The Perennial Question of Concurrent Delay – The English Viewpoint
By Mike R. Stewart and Mary E. Lindsay, K&L Gates, London
Concurrent delay remains a perennial issue in construction contracts and the disputes arising out of those contracts. The classic situation of “concurrent delay” occurs when both a contractor and the employer allege that the other is causing delay, where the delay caused by each impacts the project at the same time.The key authorities on the topic remain the same, in our view (all emphasis added).
In Percy Bilton v Greater London Council[1] it was held that, unless the building contract provides otherwise, the general rule is that the contractor must complete by the contractual date of completion, failing which he will be liable for liquidated damages to the employer. However, if the employer’s acts or omissions prevented the contractor from completing the work by the completion date, the employer will not be entitled to liquidated damages.
Similarly, Peak Construction (Liverpool) v McKinney Foundations Ltd[2] underlined that a contractual provision for liquidated damages, usually coupled with an extension of time clause, is intended to protect the employer from the contractor’s delay in completion the works. However, where the failure to complete on time is due to the fault of both the employer and the contractor, then the employer will not be allowed to rely on such clauses and obtain liquidated damages where it the delay is at least partly his own fault.
The TCC in Henry Boot Construction v Malmaison Hotel[3] clarified that,
“…if there are two concurrent causes of delay, one of which is a relevant event, and the other is not, then the contractor is entitled to an extension of time for the period of delay caused by the relevant event notwithstanding the concurrent effect of the other event. Thus, to take a simple example, if no work is possible on a site for a week not only because of exceptionally inclement weather (a relevant event), but also because the contractor has a shortage of labour (not a relevant event), and if the failure to work during that week is likely to delay the works beyond the completion date by one week, then if he considers it fair and reasonable to do so, the architect is required to grant an extension of time of one week. He cannot refuse to do so on the grounds that the delay would have occurred in any event by reason of the shortage of labour.”
However, the position, although unchanged, was somewhat muddied by the Scottish Appeal Court’s decision in City Inn Limited v Shepherd Construction Limited[4]. The dispute in this case arose in respect of an amended JCT 1980 contract and considered the approach to concurrency. On appeal, the judges agreed that, where there is both a “Relevant Event” (employer delay) and a contractor’s delaying event, then, if neither is a dominant cause of delay, the delay should be apportioned between the parties. That is contrary to the current position in English law, as described above.
The key cases have been discussed and the English law position confirmed more recently in Adyard Abu Dhabi v SD Marine Services[5] and in Walter Lilly v Mackay[6]. It is worth mentioning that in both cases, the decision in City Inn Limited v Shepherd Construction Limited was distinguished from the English approach, “that the Contractor is entitled to a full extension of time for the delay caused by the two or more events (provided that one of them is a Relevant Event)”, and the Scottish approach, “that the Contractor only gets a reasonably apportioned part of the concurrently caused delay”[7].
In Adyard Abu Dhabi v SD Marine Services 2011, the Honourable Mr Justice Hamblen addressed the prevention principle before considering the cause of delay. He did so with reference to the judgment of Judge Jackson in Multiplex v Honeywell[8]:
The authorities on the prevention principle show that:
(1) In a basic shipbuilding contract, which simply provides for a Builder to complete the construction of a vessel and to reach certain milestones within specific periods of time, the Builder is entitled to the whole of that period of time to complete the contract work.
(2) In the event that the Buyer interferes with the work so as to delay its completion in accordance with the agreed timetable, this amounts to an act of prevention and the Builder is no longer bound by the strict requirements of the contract as to time.
(3) The instruction of variations to the work can amount to an act of prevention.
Of course, this position is subject to the inclusion of an extension of time mechanism in the contract. The judge found that Adyard could not rely on the prevention principle. It then went on to consider the cause of delay in light of Adyard’s claim for an extension of time. Adyard’s claim was that it only need establish a theoretical delay in relation to one event in order to establish its entitlement to an extension of time. Adyard’s approach was that (at 260):
One looks only at the event/act in question and how it relates to the contractual completion date
The court considered Adyard’s approach to be wrong in that it meant there was no need to establish causation, and wrong in that it was contrary to the authorities (see above).
The judge referred to the authorities: Henry Boot v Malmaison and Royal Brompton v Hammond. It was then that Adyard relied on the dissenting opinion in City Inn v Shepherd, that being there were two delays, only the Relevant Event should be looked at and the contractor’s delay would be irrelevant (at 284). The judge, dismissing this approach, held (at 292):
I hold that in relation to both its extension of time claim and its claim in reliance on the prevention principle it has to establish causation in fact, which means showing that the variations were likely to or (as the case may be) did cause actual delay to the progress of the works
In Walter Lilly v Mackay 2012, Mr Justice Akenhead considered the claim for an extension of time and the authorities, and referred to the requirement to establish the actual cause of delay rather than any theoretical causes (at 365):
In the context of this contractual based approach to extension, one cannot therefore do a purely retrospective exercise. What one can not do is to identify the last of a number of events which delayed completion and then say it was that last event at the end which caused the overall delay to the Works. One needs to consider what critically delayed the Works as they went along.
He firstly examined the position in English law with reference to Henry Boot v Malmaison, De Beers v Atos Origin and Adyard Abu Dhabi v SD Marine (at 367–369) (see above). The judge concluded (at 370):
In any event, I am clearly of the view that, where there is an extension of time clause such as that agreed upon in this case and where delay is caused by two or more effective causes, one of which entitles the Contractor to an extension of time as being a Relevant Event, the Contractor is entitled to a full extension of time. Part of the logic of this is that many of the Relevant Events would otherwise amount to acts of prevention and that it would be wrong in principle to construe Clause 25 on the basis that the Contractor should be denied a full extension of time in those circumstances. More importantly however, there is a straight contractual interpretation of Clause 25 which points very strongly in favour of the view that, provided that the Relevant Events can be shown to have delayed the Works, the Contractor is entitled to an extension of time for the whole period of delay caused by the Relevant Events in question. There is nothing in the wording of Clause 25 which expressly suggests that there is any sort of proviso to the effect that an extension should be reduced if the causation criterion is established. The fact that the Architect has to award a “fair and reasonable” extension does not imply that there should be some apportionment in the case of concurrent delays. The test is primarily a causation one.
SCL PROTOCOL
Helpful guidance as to how concurrent delay should be treated when determining extensions of time is contained within the Society of Construction Law’s (“SCL”) Delay and Disruption Protocol (“the Protocol”). As would be expected, the Protocol reflects the authorities referred to above.
The main principles which emerge from the Protocol are as follows:[9]
(i) where true concurrent delay events occur, the contractor should nevertheless be entitled
to an extension of time for the “Employer Delay to Completion”; and
(ii) where “Employer Risk Events” and “Contractor Risk Events” occur sequentially but have concurrent effects, again, any “Contractor Delay” should not reduce the extension of time to which the contractor is entitled as a result of the “Employer Delay”.
CONCLUSIONS
The correct way to deal with concurrent delays in extension of time claims under English law is set out within Henry Boot Construction v Malmaison¸ pursuant to which:
“If there are two concurrent causes of delay, one of which is a relevant event, and the other is not, then the contractor is entitled to an extension of time for the period of delay caused by the relevant event notwithstanding the concurrent effect of the other event”.
This approach is based on the prevention principle enunciated in Percy Bilton v Greater London Council and Peak Construction v McKinney Foundations and is consistent with the guidance contained within the Protocol.
The position under English law is that if a contractor is entitled to an extension to the time for completion, he should receive it. Any other approach would place the employer in breach of contract.
[1982] 1 WLR 794, HL.
[2] (1970) 1 BLR 111, CA.
[3] (1999) 70 Con LR 32, TCC.
[4] [2010] CSIH 68
[5] [2011] EWHC 848 (Comm)
[6] [2012] EWHC 1773 (TCC)
[7] [2012] EWHC 1773 (TCC) at 366
[8] [2007] Bus LR Digest D109
[9] The Protocol, paras 1.4.5 and 1.4.7.