26 March, 2012

 

Legal News & AnalysisAsia Pacific Hong KongDispute Resolution – Hong Kong – Construction & Real Estate

 

Concurrent delay is an issue featuring in many construction disputes where responsibility for delay in completion of the project is in issue between the parties. It can mean one of the following situations when there is more than one event said to have caused the delay:-

 

  1. Two or more delaying events ("the Delaying Events") started and ended at the same time;
  2. The Delaying Events overlapped with each other for some time, although they do not fall within situation 1 above; or
  3. It may be neither situation 1 or 2 above, but the events might be said to have contributed to the delay. In disputes about who was responsible for the delay, the parties usually focus on 3 above.

 

Concurrent delay was argued in the case City Inn Ltd v Shepherd Construction Ltd (2010), which was before the Inner House of the Scottish Court of Session (Scotland's court of final appeal). The case concerned how the architect should grant an extension of time when there was concurrent delay. The relevant condition ("the Condition") in the contract dealing with delay in the progress of the works allowed the architect to give an extension of time if the reason for the delay was a "relevant event" (as defined in the contract), and one of the definitions being the late issue of instructions. Lord Osborne gave the majority decision and formulated certain propositions (based on his review of case law) as regards the proper approach to be taken to the application of the relevant Condition in the contract, as follows:

 

  1. Before any claim for an extension of time can succeed, it must plainly be shown that a relevant event is a cause of delay and that the completion of the works is likely to be delayed or has in fact been delayed by it.
  2. Whether the relevant event caused the delay is an issue of fact, to be resolved by common sense.
  3. The decision maker is at liberty to decide an issue of causation on the basis of any factual evidence acceptable to him. While a critical path analysis, if shown to be soundly based, may be of assistance, the absence of such analysis does not mean that a claim for an extension of time must necessarily fail.
  4. If a dominant cause can be identified as the cause of some particular delay in the completion of the works, effect will be given to that by leaving out of account any cause or causes which are not material. Depending on whether or not the dominant cause is a relevant event, the claim for extension of time will or will not succeed.
  5. Where a situation exists in which two causes are operative, one being a relevant event and the other some event for which the contractor is to be taken to be responsible, and neither of which could be described as the dominant cause (i.e. situation 3 above), the claim for an extension of time will not necessarily fail. In such a situation, it will be open to the decision maker, whether the architect or other tribunal, approaching the issue in a fair and reasonable way, to apportion the delay in the completion of the works as between the relevant event and the other event.

 

These findings are not entirely consistent with the conventional approach in previous cases decided by the English Courts. It appears from many English authorities that where two or more events are causes of the same delay, the contractor is entitled to an extension of time provided that one of the events is a relevant event. We are not aware of any case where apportionment of the delay has been accepted by the Courts.

Whilst many contractors and employers may find the above findings useful in arguing extension of time in cases of concurrent delay, the prevailing view is that it is unlikely to be followed in England. In the recent English High Court case of Adyard Abu Dhabi v SD Marine Services (2011). Hamblen J. expressly held that the English approach in the situation referred to in (v) above would be to recognise that the contractor is entitled to an extension of time and not an apportionment. This case involved ship building, but the principles referred to in relation to assessing extensions of time should be equally applicable to construction cases.

Although the City Inn decision is binding in Scotland, it is only persuasive in England and other jurisdictions, where it seems that construction lawyers are still free to raise various arguments in respect of concurrent delay.

 

 

For further information, please contact:
 
Cheung Kwok Kit, Partner, Deacons
kwokkit.cheung@deacons.com.hk
 
 
 
 
 
 

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