3 concurrency and dominant cause

8/12/2019 3 Concurrency and Dominant Cause

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WHO OWNS THE FLOAT?

CONCURRENCY AND DOMINANT CAUSE.

Presented by Bill Barton

If you have any queries from this presentation please contact Bill Barton at

[email protected]

The material in this paper has been prepared solely for the benefit of delegates on this course. It is designed

to be an integral part of the presentation and does not necessarily stand on its own. It must not be used for

giving advice in any shape or form. The author and Barton Legal accept no responsibility for loss or

consequential loss occasioned to any person acting or refraining from action as a result of this material.

All rights reserved. No part of this material may be reproduced, stored in a retrieval system, or transmitted

in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the

prior written permission of the author.

Barton Legal

www.bartonlegal.com


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The Prevention Principle

This principle is referred to throughout the discussions about extensions of time, float and

dominant cause. The two leading cases which identify and explain this principle areTrollope & Colls and Multiplex;

it is long settled that in building contracts and in other contracts too when there is a

stipulation for work to be done in a limited time, if one party by his conduct it may be

quite legitimate conduct, such as ordering extra work renders it impossible or

impracticable for the other party to do his work within the stipulated time then the one

whose conduct caused the trouble can no longer insist upon strict adherence to the timestated. He cannot claim any penalties or liquidated damages for non-completion in that

time Lord Denning Trollope & Colls.

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Contra ProferentemThis is the principle whereby a clause is read narrowly and against the party that drafted it, usually the

employer, where the terms are ambiguous. It is applicable to extensions of time because it is used in the

interpretation of extension of time and LAD clauses.

It is interesting that the leading cases make very similar reading to Lord Denning in Trollope;

The principle is laid down in Comyns Digest condition L (6), that where one party to a contract is

prevented from performing it by the act of the other, he is not liable in law for that default; and, accordingly,

a well-recognised rule has been established in cases of this kind, beginning with Holme v Guppy ((1838); 3 M

& W 387) to the effect that, if the building owner has ordered extra work beyond that specified by the

original contract which has necessarily increased the time requisite for finishing the work, he is thereby

disentitled to claim the penalties for non-completion provided for by the contract Lord Esher MR Doddv Churton. However, the more recent approach has been the combining of thoughts from prevention and

contra proferentem principles, as within the decision in Multiplex, where it was stated by Jackson J that;

(i) Actions by the employer which are perfectly legitimate under a construction contract may still be

characterised as prevention [i.e. acts which it has prevented the contractor from performing and which

cannot be relied upon to hold the contractor to a specified completion date], if those actions cause delay

beyond the contractual completion date.

(ii) Acts of prevention by an employer do not set time at large, if the contract provides for extensions of timein respect of those events.

(iii) In so far as the extension of time clause is ambiguous, it should be construed in favour of the contractor

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Time at Large

Time at large results from the application of theprevention principle

which provides that no party may require the other to comply with a

contractual obligation in circumstances where that party has itself

prevented such compliance. If the employer has prevented the

contractor from carrying out the works on timeaccording to the

original contractual completion date (and the contract does not

provide for how that delay is dealt with), the employer cannot insist

that the contractor meets the original date for completion.


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Different Contracts

Most building and engineering contracts contain express provision for adjustments to the

completion date to be made in certain circumstances, which allow the contractor to claim

an extension of time to complete the works, although it will be up to the contractor to

establish its entitlement. There are two types of delay for which the contractor may be able

to claim an extension of time;

Employer delay; the JCT Standard Building Contract 2005, rev 2 2009 refers to delay by the

employer (clause 2.29.6) as;

any impediment, prevention or default, whether by act or omission, by the Employer, the

Architect/Contract Administrator, the Quantity Surveyor or any of the Employers Persons,

except to the extent caused or contributed to by any default, whether by act or omission,

of the contractor or of any of the contractors persons.


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Delays that are not the contractors responsibility

Other delays, not caused by the employer, may entitle the contractor to

an extension of time, such as those caused by strikes, force majeure, or a

shortage of materials and labour. While the contractor does not cause

such a delay unless there is an express provision in the contract for an

extension of time, in such circumstances these delays may be at the

contractor s risk.


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Gross Entitlement Rejected

In Balfour Beatty the Court dealt with the contractors argument that anextension of time should apply from the date of receipt of the instructions

that caused the delay, irrespective of whether the contractor was in culpable

delay at the time of the instruction (a so called grossentitlement). The

Court rejected that approach.


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The Malmaison Argument

In Malmaison, Dyson J held that an employer under a building contract could argue

both that;

a relevant event did not cause (or was not likely to cause) a delay

the delay was, in fact, caused by something else (such as an event for which the

contractor was culpable).


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Concurrent Causes

In addition, Dyson J held that if there are genuinely two concurrent causes of the same

delay;

one of which is a relevant event and the other is not, then the contractor is entitled to

an extension of time for the period of delay caused by the relevant event notwithstanding

the concurrent effect of the other event. Thus to take a simple example, if no work is

possible on the site for a week not only because of exceptionally inclement weather (a

relevant event), but also because the contractor has a shortage of labour (not a relevant

event), and if the failure to work during that week is likely to delay the works beyond the

completion date by one week, then if he considers it fair and reasonable to do so, the

architect is required to grant an extension of time of one week. He cannot refuse to do so

on the grounds that the delay would have occurred in any event by reason of the

shortage of labour.


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City Inn v Shepherd

Before delving into the varying detailed judgments that were handed down in

this matter I would make the following points;

1. This is a Scottish case thus persuasive but not binding on English Courts.

2. City Inn commenced proceedings the claim was then for some four weeks

extension of time that they were seeking to claim back together with loss

and expense worth around 125k.

3. The proceedings were commenced in 2000 but the trial was only completed

in 2007 and the appeal decision issued in 2010.

4. This was a guaranteed maximum price contract.

5. The contract was SBC JCT 1980 Private with quantities of which the current

version is SBC 2005 Ed Rev 2 2009 (SBC O5).

6. There were 17 grounds of appeal although ground 17 was not pursued.


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City Inn v Shepherd

7. Grounds 1 7 concerned the operation of clause 25 (EOT) and clause 26 (loss and expense).

Grounds 8 and 6 dealt with clause 13.8 the bespoke amendment, which was intended as a

condition precedent to entitlement to extension of time. Grounds 8 to 11 also dealt withinterpretation of clause 13.8. Grounds 12 to 16 dealt with the issue of the waiver of clause 13.8.

8. For the purposes of this discussion we are only looking at grounds 1 7 but as to the balance of

the Appeal you should note that;

a) clause 13.8 did not cover all of the architects instructions (this raises drafting issues; review

issues and the application of terms)

b) the architect is presumed to know and understand the terms of the contract they areadministering (thus liability issues; third party liability of consultants to e.g. the contractor).

c) silence by one party could give rise to the inference of a waiver on the part of the employer

(site meeting minutes; conditions precedent; notice generally; information given to be

recorded).

9. It was concerned with the assessment of a fair and reasonable extension of time

under a JCT Standard Form of Contract where there was concurrent delay caused by

relevant events and matters that the contractor was also responsible for. The Court

held that in those circumstances, the decision maker could apportion delay between

the relevant and other event.


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City Inn v Shepherd10. In his judgment, Lord Osborne, on hearing the appeal summarised the position in

Scotland as;

In the first place, before any claim for an extension of time can succeed, it must plainly beshown that a relevant event is a cause of delay and that the completion of the works is likely

to be delayed thereby or has in fact been delayed thereby. In the second place, the decision

as to whether the relevant event possesses such positive effect is an issue of fact which is to

be resolved, not by the application of philosophical principles of causation, but rather by the

application of principals of common sense. In the third place, the decision maker is at liberty

to decide an issue of causation on the basis of any factual evidence acceptable to him. In

that connection, while a critical path analysis, if shown to be soundly based, may be of

assistance, the absence of such analysis does not mean that a claim for extension of time

must necessarily fail. In the fourth place, if a dominant cause can be identified as the cause

of some particular delay in the completion of the works, effect will be given to that by

leaving out of account any cause or causes which are not material. Depending on whether

or not dominant cause is a relevant event, the claim for extension of time will or will not

succeed. In the fifth place, where a situation exists in which two causes are operative, one

being a relevant event and the other some event for which the contractor is to be taken to

be responsible, and neither of which could be described as the dominant cause, the claim for

extension of time will not necessarily fail


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Conclusion

In conclusion the delay was the result of concurrent causes. None of the causes of delay

can be regarded as a dominantcause. Each of them had a significant effect on the

failure to complete timeously. In those circumstances the correct approach is in my

opinion clear from the authorities that the fact that delay has been caused by matters to

which the contractor is responsible will not deprive the contractor of his rights to claim an

extension of time for delay caused by a relevant event. Put another way, that involves a

determination of the aggregate period within which the works as ultimately defined

should have been completed having regard to the incidence of relevant events. That

determination must be made on a fair and reasonable basis as required by the contract.In a case such as the present where there is a true concurrency between relevant events

and events that involve contractor default, apportionment will frequently be appropriate.


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Monarch Steamship

This is referred to because of the comments of Bedlam L J who stated that;

Causation is a mental concept, generally based on inference or induction from uniformity

of sequence as between two events that there is a causal connection between themThe

common law, however, is not concerned with philosophic speculation, but is only

concerned with ordinary everyday life and thought and expressions


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Lord Osbourne-His SummaryLord Osborne helpfully summarises his interpretation of concurrent and I can do no better than

to quote him in full;

[49]One of the problems in using such expressions as concurrent delayor concurrent delaying eventsis that they may refer to a number of different situations. Confining attention for a moment to concurrent

delaying events, which may be taken to mean relevant events and other events, or causes of delay, which

are not relevant events, there would seem to be several possibilities. Such events may be described as

being concurrent if they occur in time in a way in which they have common features. One might describe

events as concurrent on a strict approach only if they were contemporaneous or co-extensive, in the sense

that they shared a starting point and an end point in time. Alternatively, events might be said to be

concurrent only in the sense that for some part of their duration they overlapped in time. Yet again, events

might be said to be concurrent if they possessed a common starting point or a common end point. It might

also be possible to describe events as concurrent in the broad sense that they both possessed a causative

influence upon some subsequent event, such as the completion of works, even though they did not overlap

in time. In other words, they might also be said to be contributory to or co-operative in bringing about

some subsequent event. It appears to me that one of the problems in the present case is that language

such as that under consideration here has been used in different senses at different times. It therefore

becomes important in the interest of clarity, to try to disentangle this confusion.

To summarise, Lord Osborne believes that in the absence of a dominant cause, it is acceptable for delay to

be apportioned between a relevant and non-relevant event.


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A Definition

Where two constructions of an instrument are equally plausible, upon one ofwhich the instrument is valid, and upon the other of which it is invalid, the

Court should lean towards that construction which validates the instrument.


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Multiplex

However, as Jackson J stated in Multiplex, the prevention principle does not apply if the

contract provides for an extension of time in respect of the relevant events. Where such a

mechanism exists, if the relevant act of prevention falls within the scope of the extension of

time clause, the contract completion dates are extended as appropriate and the builder

must complete the work by the new date, or pay liquidated damages (or accept any other

contractual consequence of late completion).


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The Experts Analogy Mr Bob BreezeIn rejecting the prevention principle the Court examined causation and referred to the

helpful example given by SDMS expert Mr Breeze, where he stated that;

Assuming (as is in fact appropriate in the present case) that the contractor is many months

in delay by reason of his own default. The employer decides a week before the (original un-

extended) contract completion date that he wishes a wall to be painted blue instead of the

contractually specified red. At the time of the instruction, because of the contractors

delays, the wall is not even built yet. The paint will take 5 weeks to procure but will still

arrive before the completion of the wall and the date upon which the contractor would

require the paint in line with his delayed progress. Mr Swans analysis would appear toentitle the contractor to 4 weeks extension of time (by adding 5 weeks to the date of

impact, and comparing with the original contract completion date). However, I would

suggest that common sense tells the observer that such an extension was neither fair nor

reasonable, where the employers actions have not actually delayed the progress of the

contractor by a single day.

[263] In my judgment Adyards approach is wrong as a matter of both principle andauthority. It is also contrary to common sense, as the above example illustrates.


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The Courts View

The Court also helpfully set out at paragraph [277] that:

It is to be noted that this example involves a relevant event which caused a period ofactual delay to the progress of the works no work could be done for a week due to the

weather. If that is established then the contractor is entitled to his extension of time even

if there is another concurrent cause of that same delay. A useful working definition of

concurrent delay in this context is a period of project overrun which is caused by two or

more effective causes of delay which are of approximately equal causative potency see

article Concurrent Delay by John Marrin QC (2002).


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The Courts View

The Court stated that:[286] City Inn was an extension of time rather than a prevention principle case, but in

so far as Lord Carloway was suggesting in his judgment that it is not necessary to show

that the relevant event is an operative cause of delay to the progress of the works, it

does not reflect English Law. As set out above, the English law authorities in relation to

extensions of time under the JCT form and similar contracts are clear that it must be

established that the relevant event is at least a concurrent cause of actual delay to the

progress of the works.


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Summary

1. Erosion of prevention principle

Basically, the Commercial Court would not allow a situation where despite the

existence of a contract, the application of a legal principle would entirely remove

one partys rights.

Secondly, given the existence of the contract, the Court set out to apply the

contractual terms.

Thirdly, the Court will interpret and apply those terms in such a way as to make

them work.


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Summary (contd)

2. SDMS sensibly applied the judgment in Malmaison in arguing that;

there was not a relevant event which caused the delay; but that if there was a

relevant event it was the culpability of the shipyard.


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Summary (contd)

3. The Court approved the judgment of Balfour Beatty and Malmaison, and specificallydisapproved the dissenting judgment of Lord Carloway in City Inn.

4. The Court provided a definition of concurrent delay as being a period of project

overrun which is caused by two or more effective causes of delay which are of

approximately equal causative potency.


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Conclusion

It is beholden upon the parties to apply common sense.

English Law requires that for a contractor to obtain an extension of time then the

relevant event relied upon must be at least a concurrent cause of actual delay to the

progress of the work.

Courts do not like fancy arguments and complicated programmes.

Courts are not keen on clever arguments about dominant cause. Probably, especiallyfrom lawyers. Courts are happy to apply old principles of law such as prevention and

contra proferentem but only in very limited circumstances.

The shipyard had basically thrown in the towel by the end of their case and they must

have regretted not doing so at the beginning. Did they try mediation?


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Conclusion

Apply common sense and honesty to your claim for an extension of time.

Is there a relevant event? Are there really concurrent delaying events? Are you really

able to identify and prove a dominant cause?

Do not make your case out to be more than it really is.


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Concurrent Delay- but is it?

If it has four legs, a big long nose and floppy ears and thick grey hideand stands 12 feet high it is probably an elephant and not a mouse. You

can make it sound like a mouse, but it will still be an elephant.


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WHO OWNS THE FLOAT?

CONCURRENCY AND DOMINANT CAUSE.

Presented by Bill Barton

If you have any queries from this presentation please contact Bill Barton at

[email protected]

The material in this paper has been prepared solely for the benefit of delegates on this course. It is designed

to be an integral part of the presentation and does not necessarily stand on its own. It must not be used for

giving advice in any shape or form. The author and Barton Legal accept no responsibility for loss or

consequential loss occasioned to any person acting or refraining from action as a result of this material.All rights reserved. No part of this material may be reproduced, stored in a retrieval system, or transmitted

in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the

prior written permission of the author.

Barton Legal

www.bartonlegal.com

3 concurrency and dominant cause

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