The City Inn case throws up a logical approach to granting extensions of time due to concurrent delays – if the delay has two causes, then why not apportion responsibility accordingly?
The judgments resulting from the City Inn litigation (Building, 18 January and 15 February) have already explored key issues concerning extensions of time under JCT contracts.
The latest judgment of Lord Drummond Young is surprisingly radical in its interpretation of the traditional JCT clauses and challenges some of the conventional wisdom surrounding them. Consider, for example, his approach to concurrent delays.
The classic exposition of the impact of concurrent delays on a contractor’s entitlement to an extension of time is to be found in Mr Justice Dyson’s judgement in Henry Boot vs Malmaison 1999. He gave the example of a site brought to a standstill by labour shortages (not a relevant event) during a period of exceptionally inclement weather (a relevant event). If that period of non-working is likely to delay completion by one week, then, if he considers it fair and reasonable to do so, the architect must grant an extension of time in spite of the contractor’s labour problem.
But what happens when the concurrent events operate in parallel but run from different starting dates? If the labour shortage begins on a Monday and the inclement weather starts on Thursday, are the two events still to be regarded as concurrent, or must they begin more or less simultaneously?
Judge Seymour in Royal Brompton vs Hammond 2001 took the view that they must begin simultaneously to qualify as concurrent, but in City Inn, Lord Drummond Young disagreed. Even if the start dates were different, this would still be a case of delays acting concurrently, and it might, the judge continued, be appropriate to apportion responsibility for the delay between the two causes.
This view is more likely to find support amongst contract administrators than the approach of Judge Seymour. The crucial question, where concurrent delays operate, is how the administrator is to exercise judgement in determining the extension on a fair and reasonable basis. It might,the judge continued, be appropriate to apportion responsibility for the delay between the two causes rather than award an extension equivalent to the entire length of the delay that would have resulted from the relevant event operating in isolation.
The administrator is not expected to use a coldly logical approach, but should use his discretion by reference to the
Now this approach has not previously been blessed by the courts here, although it is common in Canadian and US tribunals. The administrator is not expected to stick to a coldly logical approach, but should use his discretion by reference to the available evidence.
If there was a clearly identified “dominant cause” responsible for the delay, then obviously no apportionment would be called for, but with overlapping or concurrent delays, apportionment would offer an attractive solution.
In the City Inn case there were multiple concurrent causes, but there were also two significant instances of contractor default. So how should the apportionment be undertaken? The judge said the approach should be the same as that of a court apportioning liability on account of contributory negligence or contribution between wrongdoers. The main factors to be considered were the degree of culpability involved and the significance of each of the elements in causing delay. The contractor was awarded nine weeks out of the 11-week extension it sought.
The judge also had to deal with the contractor’s claim for prolongation costs for the extended contract period. City Inn argued that where a contractor incurs additional costs caused by both an employer delay and a concurrent contractor delay, the contractor should only recover compensation to the extent that it could identify the additional costs caused by the employer delay. The judge disagreed. Just as with the extension of time issue, he regarded it appropriate to apportion the contractor’s losses where they arose from events for which both parties were responsible. The result should be no different. Nine weeks prolongation costs were awarded.
It remains to be seen whether or not this judgment will be followed by the higher courts. But it should appeal to practitioners on all sides of the industry who support an approach to contract interpretation based on equitable principles rather than the all or nothing solution required by common law’s refusal to permit apportionment in the law of contract.