| Date | 23 January 2008 |
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| Judgment | City Inn Ltd v Shepherd Construction Ltd [2007] CSOH 190 |
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| The Issue | Concurrent delays. |
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| Implication |
In considering extensions of time, it may be appropriate to apportion responsibility for concurrent delays between competing causes where no dominant cause exists. |
printIn a previous article, my colleague Steve Briggs reported on the case of City Inn Limited v Shepherd Construction Limited and in particular the competing methods used by the parties’ experts to demonstrate the effects of delays as well as establishing criticality. The judgement in that case also addressed one of the construction industry’s oldest chestnuts, namely concurrency of delays. Given the paucity of court decisions on such substantive matters, following the successful introduction of adjudication, this judgement warrants a further article on this topic alone. The background to this case is not particularly relevant to this article save to say that the contractor, Shepherd Construction, had sought an 11 week extension of time in the Outer House of the Court of Session in Scotland. Lord Drummond Young awarded Shepherd an extension of time of 9 weeks. In so deciding, the judge held that the delay in completion was the result of concurrent causes the majority of which were caused by late instructions or variations issued by the Architect (Relevant Events for the purposes of Clause 25 of the contract) and two causes were the result of the fault of the contractor. In his view, it was irrelevant which cause started first so long as both causes existed simultaneously. The judge considered that “none of the causes of delay could be regarded as a dominant cause, each of them had a significant effect on the failure to complete timeously”. In the absence of a dominant cause, Lord Drummond Young had to find a way of dealing head-on with the thorny subject of concurrency. He reviewed the limited number of authorities on this subject matter and found either that he disagreed with some aspects of these judgements or that they did not fully address the matters before him. He did not agree with the findings of HHJ Seymour in the Royal Brompton Hospital NHS Trust v Hammond case in which it was found that a contractor would be entitled to extensions of time by reason of Relevant Events, notwithstanding its own defaults. In this particular instance, the judge was not persuaded that, in the event of true concurrency, all Relevant Events trump other causes of delay (as endorsed by the Society of Construction Law’s Protocol on Delay and Disruption). Lord Drummond Young found further guidance on the construction of Clause 25 from several American court decisions (as he had done previously in the appeal in the John Doyle v Laing Management global claim case) and came to the conclusion that it was appropriate to apportion responsibility for delay between Relevant Events and contractor default. His Lordship said that an architect was obliged by the wording of Clause 25 to determine extensions of time on a “fair and reasonable” basis and that in his opinion apportionment was consistent with that requirement. In approaching the matter of apportionment, he likened it to the exercise of apportionment in cases of contributory negligence or contribution amongst wrongdoers. In doing so, account should be taken of the degree of blame of each party and the causative potency of each delaying event. According to the judge, causative potency was likely to be more important than the degree of culpability, and he cited the length of delay caused by each causative event to be a factor that would normally fall to be considered. This decision is the first legal authority for the concept of apportionment in the process of determining extensions of time. However, this judgement does fit into a developing trend in other areas of the law, particularly with regard to personal injury claims, where apportionment between competing causes has been adopted. The judgement also extends the concept of apportionment as it relates to global claims. It will come as no surprise to readers that it was Lord Drummond Young who gave the leading opinion in the John Doyle Construction v Laing Management (Scotland) Limited case. Lord Drummond Young’s judgement however does raise some new questions. Firstly, his reliance on the words “fair and reasonable” in Clause 25 as justifying apportionment calls into question how certifiers in other forms of contract (notably NEC/ICE) should approach concurrency where the words “fair and reasonable” are missing from the relevant extension of time clauses. In such cases, the architect or engineer will be under no less an obligation to act in a fair and reasonable manner. Will apportionment therefore be applicable under these forms of contract? Secondly, will apportionment be applicable to the ascertainment of loss and / or expense claims? In this case, Lord Drummond Young considered the normal “but for” argument which is founded on the premise that if the contractor would have incurred the additional costs in any event as a result of his own delays, he would not be entitled to recover those additional costs. Nevertheless, although he acknowledged that the wording of Clause 25 and 26 differed (Clause 26 does not obligate the Architect to ascertain loss and / or expense in a “fair and reasonable” manner), he saw no reason why prolongation costs should not follow the result of the claim for an extension of time. Finally, many architects and engineers already have difficulty with understanding the mechanics of programmes, far less identifying true concurrency, degrees of culpability and causative potency of each alleged delaying factor. Furthermore, certifiers will not relish trying to apportion blame, including their own. Will their decisions on extensions of time henceforth be more impressionistic and lead to a greater number of disputes? This decision is binding in Scotland, unless successfully appealed, but it remains to be seen if it is followed south of the border. Given the general acceptance of the reasoning in the John Doyle v Laing Management case, who would bet against England and Wales also adopting apportionment when addressing concurrent delays?
CJ-0803
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