Cornerstone – Concurrent delay – there is another way
17 October 2018
Concurrent delay: a phrase which either strikes fear or joy into a party’s heart depending on which side of the argument they are on. A further feeling that is often encountered is confusion.
The phrase can be liberally bandied around in construction disputes wherever delay is mentioned, but its true meaning and effect are often overlooked.
The courts have time and time again endorsed the definition of concurrent delay formulated by John Marrin QC in 2002: “a period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency.” It is a much more limited definition than is commonly thought: on the ground and in correspondence, the terminology is used much more loosely to be synonymous with ‘any delays happening at the same time as another’. But legally it is a term of art which restricts application of the principle; indeed, Keating on Construction Contracts (a leading authority) states that “There is only true concurrency in this sense where both events cause delay to the progress of the works and the delaying effect of the two events is felt at the same time” and “only in exceptional factual situations is true concurrency of this kind likely to occur”.
Understanding the meaning of concurrent delay is relevant because it helps parties assess who bears the risk, in time and money, of risk events. Where one event arises that is the risk of the employer, and another that is the risk of the contractor, if there is true concurrent delay the starting position in English law is that the contractor will be entitled to an extension of time for that delay, but it will not be able to recover loss and expense.
This approach is often termed ‘time but no money’. The logic comes from JCT-form contracts, where relevant events are stated to be such whether or not another event also exists that is not a relevant event. On that basis, it is said, there is no reason why concurrent delay means that an extension of time ought not to be awarded. However, when it comes to loss and expense, the claim is essentially for damages, where the ‘but for’ test must be applied: a party must show that ‘but for’ the event (a relevant matter in JCT-speak) it would not have suffered the loss. It is said that ‘but for’ a relevant matter where there is concurrent delay, a contractor would still suffer the same loss (prolongation of preliminaries) because it would still be on site because of its own risk event, and thus it cannot recover damages.
The court’s general approach is a matter of continued debate, but it is now relatively settled (at least in England and Wales – the Scottish courts take a different approach). One question has been, however, whether the parties can depart from the standard ‘time but no money’ position and agree something else. The Court of Appeal has decided, in North Midland Building Limited v. Cyden Homes Limited , that it can.
In this case, the contract contained a clause stating that “any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor is responsible shall not be taken into account” in assessing entitlement to extension of time. The employer said this meant that the usual ‘time but no money’ approach did not apply, and that where there was concurrent delay, the contractor was entitled to neither money nor time. The contractor said that was not the case: first, it said the clause was ambiguous; second, it said that as a general principle of law the relevant clause should not be enforced.
The court disagreed with the contractor on both counts.
The first was dealt with simply: it said that the clause was ‘crystal clear’ that where there was concurrent delay, the contractor bore the risk of that – and it is hard to disagree.
The second was more interesting. The contractor argued that a clause such as this offended the prevention principle, the idea that a party to a contract cannot enforce an obligation where it has prevented the other party from performing that obligation. It said, therefore, that the clause was ineffective – in effect it argued that to enforce the obligation would be so detrimental to the contractor that despite having agreed it, it would be contrary to public policy.
The court described the contractor’s argument as ‘bold’ – a judicial euphemism if ever there was one. It decided that there was no authority for the proposition that the prevention principle was some kind of general legal policy in contrast to, say, rule against penalties. Rather, the prevention principle arose out of contractual principles, but had previously had no link to concurrent delay as opposed to entitlement to extensions of time generally.
Most crucially, the court noted that even if that was wrong, there was no reason why the parties could not contract out of some or all of the effects of the prevention principle. Previous cases had held that parties could draft an extension of time provision which would operate in the employer’s favour, notwithstanding that the employer was to blame for the delay, and that was applicable to this clause too. As a general principle of English law, parties are free to agree to any contractual term – even if it is a bad, or very bad, bargain for one side. The court summarised:
“If the parties do not stipulate that a particular act of prevention triggers an entitlement to an extension of time, then there will be no implied term to assist the employer and the application of the prevention principle would mean that, on the happening of that event, time was set at large. But it is a completely different thing if the parties negotiate and agree an express provision which states that, on the happening of a particular type of prevention (on this hypothesis, one that causes a concurrent delay), the risk and responsibility rests with the contractor.”
The case, therefore, confirms that it is open to parties to agree expressly how certain matters concerning delay, including concurrent delay, will be dealt with. Parties that enter into agreements without considering the implications will not be saved later by the court or an adjudicator striking out clauses as a matter of policy. What may be of more use to parties, where they seek to avoid the consequences of a clause like that in North Midland Building, will be to focus on the court’s reference to concurrent delay ‘properly so called’, i.e. that set out in the Marrin definition. Because where a clause deals with ‘concurrent delay’, it will only deal with the (it is suggested rare) circumstances where that actually exists.
For further information, please contact a member of Birketts’ Construction and Engineering Team.
This article is from the October 2018 issue of Cornerstone, our newsletter for those working in the construction industry. To download the latest issue, please visit the newsletter section of our website. Law covered as at October 2018.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2018.