Are you a blue or a red? - Dealing with concurrent delay

There are very few UK construction projects that start and finish on time. The majority are complex and have to rely on a successful interaction of a significant number of factors if completion is to be achieved by an agreed date. Many simply do not.
 
 
There are very few UK construction projects that start and finish on time. The majority are complex and have to rely on a successful interaction of a significant number of factors if completion is to be achieved by an agreed date. Many simply do not.

 
We are all familiar with the concept of a Contractor applying for an extension of time in order to avoid paying liquidated damages to an Employer. If the Contractor is responsible for the delay it receives no extension of time. If the delay is adjudged to have been due to one or more events for which the Employer accepts responsibility (“relevant events”), the Contractor is granted an extension of time and the contract completion date is adjusted accordingly.
 
But what happens if there is more than one cause of delay and, even more troubling, what happens if the Contractor is himself in delay at the same time? How do you go about sorting out the ensuing mess and just what is the Contractor entitled to by way of extensions of time?
 
The subject of concurrent delay as a concept is pretty much guaranteed to get people excited and falling into two distinctly opposing camps.
 
In the blue corner are those that believe that if there are two truly concurrent delaying events, one which is a Contractor default and the other a Relevant Event, the Contractor should not be entitled to an extension of time.
 
In the red corner are those that argue that in these circumstances the Contractor is fully entitled to an extension of time and relief from having to pay liquidated damages to the Employer.
 
So which team wins the day?
 
We are all grateful to Shepherd Construction and City Inn for spending the last ten years, in time and the monetary equivalent of the GDP of a small nation, seeking answers to this question and related matters in the Scottish courts.

The background to this expensive saga relates to the construction of a hotel in Bristol under an amended JCT 80 Form. The contract date of possession was 26 January 1998; practical completion was certified as being achieved on 29 March 1999 and the extended Completion Date as 22 February 1999. Thus, as a result, Shepherd was awarded a 4 week extension of time and the Employer, City Inn, was entitled to deduct liquidated damages for a 5 week period from 23 February 1999 at a weekly rate of 30,000, entitling City Inn to deduct liquidated damages of £150,000.

Following an adjudication and several appearances in the courts, the matter finally reached the Inner House of the Court of Session in July of 2010.
 
On the 22 July 2010 the Inner House finally brought this long-running saga to an end and in so doing set down a number of key principles that, whilst only binding on Scottish cases involving JCT 80, will nevertheless be extremely persuasive on cases argued in the English courts relating to the issue of concurrent delay, regardless of the form of contract. These principles are:
 
  1. For an extension of time to succeed, it must be shown that the relevant event is likely to delay or has delayed the works.
  2. As to whether the relevant event actually causes delay is “an issue of fact which is to be resolved, not by the application of philosophical principles of causation, but rather by the application of principles of common sense”.
  3. The decision maker can decide the question of causation (whether the event has caused delay to completion or not) by the use of whatever evidence he considers appropriate. If demonstrated to be sound, this may take the form of a critical path analysis, but the absence of such an analysis does not mean the claim will necessarily fail.
  4. If a dominant cause can be identified in respect of the delay, effect will be given to that by leaving out of account any cause or causes that are not material. If the dominant cause is not a relevant event, the claim will fail.
  5. Where there are two causes operating to cause delay, neither of which is dominant, and only one of which is a relevant event, a contractor’s claim for an extension of time will not necessarily fail. Rather, it is for the decision maker “approaching the issue in a fair and reasonable way, to apportion the delay in completion of the works… as between the relevant event and the other event.”
 
So whether the blue or the red team will win the day will depend on how the match is played and the mood of the referee. Are you changing the colour of your shirt?

Peter Vinden is Managing Director of Vinden, Adjudicator, Arbitrator, Expert and Mediator. He can be contacted by email at pvinden@vinden.co.uk. For similar articles on dispute resolution generally, visit www.vinden.co.uk