Concurrent delay revisited


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For further information, please contact David Weare, Partner, Fladgate LLP (dweare@fladgate.com)


 

In its recent decision in the North Midland[1]case, the Court of Appeal upheld a contractual provision that would mean that the contractor was not entitled to an extension of time to the completion date for any period of concurrent delay for which the contractor was responsible.  It would be unsurprising if contract draughtsmen took this as the green light to include such a provision in their contracts.  But is it fair?

If a contractor signs up to such a provision, then, as in North Midland, the courts will give effect to what the parties have agreed.  Some contractors may, however, resist being denied an extension of time on the ground of concurrent contractor delay.  In such a scenario one can imagine the following debate:


Employer: “Why should you get an extension of time, when you could not have completed on time anyway, regardless of my delay?

Contractor: “Why should I be liable for liquidated damages, when I could not have completed on time anyway, regardless of my delay?


And so it goes on until one party gives way.

The treatment of concurrent delay where there is no express contractual provision has regularly occupied the courts over the years. One much favoured approach is that of “time not money”, meaning that where there are concurrent causes of delay, one of which is a ground for extension of time and one of which is not, the contractor will be entitled to a full extension of time, but not prolongation costs.  This is the approach adopted in the Malmaison[2] case and also in the Society of Construction Law’s Delay and Disruption Protocol.

The underlying rationale for the “time not money” approach is that it would be unjust for either party to be liable for damages when the other party was itself concurrently responsible for causing the loss. There is much to be said for that view.

The so-called “prevention principle’” follows a similar logic on the basis that a party should not be liable for a failure to complete on time where it is prevented from doing so by some act or default of the other party. Where the principle applies and the contract does not allow for an extension of time, time is said to be “at large”, in other words the contractual completion date falls away and is replaced with an obligation to complete within a reasonable time.

In North Midland the Contractor sought to argue that the prevention principle was an overriding rule of law which would prevail over any express contractual provision excluding entitlement to extension of time on the ground of concurrent contractor delay.  The court rejected that argument, but that does not mean that the prevention principle is an irrelevant consideration when it comes to drafting and negotiating a contractual provision dealing with concurrent delay.

A typical extension of time clause contains a number of “relevant events” that would give rise to an extension of time. Not all of these are “acts of prevention”.  Some, such as adverse weather, terrorism and the like, are beyond either party’s control and are a matter of risk allocation.  The case for relief from liquidated damages is plainly stronger where contractor delay is concurrent with an act of prevention by the employer.

Prior to North Midland it would have been prudent not to exclude entitlement to extension of time on the basis of concurrent contractor delay where there was an act of prevention by the employer, in order to avoid the risk of time being “at large”.  That concern has been removed by the court’s decision, but there may still be an argument for distinguishing between contractor delay that is concurrent with an act of prevention by the employer and contractor delay that is concurrent with a relevant event beyond either party’s control.  Excluding extension of time in the latter case, but not the former, may be a more readily defensible position to take in negotiations as offering a middle way between the apparently irreconcilable positions illustrated above.


[1] North Midland Building Limited v Cyden Homes Limited  [2018] CA

[2] Henry Boot Construction (UK) Limited v Malmaison Hotel (Manchester) Limited  [1999]


 

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