Search

Assessing claims for extensions of time and

disruption: concurrency and apportionment
The long-running City Inn case did not just excite comment in relation to time
bars. It also added the concept of apportionment to the debate about the
assessment of extensions of time where there are concurrent delays. Dealing
with concurrency is never easy. True concurrency exists wherever the effects
of two causes of delay are having an effect on the project at the same time.
So far so good, but where it gets more complex is when you need to deal with
questions of causation – what actually caused the loss? So any judgment that
deals with this issue provides a welcome forum for discussion, even if it does
not provide the magic answers.

What do we mean by concurrent delay?

Depending, of course, on the precise terms of the contract, to obtain an
extension of time a contractor will need to demonstrate both that there was an
event recognised under the contract and that that event has delayed or is
likely to delay the works beyond the planned completion date. A problem
arises when there are two or more possible competing events arising at the
same time. Which is the true cause of delay? The question has come before
the courts in many different guises. In Leyland Shipping Company Ltd v
Norwich Union Fire Insurance Society Ltd ,1 the House of Lords adopted the
“proximate cause” test when a torpedoed ship subsequently sank in the bay
during a storm. In construction cases, the following approaches are often put
forward:
(i) Dominant cause. The idea here is that where there are two competing
clauses, the claiming party needs to establish that the other is responsible
for the dominant cause. This will be a question of fact.
(ii) The Malmaison test. This is named after Dyson J’s (now a member of
the Supreme Court) approach in Henry Boot Construction (UK) Ltd v
 Malmaison Hotel (Manhattan) Ltd 1 where he said (and the parties had
agreed to this approach):
“Second, it is agreed that if there are two concurrent causes of delay, one
of which is a relevant event, and the other is not, then the contractor is
entitled to an extension of time for the period of delay caused by the
relevant event notwithstanding the concurrent effect of the other event.”
(iii) First in line approach. This was the approach adopted by Judge
Seymour in Royal Brompton Hospital NHS Trust v Hammond .2 The test
here proceeds on the basis that where there are two competing delay
events, the one that occurred first in time is the cause of the delay.
The City Inn case reviewed all three options, soundly rejecting one of them.
John Doyle Construction Ltd v Laing Management (Scotland) Ltd 3
The apportionment debate perhaps began with the case of John Doyle
Construction Ltd v Laing Management (Scotland) Ltd, where a claim for direct
loss and expense was made under the equivalent of cl.26 of the JCT Standard
Form 1980. The court had to consider the way in which a contractor could
establish a global claim, where it is impossible to demonstrate individual causal
links between events for which the employer is responsible and particular
items of loss and expense. Typically when a global claim is pursued, the
contractor must demonstrate that the whole of his loss and expense results
from matters that are the responsibility of the employer. However, here, the
court identified that that requirement might be mitigated in three ways:
(i) it may be possible to identify a causal link between particular events
for which the employer is responsible and individual items of loss;
(ii) the question of causation must be treated by the application of
common sense to the logical principles of causation, and if it is possible to
identify an act of the employer as the dominant cause of the loss that will
suffice;
(iii) it may in some cases be possible to apportion the loss between the
causes for which the employer is responsible and other causes.
City Inn Ltd v Shepherd Construction Ltd 4 – the facts
One of the judges in the Laing v Doyle case was Lord Drummond Young. He
was also the Judge in the City Inn case. It is probably worth briefly setting out
the facts of the City Inn case. By a contract dated 15 October 1998 and 11
November 1998, the reclaimers, City Inn, engaged the respondents, Shepherd,
to build a new 168-bed hotel in Bristol. The Contract incorporated the JCT
Standard Form of Building Contract (Private Edition with Quantities) 1980
Edition with bespoke amendments. Completion date was 25 January 1999 and
liquidated damages were £30,000 per week.
Clause 25 provided that if and when it became reasonably apparent that
Shepherd was likely to be delayed, it was required to give notice forthwith to
the Architect, setting out the causes of the delay and whether any were
relevant events. Upon receipt of such notice the Architect, if in his opinion any
of the events relied upon by Shepherd were relevant events and that the
completion date would be delayed, had to give such extension of time as he
estimated to be fair and reasonable. Practical completion was achieved on 29
March 1999. In June 1999, the Architect revised the completion date to 22
February 1999, granting Shepherd an extension of time of four weeks. City Inn
was therefore entitled to deduct liquidated damages of £150,000 for the five-
week period from 22 February 1999 to 29 March 1999.
Various disputes arose between the parties and were referred to adjudication.
The Adjudicator decided that, in addition to the four-week extension of time
awarded by the Architect, Shepherd should be awarded a further five-week
extension of time, together with prolongation costs for nine weeks in total. City
Inn was therefore directed to repay the sum of £150,000 deducted by way of
liquidated damages. During 2000 City Inn issued proceedings in the Scottish
Court of Session. City Inn claimed that Shepherd was not entitled to any
extension of time beyond 25 January 1999. City Inn’s claim was advanced on
two bases.
First, as discussed elsewhere in this Review, it was argued that Shepherd did
not follow the procedures specified in clause 13.8 to claim an extension of
time. Second, it was argued that none of the Architect’s Instructions caused
any delay to completion. As a secondary argument, City Inn contended that if
any delays had been caused by the Architect’s Instructions, those delays had
been concurrent with delays arising from matters that were the responsibility
of Shepherd and that in such a case Shepherd was not entitled to an extension
of time. Shepherd counterclaimed that it was entitled to an extension of time
of eleven weeks to 14 April 1999 on various grounds, including a significant
number of Instructions for variations and additional work and late confirmation
of details of the work.
City Inn v Shepherd Construction Ltd – Lord Drummond Young
At first instance, with regard to the delay claims, Lord Drummond Young held
that City Inn was responsible for nine of the causes of delay relied upon by
Shepherd, which were Relevant Events under the Contract. Shepherd was held
responsible for two causes of delay. Lord Drummond Young held that
Shepherd was entitled to an extension of time of nine weeks and loss and
expense for that period. On the issue of concurrent delay, Lord Drummond
Young held that the Architect, in operating clause 25, should exercise his
judgment to determine the extent to which completion has been delayed by
Relevant Events and that such a determination must be on a fair and
reasonable basis. Lord Drummond Young’s basic approach was to: consider the
dominant cause first; and then, if it is not possible to identify a dominant
cause, all concurrent causes of delay must be considered. He said that:
“Where there is true concurrency between a relevant event and a
contractor default, in the sense that both existed simultaneously,
regardless of which started first, it may be appropriate to apportion
responsibility for the delay between the two causes; obviously, however,
the basis for such apportionment must be fair and reasonable.”
The Judge held that the apportionment of time and prolongation costs would
be similar to the apportionment of liability resulting from contributory
negligence or contribution between joint wrongdoers. This required
consideration of both the period of delay and the causative significance of each
event on the works as a whole.
City Inn v Shepherd Construction Ltd – the Scottish Court of Appeal
City Inn appealed to the Inner House or Court of Appeal. A key question was
whether Lord Drummond Young’s approach to concurrent delay and
apportionment was correct. Lord Osborne, with whom Lord Kingarth agreed,
upheld the decision of Lord Drummond Young stating that where there are two
competing causes in one period of delay, neither of which is dominant and only
one of which is a relevant event, the Architect should approach the issue in a
fair and reasonable way and apportion the delay between the competing
events. He set out five propositions relative to the proper approach to the
application of clause 25:
(i) It must be established that a relevant event has occurred and is a
cause of delay, and that completion of the works is likely to be delayed or
has been delayed by that relevant event.
 (ii) Whether the relevant event has had or will have any causative effect
is a question of fact to be determined by common sense.
(iii) In deciding whether the relevant event has caused delay, the
architect can consider any factual evidence he considers acceptable. A
critical path analysis is not essential.
(iv) If a dominant cause can be identified as the cause of a particular
delay, effect will be given to that by leaving out of account any causes
which are not material. Therefore, in those circumstances, the success of
an extension of time claim will depend on whether the dominant cause is
a relevant event.
(v) Where a situation exists in which two causes are operative, and one is
a relevant event and the other is caused by the contractor, and neither
can be described as a dominant cause, it will be open to the architect to
approach the issue in a fair and reasonable way to apportion the delay
between the causes.
Lord Carloway upheld Lord Drummond Young’s findings, but rejected the
concept of apportionment. He favoured a literal approach rather than the
apportionment approach preferred by Lord Osborne. In fact, Lord Carloway
said that the case all came down to what the contract said. Under clause 25 of
the JCT form an architect must decide if a relevant event had occurred, if so
whether it had or would cause delay to completion and then calculate the
appropriate extension of time that may be due. It was not a question of
concurrency at all.
The architect’s sole task is to consider whether or not any one relevant event
delayed completion, viewed in isolation, and if so, the architect should award a
fair and reasonable extension of time. He said that “what an architect must do
is to concentrate solely on the effect of the Relevant Event in the absence of a
competing default”. If a relevant event has occurred, a competing event
caused by the contractor is not relevant. Lord Carloway agreed, however, that
the matter is one of “common sense”. He said that the architect should apply
“professional judgement” and should use “his and not a lawyer’s common
sense”. The case amounts to a statement that common sense, judgement and
experience are to be preferred to an overly complicated analysis of causation.
As such, this seems to follow Roger Toulson QC who, in the case of John
Barker Construction Ltd v London Portman Hotel Ltd , set out the following
criteria that should be considered when calculating a “fair and reasonable”
extension of time:
 (i) apply the rules of the contract;
(ii) recognise the effects of constructive change;
(iii) make a logical analysis, in a methodical way, of the effect of relevant
events on the contractor’s programme; and
(iv) calculate objectively, rather than make an impressionist assessment
of the time taken up by the relevant events.
All the judges seem to have placed great weight on the need to reach a “fair
and reasonable” decision on extensions of time. Lord Osborne appears to be
unimpressed by the various attempts at classification of “concurrent delay” or
“concurrent delaying events”, stating that:
“It may not be of importance to identify whether some delaying event or
events was concurrent with another, in any of the possible narrow senses
described, but rather to consider the effect upon the completion date of
relevant events and events not relevant events. For that reason,
discussion of whether or not there is true concurrency, in my opinion,
does not assist in the essential process to be followed under clause 25.”
Royal Brompton Hospital NHS Trust v Hammond
The judges in the Scottish Court of Appeal disapproved the decision of HHJ
Seymour QC in the Royal Brompton Hospital case. Thus they disagreed that if
a relevant event occurred during a period of delay caused by a pre-existing
contractor default, then the relevant event should be disregarded and no
extension of time allowed for that period. Indeed, Lord Osborne said that this
interpretation was unnecessarily restrictive and did not allow for a common
sense view of the cause of the delay.

Conclusion
Whilst, as a Scottish decision, this is not binding on English courts, the City Inn
judgment has excited much comment and it is only a matter of time before it is
argued as being persuasive before the English courts. The Inner House
confirmed that Lord Drummond Young’s test of a fair and reasonable
apportionment of competing delay events was a valid one. One might ask the
extent to which the courts were influenced by the wording of the JCT contract
which requires that the architect or contract administrator should award such
extension of time as he “estimates to be fair and reasonable”. Lord Osborne’s
five principles set out a common sense approach to be followed when
assessing extensions of time for delays caused by more than one event.
This decision supporting a fair and reasonable assessment and an
apportionment of competing delays does not mean that the days of critical
path analyses are numbered. Whilst all three judges agreed that a critical path
analysis was not essential to carry out the exercise, they could see that such
an analysis may well be relevant. Detailed analyses of delay events should still
be carried out where the information is available. Indeed, both Lord
Drummond Young at first instance and the judges in the Inner House
considered the parties’ expert evidence on delay in some detail. Detailed and
supportable delay analysis showing the critical path through the works will
therefore continue to play a central role in claims for extensions of time.
However, where it is not possible to prepare an accurate critical path analysis,
this judgment suggests that this will not necessarily be fatal to any claim for an
extension of time.