Law and regulation of concurrent delay in England

As a general concept, concurrent delay is a well developed and understood theory. However the details of what it means and how it applies are the subject of considerable debate.

The most recent court judgment (North Midland Building Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744) suggests that the definition of concurrent delay most likely to be accepted by tribunals is:

“a period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency”.

This judgment is a Court of Appeal decision and should therefore bind courts of first instance, arbitrators and adjudicators.

It should be noted that this definition differs from that adopted in the Society of Construction Law’s Delay and Disruption Protocol (2nd Edition).

How the risk of a period of concurrent delay should be treated depends on the interpretation of the relevant contract terms and their application to the facts in issue. There is also a body of case law that considers the issue and how it affects the parties’ rights and obligations in the context of the contracts and facts applicable in each case. There is no relevant Act of Parliament.

As noted above, the treatment of concurrent delay ultimately depends on the interpretation of the relevant contract terms and their application to the facts in issue.

As a result it cannot be assumed that the contractor will be entitled to an extension of time for any period of concurrent delay (or indeed that it will not be entitled to one). There are cases that suggest that (absent any contractual exclusion of entitlement) a contractor should generally be entitled to an extension of time for concurrent delay, but these cases are first instance decisions only and there are also other judgments that suggest (by virtue of taking a very narrow definition of concurrency) the contrary (some of these judgments are referred to in the commentary on the Society of Construction Law’s Protocol scenario below). As a result the comment in the Society of Construction Law’s Protocol that: “Where a Contractor Delay to Completion occurs or has an effect concurrently with Employer Delay to Completion, the Contractor’s concurrent delay should not reduce any EOT due” cannot be taken as representing the position under English law.

In terms of any claim by the contractor for additional payment for periods of concurrent delay, again the treatment of any such claim depends on the interpretation of the relevant contract terms and their application to the facts in issue. Absent any specific contractual provision to the contrary however it is generally thought that a contractor would not be able to recover additional costs attributable to the period of concurrent delay as it would not be able to show that “but for” the occurrence of the event that in principle entitles it to additional payment it would not have incurred those costs. That is also the position adopted in the Society of Construction Law’s Protocol.

In England, parties will appoint programming (schedule) experts/delay analysts as expert witnesses; each such expert will have his/her preferred method of analysis out of a number of possible methods. The various methods of analysis are outlined in the Society of Construction Law’s Protocol. If the relevant contract specifies which method should be used, this should be adopted, but it is rare for a contract to specify this. Otherwise, there is no authoritative guidance as to which method is correct. The suggestion in the Society of Construction Law Protocol is that when the contractor’s entitlement to an extension of time is being reviewed at the time the works are being carried out it should be done so by way of “time impact analysis” (one of the “prospective” methods of analysis). The Protocol suggests that when the review of the contractor’s entitlement is carried out later (generally, after completion of the works) this may no longer be appropriate. Commentary in Walter Lilly & Co Ltd v Mackay [2012] EWHC 1773 suggested that it should make no difference whether the analysis was carried out on a prospective or retrospective basis, but more recently the judge in Fluor v Shanghai Zhenhua Heavy Industry Co, Ltd [2018] EWHC 1 thought (obiter) that the different methods would produce different results, and suggested that the correct approach when evaluating an extension of time entitlement (as opposed to damages for breach of contract) was a prospective approach. Other cases, however, suggest that a retrospective analysis is required for evaluating extension of time claims (see Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm)).

A clearly drafted term that imposed the risk of any period of concurrent delay on either the employer or the contractor would generally be given effect. That was the situation in the North Midland case (referred to above) where the Court of Appeal decided that a clause in a contract imposing the risk of concurrent delay on the contractor should be given effect.

“An event that is at the Contractor’s risk under the contract (a “Contractor Risk Event”) will result in five weeks delay to completion, delaying the contract completion date from 21 January to 25 February. Independently and a few weeks later, a variation is instructed on behalf of the Employer which, in the absence of the preceding Contractor Risk Event, would result in delay to completion from 1 February to 14 February.”

7.1 Is the Contractor entitled to an extension of time in respect of the variation? If so, for how long?

Assuming that the contract contains an extension of time clause entitling the contractor to an extension of time for variations and that it does not contain any provisions governing the treatment of concurrent delay – the position in this situation under English law is currently unclear.

One line of cases suggests that if the Contractor Risk Event and the variation are of “approximately equal causative potency” then the Contractor should be entitled to an extension of time for the delay caused by the variation (see for example Walter Lilly & Co Ltd v Mackay [2012] EWHC 1773). On that basis the Contractor would be entitled to an extension of time of 2 weeks (for the period 1 – 14 February).

Another line of cases takes a “first in time” approach which means that the event that occurs second is not regarded as an effective cause of delay (because the works were already in delay and the second event did not increase that delay) and does not entitle the Contractor to an extension of time (see for example Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 and Saga Cruises BDF Ltd v Fincantieri SPA [2016] EWHC 1875; this is also the position espoused in the Society of Construction Law’s Protocol). On that basis the Contractor would not be entitled to an extension of time.

Yet a third line of cases takes a more liberal approach and would allow an extension of time where the Employer’s variation would have caused a delay to completion in the absence of or “but for” any Contractor Risk Events (see for example, De Beers v Atos Origin IT Services UK Ltd [2010] EWHC 3276 (TCC)). This line of cases presently appears to be less prominent than the other two noted above, but there is as yet no authoritative guidance from the English Court of Appeal as to which is correct.

One point which does appear to be reasonably settled on the English cases is that a partial extension of time apportioned across the two causes of delay is not permissible. This was the position reached by the Scottish Court of Appeal (known as the Inner House of the Court of Session) in City Inn Ltd v Shepherd Construction Ltd [2010] BLR 473, but has been consistently rejected in the English cases.

7.2 Assuming the Contractor is contractually entitled in principle to recover delay-related costs relating to the variation, for what period (if any) could it recover those delay-related costs?

As noted above, absent any specific contractual provision to the contrary it is generally thought that a contractor would not be able to recover additional costs attributable to the period of concurrent delay as it would not be able to show that “but for” the occurrence of the event that in principle entitles it to additional payment it would not have incurred those costs. As a result the Contractor would not be entitled to recover delay-related costs relating to the variation.