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Extensions of Time and Concurrent Delay Case

The document summarizes a 2010 Scottish court case, City Inn v. Shepherd Construction, regarding determining contractor entitlement to extensions of time when there are competing causes of delay, known as concurrent delay. The court rejected a detailed critical path analysis in favor of a more practical approach. It decided that when concurrent delays exist from both relevant events and contractor-caused events, and none are dominant, apportioning delay between the causes is fair. This establishes precedent in Scotland and provides guidance in England that common sense, rather than an overly complex analysis, should determine extensions of time in concurrent delay situations.

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Paritosh Verma
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50 views

Extensions of Time and Concurrent Delay Case

The document summarizes a 2010 Scottish court case, City Inn v. Shepherd Construction, regarding determining contractor entitlement to extensions of time when there are competing causes of delay, known as concurrent delay. The court rejected a detailed critical path analysis in favor of a more practical approach. It decided that when concurrent delays exist from both relevant events and contractor-caused events, and none are dominant, apportioning delay between the causes is fair. This establishes precedent in Scotland and provides guidance in England that common sense, rather than an overly complex analysis, should determine extensions of time in concurrent delay situations.

Uploaded by

Paritosh Verma
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Extensions of time and concurrent delay: the City Inn

case
This guide was last updated in August 2011. 

 Construction contracts 

 TMT 

 Hotels 

 Energy 

 Core Industries & Markets 

 UK

Determining contractor entitlements to extensions of time under a


contract when there are competing causes of delay, also known as
'concurrent delay', is a complex area of law. In 2010, the Scottish
case between City Inn and Shepherd Construction highlighted again
the difficulties in establishing whether the contractor is entitled to
more time where concurrent delays exist.
The Scottish Appeal Court rejected a detailed critical path analysis
in favour of a more practical, commonsense approach. It decided
that apportioning delay was the best method where there are
competing causes of delay and none of those causes are the
dominant cause of delay.
In Scotland at least, this decision is now binding on lower courts.
Scottish judgements are not binding in England, but given that it is
an Appeal Court decision it is likely to be very persuasive. This guide
looks at the outcome of the case, and its wider implications.
Facts of the case
City Inn employed Shepherd, the contractor, to construct a hotel in
Bristol. Completion of the project ran late and, after a series of
adjudications, Shepherd was awarded a four week extension of time
(EoT) by the architect and a further five weeks by an adjudicator –
giving nine weeks extension in total. City Inn was unhappy with the
decisions of the adjudicator and its architect, and raised proceedings
in the Scottish Courts seeking various orders including:
 a reduction of the architect's certificate awarding a four week
EoT;

 a declaration that Shepherd was not entitled to a single day of


EoT;

 repayment of damages.
The parties had used a standard form JCT contract which contained
a bespoke provision (clause 13.8) which City Inn argued barred
Shepherd from obtaining any EoT at all. Shepherd argued that City
Inn had waived its right to rely on this provision.
Lord Drummond Young's opinion
The case was first heard before Lord Drummond Young in 2007.
Clause 13.8 and waiver
The evidence showed that neither party, nor the architect, had made
any reference to clause 13.8 during the course of the contract, and
applications for EoT had been made and considered as if the
provision did not exist. In fact, it became clear that the first time
City Inn ever sought to rely on the provision was during the
adjustment of its written claim, sometime after the court action had
been raised and a number of years after the job was finished.
Lord Drummond Young agreed that it would make no sense to apply
the bespoke clause (clause 13.8) to the instructions and variations
which caused delay - not because of their content, but because the
instruction or variation had itself been given too late. He also found
that City Inn had effectively waived its right to rely on the clause by
its director's failure to mention the provision in face to face
discussions with the contractor and the fact that Shepherd had then
proceeded as if the clause did not exist. There was evidence, which
he accepted, to the effect that if City Inn and its architect had
refused the earlier EoT application on the basis that it didn't comply
with clause 13.8, Shepherd would have applied the clause to later
EoT applications.
Causation, concurrency and delay
With regard to delay it was clear that various events had occurred
concurrently with one another, particularly towards the end of the
project, which all potentially caused delays to completion. Some of
these were Relevant Events under the construction contract, and
some were events which were attributable to Shepherd.
Shepherd had been unable to locate the full version of its original
construction programme to use as evidence - all that was available
was a fairly basic programme showing activities and durations. An
as-built programme was agreed between the two parties' experts,
and City Inn's expert then worked backwards to establish the critical
path of how the job had to proceed and how much time had to be
given for each task from that information. However, the critical
path  established by City Inn's expert managed to avoid many of the
matters on which Shepherd relied for its claims. This led him to the
conclusion that these had not affected the time for completion and
so the contractor was not entitled to a single day's EoT.
Shepherd's expert, on the other hand, gave evidence that he had also
tried to establish the critical path but felt it was impossible to do so
reliably from the information available. Instead, he compared the
original and as-built programmes to see where delays occurred and
then looked at what had caused those delays. He then used his
experience and judgement to offer an opinion as to the effect those
delays had on completion.
At the trial, numerous errors were identified in City Inn's critical
path analysis which were eventually conceded by its expert.
Lord Drummond Young concluded that the contract expected the
decision maker to come to a 'fair and reasonable' decision on
whether to approve an extension of time. Where a Relevant Event
and contractor risk event existed at the same time then, irrespective
of when the events began or ended, if neither of the events was
'dominant' then a fair and reasonable outcome may involve an
apportionment exercise. The judge then went on to consider the
evidence and the competing approaches of the two experts. Lord
Drummond Young rejected City Inn's critical path analysis and
preferred the evidence of Shepherd's expert. Applying this
approach, he found that Shepherd was entitled to the same nine-
week EoT that had been awarded by the adjudicator.
City Inn appealed.
The Appeal decision
The Scottish Inner House heard the appeal in 2009 and made their
decision in 2010. All three appeal judges rejected City Inn's appeal
on many of the same grounds as Lord Drummond Young. The
aspect of their decision which is most interesting, however, relates
to the proper application of an extension of time clause and how to
deal with issues of concurrency and causation. The majority
judgement, by two of the three judges, set out five propositions:
 a Relevant Event must delay or be likely to delay the works;

 whether or not the Relevant Event actually causes delay is an


issue of fact which should be resolved by 'principles of common
sense';

 the decision maker can decide whether the event has caused
delay by the use of whatever evidence he considers appropriate. This
may be a critical path analysis, but the absence of one is not fatal;

 if a dominant cause can be identified in respect of the delay,


immaterial causes should be left out. If this dominant clause is not a
Relevant Event under the contract, the claim will fail; and

 where there is no dominant cause, an apportionment between


a Relevant Event and other events must be carried out in a fair and
reasonable way.
One of the three judges in the appeal decision, Lord Carloway,
agreed with the overall result but rejected the concept of
apportionment. On his approach, the architect or decision maker's
sole task is to consider whether the relevant event, viewed in
isolation, is going to delay completion. If it is, then the next question
is what EoT would be fair and reasonable to award. Lord Carloway
agreed that this was a matter of "common sense". He also agreed
with the other two judges that a critical path analysis was not
essential to the assessment of an EoT.
What does the decision mean in practice?
In Scotland at least, the decision is now binding on lower courts.
Scottish judgements are not binding in England, but given that it is
an appeal decision it is likely to be very persuasive.
All the judges appear to place great weight on the need to reach a
fair and reasonable decision on extensions of time, although they
vary in their views as to how to reach such a decision.
The decision is also a rejection of the argument that a critical path
analysis is essential to demonstrate an EoT entitlement. The value of
a critical path analysis is not completely discounted, The City
Inn case amounts to a statement that common sense, judgement
and experience are preferable to an overly complicated analysis of
causation. However, the case is most certainly not a charter to those
who wish to cut corners in the presentation of EoT claims. Shepherd
was successful because the judge found that it was not possible to
accurately recreate the critical path through the job. If accurate
electronic programming data is available, then a decision maker
may take the view that it is relevant – while taking the issue of
dominance into account where there is concurrency.
The De Beers case – Since City Inn
Following the City Inn case, concurrent delay and extensions of time
were referred to briefly in an English case in December 2010
between De Beers - the diamond manufacturers - and an IT software
contract supplier. In this case, the judge concluded that where there
were concurrent delays the contractor could not recover damages if
it would have suffered the same loss as a result of the cause that was
within its control. The De Beers case could be relied on as a
statement of the position under English law and that the approach
of the Scottish majority in City Inn ought not be followed. As the
statements about concurrent delay in De Beers were made without
reference to case law, including City Inn, it remains to be seen what
effect the case will have.

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