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Recent Developments: Walter Lilly and the Irish Public Works Contracts

Introduction The case of Walter Lilly v Giles Patrick Mackay1 (“Walter Lilly”) concerned the demolition of the Earls Court telephone exchange in London in order to allow for the construction of three dwelling houses. The tender negotiated was £15,372,962.83 and Walter Lilly was appointed as contractor. The project fell into significant delay and the claimant sought an extension of time and loss and expense arising from the delay. The judgment Walter Lilly offers guidance by Mr. Justice Akenhead, the present Judge in Charge of the English Technology and Construction Court on the following:

- Extension of time and delay cost entitlements - Evaluation of loss and expense claims under standard form contracts - Advancement and evaluation of global claims

Mr. Justice Akenhead gave judgment in favour of the claimant in the amount of £2,330,666.26. In January 2013 the Court of Appeal dismissed an application for permission to appeal, including a proposed appeal in relation to the global claims aspect of the judgment.2 The contract The contract used in Walter Lilly was the JCT Standard Form of Building Contract 1998 Edition Private Without Quantities, as modified by the Contractors Designed Portion Supplement Without Quantities 1998 edition (revised November 2003) with various specific amendments. Walter Lilly and the Irish Public Works Contracts This paper will consider the relevance if any of Walter Lilly to the Irish Public Works Contracts3 (“the Public Works Contracts”) in relation to the following: (a) Concurrent delay in the context of (i) extension of time and (ii) loss and expense arising from the

delay. Consideration will be given to whether the various restrictions on claiming extension of time and delay cost in the Public Works Contracts render Mr. Justice Akenhead’s findings on such claims inapplicable and in particular his adoption of the Malmaison approach to concurrent delay in extension of time claims.

(b) The details of claim to be provided by a contractor when making a loss and expense claim under

a standard form contract. Here consideration will be given to Mr. Justice Akenhead’s findings as regards the level of detail to be furnished by the contractor in order to meet the requirements of claiming under clause 26.1 of the amended JCT’98 contract. Mr. Justice Akenhead makes specific reference to the conditions precedents of clause 26.1, however he makes the point that the level of detail that must be provided by the contractor to meet the requirements of the clause is open to debate. Consideration will be given to whether Mr. Justice Akenhead’s findings could be relied upon in the context of a contractor claim under clause 9.3 or 10.3 of the Public Works Contracts.

(c) Mr. Justice Akenhead’s findings in relation to global claims. Consideration will be given to

whether Mr. Justice Akenhead’s guidance on global claims could be relied upon by a contractor bringing a claim under the Public Works Contracts where it has been argued that the restrictions to claim prevalent throughout the Public Works Contracts effectively bar global claims.

1 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) 2 In the course of the judgment, Lord Justice Aikens endorsed Mr Justice Akenhead’s approach to global claims, [2013] EWCA Civ 142, paras [11]-[15]. 3 For the purpose of this paper the contract used was the Public Works Contracts for Building Works Designed by the Employer Department of Public Expenditure and Reform Document Reference PW-CF1 v.1.8 4 September 2012

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1: Extension of time and delay cost Introduction The restrictions on contractor claims under the Public Works Contracts are numerous. Mr. Justice Akenhead’s findings in relation to concurrent delay and their relevance if any to the Public Works Contracts must therefore be considered in the context of claims for (i) extension of time and (ii) delay cost. Assessing extension of time and concurrency Before Walter Lilly three general approaches were taken to assessing concurrent delay:

(a) The dominant cause approach as set out in Keating.4 (b) The approach by Mr. Justice Dyson in the Malmaison case. (c) The apportionment approach from the City Inn case.

Taking each in turn: The dominant cause approach If there are two causes, one the contractual responsibility of the defendant and the other the contractual responsibility of the claimant, the dominant cause approach suggests that the claimant succeeds if he establishes that the cause for which the defendant is responsible is the effective, dominant cause. Which cause is dominant is a question of fact, which is not solved by the mere point of order in time, but is to be decided by applying common sense standards.5 There does not appear to be any authority that expressly supports the dominant cause approach as recognised in Keating 8th ed. and the discussion appears to have disappeared in the context of time from Keatings 9th ed.6 The dominant cause approach was not supported in the case H Fairweather & Company Ltd v London Borough of Wandsworth.7 The apportionment approach In City Inn Ltd v Shepherd Construction Ltd.8 upheld by the Inner House on appeal9 it was held that where there are concurrent causes of delay, none of which can be described as dominant, the delay should be apportioned as between the extension of time relevant events and the contractor's risk events. Lord Drummond Young adopted an approach broadly similar to the apportionment of liability based upon contributory negligence and found that account should be taken of relative culpability in the causes of delay and the significance of each of the factors in causing delay.10 The approach of the English courts to concurrent delay appears to align more with the dissenting opinion of Lord Carloway in City Inn where he recognised that the clause in question namely clause 25 of the JCT 1980 was designed to allow the contractor sufficient time to complete the works, having regard to matters which were not their fault and did not, strictly speaking involve an analysis of competing causes of delay or an assessment of how far other events have or might have caused delay beyond the completion date. 4 Furst and Ramsey, Keating on Construction Contracts 8th Ed. London Sweet and Maxwell 2006 paras 8-015-8-021 5 Furst and Ramsey, Keating on Construction Contracts 8th Ed. London Sweet and Maxwell 2006 paras 8-015-8-021 6 Furst and Ramsey, Keating on Construction Contracts 8th Ed. London Sweet and Maxwell 2006 paras. 8-025 to 8-027 7 H Fairweather & Company Ltd v London Borough of Wandsworth (1987) 39 BLR. 8 City Inn Ltd v Shepherd Construction Ltd.8 [2007] ScotCS CSOH 190 9 City Inn Ltd v Shepherd Construction Ltd.[2010] CSIH 68 10 Atkin Chambers Hudson’s Building and Engineering Contracts 12th Ed. Sweet and Maxwell 2010Delay and Disruption Claims Concurrent Delay Section 6.13 Extension of Time Provisions and the Assessment of Delay Page 945

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The Malmaison approach In Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd.11 Mr. Justice Dyson found that a contractor is entitled to an extension of time notwithstanding the matter relied upon by the contractor is not the dominant cause of delay, provided only that it has at least equal “causative potency” with all other matters causing delay. In Adyard Abu Dhabi v SD Marine Services12 Mr. Justice Hamblen commented on City Inn as follows:

“the English law approach would be to recognise that the builder is entitled to an extension of time, not an apportionment – see, for example, Malmaison.”

The Walter Lilly approach Clause 25.3.1 of the amended JCT used in the Walter Lilly project states:

“If, in the opinion of the Architect, upon receipt of any notice, particulars and estimate under clauses 25.2.1 [and] 25.2.2 and .1.1 any of the events which are stated by the Contractor to be the cause of the delay is a Relevant Event; and .1.2 the completion of the Works is likely to be delayed thereby beyond the Completion Date the Architect shall in writing to the Contractor give an extension of time by fixing such later date as the Completion Date as he then estimates to be fair and reasonable.”

Where a delay is caused by both the contractor and an employer default, Mr. Justice Akenhead approved Malmaison and rejected the “apportionment” approach of City Inn stating:

“In any event, I am clearly of the view that, where there is an extension of time clause such as that agreed upon in this case and where delay is caused by two or more effective causes, one of which entitles the Contractor to an extension of time as being a Relevant Event, the Contractor is entitled to a full extension of time. Part of the logic of this is that many of the Relevant Events would otherwise amount to acts of prevention and that it would be wrong in principle to construe Cl 25 on the basis that the Contractor should be denied a full extension of time in those circumstances. More importantly however, there is a straight contractual interpretation of Cl 25 which points very strongly in favour of the view that, provided that the Relevant Events can be shown to have delayed the Works, the Contractor is entitled to an extension of time for the whole period of delay caused by the Relevant Events in question.”13

Mr. Justice Akenhead found that there was nothing in the wording of clause 25 which expressly suggested that there was any sort of proviso to the effect that an extension should be reduced if the causation criterion is established. He found that the fact that the architect has to award a "fair and reasonable" extension did not imply that there should be some apportionment in the case of concurrent delays as the test was primarily one of causation. On that basis he found City Inn case to be inapplicable within the English jurisdiction.14 Extension of time under the Public Works Contracts The question that must therefore be asked is whether a contractor bringing a claim for extension of time under the Public Works Contracts where the delay is caused by both the contractor and an employer default can rely on Mr. Justice Akenhead’s findings in relation to concurrent delay.

11 Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd. (1999) 70 Con LR 32 12 Adyard Abu Dhabi v SD Marine Services12 [2011] EWHC 848 (Comm) (section 288) 13 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [370] 14 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [370]

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Mr. Justice Akenhead placed explicit reliance on the contractual interpretation of clause 25 as set out above, finding that where a relevant event can be shown to have delayed the works, the contractor is entitled to an extension of time for the whole period of delay caused by the relevant events in question.15 Clause 9.3.2 – restrictions on extension of time claims Under clause 9.3.2 of the Public Works Contracts, if substantial completion of the works or any section has been, is being or will be delayed beyond the date for substantial completion by a delay event and if all of the following apply:

(a) The delay event is not a result of the contractor or the contractor’s personnel’s act or omission or the contractor’s breach of the contract.

(b) The contractor has made all reasonable efforts to avoid and minimise the delay. (c) The contract does not provide otherwise.

Then, subject to clause 9.3, clause 9.4 and clause 10, there shall be an extension to the date for substantial completion of the works and any affected section equal to the amount of the delay beyond the date for substantial completion caused by the delay event taking into account only site working days. The programme contingency Clause 9.4.2 of the Public Works Contracts makes reference to the fact that the contractor will be taken as having included in its initial contract sum and in its programme a contingency for delays to the date for substantial completion of the works caused by compensation events. Pursuant to clause 9.4.3 of the Public Works Contracts, the programme contingency is applied to derive the extension of time follows:

i. Unless delay exceeds the first threshold, there are no extensions. ii. If delay exceeds the first threshold but is less than or equals the sum of the first threshold and

twice the second threshold, extensions equal half of the result obtained by subtracting the first threshold from delay.

iii. If delay is more than the sum of the first threshold and twice the second threshold, extensions equal delay minus the first threshold minus the second threshold.

Clause 9.3.2 and Walter Lilly It is certainly arguable that the Malmaison approach rather that the apportionment approach based upon the respective culpability and/or causative potency of the concurrent causes would find favour in Ireland. While it is evident from the clauses outlined above that the Public Works Contracts place onerous conditions upon the contractor which must be met before the extension of time will be granted, like clause 25 in Walter Lilly, clause 9.3.2 does not contain any explicit requirements in relation to proving causation and in particular contains no explicit proviso to the effect that an extension should be reduced if the causation criterion is established as against the contractor.16 Clause 10.7.2 – restrictions on concurrent delays Clause 10.7.2 of the Public Works Contract states:

“If the Works are concurrently delayed by more than one cause, and one or more of the causes is not a Compensation Event, there shall be no increase to the Contract Sum for delay cost for the period of concurrent delay.” [emphasis added]

The key point being that while clause 10.7.2 states that there shall be no increase to the contract sum for delay cost of the period of concurrent delay, if one of the causes is not a compensation event, it

15 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [370] 16 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [370]

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does not state that there should be no extension of time for this period. It is therefore arguable that the Mr. Justice Akenhead’s findings in relation to the Malmaison approach could be relied upon by a contractor seeking an extension of time under the Public Works Contracts under clause 9.3.2 of the Public Works Contracts up to and in so far as the delay event being one of the concurrent events is not a result of the contractor’s or contractor’s personnel’s act or omission or the contractor’s breach of the contract and subject to the requirements to claim set out above being met. Delay cost As the learned authors in Hudson remark:

“…it is constantly to be borne in mind that the principles that apply to the relief of liquidated damages for delay to completion are not the same rules that apply to recovery of the actual losses suffered as a result of a delay to progress or prolongation. The general view is that in circumstances where there are concurrent causes of delay one of which is at the Contractor’s risk and the other a relevant event, the Contractor is entitled to an extension of time but does not receive loss and expense.”17

The Malmaison approach Depending on the provisions of the construction contract, the Malmaison approach to the issue of concurrent causes in the context of extension of time claims is not thought to apply generally to loss and expense claims. 18 This appears to be the sensible view as to find otherwise would allow a contractor to recover loss and expense as a result of causes within the contractor’s control and for which it is contractually responsible.19 As the learned authors of Hudson state:

“the fact that the works have been delayed in any event by the concurrent delay event which is the contractor’s responsibility does not deprive it of an extension of time entitlement in light of the Malmaison approach summarised above; but the fact that the “but for” test of causation cannot be satisfied in these circumstances is normally taken to deprive the contractor of a loss and expense claim in respect of the relevant matter.”20

The apportionment approach There is no authority extending this approach to the assessment of concurrent causes of loss and expense under the express provisions of the building contracts. Further, it has been argued that the adoption of a general apportionment approach based upon the respective culpability and/or causative potency of the concurrent causes would introduce a new element of uncertainty into this field, could prove unworkable in practice and is probably unnecessary.21

17 Atkin Chambers Hudson’s Building and Engineering Contracts 12th Ed. Sweet and Maxwell 2010 Delay and Disruption Claims Concurrent Delay Section 6.13 Extension of Time Provisions and the Assessment of Delay Page 945 18 Furst and Ramsey, Keating on Construction Contracts 9th Ed. London Sweet and Maxwell 2012 Concurrent causes page 350 Loss and Expense Claims 19 Furst and Ramsey, Keating on Construction Contracts 9th Ed. London Sweet and Maxwell 2012 Concurrent causes page 350 Loss and Expense Claims 20 Atkin Chambers Hudson’s Building and Engineering Contracts 12th Ed. Sweet and Maxwell 2010 page 351 21 Furst and Ramsey, Keating on Construction Contracts 9th Ed. London Sweet and Maxwell 2012 Concurrent causes page 350 Loss and Expense Claims

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The dominant cause approach Under the dominant cause test the contractor would become entitled to recover payment as long as the employer risk event is construed as the dominant of the competing causes despite the fact that the claimed loss/expense may have been incurred anyway.22 The “but-for” test In his paper Concurrent Delay Revisited23 John Marrin QC considers the argument put forward in Keating that a contractor will fail in his delay cost claim if he is unable to satisfy the but-for test of causation and finds that this is the approach that is the most likely to find favour in the context of calculating prolongation costs.24 This appears to concur with the findings set out in Hudson in respect of claims under the contract which are summarised as follows:25

“Depending upon the precise wording of the contract a contractor is only entitled to recover loss and expense where it satisfies the “but for” test. This, even if the event relied upon was the dominant cause of the loss, the contractor will fail if there was another cause of that loss for which the contractor was contractually responsible.”

Delay cost – restrictions under the Public Works Contracts In the case of claiming for delay costs under the Public Works Contracts however, the contractor is constrained by the following: Compensation events The delay cost must arise from one of the specific compensation events set out in schedule K of the Public Works Contracts. Further under clause 10.1, the contract sum will only be increased where:

(a) The compensation event is not a result of the contractor’s or contractor’s personnel’s act or omission or the contractor’s breach of the contract.

(b) The contractor makes all reasonable efforts to avoid and minimise the adverse effects of the compensation event.

(c) The contractor has complied with this clause 10 in full [including giving notices and details within the time required]

(d) The contract does not provide otherwise. Exclusion of delay cost Keatings makes reference to the dominant cause approach coming into play in circumstances where the loss is caused by both the claimant and defendant:

“Where the loss was caused both by the claimant and the defendant then unless the claimant can establish that the defendant’s breach was the dominant cause or the defendant can show that the claimant’s breach was the dominant cause, it is probable that the claimant’s claim and any counterclaim by the defendant would fail.”26

However in the case of a claim for delay cost under the Public Works Contracts even if the claimant contractor can establish that the employer’s breach was the dominant cause, under clause 10.7.2 of the 22 Furst and Ramsey, Keating on Construction Contracts 9th Ed. London Sweet and Maxwell 2012 Concurrent causes page 354 23 Concurrent Delay Revisited, A paper presented to the Society of Construction Law at a meeting in London on 4th December 2012 John Marrin QC February 2013 179 24 Concurrent Delay Revisited A paper presented to the Society of Construction Law at a meeting in London on 4th December 2012 John Marrin QC February 2013 179 Prolongation costs 25 Atkin Chambers Hudson’s Building and Engineering Contracts 12th Ed. Sweet and Maxwell 2010 page 357 26 Furst and Ramsey, Keating on Construction Contracts 9th Ed. London Sweet and Maxwell 2012 Concurrent causes page 350 Loss and Expense Claims Summary Page 357

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Public Works Contracts, if the works are concurrently delayed by more than one cause, and one or more of the causes is not a compensation event, there shall be no increase to the contract sum for delay cost for the period of concurrent delay. Loss and expense contingencies Under clause 9.4.2 of the Public Works Contracts the contractor is taken to have included in the initial contract sum and in its programme a contingency for delays to the date for substantial completion of the works caused by compensation events. The contingency will then deducted from the delay cost claim. Under clause 10.5.1.3, when the employer’s representative makes a determination of any adjustments to the contract sum they also make a determination of the use of the programme contingency referred to in clause 9.4 or extension to the date for substantial completion of the works any affected section. Restriction of delay cost Even if the contractor can establish an entitlement to delay cost, the amount of delay cost for which he is entitled to claim is restricted under clause 10.7.1 to the daily rate of delay cost tendered by the contractor and expenses (excluding profit and loss of profit) and under clause 10.7.3 to the extension of the date of substantial completion of the works as a result of a compensation event for a period of 7 or more consecutive non-working days that would not have occurred without the compensation event happening capped to a tendered rate of delay costs multiplied by the number of allowable additional non-working days stated in the tender.27

Recoverability of overheads / profit28 Generally where a contractor suffers delay on grounds entitling him to compensation he can still claim overheads and lost profit once he can prove on the balance of probabilities that if the delay had not occurred the contractor would have secured work or projects which would have produced a return representing a profit and/or a contribution to head office overheads. However under clause 10.7.4 of the Public Works Contracts:

“Except as provided in this sub-clause 10.7 [notwithstanding anything else in the Contract] losses or expenses arising from or in connection with delay, disruption, acceleration, loss of productivity or knock-on effect shall not be taken into account or included in any increase to the Contract Sum, and the Employer shall have no liability for such losses or expenses.” [emphasis added]

Extension of time and delay cost – conclusion In the case of delay cost: It is generally accepted that in circumstances where there are concurrent causes of delay one of which is at the contractor’s risk and the other a relevant event the fact that a contractor may be entitled to an extension of time does not automatically lead to an entitlement to the loss and expense attributable to the delay. A contractor will arguably only be successful in this element of the claim if he can satisfy the “but for” test of causation.29 Even if the event relied upon was the dominant cause of the loss, the contractor will fail if there was another cause of that loss for which the contractor was contractually responsible. However in the case of the Public Works Contracts, even if the contractor manages to meet the requirements of the “but for” test, he will still be constrained by clause 10.7.2 of the Public Works Contracts stipulation that if the works are concurrently delayed by more than one cause, and one or 27 Clause 10.7.3 of the Public Works Contracts 28 Walter Lilly, paras [540]-[543]. 29 Concurrent Delay Revisited A paper presented to the Society of Construction Law at a meeting in London on 4th December 2012 John Marrin QC February 2013 179 Prolongation costs

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more of the causes is not a compensation event, there shall be no increase to the contract sum for delay cost for the period of concurrent delay. The delay cost must also arise from one of the explicit compensation events set out in schedule K of the Public Works Contracts. Under clause 10.1, the contract sum will only be increased where the compensation event is not a result of the contractor’s or contractor’s personnel’s act or omission or the contractor’s breach of the contract and the contractor has complied with the clause 10 notice and detail requirements in full and within the time required. Further, under clause 9.4.2 of the Public Works Contracts the contractor will have to have included in the initial contract sum and programme a contingency for delays to the date for substantial completion of the works caused by compensation events and under clause 10.5.1.3, when the employer’s representative makes a determination of any adjustments to the contract sum they will make a determination of use of the programme contingency. The amount of delay cost for which the contractor is entitled to claim is also restricted by the rates and requirements referred to in clause 10.7.1 and the thresholds set out in clause 10.7.3 and the restrictions on allowable loss and expense set out in clause 10.7.2. In the circumstances, given the onerous restrictions on claiming for delay costs under the Public Works Contracts and in particular given the restriction on concurrent delay claims set out in clause 10.7.2, it appears that the findings of Mr. Justice Akenhead on concurrency will be of little benefit to a contractor in bringing such a claim. In the case of extension of time: It is the case that under clause 9.3.2(1), the contractor must show that the delay event is not a result of the contractor or the contractor’s personnel’s act or omission or the contractor’s breach of the contract before they are entitled to an extension of time. Further, it is key to remember that under clause 9.4.3 a programme contingency will be applied to the extension of time entitlement and under clause 9.4.3(i), unless delay exceeds the first threshold, no extension will be allowed. However these restrictions do not prevent a contractor claiming under the Public Works Contracts from relying on Mr. Justice Akenhead’s findings on concurrent delay. Where a delay is caused by both the contractor and an employer default, Mr. Justice Akenhead approved the Malmaison approach and expressly rejected the “apportionment” approach of City Inn. In the case of assessing extension of time under the Public Works Contracts, while clause 10.7.2 states that there shall be no increase to the contract sum for delay cost of the period of concurrent delay, it does not state that there should be no extension of time for this period. It is therefore arguable that the Mr. Justice Akenhead’s approval of the Malmaison approach may be relied upon by contractors making claims for extension of time under the Public Works Contracts.

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2: Details of claim to be provided by the contractor Introduction In Walter Lilly, Mr. Justice Akenhead has helped to clarify the exact nature and extent of detail that a contractor is expected to provide in order to adhere to clause 26.1 of an amended JCT’98 contract. Mr. Justice Akenhead makes specific reference the conditions precedents in clause 26.1, however he makes the point that the level of detail required by the contractor to meet the requirements of the clause is open to debate. Consideration will be given to whether Mr. Justice Akenhead’s findings could be relied upon in the context of a claim under the Public Works Contracts.

Clause 26 of the JCT ’98 form as amended in the case of Walter Lilly states:

“26.1.1 the Contractor's application shall be made as soon as it has become, or should reasonably have become, apparent to him that the regular progress of the Works or of any part thereof has been or was likely to be affected as aforesaid… 26.1.2 the Contractor shall in support of his application submit to the Architect such information as should reasonably enable the Architect to form an opinion as aforesaid; [that the regular progress of the Works or of any part thereof has been or is likely to be so materially affected as set out in the Contractor’s application] 26.1.3 the Contractor shall submit to the Architect or to the Quantity Surveyor such details of such loss and/or expense as are reasonably necessary for such ascertainment as aforesaid. 26.1 ….if and as soon as the Architect is of the opinion that…the regular progress of the Works or of any part thereof has been or is likely to be so materially affected as set out in the application of the Contractor then the Architect from time to time thereafter shall ascertain, or shall instruct the Quantity Surveyor to ascertain, the amount of such loss and/or expense which has been or is being incurred by the Contractor..” [emphasis added]

In comparison clause 10.3 of the Public Works Contracts states:

“10.3.1 If the Contractor considers that under the Contract there should be an extension of time or an adjustment to the Contract Sum, or that it has any other entitlement under or in connection with the Contract, the Contractor shall, as soon as practicable and in any event within 20 working days after it became aware, or should have become aware, of something that could result in such an entitlement, give notice of this to the Employer’s Representative. The notice must be given according to sub-clause 4.14 and prominently state that it is being given under sub-clause 10.3 of the Contract. Within a further 20 working days after giving the notice, the Contractor shall give the Employer’s Representative details of all of the following: “(1) all relevant facts about the claim (2) a detailed calculation and, so far as practicable, a proposal, based on that calculation, of any adjustment to be made to the Contract Sum and of the amount of any other entitlement claimed by the Contractor (3) if the Contractor considers that the programme contingency referred to in sub-clause 9.4 should be used or that there should be an extension of time, the information required under sub-clause 9.3, and, so far as practicable, a proposal, based on that information for any use of the programme contingency or any extension to the Date for Substantial Completion of the Works and any affected Section.” [emphasis added]

Conditions precedent It is accepted in the case of both clauses that the notice provisions are a condition precedent. As stated by Mr. Justice Akenhead:

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“Both sides' Counsel accept that the provision of a timely written application with supporting information and details is a condition precedent to WLC's entitlement to "direct loss and/or expense" under Cl 26.”30 “It is also clear from the clause that there are essentially two conditions precedent within it. The first relates to the making of the timely application to the Architect (Clauses 26.1.1 and 26.1.2) and the second to the provision to the Architect or the Quantity Surveyor of details of loss or expense to enable the ascertainment to be made…”31

These words were echoed by Anthony Hussey in the context of the Public Works Contracts when he states in Construction Projects Law and Practice:32

“Clause 10.3 contains very stringent conditions that must be complied with as a condition precedent to the contractor being entitled to payment for the compensation event, including a variation.”

Required details While Mr. Justice Akenhead accepted that the notice provisions set out in clause 26 were condition precedents he took a pragmatic stance on the details required to meet the requirements of the clause. In construing clause 26.1.3, Mr. Justice Akenhead held that a contractor will not lose the right to recover loss and expense where for some of the loss details are not provided.

“Construing Cl 26.1.3 in its context, an entitlement to various heads of loss and expense will not be lost where for some of the loss details are not provided. Otherwise, one can have the absurd position that where £10 out of a £1 million claim is not adequately detailed but the rest of the claim is, the whole claim would fail to satisfy the condition precedent. That cannot have been intended.”33

“As are reasonably necessary” Mr. Justice Akenhead’s findings could be relied upon to argue that the contractor bringing a claim under the Public Works Contracts should not necessarily be penalised if he does not provide all the details of the claim he is making, once he has put the employer on notice of the claim in time. However it must be noted that clause 26.1.3 simply requires the contractor to submit to the architect or quantity surveyor such details of such loss and/or expense “as are reasonably necessary” and Mr. Justice Akenhead drew specific attention to this qualification:

“Clause 26.1.3 talks about "such details . . . as are reasonably necessary for such ascertainment". This is all qualified by what is "reasonably necessary"….It is legitimate to bear in mind that the Architect and the Quantity Surveyor are not strangers to the project in considering what needs to be provided to them; this is consistent with the judgment of Vinelott J in the Merton case (see pp 97-8).”34 [emphasis added] “Again the condition precedent within Cl 26.1.3 only requires the Contractor to submit details which "are reasonably necessary" for the ascertainment of loss and expense. It does not say how the details are to be provided but there is no reason to believe that an offer to the Architect or Quantity Surveyor for them to inspect records at the Contractor's offices could not be construed as submission of details of loss and expense; this happened in this case as Mr McMorrow said credibly in evidence. One must also bear in mind that what is required is "details" of the loss and expense and that does not necessarily include all the backup accounting information which might support such detail. It would have been possible for the

30 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [463] 31 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [464] 32 Keane and Hussey, Construction Contracts Law and Practice Thomson Roundhall 2007 Anthony Hussey - Civil Engineering Contracts Chapter 7 Page 27 33 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [465] 34 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [467]

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clause to say that the Contractor should provide "details and all necessary supporting documentation" but that is not what the clause says.”35 [emphasis added]

The Public Works Contracts contains no such qualification in relation to the details to be provided. Under clause 10.3.1:

“Within a further 20 working days after giving the notice, the Contractor shall give the Employer’s Representative details of all of the following:..” [emphasis added]

The lenience afforded by Mr. Justice Akenhead may not therefore necessarily be open to a contractor claiming under clause 10.3 who is constrained by the absolute express requirement to provide all the details set out. Of course this argument must be aligned to the fact that the contractor is not required under 10.3.1(1) to provide all relevant facts about the claim but rather details of all of relevant facts about the claim. Further under clause 9.3.1:

“If the Contractor becomes aware that work under the Contract is being or is likely to be delayed for any reason, it shall as soon as practicable notify the Employer’s Representative of the delay and its cause. As soon as practicable after that, and in any event within 40 working days after the Contractor became aware of the delay, the Contractor shall give the Employer’s Representative full details of the delay and its effect on the progress of the Works.” [emphasis added]

However, it is important to note in this regard the contractor has an “out” by making its claim under clause 10.3.1 as the sub-clause goes on to state:

“where the Contractor has given notice and details of the delay under sub-clause 10.3.1 it does not have to give notice or details again under this sub-clause 9.3.1 for the same delay.”

“To determine” In Walter Lilly, Mr. Justice Akenhead spoke of ascertainment in the following terms:

“Clause 26.1 talks of the exercise of ascertainment of loss and expense incurred or to be incurred. The word “ascertain” means to determine or discover definitely or, more archaically, with certainty. It is argued by DMW's Counsel that the Architect or the Quantity Surveyor cannot ascertain unless a massive amount of detail and supporting documentation is provided. This is almost akin to saying that the Contractor must produce all conceivable material evidence such as is necessary to prove its claim beyond reasonable doubt. In my judgment, it is necessary to construe the words in a sensible and commercial way that would resonate with commercial parties in the real world….”36 [emphasis added]

Under clause 10.5.1.3 of the Public Works Contracts, if the contractor has made a claim or proposal under sub-clauses 10.3 or 10.4, the employer’s representative shall “make a determination” of any adjustments to the contract sum, use of the programme contingency referred to in sub-clause 9.4 or extension to the date for substantial completion of the works on any affected section, and notify the contractor and the employer. A contractor could therefore argue that in circumstances where Mr. Justice Akenhead specifically defined the ascertainment terms of clause 26.1 as meaning to “determine” his commercially realistic interpretation that a contractor should not be penalised if he fails to provide every single detail could be relied upon by a contractor seeking a determination by the employer’s representative under clause 10.5.1.3 of the Public Works Contracts.

35 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [465] 36 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [468]

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“…It is legitimate to bear in mind what knowledge and information the Architect already has.” In making his finding, Mr. Justice Akenhead found that the architect’s familiarity with the issues on site should be factored in when considering the level of detail of claim that a contractor should be expected to submit:

“…It is legitimate to bear in mind what knowledge and information the Architect already has. For instance, the Architect (as in this case) attended meetings regularly and frequently throughout the project and was the recipient of scores of applications for extensions of time from WLC; it might legitimately be thought that the Architect already had a very substantial amount of information at its fingertips so that, arguably, less information needed to be provided by the Contractor in its application...”37 [emphasis added]

However, it is possible that an Irish court will not share this view. Arguably an architect or an engineer’s awareness of issues on site is not enough, they may need to have a proper understanding of the circumstances of the claim at the time the claim is being made in order to make any necessary and required changes. The idea that an engineer may do this in the absence of being notified of a claim is questionable in circumstances where the engineer will obviously not wish to pre-empt a contractor claim.

As stated in the case of London Borough of Merton v Stanley Hugh Leach38:

“It is the duty of the contractor when it is apparent to him that progress of the works is delayed to give the architect as much information as he can as to the cause of the delay so as to assist the architect in performing his duty. The contractor does not discharge his duty until he has done so.”

In relation to the information to be provided by the contractor in relation to a claim for unforeseen ground conditions under clause 12(2) of the ICE Conditions (4th Ed.), Mr. Justice Goff held in Humber Oils Terminal Trustees Ltd v Hersent Offshore Ltd.39

“The engineer has to assess the strength of the contractor’s contention that the conditions encountered are of a relevant type, so he has to have a precise and relevant identification of those conditions. He has to know what is proposed to be done, including what it is likely to cost and how long it is likely to take. With that information the engineer can for example decide whether to give a suspension order or a variation order: decisions which may be of crucial importance for the future implementation of the contract.”

The ultimate dispute resolution tribunal Mr. Justice Akenhead drew attention to the fact that the architect was not the party charged with the ultimate resolution of the dispute.40

The employer’s representative is also clearly not the ultimate dispute resolution tribunal under the Public Works Contracts. If either party to the contract serve a notice disputing the employer’s representative’s determination and refers the dispute to conciliation within the time frame set out in clause 10.5.4, the ultimate dispute forum will be conciliation followed by arbitration.41

As per Mr. Justice Akenhead’s findings in Walter Lilly, under the Public Works Contracts, the employer’s representative must be put in the position in which they can be satisfied that all or some of the loss and expense claimed is likely to be or has been incurred, however it is the conciliator or arbitrator who will ultimately decide on a balance of whether the contractor has incurred the loss or expense claimed and this is reflected in the level of detail that a party must provide under clauses 13.1.3 and 13.1.4 should they proceed to conciliation.42

37 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [464] 38 London Borough of Merton v Stanley Hugh Leach (1986) 32 BLR 51 (Ch) 39 Humber Oils Terminal Trustees Ltd v Hersent Offshore Ltd. (1981) 20 BLR 16(QB) 40 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [468] 41 Clause 13 of the Public Works Contracts 42 Clause 13.1.3 and clause 13.1.4 of the Public Works Contracts

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Interpretation of terms On interpreting clause 26, Mr. Justice Akenhead states as follows:

“… in considering Cl 26, one must bear in mind that most of the matters which entitle the Contractor to such loss and expense are the "fault" or at least the risk of the Employer, such as variations or the late provision of information or instructions by the Architect. One therefore needs to consider with some care precisely what the words mean, without construing them in any way against the Contractor as such.”43

He goes on to state:

“There is no need to construe Clause 26.1.3 in a peculiarly strict way or in a way which is in some way penal as against the Contractor, particularly bearing in mind that all the Clause 26.2 grounds which give rise to the loss and expense entitlements are the fault and risk of the Employer.”44

This is particularly relevant to the Public Works Contracts on the issue of instructions and the evident unfairness that would arise if the employer is freed from the obligation to pay for a variation that he has instructed simply because the contractor has failed to fully meet the notice and detail requirements set out in clause 10.3.1. The question arises as to whether a contractor could rely on the rule of contra proferentrem in relation to clauses 9 and 10. In order to be effective an exemption clause must clearly cover what has occurred and where there is a ambiguity in a provision the contra proferentem rule normally enables the court to construe the ambiguity against the party who drafted the clause. As stated by Mr. Justice Drapeau in the New Brunswick Court of Appeal decision of Morecraft Estate v Prudential Insurance45

“..the words of the exclusion must be given a fair and reasonable construction that is in harmony with the intent of the parties and the purpose sought to be obtained. While the courts must not strain the wording of the policy to create artificial ambiguity, any real ambiguity must be resolved in favour of the insured.”

However in the case of the Public Works Contracts, it is doubtful that clauses 9 and 10 could be considered as being ambiguous. Despite the evident possibility of unfairness arising as a result of their onerous requirements, the Public Works Contracts are commercial agreements that arguably cannot be criticised for a lack of clarity in their terms. Further clause 10.1.1(3) explicitly states that the contract sum shall only be adjusted if the contractor has complied with this clause 10 in full, including giving notices and details within the time required. Arguably a court will set not aside a provision in a commercial agreement due to its apparent unreasonableness,46 particularly when clause 1.2.4 of the Public Works Contact essentially acts as a restriction on contra proferentem:

“No rule of legal interpretation applies to the disadvantage of a party on the basis that the party provided the Contract or any of it or that a term of the Contract is for the party’s benefit.”

Purposeful interpretation That said, there is the possibility that a court may adopt a similar stance to that of Mr. Justice Akenhead and give a commercially realistic interpretation to the terms, construing the words “in a sensible and commercial way that would resonate with commercial parties in the real world”47 and

43 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [463] 44 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [466] 45 Morecraft Estate v Prudential Insurance (1999) 175 DLR (4th) 138 at 143 46 City Alliance Limited v Oxford Forecasting Services Limited [2001] I.H.E.B. (Comm) 233 CA 47 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [468]

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afford the contractor some leniency and discretion in its efforts in particular to made to meet the claim notice and details requirements set out in clause 10.3. However there is no guarantee that the Irish courts will necessarily regard lenience towards the contractor in his provision of the details of claim as the correct interpretive approach. The courts may be more swayed by the express reference to purposeful interpretation in the Public Works Contracts at clause 1.2.1 namely that:

“The parties intend the Contract to be given purposeful meaning for efficiency and public benefit generally and as particularly identified in the Contract.”

This appears to align with the findings of the learned authors of Keating who in relation to the “purpose of the rule of law” state:48

“This principle, it is submitted may be of particular relevance in the context of construing the applicable test of causation in extension of time and loss and expense provisions under a building contract. It emphasises the need to decide as a matter of law (which in the present context means considering the proper construction of the clause under construction) what causal connection is required between the relevant event/loss to trigger entitlement to relief. Such an approach emphasises that when construing a provision, account needs to be taken not just of the language of causation within the clause itself (which as indicated above is usually not clear enough to give final guidance) but also the purpose of the provision in question within the contractual scheme as a whole.”

It is perhaps arguable that purposeful interpretation in the context of public benefit would be more aligned to an approach where an engineer is to provided with full details of claim so that he can properly and efficiently implement the public contract rather than affording the contractor lenience as regards his contractual obligations when making a claim. Details of claim to be provided by the contractor – conclusion In Walter Lilly, Mr. Justice Akenhead found that under clause 26.1.3 the contractor need only submit details which “are reasonably necessary” for ascertaining loss and expense and further that possibly allowing the architect or quantity surveyor to inspect the contractor’s records could constitute adequate submission of details in the circumstances.49 A contractor claiming under the Public Works Contracts could try to rely on these findings in order to ensure that an entitlement to various heads of loss and expense will not be lost where for some of the loss details has not been provided.50 While a contractor may be successful in this approach, clause 10.3 does not contain the “as are reasonably necessary” qualification to which Mr. Justice Akenhead drew specific attention, requiring instead that the contractor shall give the employer’s representative details of all of the categories of documentation sought. The same could be said to apply to the alternative provision under the Public Works Contracts namely clause 9.3.1 which requires that as soon as practicable after that, and in any event within 40 working days after the Contractor became aware of the delay, the contractor shall give the employer’s representative full details of the delay and its effect on the progress of the works. However this requirement does not extend to claims where the contractor has given notice and details of the delay under sub-clause 10.3.1. As per Mr. Justice Akenhead’s findings in Walter Lilly, under the Public Works Contracts, the employer’s representative must be put in the position in which they can be satisfied that all or some of the loss and expense claimed is likely to be or has been incurred, it is the conciliator or arbitrator who will ultimately decide on the balance of probabilities whether the contractor has incurred the loss or expense claimed.

48 Furst and Ramsey, Keating on Construction Contracts 8th Ed. London Sweet and Maxwell 2006 para 9-061 page 351 49 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [465] 50 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [491]

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Mr. Justice Akenhead found that given that the architect already had a very substantial amount of information, less details of claim needed to be provided by the contractor.51

However, it is arguable that an Irish court may prefer the findings of Mr. Justice Goff in Humber Oils Terminal Trustees Ltd v Hersent Offshore Ltd. that the engineer has to know “what is proposed to be done, including what it is likely to cost and how long it is likely to take” in order to make “decisions which may be of crucial importance for the future implementation of the contract.”52

Mr. Justice Akenhead does go on to state53 that there is no need to construe clause 26.1.3 in a peculiarly strict way or in a way which is in some way penal as against the contractor, particularly bearing in mind that all the clause 26.2 grounds which give rise to the loss and expense entitlements are the fault and risk of the employer. There is the possibility that a court may adopt a similar stance to that of Mr. Justice Akenhead and give a commercially realistic interpretation to the terms, construing the words “in a sensible and commercial way that would resonate with commercial parties in the real world.”54 The Irish courts may concur with the approach taken in Walter Lilly and determine this to mean that the contractor should be afforded some leniency and discretion in its efforts in particular to made to meet the claim notice and details requirements set out in clause 10.3. However the Irish courts may also adopt the purposive approach as enshrined by clause 1.2.1 and determine this to mean that the engineer is to provided with full details of claim so that he can properly and efficiently implement the public contract, particularly bearing in mind the express reference to the parties intending the contract “to be given purposeful meaning for efficiency and public benefit generally and as particularly identified in the contract.”55

51 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [464] 52 Humber Oils Terminal Trustees Ltd v Hersent Offshore Ltd. (1981) 20 BLR 16(QB) 53 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [466] 54 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) [468] 55 Clause 1.2.1

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3: Advancement and evaluation of global claims

Introduction Mr. Justice Akenhead concluded that Walter Lilly’s claim was not as a matter of fact a global claim.56 However his judgment offers clear and concise guidance on the subject. The question in this instance is whether such guidance is of benefit to a contractor claiming under the Public Works Contracts in circumstances where it could be argued that the forms effectively bar global claims.57 In order to consider this, Mr. Justice Akenhead findings need to be considered in turn and their relevance if any to the Public Works Contracts reflected upon. Contractual restrictions Mr. Justice Akenhead emphasised the need to adhere to any contractual restrictions on global cost or loss claims.58 In the case of the clause 26 conditions precedent to claim Mr. Justice Akenhead found that:

“If and to the extent that those conditions are satisfied, there is nothing in Clause 26 which states that the direct loss and/or expense cannot be ascertained by appropriate assessments.”59

Under the Public Works Contracts, a contractor makes his claim either under clause 9.3 (“Delay and Extension of Time”) or clause 10.3.1 (“Contractor Claims”) It is generally accepted that the notice and detail of claim requirements set out in both clause 26 and clauses 9.3.1 and 10.3.1 of the Public Works Contracts are condition precedents to claim.60 Global claims under the Public Works Contracts Global Claims are further restricted within the Public Works Contracts by virtue of clause 10.3.4 which states:

“The Contractor shall keep detailed contemporary records to substantiate any aspect of an event or circumstance about which it has given, or is entitled to give, notice under this sub- clause 10.3, and its resulting costs. These shall include any records the Employer’s Representative directs the Contractor to keep. The Contractor shall give the records to the Employer’s Representative if so directed.”

This obligation is particularly onerous, when one considers the details of claim required under clause 10.3.1 and is further compounded by the requirement on the contractor to continuously update his claim as set out in clause 10.3.3:

“If the cause of the claim has a continuing effect, the Contractor shall update the information at monthly intervals: (1) Stating the extension of time and adjustment to the Contract Sum claimed for delay and cost already incurred; and (2) So far as practicable, proposing a final adjustment to the Contract Sum and Date for Substantial Completion of the Works and any affected Section; and (3) Providing any other information the Employer’s Representative reasonably requires.”

56 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [491] 57 Keane and Hussey, Construction Contracts Law and Practice Thomson Roundhall 2007 Anthony Hussey Chapter 7-43 58 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486](a) 59 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486](b) 60 See Section 2: Details of Claim to be provided by the Contractor pages 9-10

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Further clause 10.7.2 of the Public Works Contracts states: “If a delay has more than one cause, and one or more of the causes is not a Compensation Event, there shall be no increase to the Contract Sum for delay cost for the period of concurrent delay.”

A bar on global claims? The question that therefore needs to be addressed in light of the aforementioned obstacles to claim is whether it is possible for a global claim to be brought under the Public Works Contracts. Consideration first needs to be given to how a global claim arises. The learned authors of Keating define a global claim as follows:

“In principle the loss or delay attributable to each cause relied upon by a contractor should be separately identified, particularised and proved. A global claim, however is one that provides an inadequate explanation of the causal nexus between the breaches of contract or relevant events / matters relied upon and the alleged loss and damage or delay that relief is claimed for.”61

A key issue that arises in light of this when one considers the restrictions to global claims in the Public Works Contracts is that while they are indeed onerous, they are onerous from the perspective of detail and not necessarily of cause. While the obligation on the contractor as to the giving of notice, the keeping of records and constantly updating the employer’s representative in relation to any claims made under the Public Works Contracts is clear, it is important to note the paucity of contractual requirements within the forms regarding how the causal nexus of the claim is to be established and specified. Taking each of the relevant clauses in turn: Clause 9.3 (“Delay and Extension of Time”) While it is the case that clause 9.3.1 states that if the contractor becomes aware that work under the contract is being or is likely to be delayed for any reason, it shall as soon as practicable notify the employer’s representative of the delay and its cause, where the Contractor has given notice and details of the delay under sub-clause 10.3.1 it does not have to give notice or details again under clause 9.3.1 for the same delay.62 Clause 10.3 (“Contractor Claims”) While clause 10.3.4 requires that the contractor to keep detailed contemporary records to substantiate any aspect of an event or circumstance about which it has given, or is entitled to give, notice under this clause 10.3, and its resulting costs it is the substantiation of the event or circumstances notified that is the fundamental requirement of the clause not the causal nexus of the event to the loss. In short, the events or circumstances themselves must be proved as a matter of fact, however this if anything ties in with the findings of Mr. Justice Akenhead who took the matter a step further in Walter Lilly and expressly found that a global claim must still be proved as a matter of fact.63 Claim must be proved as a matter of fact However, Mr. Justice Akenhead quoting Lord MacFayden in John Doyle Construction Ltd v Laing Management (Scotland) Ltd.64 also made it clear that the contractor does not have to prove which loss has been caused by which event, if all of the events are events for which the defender is legally responsible.

61 Furst and Ramsey, Keating on Construction Contracts 9th Ed. London Sweet and Maxwell 2012 page 338 62 Clause 9.1 of the Public Works Contracts; See also Section 2: Details of claim to be provided by the contractor page 11 63 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486](a) 64 John Doyle Construction Ltd v Laing Management (Scotland) Ltd [2002] BLR 393, (2003) 19 Const LJ 152, 85 Con LR 98, [2002] Scot CS 110, 2004 SLT 678, [2002] TCLR 24 (Outer House) and [2004] BLR 295, (2004) 20 Const LJ 477, 2004 SC 713, [2004] Scot CS 141, 2004 SCLR 872 (Inner House).

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“In such circumstances, it will suffice for the pursuer to aver and prove that he has suffered a global loss to the causation of which each of the events for which the defenders is responsible has contributed…provided the pursuer is able to give adequate specification of the events, of the basis of the defender's responsibility for each of them, of the fact of the defender's involvement in causing his global loss, and of the method of computation of that loss, there is no difficulty in principle in permitting a claim to be advanced in that way.” [emphasis added]

The requirements laid down by Lord McFayden in Doyle that a contractor must be able to give adequate specification of the events and set out the basis of the employer’s responsibility for each of them and the employer's involvement in causing the contractor’s global loss and set out the method of computation of that loss tallies with the requirements of clause 10.3.4 and the details of claim requirements set out in clause 10.3.1 and 10.3.3 of the Public Works Contracts. As stated by Anneliese Day and Jonathan Cope in their recent paper Lilly and Doyle: A Common Sense Approach to Global Claims65

“Global claims commonly include assertions that a contractor has been disrupted by a combination of the late provision of design information, variations, restricted access to site, etc. Whilst it might be relatively easy for contractors to demonstrate that such events occurred and are the employer’s responsibility, it does not automatically follow that they resulted in ‘... lower efficiency or lower productivity than would otherwise be achieved ...’. All too often contractors ask tribunals to make a leap of faith and conclude that multiple events caused disruption without giving any explanation or evidence of how the works were disrupted. In order to prove that events resulted in delay and/or disruption contractors will need to provide: (a) An explanation of how the events resulted in delay and/or disruption. (b) Contemporaneous evidence of the delay and/or disruption.”

Again requirement (b) set out above would appear to be a reiteration of the requirements of clause 10.3.4 of the Public Works Contracts. There is no bar or explicit requirement in clause 10.3.4 as to how the contractor must prove that the events relied upon actually resulted in the delay in question as set out in requirement (a) above. Proving the claim This coincides with the idea put forward by Mr. Justice Akenhead that while there may be marked obstacles in proving a global claim this does not of itself exclude them from consideration.

“There is nothing in principle 'wrong' with a 'total' or 'global' cost claim. However, there are added evidential difficulties (in many but not necessarily all cases), which a Claimant contractor has to overcome.”66

It also coincides with Mr. Justice Akenhead’s conclusion that it is open to the contractor how they prove their claim:

"(a) … the Contractor has to demonstrate on a balance of probabilities that, first, events occurred which entitle it to loss and expense, secondly, that those events caused delay and/or disruption and thirdly that such delay or disruption caused it to incur loss and/or expense (or loss and damage as the case may be). (c) It is open to Contractors to prove these three elements with whatever evidence will satisfy the tribunal and the requisite standard of proof. There is no set way for contractors to prove these three elements. For instance, such a claim may be supported or even established by

65 Lilly and Doyle: A Common Sense Approach to Global Claims. A paper presented to the Society of Construction Law at a meeting in Edinburgh on 10th April 2013 Anneliese Day QC and Jonathan Cope May 2013 D160 66 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486] (d)

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admission evidence or by detailed factual evidence which precisely links reimbursable events with individual days or weeks of delay or with individual instances of disruption and which then demonstrates with precision to the nearest penny what that delay or disruption actually cost.”67

It is arguable that Mr. Justice Akenhead’s guidance in this regard is of relevance to the Public Works Contracts as well as to the amended JCT form in Walter Lilly.

“It [the Contractor] will generally have to establish (on a balance of probabilities) that the loss which it has incurred (namely the difference between what it has cost the contractor and what it has been paid) would not have been incurred in any event. Thus, it will need to demonstrate that its accepted tender was sufficiently well priced that it would have made some net return. It will need to demonstrate in effect that there are no other matters which actually occurred (other than those relied upon in its pleaded case and which it has proved are likely to have caused the loss).”68

In Walter Lilly Mr. Justice Akenhead found that it is not necessarily the case that a claimant contractor had to show that it was impossible to plead and prove cause and effect in the normal way in order to advance a global claim.69 Mr. Justice Akenhead’s found that if events other than those relied on by the contractor, or which are at the contractor’s risk caused or contributed to the total loss, the contractor’s claim does not necessarily fail except to the extent that those other events caused the loss.

“An example would be where, say, a Contractor's global loss is £1 million and it can prove that but for one overlooked and unpriced £50,000 item in its accepted tender it would probably have made a net return; the global loss claim does not fail simply because the tender was underpriced by £50,000; the consequence would simply be that the global loss is reduced by £50,000 because the Claimant Contractor has not been able to prove that £50,000 of the global loss would not have been incurred in any event. Similarly, taking the same example but there being events during the course of the contract which are the fault or risk of the Claimant Contractor which caused or cannot be demonstrated not to cause some loss, the overall claim will not be rejected save to the extent that those events caused some loss.”70 [emphasis added]

Mr. Justice Akenhead went on to state:

“…. It may be that the tribunal will be more sceptical about the global cost claim if the direct linkage approach is readily available but is not deployed. That does not mean that the global cost claim should be rejected out of hand.”71 [emphasis added]

While under clause 10.7.2 where a delay has more than one cause, and one or more of the causes is not a compensation event, there shall be no increase to the contract sum for delay cost for the period of concurrent delay, this does not necessarily imply that an overall claim must be rejected in those circumstances. As stated by John Lyden in Global Claims In Common Law Jurisdictions72

“Pleadings must define the issues with clarity and precision. However, having regard to the following views expressed about the recovery of damages, the courts in Ireland are likely to adopt a pragmatic approach to global claims in appropriate cases.”

67 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486] (a) (c) 68 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486] (d) 69 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486] (a) 70 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486] (d) 71 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486] (f) 72 John Lyden in “Global Claims In Common Law Jurisdictions”72 A Paper Presented To The Society Of Construction Law And The Society Of Chartered Surveyors (Southern Region) At A Joint Meeting In Cork, Ireland On 26th November 2007 John Me Lyden April 2008 D91 The law in Ireland page 18

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Contractor created entanglement A contractor claiming under the Public Works Contracts could also arguably rely on Mr. Justice Akenhead’s findings that it is not correct in law that a global award will be disallowed where the claimant has himself created the impossibility of disentanglement.

“DMW's Counsel's argument that a global award should not be allowed where the contractor has himself created the impossibility of disentanglement (relying on Merton per Vinelott J at 102, penultimate paragraph and John Holland per Byrne J at page 85) is not on analysis supported by those authorities and is wrong.”

Striking out of global claims Mr. Justice Akenhead emphasised that if a global cost claim is shown to have been caused in part by other matters, this does not mean that the claimant’s claim will be reduced to nothing. Where the tribunal can take out of the global loss elements for which the contractor cannot recover, it will do so.

“The fact that one or a series of events or factors (unpleaded or which are the risk or fault of the Claimant contractor) caused or contributed (or cannot be proved not to have caused or contributed) to the total or global loss does not necessarily mean that the Claimant contractor can recover nothing. It depends on what the impact of those events or factors is.”73

These findings bear similarities to those of Lord MacFayden in Doyle:

“The global claim may fail, but there may be in the evidence a sufficient basis to find causal connections between individual losses and individual events, or to make a rational apportionment of part of the global loss to the causative events for which the defender has been held responsible.”74

A majority of applications to strike out global claims have failed, with the courts instead preferring instead to order amendments to the claim.75 This is clearly of assistance to the contractor facing the stringent restrictions on making a global claim under the Public Works Contracts as is Mr. Justice Akenhead’s view that a tribunal will where possible simply omit the elements of the global loss claim for which the contractor cannot recover. A more stringent approach However, that is not to say that an Irish court may not adopt a more stringent approach to global claims. Support for such an approach can be found in the findings of Mr. Justice Sanders in the case of Attorney General for the Falkland Islands v Gordon Forbes Construction (Falklands) Ltd.76 which dealt with the issue of the preclusion of a claim for extra costs under clause 53 of the FIDIC Conditions of Contract for Works of Civil Engineering Construction, 4th Edition. Clause 53 of the FIDIC Conditions of Contract for Works of Civil Engineering Construction, 4th Edition bears some similarities to clause 10.3 of the Public Works Contracts, requiring that the contractor keep contemporary records as may be reasonably necessary to support any claim he may

73 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486] (e) 74John Doyle Construction Ltd v Laing Management (Scotland) Ltd [2002] BLR 393, (2003) 19 Const LJ 152, 85 Con LR 98, [2002] Scot CS 110, 2004 SLT 678, [2002] TCLR 24 (Outer House) and [2004] BLR 295, (2004) 20 Const LJ 477, 2004 SC 713, [2004] Scot CS 141, 2004 SCLR 872 (Inner House). 75 Lilly and Doyle: A Common Sense Approach to Global Claims. A paper presented to the Society of Construction Law at a meeting in Edinburgh on 10th April 2013 Anneliese Day QC and Jonathan Cope May 2013 D160 referencing the failure of applications to strike out global claims in Mid Glamorgan County Council v Devonald Williams and Partners, ICI Plc v Bovis Construction Ltd (1992) 32 Con LR 90 (QBD). British Airways Pensions Trustees Ltd v Sir Robert McAlpine & Sons Ltd (1994) 72 BLR 26, (1995) 11 Const LJ 365, 45 Con LR 1 (CA); John Holland Construction v Kvaerner, Bernhard’s Rugby Landscapes v Stockley Park, note 6 and Doyle (Inner House). 76 Attorney General for the Falkland Islands v Gordon Forbes Construction (Falklands) Ltd. [2003] BLR 280 Pages 24 and 33

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subsequently wish to make (clause 53.2) and requiring that the contractor within 28 days or such time agreed by the engineer, send the engineer an account giving detailed particulars of the amount claimed and the grounds upon which the claim was based (clause 53.3).

In relation to a preliminary point in Attorney General for the Falkland Islands that the contractor was effectively barred from making a claim for failing to adhere to the provisions of clause 53 and in particular failing to make available contemporaneous records, Mr. Justice Sanders stated (paragraph 29):

“It would be perverse, I believe, if a Contractor who fails to comply with the terms of the contract, should then be allowed to introduce non-contemporary records (this is to say a document with is neither a record nor a contemporary document) to support a claim, particularly as this cannot be properly investigated by the Employer. It is almost certainly the case that, when a Contractor makes a claim under Sub-Clause 53.4, there will have been a greater passage of time than that which one would expect with a claim made in accordance with Sub-Clauses 53.1 to 53.3. The rights of the Employer to inspect the records at the time the claim arises, to conduct his own investigation as to the veracity of the claim with others on site, and to challenge the extent of the claim at the time the claim arises are fundamental to the FIDIC procedure. A Contractor who fails to meet his contractual obligations cannot put himself in a better position by so doing, and must accept the consequential detriment as a result if he fails to keep comprehensive contemporary records.”

Purposeful interpretation Further if we return to the express reference to purposeful interpretation in the Public Works Contracts at clause 1.2.1 “for efficiency and public benefit generally and as particularly identified in the contract” and align this with the findings of the learned authors of Keating who in relation to the “purpose of the rule of law” creating liability state:77

“Thus it is arguable that an examination of the purpose of the provision in question may justify and explain the distinction between the modified causation test applicable to extension of time clauses (which properly understood, are intended to be for the benefit of both the contractor and the employer) and the more traditional test based upon a simple application of the “but for” test which normally applies in the case of loss and expense claims (which are primarily for the sole benefit of the contractor to provide a contractual regime for the recovery of extra actual loss and expense and may therefore have been intended to attract a more rigorous test of causation.” [emphasis added]

It is arguable that clause 10.3 of the Public Works Contracts in so far as it allows for an adjustment to the contract sum is for the sole benefit of the contractor and as such may have been intended to attract a more rigorous test of causation particularly when it could be said to be of public benefit to ensure that an engineer is properly afforded full details of a contractor claim to allow him to make the appropriate variations to the contract works to ensure that the public contract is implemented efficiently.78

The practical reality of attempting to bring a global claim under the Public Works Contracts Finally and as highlighted by Anthony Hussey in Construction Projects – Law and Practice, Anthony Hussey the practical difficulties in mounting a global claim made under the Public Works Contracts must be considered:

“Given however the obligation on the contractor as to the giving of notice, the keeping of records and constantly updating the employer’s representative in relation to any claims, it is almost impossible to see global claims arising under that form of contract.”79

77!Furst and Ramsey, Keating on Construction Contracts 8th Ed. London Sweet and Maxwell 2006 para 9-061 page 351 78 Furst and Ramsey, Keating on Construction Contracts 8th Ed. London Sweet and Maxwell 2006 para 9-061 page 351 79 Keane and Hussey, Construction Contracts Law and Practice Thomson Roundhall 2007 Anthony Hussey Chapter 7-43

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Advancement and evaluation of global claims - conclusion Arguably many of the findings on global claims made by Mr. Justice Akenhead in Walter Lilly align with rather than compete with the requirements under the Public Works Contracts for dealing with such claims. Mr. Justice Akenhead in Walter Lilly following Lord MacFayden in Doyle found that a global claim must be proved as a matter of fact.80 These findings clearly align with the requirements set out in clause 10.3.4 of the Public Works Contracts that the contractor “keep detailed contemporary records to substantiate any aspect of an event or circumstance.” Mr. Justice Akenhead maintained that if events other than those relied on by the contractor, or which are at the contractor’s risk caused or contributed to the total loss, the contractor’s claim does not necessarily fail except to the extent that those other events caused the loss. This finding again coincides with the ethos of the Public Works Contracts that a contractor will not be compensated for events that are not compensation events and does not necessarily imply that the overall claim must be rejected in those circumstances. Mr. Justice Akenhead found81 that a contractor does not have to show that it is impossible to plead and prove cause and effect in the normal way or that such impossibility is not the fault of the party seeking to advance the global claim.

There are similarly no pleading requirements under clauses 9.3 or 10.3 and while it is the case that the Irish courts require pleadings to define the issues with clarity and precision, the courts are also likely to adopt a pragmatic approach to global claims in appropriate cases.82 Mr. Justice Akenhead found that it is not correct in law to say that a global award will be disallowed where the claimant has himself created the impossibility of disentanglement. He confirmed that if a global cost claim is shown to have been caused in part by other matters, this does not mean that the claimant’s claim will be reduced to nothing. Where the tribunal can take out of the global loss elements for which the contractor cannot recover, it will do so. The wording of clause 10.3.4 does not necessarily suggest that a contractor claiming under the Public Works Contracts could not rely on Mr. Justice Akenhead’s findings in this regard, particularly in circumstances where most of the applications to strike out global claims have failed, with the courts instead preferring to order amendments to the claim. Fundamentally, there is no explicit requirement under the forms as to how the claim is to be proved (as opposed to substantiated) and on that basis there seems to be no reason why the contractor cannot rely on Mr. Justice Akenhead’s conclusion that is open to the contractor how they prove their claim.83 However, that is not to say that an Irish court may not adopt a more stringent approach to global claims, having regard to modern day advances in record keeping, the benefits of standing over the contractor’s planning and performance requirements and encouraging mitigation of compensation events rather than disputes and claimsmanship and further reflecting the underlining requirement of reciprocal co-operation as enshrined in clause 4.1.1. The Irish courts may also place due regard on the express reference to purposeful interpretation in the Public Works Contracts at clause 1.2.1 “for efficiency and public benefit generally and as particularly identified in the Contract” and in circumstances where a global claim is for the sole benefit of the contractor insist on a more rigorous test of causation.84

80 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [480] 81 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC)para [486] 82 John Lyden in “Global Claims In Common Law Jurisdictions”82 A Paper Presented To The Society Of Construction Law And The Society Of Chartered Surveyors (Southern Region) At A Joint Meeting In Cork, Ireland On 26th November 2007 John Me Lyden April 2008 D91 The law in Ireland page 18 83 Walter Lilly v Giles Patrick Mackay [2012] EWHC 1773 (TCC) para [486] (a) (c) 84 Furst and Ramsey, Keating on Construction Contracts 8th Ed. London Sweet and Maxwell 2006 para 9-061 page 351

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Finally, the obligation on the contractor as to the giving of notice and details of claim, the keeping of records and constantly updating the employer’s representative in relation to any claims arguably makes successfully mounting a global claim under the Public Works Contracts an onerous task for the contractor. Conclusion

In light of the aforementioned, it appears evident that Walter Lilly is a case of some relevance to a contractor bringing a claim under the Irish Public Works Contracts. The findings of Mr. Justice Akenhead in relation to extension of time and delay cost entitlements, the evaluation of loss and expense claims under standard form contracts and the advancement and evaluation of global claims can be relied upon to various degrees by such a contractor. Despite the many restrictions to contractor claims under the Public Works Contracts, there are still elements of Mr. Justice Akenhead's findings that could prove useful to a contractor in bringing such claims. Fiona Forde B.L. B.A. B.A.I. Mechanical Engineering MSc. (Kings College, London) Construction Law and Dispute Resolution Postgrad. Dip. Construction Law and Contract Administration