The Council appointed Thomas Barnes (“TB”) (in administration) to build Blackburn bus station.
There were severe delays on the project, for which TB claimed extensions of time (“EOT”). The Council ultimately terminated the contract because of the delays and the administrators for TB brought proceedings contesting the termination, seeking to establish a right to EOT, and claiming loss and expense and damages for wrongful termination.
The key dispute related to the allegation that works following the erection of structural steelwork were delayed because of deflection and associated issues requiring remedial works, which caused a delay to the critical path, where it was alleged that the Council was responsible for the steelwork design. However, a separate delay occurred around the same time with TB’s roof covering work. The question was whether this contractor delay offset the Council’s steelwork design issues such that no EOT was due. This is an example of ‘concurrent delay’, where more than one event occurs at the same time and there is a mix of responsibility between contractor and employer.
The law
When considering the issue of concurrent delay, the Court acknowledged that whilst there has been much debate over time, the law is ‘settled and accurately summarised’ in Keating on Construction Contracts 11th edition. The test to be considered is therefore, the ‘effective cause’ test: a contractor will be entitled to EOT if the event relied upon was an effective cause of the delay, even if there was a concurrent cause of the same delay. Therefore, if the employer delay event would have delayed completion in the absence of the concurrent contractor delay event, an EOT is usually due.
There was much argument in the case about the appropriate method of delay analysis. The Court saw methodology as less important than establishing the factual position. It reiterated that the common objective of any method of delay analysis is to assess the impact of delay to practical completion caused by particular items on the ‘critical path’ to completion. This depends on the facts.
The Court decided that the steel deflection and roof coverings issues were concurrent over the period of delay caused by the roof coverings. Both of the works items were on the critical path, and both were causing delay over the same period.
The judgment
The Court therefore, found TB entitled to EOT. However, whilst TB did establish an entitlement to EOT and therefore delay related loss, the Court held that the Council was entitled to terminate the contract and to engage replacement contractors to complete the works. This meant that TB had no prospect of recovering any sums, since any entitlement it might have established under a final account analysis would be extinguished by the Council’s right to recover and set off the cost of having the contract completed by replacement contractors. Read the full judgment here.
Points to take away
- Where concurrent causes of delay occur for which responsibility is mixed between contractor and employer, EOT will generally be due if the employer issue is an effective cause of the delay. However, contract amendments sometimes seek to prevent this outcome.
- Delay is to be assessed on the facts and methodology is less important.
- Concurrent delay scenarios and assessments are usually highly complex with no easy answers, so ‘litigation risk’ is high.
- It is vital when terminating a contract to closely follow the termination steps, procedures and timescales stated in the contract; otherwise, the termination could be invalid, giving rise to damages claim for wrongful termination.
- Finally, note that in Scotland, responsibility for concurrent delay can be apportioned between the parties (City Inn Ltd v Shepherd Construction Ltd [2010] CSIH 68). This differs from the current position in England and Wales.