Contract clinic

Anthony Hayes Decipher

‘The client has held up our project. Can we claim for delays and costs?’

The thorny subject of concurrent delays is this month’s contract clinic question. Anthony Hayes provides the answer

THE QUESTION

We’re currently refurbishing a train station. The project is delayed, but our planner says it’s not our fault and that another delay which happened at the same time was caused by the employer. Can we still claim for the delays and extra costs?

THE ANSWER

Concurrent delay is one of the most contentious issues in construction law. It was defined by John Marrin KC as: “A period of project overrun which is caused by two or more effective causes of delay which are of approximate equal causative potency”.

This arises when a project is being delayed by two events at the same time. One will be an employer risk, the other a contractor risk. For it to be truly concurrent, both must have an equal effect on the programme.

The leading case is Henry Boot Construction v Malmaison Hotel. Here, there was no provision in the contract to allocate the risk. The delay was caused by exceptionally inclement weather (an employer risk) but also by the contractor’s shortage of labour (a contractor risk). The court ruled the contractor was entitled to an extension of time.

This decision became known as the Malmaison approach: providing one of the concurrent causes of delay was the employer’s risk, the contractor should be entitled to an extension of time for the full period of delay. The Malmaison approach grants the contractor an extension of time. But it does not necessarily follow that the contractor is entitled to payment for loss and expense

This was the most common approach for many years. However, in October last year, in Thomas Barnes Plc v Blackburn with Darwen Borough Council, the court took a more pragmatic approach, refusing to accept either expert analysis, and instead balancing the different expert views.

Standard forms of construction contracts do not usually refer to concurrent delay. But, in North Midland Building v Cyden Homes, the Technology & Construction Court clarified that the parties are free to allocate the risk of concurrent delay. In this case, the court upheld an express term. The contract stated that a delay caused by the employer which is concurrent with a contractor delay shall not be taken into account when assessing a claim for an extension of time.

The Malmaison approach grants the contractor an extension of time. But it does not necessarily follow that the contractor is entitled to payment for loss and expense. This is in part because the provision for claiming an extension of time is usually separate from the provision for compensation. In addition, the contractor must satisfy the “but for” test for causation. So, “but for” the employer risk event, the contractor would have been delayed anyway. This was outlined in De Beers UK v Atos Origin.

To answer the reader’s question, as a contractor you can likely claim an extension of time in a situation of concurrent delay, unless the parties have an express provision in the contract which says otherwise. You will probably have to prove the employer risk event was concurrent. But be warned that this is a constantly debated and evolving area of construction law, as demonstrated by the most recent case. ● Anthony Hayes is an associate at Decipher.