Concurrent delay – further guidance on the courts’ approach

In the recent case of Thomas Barnes & Sons plc (in administration) v Blackburn with Darwen Borough Council the Technology and Construction Court considered the complex issue of concurrent delay.

Construction projects will often suffer from delay. Construction contracts usually contain provisions dealing with the consequences of these delays to include whether the contractor is entitled to an extension of time and/or the costs associated with such delay, and whether the employer has an entitlement to claim liquidated damages.

The consequences of delay will depend on the cause and who is responsible (or who bears the risk) for delay under the contract. However, concurrent delay arises where a delay which is an employer risk and a delay which is a contractor risk both cause delay to the project at the same time.

Concurrent delay is a complex concept which has been considered by the courts on a number of occasions previously. The case of Thomas Barnes & Sons plc (in administration) v Blackburn with Darwen Borough Council has provided further guidance on the courts’ approach.

Background

This case concerned a project for the construction of a bus station in Blackburn. Thomas Barnes & Sons plc (Barnes) was appointed by Blackburn with Darwen Borough Council (BDBC) as the main contractor.

The project suffered extensive delays and in June 2015 BDBC terminated Barnes’ employment under the contract. Soon after, Barnes entered administration, which they claimed was as a result of BDBC’s wrongful termination of the contract and BDBC’s failure to make interim payments.

Barnes’ Administrators brought proceedings in the TCC contesting the termination and seeking to establish Barnes’ right to extensions of time and loss and expense, seeking damages of £1.7 million. BDBC denied the claims in full.

Delay events

Barnes claimed it was entitled to an extension of time and associated loss and expense due to issues with the steelwork which were the responsibility of BDBC’s design team. BDBC’s position was that the delays were caused by an issue with the roof coverings, which were the responsibility of Barnes.

The TCC had to consider whether the two periods of delay ran parallel to each other. The TCC was provided with expert evidence by both parties and concluded that the delays were in fact concurrent.

Previous judicial approach on concurrent delay.

Historically, the preferred approach to concurrent delay was to apply that established in Henry Boot Construction Ltd v Malmaison Hotel (Manchester) Ltd. The approach adopted in this case was that a contractor will be entitled to an extension of time if the employer event they rely on was an ‘effective cause’ of the delay. This means that if the employer delay would have delayed the project in the absence of the contractor delay, an extension of time would be due. However, a contractor would not be entitled to recover any costs. This is often referred to as the ‘time but no money’ approach.

Since Malmaison there has been much judicial debate about the relationship between the cause and effect of delay, which has led to the courts considering other ways of assessing concurrent delay.

More recent cases (such as Saga Cruises BDF Ltd v Fincantieri SPA and Adyard Abu Dhabi v SD Marine Services) have favoured the ‘first-in-time’ test. That is, where an event has caused delay to completion, subsequent delays are not treated as also causing delay unless they actually increase the period of delay already caused. Therefore distinguishing from a situation where, for example, an employer delay event makes no difference to the overall completion date because the works have already been delayed by a contractor delay event.

The TCC’s decision

In the present case the TCC concluded that the correct approach was that established in Malmaison, and found that Barnes was entitled to an extension of time. However, the claim for loss and expense failed because the losses claimed would have been incurred by Barnes in any event due to the contractor delay event which was also operative at the time. This is contrary to the more restrictive ‘first-in-time’ approach which had more recently been applied by the courts.

A further interesting point to note about the case was that the delay methodology arguments put forward by both parties were rejected, with the court preferring a common sense, facts based approach. This could lead to uncertainty going forward.

Conclusion

This case confirms that in instances of concurrent delay an extension of time will usually be due if the employer delay is an ‘effective cause’ of the delay. However, this is an area of law where there remain conflicting authorities and therefore this decision is likely to result in further uncertainty and debate around the correct approach to concurrent delay claims. It will be interesting to observe how the court approaches the issue in any appeal and in future cases.

The Birketts View

Concurrent delay cases are highly complex and the conflicting authorities in this area of law mean that there is no easy answer.

Parties are free to agree the procedures that will apply in circumstances of concurrent delay in their construction contracts. In the absence of express provisions, parties may find that a dispute arises which leads to adjudication, arbitration or court proceedings. This case is a useful reminder of the importance of agreeing the apportionment of risk before starting work on a project, and for agreed contractual terms to be clearly and unambiguously drafted in order to seek to avoid disputes.

Should a dispute regarding delay look likely to arise, it is very important to be able to show clear and robust evidence of any delays on a construction project, with reference to the applicable contract programme, and to be able to evidence the operative cause of such delay. For more information or to discuss the issues raised in this article, please contact the Construction and Engineering Team.