Concurrent delay – the contract says apportion – so how should you apportion?
I worked on a matter recently in which there was concurrent delay. The contract expressly provided for the apportionment of delay between the employer/principal and contractor. So, how to apportion? Consider all the delay events and then take a guess?
Let’s consider how the judge apportioned delay in City Inn v Shepherd Construction. And, just how did the court come to apportion? Lack of a dominant cause?
The Scottish courts in City Inn said that where there is true concurrency it may be appropriate to apportion responsibility for the delay between the two causes on a “fair and reasonable” basis. This procedure, the court considered, reflected the requirements of the contract which directed the architect to grant an extension of time by fixing a completion date that he considers “fair and reasonable”.
The court relied on the approach taken by the US Board of Contract Appeals in Chas. I. Cunningham Co. (1957) in which the contractor claimed an extension of time but was itself in delay. The Board of Contract Appeals said that it is “well settled that the failure of a contractor to prosecute the contract work with the efficiency and expedition requisite for its completion within the time specified by the contract does not, in and of itself, disentitle the contractor to extensions of time for such parts of the ultimate delay in completion as are attributable to events that are themselves excusable”.
The court in City Inn considered that the approach taken by the Board of Contract Appeals recognises the fact that culpable and non-culpable causes of delay will often coexist and interact, and permits the architect under JCT forms to apportion the delay between the culpable and non-culpable causes. The court considered that this was the only way in which a fair result can be achieved in such cases and which is contemplated by the wording of clause 25. The decision of the Board in Chas. I. Cunningham Co was also followed in Sun Shipbuilding & Drydock Co (1968). They are interesting cases but we’ll stick to City Inn for now.
Clause 25 of the JCT form uses the words “fair and reasonable” and the judge in City Inn attached considerable importance to these words in its interpretation of clause 25, especially in its practical application.
The court however agreed with City Inn in that, if a relevant event can be shown to be the dominant cause of a delay, the party responsible for that event will be held responsible for the delay.
The court explained that, in practice, causation tends to operate in a complex manner, and a delay to completion may be caused in part by relevant events and in part by contractor default, in a way that does not permit the easy separation of these causes. In such a case, the solution envisaged by clause 25, the court considered, is that the architect, or in litigation the court, must apply judgment to determine the extent to which completion has been delayed by relevant events. In an appropriate case apportionment of the delay between relevant events and contractor’s risk events may be appropriate. Precisely when and how that should take place is a question that turns on the precise facts of the case.
The court concluded that the delay in completion was the result of concurrent causes. The court considered that the majority of those causes were the result of late instructions or variations issued by the architect and are relevant events for the purposes of clause 25, i.e. they give an entitlement to an extension of time. Two of the causes, work on the lifts and work on the stair balustrading, were the fault of the contractor, Shepherd Construction. The court said that, in its opinion, none of the causes of delay can be regarded as “dominant” but that each of them had a significant effect on the failure to complete timeously.
Clause 25 of the contract requires that the architect should exercise his judgment to determine the extent to which completion has been delayed beyond the completion date by relevant events or non-contractor’s risk events. This, the court said, involves a determination of the aggregate period within which the works as ultimately defined should have been completed having regard to the incidence of relevant events. In a case such as City Inn, where there is true concurrency, between the relevant events and events that involve contractor default, the court said apportionment will frequently be appropriate. The court considered that apportionment enables the architect to reach a fair assessment of the extent to which completion has been delayed by relevant events while at the same time taking into account the effect of other events which involve contractor default. It is important to note that not all jurisdictions will follow City Inn in this regard.
How did the court apportion?
In the court’s opinion, the two main elements of the apportionment exercise to consider are:
1. The degree of culpability involved in each of the causes of delay; and
2. The significance in each of the factors causing delay.
The court considered that culpability is likely to be the lesser important of the two elements.
The causative significance of each of the factors is likely to be more important and in this regard, two further matters in relation to this element will be potentially important:
2.i) The length of the delay caused by each of the causative events; and
2.ii) The significance of each of the causative events for the works as a whole. For example, an event that only affects a small part of the building may be of lesser importance than an event whose effects run throughout the building or which has a significant effect on other operations.
The court stressed however, that the question will be one of judgment.
The court applied the above criteria as follows:
1. Degree of culpability: the court did not consider culpability to be a major factor, but considered that the “sheer quantity” of late instructions was significant, and so was the fact that the failure to issue instructions occurred following requests for information which started during the course of the works.
2. Causative significance:
2.i) The court considered that the events all caused some delay although the delay resulting from the gas venting instruction was concurrent with 3 ? weeks of the delay resulting from the late instruction relative to the roof steelwork. The two items that had the longest lasting effect were the cooling to the refuse room and the stair balustrades, both of which conclude on about 12th April.
2ii) In relation to the causative significance of each of the events for the works as a whole, the court took into account the fact that items such as the en-suite fittings, the bedheadlights and the trouser presses affected all of the bedrooms in the hotel. The court finally took account of the fact that the number of relevant events is substantially greater than the number of items for which Shepherd Construction were responsible; moreover, some of them, notably the gas venting and roof steelwork instructions, related to important matters that had significant effects on the overall progress of the works.
Court’s conclusion
In taking all these matters into account, the court was of the opinion that the part of the total delay apportioned to relevant events should be substantially greater than apportioned to the two items for which Shepherd Construction was responsible. The court therefore considered that a fair and reasonable result would be that Shepherd Construction was entitled to a 9-week extension of time from the original date for completion, i.e. until 29th March 1999.
The court’s view was upheld on appeal.
How would you apportion: consider all the delay events and then take a guess?
LLM, FRICS, FCIArb, Chartered Arbitrator
5 年Please note that part 2 of a Delay and Disruption series has now been posted on LinkedIn: https://www.dhirubhai.net/feed/update/urn:li:activity:6574164646633308161
Owner @ Fearnsides and Associates - Construction Management Services Consultants - Claims, Delay Analysis, Commercial, Contract Admin & Management, Project Controls, QS & Expert Witness(delay, quantum & support).
8 年Agreed L.H., however, in the ME no one really seems to know what concurrency really is. I therefore try to draw on all the various commentaries in all countries, to see if there is a common thread. My view, however, is that common sense should prevail. Unfortunately, there seems to be a movement away from common sense and for Employers to scream concurrency and go on to insist upon "time no money" as a get out of any form of payment. This they do without really undertaking any form of detailed delay analysis and to infer that it is all too complicated to unravel. I think they are wrong, using common sense and computers the as-built CP and near as-built CP's can be established and any parallel critical delay can be established for competing concurrent events on separate paths. Where events compete on one activity (as the activity is in progress) we are talking about concurrent causation, the effect, if the as-built CP has been established, is known. I think problems really exist in parallel as-built critical paths and their establishment. We have Australians talking about overlap, overlap of what may I ask? If concurrency is thought about interns of overlap, it, to my mind, would be a very unlikely event if it were to occur.
Principal Mentor/Trainer at ICL Academy. Construction Dispute & Claims Specialist for FIDIC 1999 & 2017, Malaysian Forms - PWD 203A, PAM 2017 and other Standard Forms- JCT, NEC, SIA (Singapore) etc.
8 年Let us work on what the courts in each country/jurisdiction say so far about concurrent delays. I am sure different common law country in different jurisdiction has handled the matter differently and how they have handled the matter is important as that is what count. No point in studying what other countries courts has said about the matter as what matters is the case law/common law in existent in the country of dispute as and when the the matter need to be resolved as that is how your issue will be settled, not how it is settled in other jurisdiction.
Owner @ Fearnsides and Associates - Construction Management Services Consultants - Claims, Delay Analysis, Commercial, Contract Admin & Management, Project Controls, QS & Expert Witness(delay, quantum & support).
8 年Telepathy
Independent Consulting Engineer, Arbitrator, ADR Practitioner, and Technical Expert
8 年Somehow, one has to find an equitable balance. Is there a presumption that facts are more significant than blame and that a dominant cause of delay becomes the effective cause?