Law and regulation of concurrent delay in Australia

Jurisdiction with developed jurisprudence

1. Is concurrent delay a well developed and understood concept?

As a general concept, concurrent delay is a well developed and understood concept in Australia. However, the details of what it means and how it will be dealt with remains uncertain given the lack of recent judicial consideration.

2. Is there a generally understood and accepted definition of concurrent delay and when it arises?

Cases in relation to concurrent delay are rarely brought before the Australian courts. This is likely a consequence of the most popular standard forms of contract used in the construction industry (the AS2124 and AS400 based forms of contract, PC-1 and ABIC MW-1) providing for the ultimate resolution of disputes through arbitration. The AS2124 and AS4000 contracts and ABIC MW-1 also make express contractual provision for how concurrent delays are to be dealt with but do not actually define concurrent delay. The relevant provisions also capture the concurrent effects of sequential delays (which is more commonly referred to as concurrent delay as noted at paragraph 10.4 of Guidance Part B of the Protocol despite not being true concurrent delay).

3. How is the issue of concurrent delay treated?

The limited amount of cases that have come before the Australian courts generally appear to deal with, the concurrent effects of sequential delays rather than true concurrent delay.

 As a starting point, in determining how a period of concurrent delay (or sequential delays with concurrent effect) will be treated, the court will have regard to the interpretation of the relevant contract terms and their application to the facts in issue.

The current Australian authorities favour the "first in time" approach, with the effect that delays are not taken to be concurrent where the contractor risk event arises first, causes actual delay to the contractor and concludes after the effects of the qualifying event have ceased. Nevertheless, the Australian courts may not follow that approach in future cases, depending on the express contractual terms, how the contract defines concurrent delay (if at all) and the factual matrix. There is no relevant legislation.

4. Are there any general principles that apply to the treatment of concurrent delay?

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 as a general rule 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).

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” is, in our view, a correct representation of the position under Australian law in relation to true concurrent delays or where the effects of sequential delay events are felt at exactly the same time.

However, where the term concurrent delay is used to apply to sequential delays that are having overlapping effect on the works, then in our view the above position does not represent the position under Australian law if the Contractor risk event started before and ended after the Employer risk delay event.

However, the parties can displace this starting position by using clearly worded express provisions in the contract to allocate risk in a different manner.

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. Consistent with the position under English law (and that adopted in the Society of Construction Law Protocol), 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.

5. How is the question of evidence as to causes and periods of delay dealt with?

Typically, in litigation or arbitration, each party will each appoint a programming (schedule) expert as an expert witness in relation to delay. 1 In relation to litigation before the courts, it is noted that Australia consists of nine state and territory Supreme Court jurisdictions as well as a federal jurisdiction. Although there are similarities between some of the jurisdictions, the rules in relation to expert evidence are not consistent and a detailed consideration of the differences is beyond the scope of this publication. Although parties normally appoint their own experts, they may agree to appoint a joint expert and a court or arbitrator (subject to the relevant arbitral rules or agreement to the contrary by the parties) may appoint an expert to assist the court/tribunal.

The party appointed experts will each have their own preferred method of analysis out of a number of possible methods.  The six most commonly accepted methods of delay analysis are outlined in the Society of Construction Law’s Protocol.

Notably, the recent decision of Hammerschlag J in the NSW Supreme Court (White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] NSWSC 1166 at [191]) held that “the fact that a method appears in the Protocol does not give it any standing, and the fact that a method, which is otherwise logical or rational, but does not appear in the Protocol, does not deny it standing."  

Hammerschlag J went on to say that “[t]he Court is concerned with common law notions of causation. 2 As set out in March v E & MH StramarePty Ltd (1991) 171 CLR 506. The only appropriate method is to determine the matter by paying close attention to the facts, and assessing whether White has proved, on the probabilities, that delay in the underboring solution delayed the project as a whole and, if so, by how much” 3 White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] NSWSC 1166 at [197].

While the judgment in White Constructions appears at odds with Bleby J’s judgment in Alstom v Yokogawa Australia (No 7), 4 [2012] SASC 49  it is often overlooked that Bleby J rejected the “Resource Analysis” methodology employed by Alstom’s delay expert not just because it was not referred to in the Protocol, but also because Alstom’s expert was unable to point to any recognition of this methodology in a construction law text or anything else to indicate its widespread acceptance as a recognised delay analysis methodology. 5 [2012] SASC 49 at [1282] – [1289].

Hammerschlag J’s decision in White Constructions does not render the Protocol irrelevant to disputes governed by Australian law; it simply means that reliance on a methodology referred to in the Protocol is not enough of itself to establish the suitability of that methodology. The factual evidence adduced by the parties must also support the delay case advanced 6 White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] NSWSC 1166 at [200], -[201].  and the assumptions adopted by the experts in their analysis. 7 White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] NSWSC 1166 at [194).

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.

Even where the methodology to be used is not specified, the precise language of the contract may be relevant to what methodologies will be acceptable to be used. In Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd 8 2017 QSC 085.  it was held that either a prospective or a retrospective methodology could be used because clause 35.5 of the contract provided that the contractor was entitled to an EOT where it could demonstrate that it “has or will be actually delayed”. 9 2017 QSC 085 at [659].  Flanagan J held that the “use of the words “has been... actually delayed” addresses past delay permitting or indeed inviting retrospective analysis. A Contractor would be entitled to an extension of time for Practical Completion if it demonstrates either a past or future delay.” 10 2017 QSC 085 at [662].

6. Would a contract term which provides that one or other party will take the risk of concurrent delay be effective in your jurisdiction?

A clearly drafted term that imposed the risk of any period of concurrent delay on either the employer or the contractor will generally be given effect. Express provisions of this nature have for many years been included in the AS2124 11 Which disentitles the contractor to an EOT to the extent of concurrency of qualifying and non-qualifying events. and AS4000 forms of contract. 12 Which requires the Superintendent to apportion the period of concurrent delay according to the respective causes’ contribution.

7. The SCL Protocol scenario

“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?

As a starting point, in the above scenario (which refers to the concurrent effects of sequential delays), assuming that:

  1. the contract contains an extension of time clause entitling the contractor to an extension of time for variations; and
  2. that it does not contain any provisions governing the treatment of concurrent delay,

the Australian courts are unlikely to hold that the Contractor is entitled to an extension of time based on the judgment of Giles CJ in Australian Development Corp Pty Ltd v White Constructions (ACT) Pty Ltd (1996) 12 BCL 317, 345.

In that case, His Honour held that there was not a delay entitling the contractor to an extension of time where industrial action occurred (which would ordinarily have entitled the contractor to an extension of time under the contract), but the contractor was already being critically delayed by an event at its risk (a delay in obtaining a necessary building permit) and the permit delay continued after the effects of the industrial action ended.  On the facts before him, His Honour held that the contractor could not establish that it was actually delayed by the event that would ordinarily entitle it to an extension of time, because the delays for which it was responsible started before and ended after the industrial action.

That actual delay, as opposed to potential delay, is clear from the judgment of Rolfe J in the NSW Supreme Court in Turner Corp Ltd v Coordinated Industries Ltd. Actual delay must be caused to works on the critical path; it was not sufficient that an event would have caused critical delay if the contractor was otherwise in a position to proceed. 13 Turner Corp Ltd v Coordinated Industries Ltd (1995) 11 BCL 202, 219-21

Such an approach is consistent with the general Australian common law principles of causation and is also in line with the “first in time” approach the English courts have at times adopted as the second event (which would otherwise ordinarily entitle the contractor to an extension of time) is not regarded as an effective cause of delay. 14 See Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 and Saga Cruises BDF Ltd v Fincantieri SPA [2016] EWHC 1875

If the facts clearly show that the variation was the delay event actually driving the critical path from 1 February to 14 February (and not merely that it would have caused delay absent the Contractor Risk Event) then the Contractor should be entitled to an extension of time for that period. Such an approach is not inconsistent with the decisions of Giles CJ or Rolfe J.

In relation to the apportionment approach adopted by the Scottish courts in City Inn v Shepherd, such an approach is inconsistent with Australian authority 15 Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184 at [184] to [206].  and if the parties wish to have concurrent delay dealt with in such a manner they will need to make express provision for such in the contract (as AS4000 does).

However, given the relative lack of Australian case law on concurrent delay there is some uncertainty as to precisely how the courts might deal with concurrent delay (or the concurrent effects of sequential delays as is the case in the given scenario) given recent developments in other jurisdictions.

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?

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.