Practical Law

By now, you’ll no doubt have noticed that the ninth edition of Keating on Construction Contracts (Sweet & Maxwell, 2011) has arrived on your bookshelves.

Published earlier this year, the new edition has been eagerly awaited, not least because some of us were impatient to see what colour it was going to be (it’s a grey and orange combination this season, embellished with a touch of gold). More importantly, however, Keating has devoted an entire chapter (chapter eight) to delay and disruption claims. It’s a relief to see that it’s not just me who finds this a difficult area – the subject really is complex!

Of course, the eighth edition already dealt with many of the issues included in the new chapter eight. However, this text has been consolidated within a single chapter, expanding on those issues and adding commentary on the entirely new topics of delay analysis and disruption claims. In addition, Keating has added an updated discussion on the very tricky topic of causation and concurrent causes of delay (chapter nine).

Concurrent delay – when does it arise and what is the issue?

The issue of concurrent delay in construction contracts is a major headache for those in the industry. As there is little coherent guidance from the courts on the subject, the ninth edition of Keating provides a useful roadmap to this issue.

Where two events, one being the employer’s responsibility and the other the contractor’s responsibility, cause concurrent delay to a project, the question arises as to whether the contractor is entitled to extra time and/or money. There are a host of different approaches to causation that can be used to assess such claims, which is where it all starts to get rather confusing. Helpfully, Keating includes a definition of concurrency:

“…a period of project overrun which is caused by two or more effective causes of delay which are of approximately equal causative potency”.

This is the so-called John Marrin definition, approved in 2011 in Adyard Abu Dhabi v SD Marine Services.

Keating attempts to deal with and consolidate recent developments in the law (the De Beers v Atos, City Inn v Shepherd and Adyard cases), while taking the reader through the various competing approaches, including:

• The “but for” test.
• The burden of proof approach.
• The Devlin approach (from Heskell v Continental Express Ltd [1950] 1 All ER 1033).
• The dominant cause approach.
• The Malmaison approach (named after Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 33).
• Apportionment.

Concurrent delay and extensions of time

Keating now leaves us in little doubt that the Malmaison approach is the:

“…now accepted approach to resolving issues of true concurrency in the context of extension of time claims”.

Like the eighth edition, the ninth edition appears to apply the Malmaison approach to John Marrin’s definition of concurrent delay. So, a contractor would be entitled to an extension of time even though the matter relied on is not the dominant cause of delay, provided that it has at least equal “causative potency” with all other matters causing delay. The rationale for this is that, where the parties have expressly provided in their contract for an extension of time caused by certain events, they must be taken to have contemplated that there could be more than one effective cause of delay (one of which would not qualify for an extension of time) but by their express words agreed that the contractor is entitled to more time for an effective cause of delay falling within the relevant contractual provision. This approach was approved by the TCC in Steria Ltd v Sigma Wireless Communications Ltd.

Even with more pages now devoted to concurrency and related issues, the inherently complex nature of the subject and the lack of case law means that the much needed clarity remains elusive and many questions remain:

• Does Malmaison only apply to “John Marrin concurrency”?
• What does “equal causative potency” actually mean in this context?
• Why shouldn’t a cause that has less than equal causative potency qualify, provided it is at least an effective cause of delay?

The words used in the summary at the end of chapter nine (paragraph 9.072) seem to suggest an acceptance of this last bullet point, thereby invoking a looser definition of concurrency in which the Malmaison approach applies whenever there can be said to be two “effective” causes of delay. Perhaps Keating considers these to be one and the same, believing that the words “equal causative potency” add little to the requirement that there be two effective causes of delay?

Different categories of claim – no need for the appropriate tests for causation to be the same?

Another development in the ninth edition is a marked distinction between the approaches that might be used to:

• Assess an extension of time claim (as discussed above).
• Determine an associated loss and expense claim.
• Assess a damages claim.

The ninth edition appears to make the point that there is no reason, in principle, why the appropriate tests for causation should be the same as between any of these claims.

Indeed, in contrast with extension of time claims, it is emphasised in a number of places that the Malmaison approach is unlikely to apply in loss and expense claims, unless the particular wording of a contract permits it. Citing De Beers as authority, the ninth edition notes that the fact that the “but for” test of causation cannot be satisfied where there are concurrent causes of delay is normally taken to deprive the contractor of a loss and expense claim. It therefore appears that a stricter test of causation will apply to loss and expense claims than in post-Malmaison extension of time claims, the result being that a contractor will usually get time but not money.

The summary position

Chapter nine concludes with a helpful summary of Keating’s preferred approaches to assessing each of the different categories of claim arising out of concurrent delay. Of course, Keating has also included a caveat in chapter eight:

“..a proper analysis of entitlement to extension of time and any associated loss and expense in each case must involve a careful consideration of the wording of the relevant clauses and an assessment of the (possibly different) tests of causation that should be applied to them in order for the contractor’s actual entitlement to be arrived at.”

In the end, this seems to be the point. Concurrent delay raises a multitude of hypothetical factual scenarios and there is still a lack of precise guidance from the courts in dealing with each of these. In addition, the various tests are not rules of law. They may be displaced by alternative tests depending on the wording of the relevant clauses and the overall commercial intent of the contract. Although the ninth edition offers us further guidance, there is no universal solution. Sadly, the issue of concurrent delay remains a major headache.