UK: Responsibility For Concurrent Delay

Last Updated: 14 December 2017
Article by Jeremy Glover

Claims revolving around concurrent delay are a frequently encountered problem in construction contracts. As Jeremy Glover explains, the problem of concurrency typically arises when the Contractor is in delay, but the Employer also appears to be delaying the Contract. The question then arises as to whether the Contractor is entitled to receive an extension of time in any event? There are many different answers depending on what the Contract says and which law applies.

What is concurrent delay?

The definition of concurrency that tends to find most favour is the one put forward by John Marrin QC:

"A period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency."1

The position in England and Wales

In England and Wales, Mr Justice Akenhead, in the case of Walter Lily v MacKay & Others,2 gave a clear answer to this question outlined at the start of this article:

"In any event, I am clearly of the view that, where there is an extension of time clause such as that agreed upon in this case and where delay is caused by two or more effective causes, one of which entitles the Contractor to an extension of time as being a Relevant Event, the Contractor is entitled to a full extension of time. Part of the logic of this is that many of the Relevant Events would otherwise amount to acts of prevention and that it would be wrong in principle to construe cl. 25 on the basis that the Contractor should be denied a full extension of time in those circumstances. More importantly however, there is a straight contractual interpretation of cl. 25 which points very strongly in favour of the view that, provided that the Relevant Events can be shown to have delayed the Works, the Contractor is entitled to an extension of time for the whole period of delay caused by the Relevant Events in question."

As far as Mr Justice Akenhead was concerned, there was nothing in the wording of the contract which expressly suggested that there was any sort of proviso to the effect that an extension should be reduced if the causation criterion was established. The fact that the Architect had to award a 'fair and reasonable' extension did not imply that there should be some apportionment in the case of concurrent delays. The key test was primarily a causation one.

One further justification for the English approach is that as the contract in question in the MacKay case expressly provided for an extension of time for certain relevant events, it must have been contemplated that there could be more than one effective cause of delay and also expressly agreed that a contractor is entitled to an extension of time for an effective cause of delay.

The position in Scotland

One reason for Mr Justice Akenhead's comments was to make clear that he did not accept the position which had been adopted by the Scottish courts where the preferred approach is known as the "apportionment" approach. This followed the case of City Inn Ltd v Shepherd Construction Ltd. At first instance, Lord Drummond Young said that:3

"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 responsibility for the delay between the two causes; obviously, however, the basis for such apportionment must be fair and reasonable."

In other words, this would require consideration of the period of delay and the causative significance of each event on the works as a whole. On appeal4, Lord Osbourne took a slightly different approach concluding that if a dominant cause can be identified as the cause of a particular delay in completion of the works, effect will be given to that by leaving out of account any causes which are not material. However, where a situation exists in which two causes are operative, one being a relevant event and the other some event for which the Contractor is to be taken to be responsible, and neither of which could be described as the dominant cause, the claim for extension of time will not necessarily fail. In such a situation, it will be open to the decision-maker, approaching the issue in a fair and reasonable way, to apportion the delay in the completion of the works occasioned thereby as between the relevant event and the other event.

As will be clear, Mr Justice Akenhead did not agree, noting in the Mackay case that:

"It therefore follows that, although of persuasive weight, the City Inn case is inapplicable within this jurisdiction."

Concurrency under the civil law codes

Civil law codes tend not to make express provision for concepts such as concurrency. In the absence of any specific requirement set out in the contract, it is quite possible, bearing in mind the general requirements of good faith and fairness, that the civil law approach might tend to favour apportionment. To take the UAE civil code:

  • As a starting point, Article 246(1) requires that a contract must be performed in accordance with its contents, and in a manner consistent with the requirements of good faith.
  • Article 290 states that: "it shall be permissible for the judge to reduce the level by which an act has to be made good or to order that it need not be made good if the person suffering harm participated by his own act in bringing about or aggravating the damage."

The UAE Civil Code therefore does seem to recognise the concept of apportionment and taken together these three provisions do seem to suggest that a Tribunal under UAE law might be able to adopt an apportionment approach when there is concurrent Employer and Contractor delay.

FIDIC and concurrent delay

In the 1999 FIDIC form there is no mention of concurrent delay. However, as we have noted elsewhere in this year's Review,5 the 2016 pre-release version of the FIDIC Yellow Book included at sub-clause 8.5 the following new provision:

"If a delay caused by a matter which is the Employer's responsibility is concurrent with a delay caused by a matter which is the Contractor's responsibility, the Contractor's entitlement to EOT shall be assessed in accordance with the rules and procedures stated in the Particular Conditions (if not stated, as appropriate taking due regard of all relevant circumstances)."

We noted there that this rather neutral comment will of course have the effect of raising the issue of concurrency as a matter that needs to be dealt with by the parties when they negotiate and finalise the contract. That is, of course, if they had not already planned to do so. It is often the course that contracts are already amended to suggest that it is the Contractor who bears the risk of delays when there is a concurrent delay by the Employer. A dispute about one such clause was heard in the early autumn of 2017 in the TCC in England.

A recent English decision: North Midland Building Ltd v Cyden Homes Ltd6

The Claimant Contractor and the Defendant, the Employer, had agreed certain bespoke amendments to the JCT Design and Build Contract 2005, one of which concerned the way in which extensions of time would be dealt with in certain circumstances. Clause 2.25.1.3(b) as amended read as follows:

"2.25.

1. any of the events which are stated to be a cause of delay is a Relevant Event; and

2. completion of the Works or of any Section has been or is likely to be delayed thereby beyond the relevant Completion Date,

3. and provided that

(a) the Contractor has made reasonable and proper efforts to mitigate such delay; and

(b) any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor is responsible shall not be taken into account

then, save where these Conditions expressly provide otherwise, the Employer shall give an extension of time by fixing such later date as the Completion Date for the Works or Section as he then estimates to be fair and reasonable."

Sub-clause (3) was the part added by the parties to the standard clause. The clause as amended added into the extension of time machinery the proviso that, in assessing an extension of time, "any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor is responsible shall not be taken into account".

The works were delayed and North Midland applied for an extension of time for a variety of reasons. As part of their reply, Cyden maintained that if there were two delaying events occurring at the same time and causing concurrent delay to completion of the works, with one event which otherwise entitled the Claimant to an extension of time, and the other being "another delay for which the Contractor is responsible", then the Contractor would not be entitled to an extension of time in respect of those two delaying events. North Midland disagreed.

North Midland placed reliance upon the doctrine of prevention. Mr Justice Fraser explained that:

"Essentially the prevention principle is something that arises where something occurs, for which it is said the employer is responsible, that prevents the contractor from complying with his obligations, usually the obligation to complete the works by the completion date."

The Judge further noted that in Multiplex Construction (UK) Ltd v Honeywell Control Systems Ltd7, Mr Justice Jackson (as he then was) had considered the relationship between the prevention principle and time at large, setting out that:

(i) Actions by the Employer which are perfectly legitimate under a construction contract may still be characterised as prevention, if those actions cause delay beyond the contractual completion date.

(ii) Acts of prevention by an Employer do not set time at large, if the contract provides for extension of time in respect of those events.

(iii) Insofar as the extension of time clause is ambiguous, it should be construed in favour of the Contractor.

North Midland said that as a consequence of the first two propositions time was at large. Mr Justice Fraser explained that:

"the concept of 'time at large' does not mean that the contractor has an indefinite time to complete the works. If the completion date in the contract, and the mechanism for having that extended by means of awarding so many weeks to an originally agreed completion date, are inoperable or for some other reason no longer applicable, in general terms the contractor's obligation becomes one to complete the works within a reasonable time. That is what the shorthand expression 'time at large' is usually understood to mean."

North Midland said that dealing with concurrent delay in the way that the Employer had dealt with it in response to the application for an extension of time was unfair and not in accordance with the terms of the contract. An extension of time ought to be granted without taking account of concurrent delays for which the Claimant is responsible, and disallowing those latter periods. However, the Judge made it clear that he did not consider that the prevention principle arose at all.

Indeed, there was a "final nail in the coffin". Clause 2.26.5 defined Relevant Events as the following:

"any impediment, prevention or default, whether by act or omission....."

This sub-clause therefore specifically classified acts of prevention as Relevant Events. This clause also had words added to it by specific amendment by the parties. In those circumstances, the answer to the question as to how extensions of time were agreed to be dealt with in terms of acts of prevention was clear. Such acts of prevention were, as Relevant Events. Time could not be said to be at large.

In fact, Mr Justice Fraser was "crystal clear" that the parties had agreed that if the Contractor was responsible for a delaying event which caused delay at the same time as, or during, that caused by a Relevant Event, then the delay caused by the Relevant Event "shall not be taken into account" when assessing the extension of time. That did not raise any issues of construction whatsoever. The parties were free to agree whatever they liked in terms of how the risk of concurrent delay should be allocated.

The Judge further confirmed that there was no rule of law that prevented the parties from agreeing that concurrent delay be dealt with in any particular way.

The agreement between the parties was a clear agreement dealing with the proper approach to consideration of the appropriate extension of time in situations of concurrent delay, when one cause would otherwise entitle the Contractor to such an extension (absent the concurrent event) but the other cause would not. As agreed here, in that situation, North Midland was not entitled to an extension of time in that situation.

At the end of his judgment, Mr Justice Fraser referred to a discussion about whether, where concurrent delay exists, the prevention principle is engaged at all, referring for example to the words of Mr Justice Coulson (as he then was) in the case of Jerram Falkus Construction Ltd v Fenice Investments Inc8:

"Accordingly, I conclude that, for the prevention principle to apply, the contractor must be able to demonstrate that the employer's acts or omissions have prevented the contractor from achieving an earlier completion date and that, if that earlier completion date would not have been achieved anyway, because of concurrent delays caused by the contractor's own default, the prevention principle will not apply."

It was suggested that these words should not be followed. Mr Justice Fraser disagreed and advised parties where disputes occurred about this point to proceed on the basis that the prevention principle is not engaged where there is concurrent delay.

Conclusions

Mr Justice Fraser has made it clear that the clause in question, which allocated the risk of concurrent delays to the contractor was both valid and enforceable. Although the usual position in England and Wales is that a contractor is entitled to an extension of time where two causes of delay to completion operate concurrently, one of which is the contractor's risk and one of which is the employer's risk, this judgment confirms that contracting parties are free to allocate risk as they choose. It is becoming increasingly common for parties to construction projects to introduce provisions which allocate the risk of concurrent delay to the party carrying out the works. This judgment confirms that the TCC will, in principle, uphold any such arrangement.

As will be clear from this year's Review, in the UK there have been a number of recent decisions at the highest level9 which reaffirm the importance of the words agreed in the contract. In the 2017 case of Carillion Construction Ltd v Woods Bagot Europe Ltd10 in the Court of Appeal, Lord Justice Jackson stated that:

"Recent case law establishes that only in exceptional circumstances can considerations of commercial common sense drive the court to depart from the natural meaning of contractual provisions. See Arnold at [19] and [20]. In Grove the Court of Appeal applied those principles to a construction contract, which operated harshly against the interests of a contractor. The court declined to depart from the natural meaning of the contractual provisions."

This decision is an example of a court doing just that.

Footnotes

1. For an authoritative discussion on concurrent delay, see John Marrin QC, "Concurrent Delay Revisited", SCL Paper 179, February 2013, available at http://www.scl.org.uk.

2. [2012] EWHC 1173 (TCC)

3. [2007] CSOH 190

4. [2010] CSIH 68

5. See Article in this Review comparing and contrasting the new NEC4 and FIDIC forms

6. 2017] EWHC 2414 (TCC)

7. [2007] BLR 195

8. (No.4) [2011] EWHC 1935 (TCC)

9. See the Supreme Court decisions of Arnold v Britton [2015] UKSC 36 and Wood v Capita Insurance Services Ltd [2017] UKSC24.

10. [2017] EWCA Civ 65


This article is taken from Fenwick Elliott's 2017/2018 Annual Review. To read further articles go to Fenwick Elliott Annual Review 2017/2018


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