The recent judgment in the Scottish case of City Inn v Shepherd Construction has highlighted again the diffi culties inherent in establishing the contractor’s entitlement to an extension of time where concurrent delays exist.
City Inn engaged Shepherd Construction to build a hotel under an amended JCT contract. The project was delayed and a dispute arose over the assessment of extension of time and the resulting liability for liquidated damages.
The contract contained an extension of time provision in Clause 25 similar to current JCT contracts. The clause provided that “if … the completion of the Works is likely to be delayed … the Architect shall … give an extension of time by fi xing such a later date as the Completion Date as he then estimates to be fair and reasonable”. This clause, however, did not specifi cally set out how the certifi er was to deal with concurrent causes for delay.
The court decided that where two concurrent causes are operative, one being a relevant event and the other being an event for which the contractor is responsible, the certifi er will have to approach the issue in a fair and reasonable manner and apportion the delay between the causes unless one of them is dominant.
The court adopted a very broad defi nition of what was a concurrent cause, stating that not only could concurrency arise where there were overlapping or partially overlapping (in time) delaying events but that concurrency could also arise where there were two or more events which “possessed a causative infl uence upon some subsequent event, such as the completion of the works, even though they did not overlap in time. In other words they might also be said to be contributory to or co-operative in bringing about some subsequent event.”
The wide approach adopted by the court means that the incidence of claims of concurrency is unlikely to decrease given that most signifi cant projects will have delaying events, some of which are the employer’s responsibility and some of which are the contractor’s.
There also remains the diffi culty of knowing exactly what is meant by “apportion the delay” in the event of concurrent causes for delay, and how, practically, a certifi er is expected to go about this process.
One way of avoiding the uncertainty is to do away with the problem in the fi rst place by setting out in the contract a clear rule as to how concurrency should be treated. While most standard form contracts are silent on this issue, the JCT 2005 Major Project form resolves matters in the contractor’s favour (Clause 18.7.3).
However, it is not uncommon to see this provision reversed by amendment to exclude the contractor’s ability to seek an extension of time for a relevant event where it ran concurrently with another event which is not a “relevant” one, ie for which he bears the risk. This approach will depend on a contactor’s ability to price for the risk.