Knowledge Bank ~ Concurrent Delay – Logic not Voodoo
My instinct tells me it is time we revisited the black art of concurrent delay. Whilst I believe common sense can prevail in understanding the concept – it is easy to appreciate why the various rulings send many into a glazed state.
2016 saw a high profile new ruling in the case of Saga Cruises v Fincantieri. Plus the Society of Construction Law (SCL) recently issued their revised delay and disruption protocol. So, no time like the present to review the mysterious issue of concurrent delay, and demystify how to make use of it in practice!
Cutting to the Core Facts
There have been a substantial number of rulings over the years, and whilst one would think this would provide clarity, each has delivered a slightly new interpretation. All that said and done, I strongly believe the most definitive way to get the right verdict is for common sense to prevail – usually there is a sound basis in each verdict, and frequently the outcome is driven by the lack of proven facts or evidence to hand. Basically, by ensuring you can present compelling, proven facts, there is strength in your position.
Let us briefly go back to basics, to clarify what a concurrent delay really is – both in text book terms, but also in how case law has shaped it.
The Acid Test
The recognised definition of a concurrent delay is that made clearly and succinctly by Mr. Marin QC, when in 2002 he defined it as:
“…a period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency.”
At a talk to the SCL in 2012, Marin argued that any theory of concurrent delay, should address three key problems:
- It should not offend what is known as the ‘prevention principle’; this being that an employer cannot deduct liquidated damages if it has itself been the cause of the delay.
- It must not allow a situation where, for the same period of delay, the employer can deduct liquidated damages and the contractor can get an extension of time, as this would make no sense.
- It should try to satisfy a test for causation known as the “but for” test.
Noteworthy Cases – Rightly or Wrongly
The benchmark case that satisfies these is that of Henry Boot Construction (UK) Ltd v Malmaison Hotel (1999); known as the Malmaison approach. This is where the Contractor received alleviation from liquidated damages but was unable to receive compensation in terms of prolongation from the Employer. This became the standard approach until 2010.
Since then there have been updated interpretations. There was a lot of industry noise about the ‘apportionment approach’ arising from City Inn Ltd v Shepherd Construction Ltd (2010), where commentators suggested a new approach needed to be considered.
I would venture that it is nothing of the sort, being little better than a straw man. In reality, this was a narrow judgement based on the particular wording of the JCT and the circumstances of the case, and rightly only currently holds force in the Scottish courts. Its questionable value was reaffirmed by the judgement in Walter Lilly v Mackay (2012) which reverted to the classic Malmaison approach. The right decision given the criticism the City Inn verdict received for offending the first of Mr. Marin’s three problems.
Sandwiched between Malmaison and Walter Lily we have two other useful references, DeBeers UK Ltd v Atos Origin IT Services UK Ltd (2010) which emphasises the fact that the contractor is entitled to a reasonable amount of time to complete the work. Specifically, the court said:
“… where delay is caused by the employer, not only must the contractor complete within a reasonable time, but also the contractor must have a reasonable time within which to complete. It therefore does not matter if the contractor would have been unable to complete by the contractual completion date if there had been no breaches of contract by the employer, because he is entitled to have the time within which to complete which the contract allows or which the employer’s conduct has made reasonably necessary.” [sic]
Adyard Abu Dhabi v SD Marine (2011) which again disavowed City Inn, and emphasised the importance of there being causation, i.e. it is essential to demonstrate that a particular event actually caused a delay to the works at the time it occurred. This latter point being of practical relevance when setting up your project administration.
Conclusions from case law:
The net approach has overwhelming grounds for its application.
- Apportionment of time is not an appropriate approach to take.
- The Contractor is entitled to reasonable time to complete the works.
- Causation must be proved, which is best achieved through an accurate programme.
The latest ruling – has this changed key thinking?
I believe the latest ruling supports the points noted above, providing more clarity rather than debunking previous thinking.
The case of Saga Cruises BDF Ltd v Fincantieri SpA (2016) involved dry docking work which was first delayed by strikes, for which both parties agreed a postponement of the completion date. After this relevant event, there were further delays which pushed back completion. The contractor unsuccessfully argued these were concurrent delays.
The Adyard ruling helps guide the way; with the fact that causation must be proved. The ruling also revisited several previous cases and rather neatly summed up with the following conclusion:
“A careful consideration of the authorities indicates that unless there is a concurrency actually affecting the completion date as then scheduled, the contractor cannot claim the benefit of it. Causation in fact must be proved based on the situation at the time as regards delay. The yard’s approach is over broad. The submissions of Owners are to be preferred.”
What does this mean in practice
These need looking at from two perspectives – one of prevention in the first place, the other of making sure you have the facts to know where you stand if prevention was not possible.
- Make sure the terms of ‘concurrent delay’ are specifically defined in the contract.
- Set up a robust project schedule and effective mechanism to make sure it remains up to date.
- Actively manage relations between your contract admin staff and on-site project management.
- Ensure robust, contemporaneous record keeping procedures are in place.
- Act quickly to make sure any applications for time extensions are within contract timelines.
- Get an accurate delay analysis of your position in the dispute not just a legal opinion.
- Quickly gather and protect accurate, compelling records to support your position.
Key Facts & Timelines on Concurrent Delay Judgements
To give you some reference points on the historical judgements, these are the key cases that have shaped the thinking on the issue:
|Balfour Beatty v Chestermount Properties(1993)||‘Net’ approach to time extension upheld rather than gross entitlement.|
|Henry Boot v Malmaison (1999)
– since regarded as the authoritative ruling
|Contractor receives full extension of time entitlement (worth noting however probably NOT time-related costs).|
|City Inn Ltd v Shepherd Construction (2010)||Unhinged previous Malmaison thinking and interpretations.
Apportionment of time extension granted.
Ruling stated Critical Path Analysis was not essential – but would have been helpful.
|DeBeers UK Ltd v Atos Origin IT Services UK Ltd (2010)||Full time extension granted.|
|Adyard Abu Dhabi v SD Marine (2011)||Proof of causation needed to prove the actual delay – as none available the claim failed.
Note that Critical Path Analysis would have provided this proof.
|Walter Lilly v Mackay (2012)||Full entitlement to time extension awarded.
The ruling left open the situation with regards claiming costs, however emphasis was placed on the burden of proof that a ‘relevant event’ caused the delay which led to the loss and expense.
|Saga Cruises BDF Ltd v Fincantieri SpA (2016)||Defence failed due to lack of proof linking the delay to the relevant event.
Again, Critial Path Analysis would have supported this. Questionable if a full delay analysis was completed to accurately verify Fincantieri’s defence claim and appeals.
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