Concurrent delay: TCC decision marks a broader approach

A TCC decision published this week has upheld an extension of time claim under the JCT form based on a finding of concurrent delay. Such findings have been rare and the court’s approach to concurrent delay is much broader than the “first-in-time” approach adopted in recent Commercial Court cases and reflected in the 2nd edition of the SCL Delay and Disruption Protocol. This decision is likely to encourage further debate in this complex area of the law.

Concurrent delay: an overview

In its broadest sense, concurrent delay arises as an issue whenever claims for extension of time are met with an allegation that the contractor would have been unable to complete the works on time even if the event claimed for had not occurred due to its own delays or those for which it is contractually responsible.

The position with regard to concurrent delay in Scotland has largely been settled by the Inner House decision in City Inn Ltd v Shepherd Construction Ltd in 2010, which permits responsibility for concurrent delay to be apportioned between the parties. Apportionment has, however, been rejected by the English courts and the position in England is generally believed to be as stated in Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd, that the contractor is entitled to an extension of time but not additional cost.

The primary area of debate under English law concerns the definition of concurrent delay for the purpose of the Malmaison principle. When are two delays sufficiently significant that they can both be said to have caused concurrent delay to completion? Is it sufficient merely that each would have caused delay to completion in the absence of the other? Or must they both be on the critical path or of roughly equal impact on the project? Broadly speaking, three schools of thought can be identified as to the causative connection required under English law:

• One traditionally popular view, sometimes referred to as the “consensus view” or dominant cause approach, requires two delaying events to be of “equal causative potency”. A critical path analysis will typically be used to eliminate delaying events which have not impacted the critical path, but even events which both impact the critical path may not, on analysis, be shown to be of “equal causative potency”. The question is one of common sense in all the circumstances.
• A broader test has recently been advocated by some commentators, described as a “reverse ‘but for’ test”. This approach asks simply whether the delaying event for which an extension of time is claimed would have delayed completion in the absence of the delay event(s) that the contractor is responsible for. In such circumstances, the delaying event claimed for is an “effective cause” of delay and there is no need to ask whether it is of “equal causative potency” with any contractor culpable delay events.
• A narrower test to the consensus view is sometimes advanced which focuses on the point in time at which delaying events occur. Where an existing event has caused delay to completion, subsequent delay events are treated has not being a cause of delay to completion at all unless and to the extent that they increase the delay already caused by the existing event. This is sometimes referred to as the “first-in-time” approach.

Support may be found to varying degrees for each of the above approaches in the cases, but recent Commercial Court cases, as well as the 2nd Edition of the SCL Delay and Disruption Protocol, have favoured the “first-in-time” approach.

The “first in time” debate

Two recent Commercial Court decisions, Adyard Abu Dhabi v SD Marine Services and Saga Cruises BDF Ltd v Fincantieri SPA, have drawn support for a “first-in-time” approach from the following passage of the 2001 TCC decision in Royal Brompton Hospital NHS Trust v Hammond (No. 7) (per HHJ Seymour QC):

“It is … necessary to be clear what one means by events operating concurrently. It does not mean, in my judgment, a situation which, work already being delayed, let it be supposed, because the contractor has had difficulty in obtaining sufficient labour, an event occurs which is a relevant event and which, had the contractor not been delayed, would have caused him to be delayed, but which in fact, by reason of the existing delay, made no difference. In such a situation although there is a relevant event, 'the completion of the Works is [not] likely to be delayed thereby beyond the Completion Date.'

The relevant event simply has no effect upon the completion date. This situation obviously needs to be distinguished from a situation in which, as it were, the works are proceeding in a regular fashion and on programme, when two things happen, either of which, had it happened on its own, would have caused delay, and one is a relevant event, while the other is not. In such circumstances there is a real concurrency of causes of the delay.”

This passage has, however, been doubted in other decisions, not referred to in the Commercial Court cases. For example, the Scottish appeal court (known as the Inner House) reached a contrary view in City Inn Ltd v Shepherd Construction Ltd, describing the “first-in-time” approach as “unnecessarily restrictive and one which would militate against the achievement of its obvious purpose of enabling the architect, or other tribunal, to make a judgment on the basis of fairness and a common-sense view of causation.” Detractors therefore point out that causation at law is more a matter of common sense than strict logic and it cannot therefore be appropriate to exclude potential causes of delay merely because they happen to occur after other competing causes of delay. Similar criticisms have been levied at the 2nd Edition of the SCL’s Delay and Disruption Protocol, published in 2017, which appears to support a “first-in-time” approach.

A further criticism of the “first in time” approach comes from the “prevention principle” which recognises that a contractor should not be subject to liquidated damages for delay to completion for periods in which it had been prevented by its employer from completing the works. In Saga Cruises, for example, an employer variation had prevented completion of the works by the agreed date, but liquidated damages were still ordered because the delay caused by the variation was held to have started and finished within a contractor delay period.

The scope of the “prevention principle” is, however, also the subject of debate. In Jerram Falkus Construction Ltd v Fenice Investments Inc the Technology and Construction Court held that the principle would not apply to cases of concurrent delay. This finding was contrary to position taken in the then current edition of Keating on Construction Contracts and has been subsequently criticised by a number of commentators including John Marrin QC. The Court of Appeal acknowledged this debate in North Midland Building Ltd v Cyden Homes Ltd and, without seeking to resolve it, noted that the “prevention principle has no obvious connection with the separate issues that may arise from concurrent delay”.

Thomas Barnes & Sons Plc v Blackburn with Darwen Borough Council

Blackburn with Darwen Borough Council (the “Council”) appointed Thomas Barnes to build a large central bus station in Blackburn on the terms of an amended JCT Standard Building Contract with Quantities, 2011 edition. Large delays occurred on the project, for which Thomas Barnes claimed extensions of time. Blackburn ultimately terminated the contract for delay and Thomas Barnes brought TCC proceedings contesting the termination and seeking to establish its right to extensions of time and loss and expense.

The primary delay event supporting Thomas Barnes’ extension of time claim was the deflection of certain steel supports which required investigation and remedial work. This issue prevented concrete topping from being poured, which in turn prevented the construction of a “hub” which was to provide office space. The construction of the hub was required before internal finishes could be commenced, which was the last activity on the programme.

The deflection of the steel supports was not Thomas Barnes’ responsibility and the Council accepted that an extension of time was to be given in respect of the delay caused by this issue. However, whilst the deflection issue was ongoing, Thomas Barnes had suffered delays to the roof works. Completion of the roof works to provide a watertight structure was required before the hub internal finishes could commence. However, the roof delays were resolved prior to the construction of the hub and did not add any independent delay to that caused by the deflection issue.

In these circumstances, the court found that the roof delays were concurrent with the deflection delays, despite the former being subsumed by the later:

“In my judgment this is a case where these causes were concurrent over the period of delay caused by the roof coverings. That is because completion of the remedial works to the hub structural steelwork was essential to allow the concrete topping to be poured and the hub SFS to be installed, without which the hub finishes could not be meaningfully started, but completion of the roof coverings was also essential for the hub finishes to be meaningfully started as well. It is not enough for the claimant to say that the works to the roof coverings were irrelevant from a delay perspective because the specification and execution of the remedial works to the hub structural steelwork were continuing both before and after that period of delay. Conversely, it is not enough for the defendant to say that the remedial works to the hub structural steelwork were irrelevant from a delay perspective because the roof coverings were on the critical path. The plain fact is that both of the works items were on the critical path as regards the hub finishes and both were causing delay over the same period.”

The Council had sought to avoid this finding by relying on a prospective delay analysis to argue that during much of the roof delays, the concrete topping and hub works were still in float. It therefore argued that the critical path first ran through the roof delays and then switched to the hub works once the float had been used up. The Court rejected this approach:

“Whilst I am prepared to accept this evidence from a theoretical delay analysis viewpoint, comparing the as-planned programme with the position at various points in time, it does not seem to me to be a sufficient answer to the point on causation, which is that on the evidence the fact is that the delay to the remedial works to the hub structural steelwork and the delay to the roof coverings were both causes of delay over the period identified by Mr Gunton where the roof coverings were delayed. Even if there had been no delay to the roof coverings the hub finishes, which it is agreed were on the critical path, could not have started earlier because of the delay to the remedial works to the hub structural steelwork.”

In discussing the legal approach to concurrent delay claims the court noted a concession by counsel that the law in this area “is settled” and relied on a passage in the current edition of Keating on Construction Contracts that a contractor would be entitled to an extension of time if the event claimed for was “an effective cause of delay even if there was another concurrent cause of the same delay in respect of which the contractor was contractually responsible”.

Despite upholding Thomas Barnes’ claim to extension of time, the court’s finding of concurrent delay meant that much of its loss and expense claim failed because the losses claimed for would have been incurred in any event due to the roof delays.

Conclusions and implications

This is a significant decision of the TCC which is likely to provoke further debate as to the correct approach to concurrent delay claims under English law. Although not directly addressed in the judgment, the Court’s reasoning as to concurrent delay appears contrary to the “first-in-time” approach favoured by recent Commercial Court decisions and the 2nd Edition of the SCL Protocol. It is particularly of note that the Court refused to accept either of the critical path arguments presented by the competing delay experts and instead favoured a more pragmatic, common sense approach.

The Court’s adoption of the “effective cause” test recorded in Keating reflects similar comments by Mr Justice Akenhead in Walter Lilly & Company Ltd v Mckay. However, the use of this phrase does little to clarify the precise circumstances in which delays in a complex construction project will be held to be concurrent for the purpose of extensions of time claim. The uncertainty in this area of the law was recently acknowledged by the Court of Appeal in the Cyden Homes case where “differences of view expressed in both the first instance cases and the text books” were noted, but left unresolved. The findings in the present case, coming against the tide of recent Commercial Court decisions, are likely to add to this uncertainty and it is hoped that the Court of Appeal will soon have the opportunity to rule definitively on the topic.

References:

Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 33

Royal Brompton Hospital NHS Trust v Hammond (No. 7) (2001) 76 Con LR 148

City Inn Ltd v Shepherd Construction Ltd [2010] CSIH 68

Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848

Jerram Falkus Construction Ltd v Fenice Investments Inc [2011] EWHC 1935

Walter Lilly & Company Ltd v Mckay [2012] EWHC 1773 (TCC)

Saga Cruises BDF Ltd & Anor v Fincantieri SPA [2016] EWHC 1875

North Midland Building Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744

Thomas Barnes & Sons Plc v Blackburn with Darwen Borough Council [2022] EWHC 2598 (TCC)