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Concurrent Delays and Delay Analysis

Disputes between City Inn Limited and Shepherd Construction Limited relating to a hotel project at Temple Way, Bristol, England, have been long running. They are producing some interesting case law. Our readers may recall an earlier judgment in which the Scottish court considered the claim by the contractor that a time bar on submission of claims for extension of time operated to make the liquidated damages a penalty in circumstances where the contractor had failed to serve a timely notice. The claim was unsuccessful.

Recently, on 30 November 2007, the Outer House of the Court of Session in Scotland gave a further decision on disputes between the parties. The judgement considers the contractor's entitlement to extensions of time, particularly in respect of variations in the gas membrane in the substructure and in the roof cladding, and late instructions. The contract was based upon the Scottish version of the JCT 1980 standard form of building contract. The case is interesting for what it says about (1) the approaches adopted by the opposing parties' experts in analysing delays to the project; and (2) the correct approach to adopt where two or more events (some the responsibility of the contractor and some the responsibility of the employer) contribute concurrently to a period of delay.

The following points are to be drawn from the judgment:

• The contractor's expert had examined the issue of critical delay by first testing the original programme for reasonableness and completeness; then examining the factual evidence to determine where time on the project was critically lost; then seeking to identify the cause of the loss of time. In effect, this was an "as planned against as built" methodology. The Judge accepted the view of the contractor's expert, considering that it was based on a common sense approach.
• By contrast, the Employer's expert attempted to construct an as-built critical path using computer software. The judge thought this approach had serious defects, the major difficulty being that any significant error fed into the programme was likely to invalidate the whole analysis. The employer's expert conceded at trial that there were a number of incorrect logic links in the programme, and the Judge felt that this point made his as-built critical path analysis "of doubtful value".

• On the issue of concurrent delay, the Judge acknowledged that Judge Seymour QC had said in Royal Brompton & Hospital NHS Trust v Hammond (No. 7) that two events were not concurrent if one began before the other. The Judge disagreed with this analysis, asking why it should matter whether one event began two days before or two days after (all at the same time as) the other? The key issue was whether the events in question caused or contributed to the same period of delay.
• In considering entitlement to an extension of time, the Judge attached considerable importance to the wording in clause 25 of the contract which required the award of an extension of time to be "fair and reasonable". After analysis of case law considering issues of concurrent delay (including particularly, Henry Boot Construction v Malmaison Hotel (Manchester) Ltd), the Judge concluded that what was required by clause 25 was that the architect should exercise his judgment to determine the extent to which completion has been delayed by relevant events. The architect must make a determination on a fair and reasonable basis. Where there was true concurrency between a relevant event and a contractor default, in the sense that both existed simultaneously, regardless of which started first, it might be appropriate to apportion responsibility for the delay between the two causes. The basis for such apportionment must be fair and reasonable.

On the facts of the case, there was an 11 week overrun caused, the Judge concluded, by 11 events the responsibility of the employer and by 2 events the responsibility of the contractor. Taking into account their relative significance, the Judge concluded that the contractor should be awarded a 9 week extension of time.

Conclusion

Scottish decisions are not binding on the English Courts (or the Hong Kong Courts), although they may be of persuasive authority.