Concurrency confusion: City Inn revisited (Part 1 of 2)

United Kingdom

A decision last Friday holds major ramifications for disputes over delay in construction contracts. Its importance merits two Law-Nows of which this is the first. The second is at: click here.

The decision is the final judgment in City Inn v Shepherd Construction, an action commenced seven years ago in the Scots courts for about £300,000. The decision considers in detail the position under a JCT-style contract where extensions of time and loss and expense are claimed by a contractor for delay attributable to both a Relevant Event (giving an entitlement) and a contractor’s risk event (giving no entitlement).

The judgment takes the following stance on three core questions when there are competing causes of delay:

1. It is irrelevant that delay due to a contractor’s risk event begins prior to delay due to a Relevant Event, provided that the effect of the delay is in fact concurrent. The Court disagreed with the contrary view of the English TCC in Royal Brompton Hospital NHS Trust v Hammond (No 7).
2. It is permissible to eliminate one competing cause if the other can be said to be the “dominant” of the two causes, even though both of the causes are relevant or “operative” causes. The judge suggested that one competing cause was not dominant over another when they each had a significant effect on the delay to completion.
3. If neither of the competing causes can be said to be “dominant” then it will often be appropriate to apportion time between the two causes and make a similar apportionment for loss and expense. In apportioning, two matters were important: the degree of culpability involved in each of the competing causes of delay and their relative causative potency (with the latter usually being most relevant). This approach is not presently to be found in the English authorities and might be seen to be incompatible with the approach of the TCC in Henry Boot Construction v Malmaison Hotel.

In applying his approach the judge found the as-built critical path approach of the Employer’s delay expert of very doubtful value given its reliance on computer-based analysis. Repeating concerns heard recently in English courts he said: “The major difficulty, it seems to me, is that in the type of programme used to carry out a critical path analysis any significant error in the information that is fed into the programme is liable to invalidate the entire analysis. Moreover … it is easy to make such errors.” After identifying a number of errors the judge found it “necessary to revert to the methods that were in use before computer software came to be used extensively in the programming of complex construction contracts” which was essentially what the Contractor’s delay expert did in his as-planned versus as-built approach. “Those older methods are still plainly valid, and if computer-based techniques cannot be used accurately there is no alternative to using older, non-computer-based techniques.”

This decision has broad application under JCT forms as the contract in issue is materially the same as the JCT 1998 and 2005 suite of contracts. It is, however, by no means the final word on how to deal with competing causes of delay under JCT contracts but is likely to play a significant part in the future work of both certifiers (who may not welcome apportioning blame, particularly theirs) and tribunals. In addition, the case may well prompt the TCC to give a clear statement on the English position at the next opportunity.

Reference: City Inn Ltd v Shepherd Construction Ltd [2007] CSOH 190