The Saga Decision: Concurrent Delay And Causation

The English High Court decision in Saga Cruises BDF Ltd & Anor v Fincantieri SpA1 emphasises that unless there is concurrent delay affecting a contractor's completion date, the contractor will not be entitled to an extension of time.

What is concurrent delay?

"Concurrent delay" is a period of project overrun caused by two or more delay events. At least one delay is caused by an event usually defined in the construction contract as a "Relevant Event" or an "Excusable Delay" entitling the contractor to an extension of time eg delayed access to site. The other delay is caused by an event for which the contractor accepted the time and cost consequences eg a labour shortage. To be concurrent, the delays must be of approximately "equal causative potency"2 and be felt at the same time. The Malmaison3 decision stands as authority for the proposition that concurrent delay will entitle a contractor to an extension of time to the completion date, but not to its time-related costs.

Facts

The facts of Saga Cruises, as they relate to concurrent delay, are as follows:

In 2010, Saga Shipping ("Owners") purchased a cruise ship built in 1981. The Owners contracted with Fincantieri, an Italian shipbuilding company ("Contractor"), to refurbish the ship for €14.3 million. The refurbishment was for engineering and fit out works to transform the vessel into the Owners' premier cruise ship. The contract contained a clause imposing liquidated damages on the Contractor for delay in reaching completion ("Scheduled Completion Date"), for any reason for which the Contractor was responsible. Liquidated damages were capped at €770,000. The works were scheduled to start on 9 November 2011 and conclude by an extended Scheduled Completion Date of 2 March 2012. The Contractor did not achieve Completion until 16 March 2012. The Owners claimed €770,000 in liquidated damages for the Contractor's delay between the extended Scheduled Completion Date (2 March 2012) and Completion (16 March 2012). The Owners and the Contractor evidenced competing reasons for the delay in reaching Completion. The Court accepted that: the Contractor was responsible for delays between 2 March 2012 and 16 March 2012 for several reasons, including its failure to adequately complete new cabins by the Scheduled Completion Date; and the Owners were responsible for delays from around 3 March 2012 to 14 March 2012 arising from weight problems in the ship's lifeboats, and between 2 March 2012 and 10 March...