Projects & Construction Law Update - October 2017

Please find below Clyde & Co's latest projects and construction law update from October 2017

CASE UPDATE

North Midland Building Limited v Cyden Homes Limited [2017] EWHC 2414 (TCC)

The concurrency case that's got everyone talking

Traditionally, construction contracts have remained silent on the issue of concurrency, leaving any potential disputes to be resolved by the common law position that, in the event of concurrent delay, the contractor gets time but not money. However, it is likely that all this is about to change, with the Court confirming that parties are free to allocate concurrency risk in their contracts.

Concurrent delay has always been a contentious issue, with differing views as to the correct approach for dealing with concurrent delay when assessing extensions of time (EOTs) and also as to the actual meaning of concurrent delay itself.

True concurrent delay is the occurrence of two or more delay events (one an employer risk event and the other a contractor risk event), with equal causative effect, which occur at the same time and the effects of which are felt at the same time. This form of concurrent delay is rare and will only take place in exceptional factual circumstances. The more common type of concurrent delay is when two or more delay events occur at different times but their effects are felt at the same time (either coinciding or overlapping).

Traditionally, most UK contracts are silent on how concurrent delay impacts a contractor's entitlement to an EOT. This has largely been due to the uncertainty around whether express provisions allocating concurrency risk would be enforceable. One of the concerns was whether or not such provisions would offend the prevention principle.

Where the contract is silent, the position under English common law is that the contractor will be entitled to an EOT but not loss and expense (as there are issues in proving causation). This is generally referred to as the Malmaison approach (following the 1999 case of Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 32) and was confirmed in the 2012 case of Walter Lilly & Company Ltd v Giles Patrick Cyril Mackay and another [2012] EWHC 1773 (TCC).

However, the recent case of North Midland Building Limited v Cyden Homes Limited has put such concerns to bed. The case centred on the correct interpretation of an amendment to the standard EOT regime in the JCT Design and Building Contract 2005, with the parties agreeing an additional proviso 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 construing the term, Fraser J took the view that 'there is no point of construction at issue on the clause in question' and holding that the meaning of the words 'is crystal clear'. He stated that 'The contractor would not be entitled to an extension of time for Event X (for which he was not responsible) in so far as delay caused by that event was concurrent with delay caused by Event Y (for which he was).

He gave short shrift to arguments by the claimant that, by virtue of the doctrine of prevention, the defendant's construction was 'not allowed' and that the effect of the clause was to make time at large. He stated that 'there is no rule of law of which I am aware that prevents the parties from agreeing that concurrent delay be dealt with in any particular way', finding that the prevention principle simply does not arise.

To provide further assistance, Fraser J also referred to the findings of Hamblen and Coulson JJ in the cases of Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm) and Jerram Falkus Construction Ltd v Fenice Investments In (No. 4) [2011] EWHC 1935 (TCC) respectively. Coulson J concluded, identically with Hamblen J, that:

'...for the prevention principle to apply, the contractor must be able to demonstrate that the employer's acts or omissions have prevented the contractor from achieving an earlier completion date and that, if that earlier completion date would not have been achieved anyway, because of concurrent delays caused by the contractor's own default, the prevention principle will not apply.' (emphasis added)

It is ultimately a causation point requiring the contractor to show that the employer's acts caused actual delay, which is impossible in circumstances of concurrent delay. This point was not open to Fraser J for decision but he stated that if it were, he would follow the same reasoning and come to the same conclusion as both Hamblen and Coulson JJ did.

This decision is going to have significant practical impacts on parties negotiating construction contracts. We now have a very...