On 29 July 2016, the Commercial Court issued its decision in the case of Saga Cruises BDG Limited and Anor v Fincantieri Spa [2016] EWHC 1875 (Comm).

This case confirms that in some circumstances, concurrent delay (i.e. a period of project overrun which is caused by two or more events – one of which is the employer's responsibility and the other the contractor's responsibility) will not entitle the contractor to an extension of time. In other words, it does not follow automatically that concurrent delay means the contractor is entitled to an extension of time - the issue of causation must always be properly considered.

The basic facts in the Saga Cruises case relevant to the issue of delay are as follows:

  • The claimant owners ("Owners") of a cruise ship contracted with the defendant shipyard ("Yard") for engineering and fit out works with the aim of transforming the ship into the Owners' flagship.
  • The engineering and fit-out works were scheduled to start on 9 November 2011 and be completed by 17 February 2012. However, the works were considerably delayed and the scheduled completion date was postponed to 2 March 2012 by agreement.
  • During the period of the works, there were a number of delays to the scheduled completion date some of which were the responsibility of the Yard, and others the responsibility of the Owners. Ultimately, this meant that the ship was not delivered to the Owners until 16 March 2012. The causes of the delay included the following:
    • The Yard was responsible for creating new cabins by converting the available space on one of the decks, and for installing a proprietary decking system. The Court held that this work was not completed before 16 March 2012 and 12 March 2012 respectively.
    • The Owners were responsible for the lifeboats. The Owners discovered major issues with the weight of the lifeboats which resulted in delays between 3 March 2012 and 14 March 2012.
    • The Owners were responsible for requesting that the Yard install additional insulation which led to a delay between 2 March 2012 and 10 March 2012.

One of the issues in the case was whether any, or all, of the periods of delay for which the Yard was responsible were also the fault of the Owners and therefore concurrently caused.

The Owners submitted that, if completion of the works was already delayed by risks for which the Yard was responsible, then delays to completion that were the responsibility of the Owners (including, for example, the work associated with the lifeboats and additional structural fire insulation), were not to be treated as recoverable delay and did not entitle the Yard to an extension of time.

In response, the Yard relied on Malmaison (1990) and Walter Lilly (2012) for the proposition that, when there are two concurrent causes of delay, one of which would be a relevant event (i.e. an event entitling a contractor to an extension of time) and the other would not, the contractor is entitled to an extension of time for the relevant event notwithstanding the concurrent effect of the other event.

The Court rejected the Yard's approach as over-broad and held that the delays caused by the Owners did not operate so as to cancel out the delays of the Yard. When the Owners delays occurred, there were already items outstanding that were the responsibility of the Yard. Accordingly, the Yard could not then rely on a period of concurrency to disentitle the Owners from liquidated damages as a remedy for culpable delay.

Referring in particular to the analysis in the cases of Adyard Abu Dhabi (2011) and Balfour Beatty Building Ltd (1993), the Court concluded that:

A careful consideration of the authorities indicates that unless there is a concurrency actually affecting the completion date as then scheduled the contractor cannot claim the benefit of it. Causation must in fact be proved based on the situation at the time as regards delay. The Yard's approach is over broad. The submissions of Owners are to be preferred.

In other words, a contractor should not be entitled to the benefit of a relevant event if it was already delayed such that the relevant event had no actual impact. A contractor must prove that the employer's risk relevant event caused delay.

Accordingly, the Saga Cruises case stands as a timely reminder that the principles on concurrent delay as outlined in the case of Walter Lilly cannot be applied as a blanket rule without assessing the timing of the delay events and considering the true causative effect of a relevant event.