What happens when delays have been caused equally by client and contractor? Here are some thoughts from John Marrin QC
Assume that a project overruns by one month. There are two equally significant causes. The first is the contractor repairing its defective work. The second is variations requested by the employer. Does the contractor get an extension of time?
The above example raises the problem of “concurrent delay”. Lawyers and delay analysts have theorised about it for years. No definitive answer has been given by the courts.
The most recent contribution to the debate came in a talk given just before Christmas in London to the Society of Construction Law. The speaker was John Marrin QC of Keating Chambers. His previous paper on the topic in 2002 has been endorsed by the High Court. So a packed audience was waiting to hear his latest thoughts.
Any theory of concurrent delay, Marrin argued, should be able to provide an answer to three problems. First it should not offend what is known as the “prevention principle”. This is the notion that an employer cannot deduct liquidated damages (LDs) if it has itself been the cause of the delay. Second, it must not allow a situation where, for the same period of delay, the employer can deduct LDs and the contractor can get an extension of time. That would make no sense. Third, it should try to satisfy a test for causation known as the “but for” test.
Armed with these requirements, Marrin then examined the various approaches to concurrent delay.
Many cases of so-called concurrent delay, on closer analysis, resolve themselves into something else. In other words, one often finds that one cause or another was really the true cause of the delay, so that there never was any concurrency in the first place.
The ‘Malmaison’ approach ticks all the boxes. it has also been endorsed by the courts in subsequent cases and is the preferred approach
Marrin’s working definition of concurrent delay is a delay caused by two or more events that are approximately equal in terms of causing the delay. So if one of the events can properly be said to be only a minor cause of the delay, it may be disregarded altogether, and there is then no concurrency at all. Thus, genuine concurrent delays may be quite rare.
In cases where there does seem to be genuine concurrent delay, what about apportioning the time? This approach has found favour in Scotland with the case of City Inn vs Shepherd, and also in some other jurisdictions, but does not represent English law. It is not a good approach either, says Marrin, because if you allow any LDs at all in a situation where the employer has caused the delay, even if only in part, you potentially contravene the prevention principle. Also, the basis for any apportionment is usually unclear.
How about looking at the “dominant cause” test then? Here, you decide which of the two causes is dominant. That then tells you whether the employer or contractor wins.
But if two causes are equal in their effect, how can it be said that one is dominant? This approach did not find favour in the only court case where it was considered, anyway.
That leaves the “Malmaison” approach, so called after the case of Henry Boot Construction vs Malmaison Hotel (Manchester) Ltd (1999). With this, the contractor gets its extension of time, but does not necessarily get any loss and expense, which it has to prove separately. This is better, says Marrin - it just about ticks all of the boxes in the three tests above. It has also been endorsed by the courts in subsequent cases and is the preferred approach. The contractor gets an extension of time for the event that he relies on, even if he is to blame for some other concurrent event.
Employers should remember that it is possible for them to draft that approach out of their contracts. The parties are free to provide their own scheme for dealing with concurrent delay. “Anti-Malmaison” clauses have been appearing in contracts for years, though they have not yet been tested in the courts.
Employers will argue that such a clause is fair, as there is no presumption in favour of either party. Contractors will say that the Malmaison approach is the leading one for good reason. As ever, whether such clauses end up in contracts depends on commercial negotiation.
Ian Yule is a partner in Weightmans