as it became overdue.
The judge concluded that the landlord must have accepted that the tenancy was at an end no later than the day on which the next rent payment was due after the tenant had vacated the premises.
The landlord, unsurprisingly, appealed against the decision and was rewarded by the Court of Appeal, which reversed the decision. Lord Justice Longmore said that ‘mere omission cannot…be unequivocal conduct of the necessary kind’ to show a landlord’s acceptance to the surrender of a lease.
Had this case stood, it would have placed a very low burden of proof on tenants to show that landlords had accepted the termination of their tenancies. It also illustrates the point that changing the basis of one’s plea in mid-case should only be done with care.
Please contact <<CONTACT DETAILS>> for advice on any landlord and tenant matter.
Landlords to Lose Right to Retain Deposits
The Government has announced that it is to set up a company to control the deposits paid to landlords by their tenants. The aim is to put an end to the problem caused by unscrupulous landlords who do not return deposits at the end of a tenancy. One in five tenants is said to be aggrieved at how their deposit has been dealt with at the end of their tenancy.
However, critics of the new Tenancy Deposit Scheme (TDS) point out that it does not contain any protection for landlords who find that a tenant has withheld the last month’s rent, which is also said to occur in approximately 20 per cent of cases.
Under the TDS, the deposit will be paid into escrow with the company and an arbitration system set up to resolve disputes between landlords and tenants over the amount of damage done to a property which is attributable to the tenant. Landlords will fund the scheme by payment of a fee and will have no right to the interest earned on the deposit during the period of the tenancy. Landlords who fail to put the deposit into the scheme within 14 days of receipt will be hit with a fine of up to three times the deposit. The Government is also drawing up guidelines as to what constitutes reasonable wear and tear, which is the responsibility of the landlord and not the tenant. The new system is intended to apply to properties rented after 1 October 2006.
For landlords, the TDS will mean extra costs and bureaucracy. For tenants, it will mean assurance that at the end of the tenancy, their deposit will not simply be pocketed by the landlord. Over £740m of deposits are reported to be held by landlords in respect of shorthold tenancies.
Says <<CONTACT DETAILS>>, “Landlords will not welcome the additional complexity this will bring, although assurances have been given that the extra cost of the scheme will be low. It is hoped that the new arrangements will give tenants confidence that in normal circumstances deposits will be refunded so there will no longer be an incentive to withhold rent rather than struggle to recover the deposit held by the landlord.”
Law Not to be Used to Prevent Landlord’s Exit Strategy
The House of Lords has confirmed that the Landlord and Tenant (Covenants) Act 1995 is not intended to be used to prevent a landlord from exercising an exit strategy as regards a lease.
A company called Avonridge was the head tenant of a number of shops under a lease due to expire in 2067. It granted subleases, to six tenants, which included a covenant by Avonridge to pay the rent due under the head lease, but only until such time as it had disposed of its interest in the property.
Once the subleases had been granted, Avonridge sold the head lease on to another company, thus ending its interest in the property. The new owner subsequently disappeared, leaving the rent under the head lease unpaid.
The tenants were then faced with a bill for the rent unpaid under the head lease and sued Avonridge, claiming that the relevant clause was prohibited under the 1995 Act. The Act contains provisions which will allow the owner of a head lease to accomplish what Avonridge sought to do, but only by the service of specific notices, which did not occur in this case. It also contains anti-avoidance provisions to make void any wording in a tenancy agreement which would frustrate any other section of the Act.
The House of Lords decided that the purpose of the Act is to give both landlords and tenants an exit strategy from their lease commitments when they enter into legal assignments of their interests. It can not be used to prevent a landlord having an exit strategy which has been agreed with a tenant. The failure to follow the procedure as set out in the Act did not, in this case, invalidate the agreed terms.
Tenants with sub-tenants should consider making sure their under leases contain clauses limiting their liability by the provision of automatic releases from their obligations if they dispose of their interest in a property. If such clauses are not present, they should follow the notice procedure laid down in the Act.
Please contact <<CONTACT DETAILS>> for advice on commercial property matters.
Loss Must be Real to be Actionable
A building dispute has again brought into focus the principle that for damages to be awarded, there has to be an actual, rather than a theoretical, loss. The case involved a firm of building contractors which built a training college for a Midlands landowning firm.
There were a number of defects in the work and the landowners agreed to pay the retention of £470,000 to the builders only when these had been rectified by them. The retention was proportionally payable if the defects were only partially put right.
The contractors were advised by the landowners that they should stop their remediation work on the defects before they had completed it. They therefore sought payment of the element of the retention which was due based on the remediation work done. The landowners counterclaimed for the cost of work they had done and for the estimated cost of putting right the defects which had not yet been dealt with. Preceding cases had determined that the sum claimable is the cost of the remedial work, if it is reasonable to claim it, but where the claim is out of proportion to the loss, some other measure is appropriate.
While the dispute was going on, the landowners decided to sell the property and put it on the market. There was a considerable amount of interest and it was apparent that the value placed on the property by the prospective buyers was not materially affected by the defects. Accordingly, the landowners’ loss was minimal and to award them the full cost of remedying the defects would be unfair in that it was not proportionate to the loss.
As a result, the damages awarded to the landowners were nominal. Says <<CONTACT DETAILS>>, “The courts will not award damages unless there is an actual, measurable loss and even then the claimant has a duty to minimise any loss suffered. Contact us for advice on any commercial or other dispute.”
Making Good is Not Making Perfect
Virtually all leases contain a dilapidations clause to the effect that at the end of the lease the tenant will leave the property in a reasonably good state of repair. However, what constitutes a reasonably good state of repair is often a matter of opinion which can lead to dispute.
Recently, a case came to court involving just such a dispute. The tenants of a property had experienced problems with the roof, which was of the corrugated asbestos sheet type. The tenants had the roof surveyed and were advised that it could be put into a good enough state of repair to last for a further decade by undertaking works to patch it and to replace certain of the asbestos sheets and fixings. As an alternative, a more comprehensive series of works could be undertaken which would make the roof good for 40 years, but at a much higher cost.
As the lease had only three years to run, the tenants entered into discussions with the landlords regarding the options, but these did not amount to anything, so the tenants proceeded with the less expensive scheme of repairs.
At the end of the lease, the tenants vacated the premises and the landlords replaced the roof, claiming a total of over £120,000 under the dilapidations clause.
The dispute went to court and consideration was given to the question as to whether a covenant which required a tenant to ‘well and substantially’ repair the premises meant that the patched repair undertaken by the tenants was sufficient under the lease.
The court’s conclusions were:
·        a covenant expressed in these terms does not require a tenant to put the premises back into a state of perfect repair – the appropriate standard is that of an occupier judging the premises for the purposes of its intended use;
·        the test must consider the incoming tenant’s view from the point of view of taking a lease on the same terms as the lease under consideration;
·        replacement is only a requirement if repair is not a feasible option; and
·        where the tenant has a choice of repair methods to use, it cannot be criticised for using the cheapest method.
Accordingly, the landlords’ claim against the tenants failed. “Had the landlords negotiated with the tenants, it is likely that the tenants would have made a contribution to the cost of the re-roofing,” says <<CONTACT DETAILS>>. “This would have led to a substantial saving for the landlords compared with bearing the whole cost of re-roofing the property and then losing in court.”
We can assist in helping to ensure that negotiations with landlords or tenants reach a conclusion that is satisfactory to all.
New Scheme to Deal with Unsatisfactory Housing
The Government has introduced new rules to govern the way in which unhealthy or unsafe rented housing accommodation is to be regulated. The reforms create a ‘scoring’ system for residential properties, such as flats, which contrasts with the present system, which just defines properties as being fit or unfit for habitation. Under the new system, there are 29 categories of hazard and these are assigned to four classes of harm ranging from moderate harm to severe harm. The degree of harm is assessed with regard to both mental and physical wellbeing in both the short and long term and the risk of harm which is considered is any risk which arises as a result of a deficiency in the building.
The requirement for residential premises is now based on the principle that they should provide a safe and healthy environment for residents and visitors. Responsibility for assessment and enforcement rests with the local council.
The council’s inspector has to assess the likelihood that during the 12 months following the assessment the occupier will suffer harm as a result of the identified hazard (this is done via the scoring system) and the range of potential outcomes that may result from such an occurrence. ‘Moderate’ harm is given a value of 10 points, serious harm is given a value of 300, severe harm carries a value of 1,000 and extreme harm (i.e. likely to cause death or permanent disability) carries a value of 3,000 points. The score for the probability of the occurrence happening is then multiplied by the appropriate value of the severity of harm, to give an overall score, which is allocated to a risk category (A, B, or C) based on the score.
An authority is obliged to act in regard to a category A risk, but has the power to do so if it chooses for category B and C risks.
Says <<CONTACT DETAILS>>, “The new regulations are intended to create a more logical basis on which action in respect of unsatisfactory housing can be prioritised.”
Occupier’s Liability
The Court of Appeal has held (Keown v Coventry Healthcare NHS Trust) that a child who climbed a fire escape, which was not itself in disrepair or dangerous, knowing that there was a risk of falling and that what he was doing was dangerous, was not owed a duty, under the Occupiers’ Liability Act 1984, by the owner of the fire escape. The danger arose because of the actions of the child and not because of the state of the premises.
In 2004, the courts considered the case of an adult who suffered injuries when he dived into shallow water in a lake where swimming was prohibited (Tomlinson v Congleton Borough Council and Another). The House of Lords concluded that the accident had arisen not as a result of the state of the premises but because the man had chosen to indulge in an activity that was inherently dangerous. Where there is an obvious peril and adequate warning signs are posted, there is no absolute duty for the occupier to further protect the individual if they do something which carries obvious risks.
In the recent case, Martyn Keown was 11 years old when he suffered injuries as a result of a fall from an external fire escape at Gulson Hospital, which was owned and occupied by the Coventry NHS Trust. He fractured his arm and suffered brain damage. Coventry County Court had ruled that the Trust was two-thirds responsible for the accident.
The Court of Appeal ruled that it was a question of fact and degree whether premises which were not dangerous from the point of view of an adult could be dangerous for a child. A duty to protect against obvious risks existed only in cases where there was no genuine and informed choice such as where there is some lack of capacity such as the inability of children to recognise danger.
The Court held that it would not be right to ignore a child’s choice to engage in a dangerous activity in every case just because he or she was a child. In this case, it could not be said that the boy was not aware of the danger. In the Court’s view, the ‘threshold question is not whether there is a risk of suffering injury by reason of the state of the premises. It is whether there is a risk of injury by reason of the danger due to the state of the premises’. For the answer to this question to be ‘yes’, the premises would have to be shown to be inherently dangerous.
Says <<CONTACT DETAILS>>, “If a person is injured because of their own behaviour and there is no inherent danger in the premises, the owner of the premises should not bear liability for the injury.”
Optional Errors
People who want to buy a property but do not currently have the means to do so, or who simply want to be guaranteed the opportunity to buy it during a specified period or at some future date, will often undertake an option agreement with the owner. Under such an agreement, the prospective purchaser enters into a contract, which normally involves the payment of an up-front charge in exchange for having the legal right to buy the property at or within some future time. Options are widely used where a purchaser wishes to purchase land only if an event (normally the granting of planning permission which the prospective purchaser undertakes to obtain) occurs.
The timing of a purchase under an option agreement can be influenced by a number of factors, so options are usually for a specified period. One common trap in these cases is that the maximum period for which such an option can legally be granted is 21 years. If the option is created for a longer (or indeterminate) period, it is unenforceable. This is so even if the option must be preceded by some event, such as the granting of planning permission. Also, an option for sale of land must be registered at the Land Registry to be enforceable.
In order to purchase the land subject to the option, the purchaser must serve on the vendor a valid notice within the specified time limit. If the option is to be exercised just before the period expires, it is advisable to ensure that proof of delivery (time and/or date stamped as appropriate) is obtained. Also, the option notice must not in any way change the subject of the notice. For example, adding an offer to purchase something attached to the land which was not mentioned in the original option agreement will probably invalidate the option.
It is especially important to make sure all procedural matters are dealt with correctly as regards the notice to exercise the option. In particular, it is sensible for the purchaser of an option to make sure that where there is a ‘trigger event’, which starts the time running during which the option can be exercised, the wording of the agreement is such that the clock starts running when the purchaser becomes aware of the event, not when the event takes place. Failure to do this could result in the loss of ability to exercise an option because the prospective purchaser is unaware of the occurrence of the trigger event.
Please contact <<CONTACT DETAILS>> for advice on commercial property matters.
Prescott Aims to End ‘Aerial Blight’
Satellite dishes may be very popular, but few if any would argue that they are beautiful. In a bid to square the circle between the negative visual impact of satellite dishes and other antennae and the need for people to have access to digital services, the Office of the Deputy Prime Minister has issued planning guidelines on the siting of aerials and satellite dishes. These are intended to comply with the ‘neutrality of technology’ required by the Communications Act 2003. The regulations will apply to all forms of receiving apparatus.
The present guidelines require that an antenna is sited in such a way as to minimise the impact on the external appearance of the building. This requirement will remain. The additional requirements for dwellings and buildings under 15m in height are:
·        up to two antennae are permitted, the larger of which shall not exceed 100cm in any direction and 35 litres in cubic capacity;
·        the maximum size for the second (smaller) antenna is 60cm in any linear direction and 35 litres cubic capacity;
·        antennae mounted on chimneys are restricted to the smaller of the above sizes. If there is a chimney, the antenna must not rise above it and must not in any event rise more than 60cm above the roof line; and
·        if the property has no chimney, the antenna should not rise above the roof line.
The regulations are different for buildings in conservation areas and National Parks, buildings taller than 15 metres, and those located in areas of outstanding natural beauty. Listed buildings continue to require planning consent for the siting of an aerial.
If you require advice on any planning matter contact <<CONTACT DETAILS>>.
Real Estate Investment Trusts
The Government recently published its draft legislation on Real Estate Investment Trusts (REITs), which will be companies listed on the stock exchange which carry out a ‘qualifying property letting business’. Already, in his latest budget, the Chancellor has announced changes to the proposals.
To qualify as a REIT, a minimum of 75 per cent of the company’s profits must be derived from property letting and three-quarters of its asset value must be in the form of assets used in the qualifying activity. An ‘entry charge’ of 2 per cent of the market value of its investment properties will be payable when a company becomes a REIT.
REITs will be exempt from corporation tax on their qualifying property rental income and will not pay corporation tax on chargeable gains arising which relate to the REIT properties. They will pay corporation tax at the usual rates on the profits arising from non-qualifying activities. They will be required in normal circumstances to distribute 90 per cent of tax-exempt profits, from which tax at the basic rate will be deemed to be withheld for both UK residents and non-residents.
For tax exemption, the REIT must contain at least three properties and no one property may exceed 40 per cent of the value of all the properties in the qualifying business.
Says <<CONTACT DETAILS>>, “The REIT structure presents an interesting opportunity for investors and property companies alike. It will be interesting to see whether there will be further changes in the legislation between now and its anticipated implementation in January 2007.”
Tax Traps for Farmers
HM Revenue and Customs (HMRC) seem to be taking an argumentative approach to claims for Agricultural Property Relief (APR) – using both common sense and legalistic arguments to press for denials of relief when they think it is justified.
A recent decision of the Lands Tribunal has reduced the attractiveness of buying a ‘hobby farm’ in the country for those not engaged in full-time agriculture.
Under current law, APR is given for Inheritance Tax (IHT) purposes for farmhouses to the extent of their ‘agricultural value’. That value is the value which a buyer might reasonably pay for the farmhouse if it is subject to a planning constraint limiting its future use in perpetuity to agricultural purposes only.
HMRC’s interpretation of this is that such a planning constraint limits the occupation of the farmhouse to someone who manages the farm on a day to day basis, or who is the widow, widower or dependant of such a person. Such limitations are typically applied when granting planning permission under an ‘agricultural tie’.
The Lands Tribunal accepted the correctness of HMRC’s approach and thus far there has been no appeal against the decision. This decision effectively limits the application of APR for ‘lifestyle buyers’ who are not full-time farmers.
In another dispute over APR, HMRC adopted a narrow approach based on the letter of the law, denying APR with regard to buildings used as poultry houses. Whilst it may seem self-evident that a poultry house is agricultural property, HMRC did not agree that APR applied to them in this instance because the relevant legislation states that it is due when the occupation of the building is ‘ancillary to that of the agricultural land or pasture’. The problem in this case was that there was little land which was not covered by poultry houses, which dominated the property. In HMRC’s view, the poultry houses were not ancillary to the land; the land was ancillary to the poultry houses. Accordingly, they were not eligible for APR.
“These cases show that HMRC will argue on a broad or a narrow construction of the law, depending on which suits their purposes,” says <<CONTACT DETAILS>>. “It is essential to keep both possibilities in mind when considering situations in which the availability of APR or similar reliefs is important.”
VAT Treatment of Development Depends on Intention
VAT law generally pays little attention to what is in people’s minds when they undertake a supply, preferring to concentrate on the reality of what is supplied.
With property development, however, a recent case shows that the intention is critical in deciding the VAT treatment of a project. The case involved a company of consulting engineers which constructed a mental home and applied for zero-rating under Sch 8 group 5 of the VAT Act. HM Revenue and Customs (HMRC) denied their subsequent claim for recovery of the relevant input VAT, claiming that the building was not to be used for the making of zero-rated supplies, but for the making of exempt supplies, being used as a prison or hospital.
Note 12(b) to Sch 8 group 5 of the VAT Act (which deals with zero-rating of supplies) reads, ‘Where all or part of a building is intended for use solely for a relevant residential purpose or a relevant charitable purpose….a grant or other supply relating to the building (or any part of it) shall not be taken as relating to a building intended for such use unless before it is made the person to whom it is made has given to the person making it a certificate in such form as may be specified in a notice published by the Commissioners stating that the grant or other supply (or a specified part of it) so relates’. The developer received the relevant certificate from its client, Pastoral Homes Ltd. Pastoral was an organization which provided care for female patients for whom ordinary psychiatric hospitals could do no more, and aimed to provide them with a home, if necessary, for life. During the course of construction, Pastoral Homes Ltd. was sold to another company which sought assurance that they were correct in recovering the input VAT charged.
An HMRC officer who visited the site concluded that it did not qualify for zero-rating on the grounds that it wassimilar to a hospital and a prison’.     Furthermore, HMRC argued that at the time the supply was made, its intended use was as a hospital or (rather desperately, it seems) a prison. Accordingly, the input VAT would not be recoverable.
The Tribunal did not support HMRC, which duly appealed to the High Court. The Court concluded that HMRC had used the wrong test in considering only the actual use to which the building was put: the intention was to construct a zero-rated building and that was the correct treatment. At the time the supplies were made, the intended use was for making zero-rated supplies. The actual use for exempt supplies came later.
When Delay Justifies Termination
Construction contracts typically contain restitution clauses which seek to make recompense for losses due to late completion of the works. However, construction contracts are also notorious for being subject to contractual variations as unanticipated problems arise during the course of construction.
When contracts are issued to do other works which are not part of the original contract, these are often not themselves subject to time limits and are said to be ‘at large’. In such cases the time limit for the completion of the contract becomes a ‘reasonable time’.
In a recent case, a subcontractor had failed to complete works in a reasonable time and the main contractor sought to terminate the contract. In the view of the Court of Appeal, this is permissible when:
·        reasonable notice has been given, making time of the essence for the contract, and the subcontractor fails to meet the deadline; or
·        in the absence of such a notice, the failure of the subcontractor to complete in time is serious enough to constitute a fundamental breach of the contract.
The argument turned on what was regarded as ‘a reasonable time’ for the work to be done. In the view of the Court of Appeal, what constitutes a reasonable time has to be looked at in context, taking all relevant circumstances into account.
In particular:
·        the original completion dates could not be completely ignored, even if the subcontractor had misunderstood the amount of work involved; and
·        where there were variations made to the contract after the original completion date had passed, this did not necessarily mean that the concept of a reasonable time had to be reassessed with reference only to the variations and the outstanding work that remained to be done at the date of the variation.
Says <<CONTACT DETAILS>>, “In practice, therefore, it would seem that when looking at minor variations to an original contract, where the contract is at large, the courts will consider all the relevant circumstances and if a contractor fails to make the subcontractor aware that the contract has to be completed promptly, a ‘reasonable time’ could be longer than thought. If possible, it makes sense for developers to incorporate new completion dates for all variations. If the variations are minor and the contract is still current, try to negotiate an agreement to the effect that the variation does not extend the original completion date.”

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