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Briefing note Author: Kimberley Eyssell Date: June 2010

Concurrent Delay

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INTRODUCTION Whilst this is a topic that appears to feature fairly frequently in construction disputes, there is actually very little case law and those cases which do exist, are to a certain extent inconsistent or specific to their particular facts.

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So what is concurrent delay? An easy enough question, but even the answer is not straightforward as within the industry there are different definitions. A very narrow definition was proposed by Judge Seymour in the case of Royal Brompton Hospital NHS Trust v Frederick A Hammond & Ors1 when he described concurrent delay as: Two or more delay events occurring within the same time period, each independently affecting the Completion Date.

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He went on to say: It is, I think necessary to be clear what one means by events operating concurrently. It does not mean, in my judgement, a situation in which, work already being delayed, let it be supposed, because the contractor has had difficulty in obtaining sufficient labour, an event occurs which is a Relevant Event and which, had the contractor not been delayed would have caused him to be delayed, but which in fact, by reason of the existing delay, made no difference. In such a situation although there is a Relevant Event, the completion of the Works is not likely to be delayed thereby beyond the Completion Date.

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The strictest definition of concurrent delay is when two events happen at the same time. In my experience, whilst concurrent delay is often raised as an issue during disputes, it is actually comparatively rare that that the factual circumstances satisfy this strict definition. Instead in practice concurrent delay is used to describe scenarios where the contractor2 is already in culpable delay and an employers risk event occurs and also scenarios where both parties have delayed the works and the contractor does not have an up to date plan and or sufficient records to be able to demonstrate that an extension of time should be awarded more a case of arguing its not my fault its yours than being able to demonstrate true concurrency.

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In my view there is very little authority on the topic because of the following reasons:

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Royal Brompton Hospital NHS Trust v Hammond & Others (No.7) [2000] 76 Con LR

In this paper I have referred to issues between an employer and a contractor, these issues could of course also be between a contractor and its subcontractors. 1

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www.charlesrussell.co.uk 1.5.1 Despite concurrent delay being raised by contractors relatively frequently, true concurrency is rare; 1.5.2 Where there is an example of true concurrency, as this area of law is so uncertain it is likely parties prefer to settle disputes through negotiation or adjudication (where decisions are not reported) which represents a quicker, cheaper and less forensic alternative to litigation and arbitration; 1.5.3 It must not be forgotten that a claim in respect of concurrent delay must satisfy the basic elements of a delay claim i.e. that the contractor must be able to prove that the event occurred, that the event was on the critical path and as a consequence the completion date is impacted. As stated above, often in practice contractors do not have sufficient records to be able to satisfy the burden of proof that is required and therefore would not be advised to pursue such a claim in litigation. 1.6 This paper focuses on the entitlement to additional time in circumstances of concurrent delay and does not address in any detail the issue of financial compensation as a consequence of the delay. 2 2.1 DELAY IN GENERAL To put the issue of concurrent delay in context it is useful to remind ourselves of how issues of delay and costs associated with delay are usually dealt with in construction contracts. 2.1.1 Delay caused by the contractor (a) The general rule is that, where provided for by the contract, the contractor will be liable to pay liquidated and ascertained damages (LADs) to the employer at a predetermined rate if he does not complete the works by a specified completion date3. (b) Agreeing the rate of damages in advance can be said to benefit both the employer and the contractor: the employer does not need to prove his actual losses, while the contractors potential liability for delay is limited to the agreed rate. 2.1.2 Delay caused by the employer (a) If by his acts or omissions the employer has prevented the contractor from completing the works by the completion date (e.g. by instructing the contractor to carry out additional works), the contractor will usually be awarded an extension of time in which to complete the works in accordance with express contractual provisions.

Percy Bilton Ltd v Greater London Council [1982] 1 WLR 794 2

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www.charlesrussell.co.uk (b) Providing for an extension of time in such circumstances allows the employer to avoid the effect of the "prevention principle". This principle, applicable in most common law jurisdictions, provides that no party may require the other to comply with a contractual obligation in circumstances where that party has itself prevented such compliance. Consequently, if the employer has himself delayed the contractor, then (in the absence of contractual extension of time provisions) the original completion date falls away and time is "put at large" i.e. the contractor need only complete the works within a reasonable time and the employer cannot claim LADs.4 (c) Where the employer has delayed the contractor, many contracts provide that the contractor also has an express entitlement to recover from the employer the loss and expense he has incurred as a direct result of the delay. 2.1.3 Delay caused by the neutral events (a) The contract should also specify how neutral delay events, such as unforeseen ground conditions, will be dealt with. In this sense the extension of time/loss and expense provisions also represents a system of risk allocation5. (b) As a contractors entitlement or otherwise to an extension of time/loss and expense does not necessarily reflect the employers culpability, it is therefore more useful to refer to contractor risk events and employer risk events (rather than delay caused by the employer/contractor). 3 3.1 METHODOLOGY In a very well regarded paper given to the Society of Construction Law6, John Marrin QC analysed the different approaches advanced in the construction industry to demonstrate an entitlement to an extension of time as a consequence of concurrent delay. He concluded that in the UK there are four main

methodologies. I have summarised these below and given an indication as to how the different methodologies have been received by the courts. 3.1.1 Apportionment (a) Where there are two competing causes of delay of equal or relative causative potency, one approach is to apportion the overrun and its financial consequences between the contractor and the employer. Whilst this may be a logical and sensible approach, this approach is not supported by English Law and the principle of causation which
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Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd [1970] BLR 111 Balfour Beatty Building Ltd v Chestermount Properties Ltd [1993] 62 BLR 1 John Marrin QC, Concurrent Delay, Society of Construction Law, February 2002 3

Charles Russell LLP is a limited liability partnership registered in England and Wales, registered number OC311850, and is regulated by the Solicitors Regulation Authority. Any reference to a partner in relation to Charles Russell LLP is to a member of Charles Russell LLP or an employee with equivalent standing and qualifications. A list of members and of non-members who are described as partners, is available for inspection at the registered office, 5 Fleet Place, London EC4M 7RD.

www.charlesrussell.co.uk generally reflects an all or nothing approach to liability. The apportionment

methodology is also not reflected in the way delay is provided for in the standard industry contracts such as the JCT. However in a recent Scottish Case, City Inn Ltd v Shepherd Construction Ltd7, this approach was favoured by the court. discussed in more detail below. 3.1.2 The but for test (a) An approach often advanced by contractors (as it favours the claimant) is the but for test. This is used in circumstances where additional work has been instructed, (for which the contractor would be entitled to a reasonable extension of time), but where the contractor has taken longer to complete the works. A contractor may seek to argue that but for the instructed variations he would not be in delay. However again, this This is

approach has not been well received by the courts and it is thought that the English Courts are unlikely to apply the but for test of causation to a contractual claim unless the wording of the contract clearly provides for this. 3.1.3 The dominant cause approach (a) This methodology is based on the concept that it is possible to analyse two causes of delay and assess which event is the dominant or predominant cause of the delay. However in the case of H Fairweather and Company Limited v London Borough of Wandsworth8 the Court held that this approach was inappropriate. 3.1.4 Strict contractual approach (referred to by John Marrin QC as the Malmaison9 Approach) (a) This methodology is based on the concept that if there are two delaying events and one is a relevant event under the contract i.e. has been identified as an employers risk event then the contractor will be entitled to an extension of time and the contractors risk event is disregarded. This case is dealt with in more detail below. 4 4.1 AUTHORITIES As is suggested above, there are very few authorities on the topic of concurrent delay and the cases that are decided are inconsistent or are specific to their particular facts. However the general theme is that the existence of a contractor risk event does not generally preclude an entitlement to an extension of time in respect of a subsequent delay.

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City Inn Ltd v Shepherd Construction Ltd [2007] CSOH 190 (1987) 39 Build.L.R 106, QBD (OR) Henry Boot Construction 9UK) ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 32, TCC 4

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www.charlesrussell.co.uk 4.2 Peak Construction v McKinney Foundations10 4.2.1 Peak Construction entered into a bespoke contract with Liverpool Corporation in 1964 for the construction of a multi-storey block of flats. McKinney Foundations was the nominated subcontractor for foundation piling. The facts of this case are quite unusual. It became apparent that a pile was gravely defective and it was agreed that work should be suspended while the problem was investigated. However due to the fault of the Council the investigation was

delayed and there was a similar delay in McKinney being instructed to commence remedial work. The remedial work took 6 weeks to complete but because of the Councils delay there was an overall delay of 58 weeks to the completion date. 4.2.2 In the Court of Appeal, Salmon LJ considered the provisions regarding liquidated damages and concluded: If the failure to complete on time is due to the fault of both the employer and the contractor, in my view the clause does not bite. I cannot see how, in the ordinary course, the employer can insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled 4.2.3 The rationale behind this decision is that it is not equitable for an Employer to retain the benefit of liquidated damages if by its own act it has caused the delay (referred to as the prevention principle). This case is the foundation for analysing extension of time claims. 4.3 Balfour Beatty Building v Chestermount Properties11 4.3.1 The application of the prevention principle was considered again in this 1993 case, which considered the interesting scenario of where an employers risk event occurs after the time that the works ought to have been completed. Ordinarily, where an employers risk event occurs the contractor would be entitled to an extension of time, but what happens when the contractor is already in culpable delay? 4.3.2 Balfour contracted with Chestermount for the construction of the shell and core of an office block under the JCT Standard Form 1980, Private Edition with Approximate Quantities. The works were not completed by the contractual completion date and the architect issued a certificate of non-completion, however the architect then instructed instructions for fit-out works as variations. 4.3.3 Balfour argued that the effect of the variation instruction was to discharge the terms of the contract with respect to LADs and put time at large or alternatively that it was entitled to an
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Peak Construction (Liverpool) Ltd v McKinney Foundations ltd 1 BLR 111, CA Balfour Beatty Building v Chestermount Properties 62 BLR 1, QBD 5

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www.charlesrussell.co.uk extension of time for the period required to carry out the instructions. Following the principle of Peak Construction, the Employer should not have been entitled to LADs, however the court felt that applying this principle would lead to highly extreme consequences i.e. that by instructing a variation the employer would in fact relinquish its right to claim LADs for the period of culpable delay. It was felt that this consequence could not reflect the common intention and would be improbable in the absence of some other express provision supporting it. 4.4 Henry Boot Construction v Malmaison Hotel12 4.4.1 Henry Boot contracted with Malmaison under a JCT Standard Form of Building Contract 1980 for the construction of a hotel in Piccadilly, Manchester. This case was actually concerned with an appeal of an arbitrators decision regarding the extent of his jurisdiction, however in his judgement Dyson J recorded without dissent certain matters which had been agreed by the parties: it is agreed 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 it 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. 4.4.2 This case suggests that a contractor will succeed on a claim for an extension of time if it can establish that one of the delaying events affords grounds under the contract for an extension of time regardless of the contractors risk event. This case has for obvious reasons been well received by contractors and does represent a fairly straightforward approach to dealing with the difficult issue of concurrent delay. 4.4.3 This decision was supported by HHJ Seymour in the case of The Royal Brompton Hospital NHS Trust v Hammond [200013] However, in this case whilst Judge Seymour endorsed this

approach he went on to say that it only applied in the relatively rare situation where two competing causes of delay occur simultaneously, rather than a situation where, for example, a shortage of labour occurs two days before the start of substantial period of inclement weather.
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Henry Boot Construction (UK) ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 32, TCC Royal Brompton Hospital NHS Trust v Hammond & Others (No.7) [2000] 76 Con LR 6

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www.charlesrussell.co.uk This distinction was criticised as arbitrary in City Inn Ltd v Shepherd Construction Ltd (a Scottish case which is discussed in greater detail below) as in either instance the two events operate concurrently to delay completion of the works: it should not matter which event occurs first in time. The Royal Brompton case does however go someway to eroding the clear approach established in the Henry Boot case. 4.5 City Inn Ltd v Shepherd Construction Ltd14 4.5.1 The parties had contracted on an amended JCT Standard Form of Building Contract (Private Edition with Quantities) (1980 edition) for the construction of a hotel in Bristol. The works were certified as practically complete nine weeks after the contractual completion date. The

employer claimed that it was entitled to nine weeks LADs at 30,000 per week whereas the contractor claimed that it was entitled to an extension of time up to the date of actual completion and to loss and expense at 11,519 per week. 4.5.2 In the absence of a critical path programme showing how the contractor had originally intended to complete the works, Lord Drummond Young was compelled to find that the delay to completion was the result of concurrent causes: eleven of the thirteen delay events were caused by the employer and the remaining two were caused by the contractor. None of the causes of delay could be regarded as a dominant cause; each of them had a significant effect on the failure to complete the works on time. However, Lord Drummond appeared to accept that, where one delay event is clearly dominant, the dominant cause test is appropriate (as stated above this approach was criticised in the Fairweather case). 4.5.3 On the basis of the specific wording of the relevant contractual provisions, Lord Drummond Young concluded that in JCT type contracts (in respect of both extension of time and loss and expense clauses), where there is true concurrency of effect between contractor risk events and employer risk events, it may be appropriate to make an apportionment i.e. to allocate the time and money effects of the delay based on the relative causative potency or significance of the competing causes of delay: What is required by clause 25 [extensions of time] is that the architect should exercise his judgment to determine the extent to which completion has been delayed by relevant events. The architect must make his judgment on a fair and reasonable basis. Where there is true concurrency between a relevant event and a contractor default, in the sense that both existed simultaneously, regardless of which started first, it may be appropriate to apportion delay between the two causes

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City Inn Ltd v Shepherd Construction Ltd [2007] CSOH 190 7

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www.charlesrussell.co.uk 4.5.4 Lord Drummond Young proceeded to set out the basis for apportionment. He considered that two main elements were important: (a) the degree of culpability involved in each of the causes of the delay (likely to be the less important element); and (b) the significance of each of the factors in causing the delay, based on: (i) (ii) 4.5.5 the length of the delay caused by each of the causative events; and the significance of each of the causative events for the works as a whole.

Lord Drummond Young concluded that a nine week extension of time was due and therefore no LADs were payable.

4.5.6

Lord Drummond Young agreed with the principle that loss and expense does not automatically follow a successful claim for an extension of time and that there is was no equivalent obligation in the JCT contract for the architect to make a loss and expense award on a fair and reasonable basis. Nevertheless (and for reasons that are not entirely clear from the

judgment), he found that where such costs are to be awarded then it was also appropriate to adopt an apportionment approach. Consequently he also awarded loss and expense for the same nine week period. 5 5.1 OTHER AUTHORITIES The Society of Construction Law Delay and Disruption Protocol provides: Where Contractor Delay to Completion occurs or has effect concurrently with Employers Delay to Completion, the Contractors concurrent delay should not reduce any EOT due. 5.2 The Protocol was published in October 2002 following the Henry Boot/Malmaison case and reflects the rationale of that decision. 6 6.1 CONCLUSION The topic of concurrent delay is a difficult one. The industry uses different methodologies and approaches to justify an entitlement to extensions of time. The courts have considered these methodologies and some have found favour with some judges but not with others. A significant issue is the fact that the judgements are all first instance decisions and therefore there is no clear precedent to follow. 6.2 However following the Henry Boot Construction v Malmaison Hotel case in 1999, it appeared to be accepted that where it could be established that an employers risk event had occurred, the contractor would be entitled to an extension of time and the contractors risk event could be disregarded.
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www.charlesrussell.co.uk 6.3 The position is less clear after the City Inn Ltd v Shepherd Construction Ltd case in 2007 which appears to support both the apportionment approach and also the dominant cause approach. However the City Inn

case is a Scottish case and as such the decision is said to be persuasive but not binding on the English Courts. There has also been some academic and professional criticism of this case and it has been suggested that whilst Lord Drummond Young carried out a detailed review of previous authorities he erred in his application of some these authorities. It is not clear therefore to what extent this decision will be relied upon. 6.4 Whilst predicting how the courts will deal with this issue is like trying to guess who will win the World Cup, in my view the principles in the Henry Boot Construction v Malmaison Hotel will remain good law and in any event will continue to be relied upon by contractors.
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Charles Russell LLP is a limited liability partnership registered in England and Wales, registered number OC311850, and is regulated by the Solicitors Regulation Authority. Any reference to a partner in relation to Charles Russell LLP is to a member of Charles Russell LLP or an employee with equivalent standing and qualifications. A list of members and of non-members who are described as partners, is available for inspection at the registered office, 5 Fleet Place, London EC4M 7RD.