Concurrent delays and time bars on extension claims
City Inn Limited V Shepherd Construction Limited
25 January 2008
Final judgment in this long running dispute between City Inn
Limited ("City") and Shepherd Construction Limited ("Shepherd") was
handed down at the end of last year by the Outer House, of the
Scottish Court of Session, similar to the English High Court. While
Scottish cases are not binding on English Courts they are referred
to for guidance.
Given the issues in dispute, the state of English law in respect
of these issues and what the Judge, Lord Drummond Young, said in
his Judgment, the English Courts may well consider this judgment
when faced with disputes involving concurrent delays, time bar
clauses to extension of time applications, prolongation costs and
(perhaps less so) regarding methods of delay analysis.
The dispute concerned a hotel project in Bristol. City engaged
Shepherd under a JCT Standard Form of Building Contract (Private
Edition with Quantities) (1980 Edition) with bespoke
amendments.
The dispute centred on whether or not Shepherd were entitled to
an 11 week extension of time, and their entitlement to prolongation
costs or City's right to liquidated damages.
Concurrent delay
The delay was found by the Judge to have been caused by 11
Relevant Events and two causes for which Shepherd were responsible
The judgment considered what happened when such a delay occurred
and how clause 25 of the JCT contract operated.
The Judge referred approvingly to Dyson J.'s judgment in
Henry Boot Construction UK v Malmaison Hotel (Manchester)
Limited. If there are two concurrent causes of delay one a
Relevant Event and the other the contractor's responsibility then,
in line with authority, the architect may award an extension of
time for the period of delay caused by the Relevant Event if he
considers it fair and reasonable to do so.
The Judge stated that two important points emerged from Dyson
J's remarks. One was that a Relevant Event may be taken into
account even if it occurs concurrently with another matter which is
not a Relevant Event. This reflected the underlying intention of
clause 25 of the JCT form which was to achieve fairness between the
parties, and to achieve this the contract afforded the architect a
reasonably wide discretion.
The second important point was that the architect had to satisfy
himself that that the occurrences in question actually caused delay
to completion.
The Judge considered an aspect of the judgment of Judge Richard
Seymour QC in Royal Brompton Hospital NHS Trust v Hammond (No
7). Judge Seymour considered what constituted a concurrent
delay. He stated the need for the events in question to start and
occur simultaneously. Our Judge found this distinction arbitrary,
what mattered was whether the events in question operated
concurrently. Also, if one cause was dominant then there would not
be a concurrent delay. Each case would depend upon the facts. In
this case none of the 13 causes of delay was dominant. It was a
truly concurrent delay.
Determining the extension – the apportionment
method
Therefore, the architect was to determine the extent to which a
Relevant Event had delayed completion on a fair and reasonable
basis. He needed to apportion the effects of the concurrent delay
events. This determination was to be made along lines broadly
similar to apportionment of liability in contributory negligence
cases. The Judge stated two main elements were important. One was
the degree of culpability involved. The other more important
element, was the significance of each of the factors in causing the
delay.
To establish the causative significance of each factor the Judge
stated that another two matters appeared to him to be important.
One was the length of delay caused by each factor. The second was
the significance of each causative factor for the works as a whole
– did it affect all of the works or just, say, a small part of the
works?
The emphasis was to arrive at a fair and reasonable result, it
was a matter of judgment. Establishing the appropriate extension or
otherwise was not susceptible to determination by applying cold,
empirical logic. The contractor was awarded nine weeks out of the
11 sought.
Prolongation costs
The Judge agreed with the principle that prolongation costs do
not automatically follow success in a claim for an extension of
time as a result of concurrent delay. He found that where, as here,
such costs are to be awarded then it was appropriate to adopt the
reasoning applicable to an extension of time. He cited the
"Doyle" case as perhaps of relevance to such an
apportionment approach. The contractor was entitled to nine weeks
prolongation costs.
The time bar clause
Bespoke contract clause 13.8 appeared to impose a procedural
condition precedent to the entitlement to an extension of time.
Shepherd had not complied with this. It stated that if the
contractor was issued with an instruction which in his opinion
"will require an adjustment to the Contract Sum and/or delay
the Completion Date" then he was required to inform the
architect within ten working days of receipt of the instruction and
to provide estimates of the additional cost and delay. The clause
allowed the architect to dispense with this requirement, but stated
that if he had not dispensed with it and if the contractor did not
comply with the clause he would not be entitled to an extension of
time under clause 25.3.
The Judge found the clause harsh so he construed it narrowly. He
found that it did not apply to instructions where a delay would be
caused by the lateness of their issue, lateness being by reference
to the contractor's programme, because the lateness caused delay,
not the instruction. The clause only applied to instructions where
delay would be caused by their content. There was only one such
instruction.
In respect of this instruction, the employer (through his
architect) had waived the clause. The employer had to invoke the
clause if he wished to rely on it and claim immunity from the
entitlement to an extension. Failure to invoke clause 13.8 was
significant given its contractual importance. Despite the claim for
an extension having been discussed at length in a meeting, clause
13.8 hadn't been mentioned. The Judge found this to mean the
employer had decided not to invoke the clause.
It was also necessary for the contractor to rely on the waiver.
Here there was such reliance, Shepherd had pursued its extension
claim under clause 25 without reference to clause 13.8.
Delay analysis
The Judge found City's expert's delay analysis evidence of
doubtful value because of errors in his computer program. The Judge
preferred the more traditional methodology adopted by Shepherd's
expert, not involving the assistance of computer software, and he
described this evidence as being based "on the factual
evidence" and "on sound practical experience and on common
sense." This echoes English judicial comment on the perils of
relying on computer delay analysis programs which may be unreliable
depending on what data is or is not inputted.
For more information or advice, please contact Shaun
Tame or Kate Parkes.