There is an ongoing debate as to the correct approach to take in relation to concurrent delay under construction contracts - where delay is caused by two events which run alongside each other, one of which is a contractor risk event and the other is an employer risk event. The correct approach was considered in the recent case of Saga Cruises BDF Ltd v Fincantieri SPA .
What is the current legal position on concurrent delay?
The law in England is thought to be as set out by Dyson J in Henry Boot Construction Ltd v Malmaison Hotel (Manchester) Ltd . Now known as the ‘Malmaison principle’, this established that a contractor is entitled to an extension of time but not additional costs where there is concurrent delay.
Although the Malmaison principle appears straightforward there are conflicting interpretations as to what approach should be taken when deciding whether there is a link between two potential causes of delay such that they can be considered concurrent. Saga Cruises considered which the favoured approach is.
The basic facts in Saga Cruises were:
- The claimant owned cruise ships and contracted with the defendant to carry out some repair and fit-out works to one of their cruise ships, the Saga Sapphire.
- Works were due to start on 9 November 2011 and be completed by 17 February 2012. There were several delays to the works and it was agreed between the parties to extend the completion date to 2 March 2012.
- Throughout the works there were a number of delays to the scheduled completion date, some of which were the claimant’s responsibility and others that were the responsibility of the defendant. In the end the claimant did not receive the completed cruise ship until 16 March 2012.
A few of the key causes for the delay were as follows:
- The defendant was responsible for creating new cabins which were not completed until 16 March 2012, and for the installation of a new proprietary decking system which was not completed until 14 March 2012.
- The claimant was responsible for lifeboats, which had major weight issues, resulting in delays between 3 March 2012 and 14 March 2012.
- Defective flooring was installed by representatives of the claimant, who was responsible for requesting that the defendant installed additional insulation. This led to delays between 2 March 2012 and 10 March 2012.
So what did the respective parties argue?
- The claimant argued that the completion of the works was already delayed by delay events which were the defendant’s responsibility and as such the claimant's failings did not impact upon the actual completion of the works. This is seen as a narrower interpretation of the Malmaison principle and focuses on timing rather than substance of a delay event.
- Unsurprisingly the defendant argued that there were two concurrent causes for delay, one of which would entitle the defendant to an extension of time, and one which would not, so it was entitled to an extension of time notwithstanding the concurrent cause of delay. This is seen as the broader interpretation and does not limit itself to focusing on timing but considers whether delay events are an effective cause of delay.
What did the court decide?
The court agreed with the claimant. In a key part of the judgment the court explained:
“the importance in concurrency arguments of distinguishing between a delay which, had the contractor not been delayed would have caused delay, but because of an existing delay made no difference and those where further delay is actually caused by the event relied on."
As a result, the court did not give the defendant an extension of time for the period between 2 and 14 March 2012, the period where delays were also caused by the claimant. The court did not believe that the defendant should be entitled to rely on the claimant’s delay events to effectively cancel out the delays for which the defendant was already responsible. In order for the defendant to benefit from the Malmaison principle, the defendant would have to prove that the claimant's delay events caused delay.
Although Saga Cruises does not bring to an end uncertainty in relation to concurrent delay, it does show a trend towards a more restrictive approach to the assessment of concurrent delay. The decision reached in this case is the simplest interpretation to implement, but does that necessarily mean that it is the best approach to take? It will be interesting to see how the court approaches concurrent delay cases in the future and whether they support this more restrictive approach.