Seminar

Concurrency In Construction Delays

7 September 2005

Speakers Adrian Williamson QC

Introduction
  1. When building or engineering contracts fall into delay it is often asserted by one party or the other that there are concurrent causes of this delay. It is easy to see why this is so.

  2. Suppose that the Employer has been at fault perhaps by providing necessary information late or in a piecemeal fashion. Suppose also, however, that the Contractor has performed poorly, being disorganised or lacking labour resources on site. Clearly, the Employer will be unhappy about having to pay loss and expense in such circumstances or foregoing his right to claim liquidated damages for any delay.

  3. However, the Contractor may also be unhappy. He may have been at fault but he may also have perfectly sound grievances in relation to the late provision of the information. Why should he have to pay liquidated damages? Why, also, should his preliminary and other resources be prolonged on site without additional compensation?

  4. So it is easy to see why concurrency is so often asserted. However, the burden of my argument will be this that concurrency, although often asserted, is rarely proved. Indeed, in my view, concurrency is a most unlikely finding to be made by any Court or by any Arbitrator or Adjudicator properly applying the law.

    Causation Generally
  5. To understand why this is so, one has to go back to the beginning. The beginning is, in this context, the concept of causation.

  6. There are two particular features relating to causation which make this a difficult topic in the context of construction contracts.

  7. The first is that where delay occurs each party may have a claim arising out of this delay against the other. The Contractor will be asserting that the delay is caused by the Employer and the Employer will be saying that the delay is caused by the Contractor. However, one has to arrive at an approach to causation which does justice to both of these contentions.

  8. The second, obvious, difficulty in relation to causation in construction contracts is that the issue is often factually complex. There may be many events said to cause delays. Each of these may impact upon a myriad of activities. By the same token, an event occurring at one time may give rise to delay much later or not at all.

  9. In this context, Keating on Building Contracts at paragraph 8-26 suggests that there are three possible approaches to causation in the sort of situation which I have postulated where each party under the contract has a potential delay related claim against the other.

  10. The first is described as “the Devlin approach”, a reference to a decision of Mr. Justice Devlin as he then was in Heskell v Continental Express Limited [1950] 1 All England 1033. The approach is this:

    “If a breach of contract is one of two causes of a loss, both causes co-operating and both of approximately equal efficacy, the breach is sufficient to carry judgment for the loss.....”

  11. However, this approach is obviously unworkable in a construction contract context. The difficulty is that it must be applied to both the claim of the contractor for loss and expense or damages and the counterclaim of the Employer for liquidated damages. In those circumstances, one could have the absurd position that the Contractor’s claim for direct loss and expense succeeded in relation to a period of delay and the Employer’s claim for liquidated damages succeeded in respect of exactly the same period of delay.
  12. The second possible approach is described as “the burden of proof approach”. This is said to be as follows:

    “If part of the damage is shown to be due to a breach of contract by the Claimant, the Claimant must show how much of the damage is caused otherwise then by his breach of contract, failing which he can recover nominal damages only....”

  13. Again, this approach founders when one considers the fact that there are two claims being made. The logical consequence, the obverse of the Devlin position, is that both the claim for loss and expense and the counterclaim for LADs would fail.
  14. So one is left with the so called “dominant cause approach”. This is defined as follows:

    “If there are two causes, one the contractual responsibility of the Defendants and the other the contractual responsibility of the Claimant, the Claimant succeeds if he establishes that the cause for which the Defendant is responsible is the effective, dominant cause....”

  15. This approach has the great advantage that it can be applied equally to both claim and counterclaim. There can only be one dominant cause of any particular period of delay. If the dominant cause is the contractual responsibility of the Employer, the Contractor gets loss and expense and does not pay liquidated damages. If the dominant cause is the contractual responsibility of the Contractor, his claim for loss and expense fails and he must pay liquidated damages for the period of delay.

    The approach in practice: Balfour Beatty v Chestermount
  16. There is in fact precious little authority as to how these difficult questions should be approached. That is, no doubt, why the learned editors of Keating say that the law is unclear.

  17. However, the nearest that one gets to any statement of a general approach is the decision of the Commercial Court in Balfour Beatty v Chestermount [1993] 62 BLR 1.

  18. That said, even this case is not directly on point. The Court was not immediately concerned with issues of causation and concurrency. In fact, the Court was dealing with two issues. One related to whether an Architect under a JCT Form of Contract could grant an extension of time for the completion of the Works in respect of a Relevant Event occurring during a period of culpable delay.

  19. The more pertinent issue considered by the Court in Balfour Beatty, for present purposes, was whether any such extension of time should be awarded on a “gross” or a “net” basis. This was what used to be known as the “colour of the front door” argument. In other words, the Contractor has overshot completion by 6 months. He is about to complete when the Architect says that he wants to change the paint colour on the front door. This causes one day’s delay while the new paint is sourced and applied. Does the Contractor get one day’s extension of time or six months and one day extension of time? The argument for the latter being that whatever else had happened he could not have completed any earlier because he only received the instruction six months after the contractual completion date.

  20. The Commercial Court, not surprisingly, gave short shrift to this argument and concluded that the extension of time must be on a “net” basis i.e. in the circumstances mentioned above one day rather than six months and one day.

  21. However, the Court gave some general guidance as to how extensions of time should be considered. In particular at page 25 it was said that:

    “The underlying objective is to arrive at the aggregate period of time within which the Contract Works as ultimately defined ought to have been completed having regard to the incidence of non-contractor’s risk events and to calculate the excess time if any, over that period, which the Contractor took to complete the Works. In essence, the Architect is concerned to arrive at an aggregate period for completion of the contractual works, having regard to the occurrence of non-contractor’s risks events and to calculate the extent to which the completion of the Works has exceeded that period.....”

  22. Similarly at page 29 it was said that:

    “(The Architect’s) objective must be the same: to assess whether any of the relevant events has caused delay to the progress of the Works and, if so, how much.....”

  23. It seems to me that Balfour Beatty provides some support for the dominant cause approach identified above. In assessing events which caused delay, the Holy Grail is to identify which is the event or combination of events which have been the critical or dominant or essential cause of delay.

    Concurrency
  24. Against that background, one then looks to see what room there is for the notion of concurrency.

  25. Not surprisingly, there is not really much room. To decide that there is concurrency is to abandon the search for the Holy Grail. Putting the matter another way, the Court simply throws up its hands and says that it is really too difficult to identify what did cause delay to the project in question. That is not a happy conclusion to reach.

  26. Thus, in my view, for concurrency to arise there must be two events which cause a delay which precisely and entirely overlaps.

  27. For example, the Employer might fail to give possession of a site for the first week of the Contract. However, during this same week it may be that the Contractor has no men or materials available and so could not progress the Works in any event.

  28. However, although it is possible to think of theoretical situations of concurrency they are, in my experience, rare in practice.

    Conceptual difficulties with concurrency
  29. Moreover, there are other reasons why Tribunals will be slow to make findings of concurrency.

  30. Taking the situation postulated above and assuming that one has a JCT Building Contract the Contractor would not, it may be said, be entitled to either extension of time or direct loss and/or expense.

  31. As to the former, the Architect could not be satisfied in the words of Clause 25.3.1.2 that "the completion of the Works is likely to be delayed thereby beyond the Completion Date..." (emphasis supplied).

  32. As to loss and expense the Architect has to be satisfied under Clause 26.1 that the disruption of the regular progress of the Works, and the consequential loss and expense, are “due to” the “matter” specified by the Contractor.

  33. So, it may be said, the Contractor fails both in respect of time and money. However, a difficulty then arises.

  34. The general principle is that if an Employer prevents the completion of the Works as, for example, by failing to give possession of the site, he loses his right to claim liquidated damages for non-completion on time for he “cannot insist on a condition if it is his own fault that the condition has not been fulfilled”: see Amalgamated Building Contractors Limited v Waltham Holy Cross UDC [1952] 2 All England 452 at 455.

  35. Furthermore, this rule probably applies even if the Contractor has by his own delays disabled himself from completing by the due date: see SMK Cabinets v Hili Modern Electrics [1984] VR 391.

  36. There can, in the circumstances posited above, be no possibility of the liquidated damages regime being preserved by a valid extension of time since, ex-hypothesi, there is no scope for such an extension of time to be given.

  37. Thus, a finding of concurrency is unattractive for two reasons:

    1. The Tribunal, rather than making a real determination, says that this determination is too difficult to make.
       
    2. The extension of time provision, however elaborate and sophisticated, becomes impossible to operate and the right to claim liquidated damages goes.

    Concurrency: Cases
  38. Given these factors, it is perhaps not surprising that the guidance available from the authorities on concurrency is very limited.

  39. In Henry Boot Construction (UK) Limited v Malmaison Hotel 70 Con LR 32 Dyson J. (as he then was) was concerned with a jurisdictional challenge to an Arbitrator. In the Arbitration, the Contractor was claiming an extension of time on the basis of various events. The Employer wished to challenge this claim by advancing both a negative and a positive case. The negative case was that the events relied on by the Contractor had not caused the alleged or any delay. The positive case was that delay had in fact been caused by other events. The Contractor argued that it was not within the jurisdiction of the Arbitrator to consider this positive case and that he was only entitled to consider the events put before him by the Contractor. This proposition was rejected both by the Arbitrator and the Court.

  40. It is important to bear this in mind when considering the passage at paragraph 13 of the Judgment dealing with concurrency, in which Dyson J. stated:

    “....it is agreed that if there are two concurrent causes of delay, one of which is a relevant event, and the other is not, then the Contractor is entitled to an extension of time for the period of delay caused by the relevant event notwithstanding the concurrent effect of the other event. Thus, to take a simple example, if no work is possible on our site for a week not only because of exceptionally inclement weather (a relevant event), but also because the Contractor has a shortage of labour (not a relevant event), and if the failure to work during that week is likely to delay the works beyond the Completion Date by one week, then if he considers it fair and reasonable to do so, the Architect is required to grant an extension of time of one week....”

  41. As is clear from the above passage this was a concession and, furthermore, it was a concession in relation to an issue which did not directly arise before the Court. Thus, these observations, notwithstanding that they came from Dyson J., need to be approached with some caution.

  42. The other potentially relevant authority is Royal Brompton Hospital NHS Trust v Hammond & Others (No. 7) [2000] 76 Con LR. This was a decision of his Honour Judge Seymour QC, as he then was. Whilst, at page 174, Judge Seymour referred to and followed what Dyson J. had said in Henry Boot he made clear in the preceding passage that true concurrency was unlikely to be found very often:
     
    “...it is, I think, necessary to be clear what one means by events operating concurrently. It does not mean, in my judgment, a situation in 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’ ”.

  43. Moreover, one must bear in mind in relation to Royal Brompton that this was a professional negligence case. The Architects were being sued on the basis that they had been far too generous in granting extensions of time. One of their many responses was to say that it was perfectly appropriate to give extensions of time where there were concurrent culpable and non-culpable causes of delay. However, the Court was not directly concerned with the issue of whether extensions of time should or should not be granted where there is true concurrency.

    Problems with the Henry Boot approach
  44. Although the guidance in the Henry Boot case appears clear, and comes from an extremely eminent source, there is, it is suggested, some difficulty with this approach.

  45. It seems to follow that where there is true concurrency as identified the Contractor gets an extension of time for the relevant period and the Employer’s claim to liquidated damages fails. That seems a fair outcome.

  46. However, there are difficulties.

  47. Firstly, how does one bring such a conclusion within the wording of JCT Clause 25 or similar clauses? The Contractor has not in fact been delayed by the bad weather or other Employer’s risk event. He would have been delayed in any event because he had insufficient labour.

  48. Secondly, what of direct loss and/or expense? Surely the Contractor is not to receive loss and expense for this period when he would have had to be on site in any event owing to his own default. So one gets back into the problem of inconsistent conclusions on claim and counterclaim.

  49. It may well be that the solution proposed by Dyson J. is fairer and more reasonable than a situation whereby the Contractor pays the liquidated damages even though he would have been in delay anyway due to the Employer’s default. It is also more attractive then an outcome whereby the elaborate extension of time provisions are disapplied and time becomes “at large”.

  50. However, there are conceptual difficulties and this reinforces the suggestion made above that a Court or other Tribunal will rarely, if ever, make a finding of true concurrency.
     
    Concurrency and Bespoke Amendments
  51. Mindful of these difficulties, Employers and developers now seek to make amendments to Standard Forms which deal specifically with the issue of concurrency. The intention is that if there is concurrency the Contractor gets neither extension of time nor loss and expense but has to pay liquidated damages for the period of delay.

  52. In consideration such amendments, one must begin with the proposition that “the parties are to be regarded as masters of their contractual fate”: see Pagnan v Feed Products [1987] 2 Lloyd’s Reports 601 at 611.

  53. Thus, if the amendments are sufficiently clear and compelling in their effect they may indeed have the result suggested above.

  54. However, no matter what wording is adopted it will still fall to be interpreted by a Tribunal. Most Tribunals will, I think, be unhappy with an outcome whereby the Contractor must pay liquidated damages even though he could not have completed earlier in any event owing to the Employer’s default.

  55. Thus, such bespoke amendments are, in my view, likely to be construed narrowly. In other words, concurrency will only be held to arise where there is true concurrency of the plainest kind as identified above.

  56. Alternatively, a Tribunal might in effect undermine such provisions by construing them broadly and then concluding that they offended against the principle that the Employer should not be entitled to claim damages where he had himself prevented the Contractor from completing on time i.e. the time at large argument above.

    Conclusion
  57. For the reasons identified above, it is my view that Tribunals will always be reluctant to conclude that there is concurrency and will confine such a conclusion to circumstances of “true concurrency”.

  58. It is also my view that attempts to draft bespoke amendments to Standard Forms to make concurrency a more likely finding are themselves likely to be unsuccessful.


    Adrian Williamson QC, Barrister, Arbitrator, Adjudicator.
    The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice. © All rights reserved.

11th August 2005
Keating Chambers
15 Essex Street
London, WC2R 3AA


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