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Concurrent delays and time bars on extension claims

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 Citys 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 contractors 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 Js 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 contractors 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 hadnt 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 Citys experts delay analysis evidence of doubtful value because of errors in his computer program. The Judge preferred the more traditional methodology adopted by Shepherds 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.

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