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DD10: Approaches to assess contributory causes of delay and additional cost

Updated: Mar 31


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To date, I have written three articles on concurrent delay. The first provided an overview (DD07), the second identified what is not concurrent delay (DD08), and the third explored the interrelationship between the ‘prevention principle’ and concurrent delay.

This article will look at approaches to assess contributory causes of delay and additional cost and the final article on concurrent delay will review the provisions dealing with concurrent delay in some of the Australian Standard form contracts.

Approaches to assess competing causes

Identification of, and consequences for, concurrent delay depends on the contract and the law on causation in the particular jurisdiction you are in.

Notwithstanding, this article will look at the following seven approaches to assess contributory causes of delay and additional cost, one or more may, or may not, be applicable in your jurisdiction:[1]

1. Malmaison approach;

2. Dominant cause approach;

3. Concurrent delay apportioned;

4. The tortious solution;

5. “But for” test;

6. Burden of proof; and

7. Devlin approach.

1. Malmaison approach

The Malmaison approach has its roots in the English case of Henry Boot v Malmaison and is taken from a passage in the judgment which sets out where the disputing parties had reached agreement as follows:[2]

“…it is agreed that if there are two concurrent causes of 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…”

The Malmaisson approach in relation to extensions of time was subsequently approved in Motherwell Bridge Construction Ltd v Micafil Vakuumtechnik [3] and in Royal Brompton v Hammond.[4]

In line with the Malmaisson approach, the position in the US is set out in RP Wallace Inc v United States as follows:[5]

“Concurrent delay is not fatal to a contractor’s claim for additional time due to excusable delay, but precludes the recovery of delay damages. If a period of delay can be attributed simultaneously to the actions of both the Government and the Contractor, this court has stated, there are said to be concurrent delays, and the result is an excusable but not a compenable delay.”

The SCL Protocol first and second editions are consistent with both the Malmaission approach and the US court in RP Wallace Inc v United States.

The Malmaisson approach requires a relaxation of the ‘but-for’ test of causation. A relaxation is required in this approach because, in a case of concurrent delay, the contractor is never able to show that it would have compeleted on time but-for the event relied upon. The justification for the relaxation would be, it could be argued, that it is necessary to avoid a result which runs contrary to the parties’ expressed intention where the parties have contractually agreed that the contractor should be granted an extension of time in a case of employer delay.


2. Dominant cause approach

If there are two competing causes, where one is the contractual responsibility of the defendant and the other the contractual responsibility of the claimant, the claimant succeeds if it establishes that the cause for which the defendant is responsible is the effective dominant cause. The dominant cause of concurrent delay would be the “operative” cause.

However, in Australia, the Victorian court in SMK Cabinets v Hili Modern Electrics did not consider that the dominant cause test applied in relation to extensions of time claims.[6]

The dominant cause approach was also rejected by the English court in H Fairweather & Co v London Borough of Wandsworth.[7]

However, in John Doyle Construction v Laing Management (Scotland), the Scottish court said:[8]

“In such cases, if an event or events for which the employer is responsible can be described as the dominant cause of an item of loss, that will be sufficient to establish liability, notwithstanding the existence of other causes that are to some degree at least concurrent.”

The court in John Doyle cited the House of Lords decision in Leyland Shipping as follows:[9]

“In our opinion the same approach should be taken to cases such as the present. If an item of loss results from concurrent causes, and one of these causes can be identified as the proximate or dominant cause of the loss, it will be treated as the operative cause, and the person responsible for it will be responsible for the loss.”

In City Inn, the Scottish court said that:[10]

“…it may be possible to show that either a relevant event or a contractor’s risk event is the dominant cause of that delay, and in such a case that event should be treated as the cause of the delay.”

Although the court in Fairweather expressly disapproved of the “dominant cause” test, in a later English case the dominant cause approach was applied by the English High Court in Mirant Asia Pacific Construction (Hong Kong) v Ove Arup and Partners International,[11] in which it was held that a claimant establishes liability in contract if it shows that the cause which is the responsibility of the defendant is the dominant cause, or, as the court put it, “the real efficient cause”. The court relied on parts of the Scottish decision in John Doyle v Laing Management approving the dominant cause approach.

In relation to delay damages/loss and expense, if the dominant cause is applied it would give an entitlement to further payment if the employer risk event is found to be the most dominant of the competing events. However, this approach is contrary to the “but-for” test which, it is submitted, should be satisfied for a contractor to be entitled to further payment for loss and expense incurred.

There are difficulties with the dominant cause approach. The first, a practical difficulty, is that in a case of concurrent delay, where concurrent delay is defined as employer/contractor delay of approximately equal causative potency (if this definition of concurrent delay is accepted), it will be implicit in the findings of fact that there was more than one cause of delay of approximately equal causative potency. It would therefore be difficult to select the cause which is dominant if both causes are equally causative.

Again, like the Malmaisson approach, dominant cause approach requires a relaxation of the ‘but-for’ test of causation.

Unless the contract expressly states otherwise, the dominant cause approach may also conflict with the operation of the prevention principle. If the extension of time is not granted on the basis that the contractor cause of delay was the dominant cause, arguably it will not give the contractor relief for the employer’s act of prevention.


3. Concurrent delay apportioned

In the Scottish case of City Inn v Shepherd Construction,[12] the court considered that City Inn and Shepherd both caused critical delay and formed the view that there was “true concurrency”, that none of the causes of delay could be considered to be a dominant cause, but that all the delays had a significant impact on the overall delay. As a result, the court considered a fair and reasonable approach to determine entitlement to an extension of time would be to use an apportionment approach.

Lord Carloway, however, did not agree with the apportionment approach and City Inn is therefore not a full endorsement of apportionment.

There seems to be no authority in Australia to support the apportionment of damages caused by concurrent causes. However, as we will see in my next article DD11, the Australian Standard forms AS4000-1997 and AS4902-2000 expressly provides that, “when both non-qualifying and qualifying causes of delay overlap, the Superintent shall apportion the resulting delay to WUC according to the respective causes’ contribution.”


4. The tortious solution

If the tortious solution applies, the claimant recovers if the event on which it relies caused, or materially contributed to, the loss.

Where the tortious solution to determining competing causes operates, if there are competing causes of loss, the contractor is able to recover in full if it demonstrates that the cause for which the employer is liable caused, or materially contributed to, its loss. In IBA v EMI,[13] a television aerial mast collapsed as a result of two separate causes operating at the same time. The less important of the causes was the negligent design by subcontractors, but the subcontractors were held liable on the basis that their negligent design materially contributed to the collapse. It is possible for there to be contribution between two or more defendants or between a defendant and one or more third parties. If the contractor’s loss was partly its own responsibility, damages may be reduced for contributory negligence.


5. “But for” test

‘But for’ the employer’s breach, would the contractor have suffered the delay and/or loss claimed?

If the contractor would have suffered the delay and/or loss in any event, and if the ‘but for’ test is applicable, the contractor’s claim fails. However, if the contractor would not have suffered the delay and/or loss claimed in any event, the ‘but for’ test leads to the conclusion that the contractor has no entitlement to additional time and/or money.

In DeBeers UK v Atos Origin IT Services,[14] the court said that “the contractor cannot recover damages for delay in circumstances where he would have suffered exactly the same loss as a result of causes within his control or for which he is contractually responsible.”

Where there is concurrent delay, the strict application/finding of the “but for” test to both time and money would likely result in non-excusable, non-compensable delay; that is, no entitlement to time or money.

Where there is concurrent delay, unless the contract states a contrary intention, it is suggested that the ‘but for’ test:

· is applied in relation to loss and expense / damages; and

· there is a very strong argument that the test should be relaxed in relation to the contractor’s entitlement to an extension of time.


Burden of proof

If part of the delay or loss is shown to be due to a breach of contract by the claimant, the claimant must show how much of the damage was caused otherwise than by its breach of contract, failing which the claimant can recover nominal damages only.

However, in relation to concurrent causes of loss where there is true concurrent delay, under this test, nothing would be recoverable unless the contractor is able to demonstrate what part of its loss was solely the employer’s liability and vice-versa.


Devlin approach

The Devlin approach to the assessment of competing causes is that, if a breach of contract is one of two causes of loss, both causes co-operating and both of approximately equal efficacy, the breach is sufficient to carry judgment for the loss. This comes from Devlin J’s statement in Heskell v Continental Express.[15]


Summary

This article has covered seven approaches to assess contributory causes of delay and additional cost. Depending on the applicable contract and law, one or more of the approaches my be used. If in doubt as to which approaches are/are not applicable, legal/expert advice is strongly recommended.


Next article

My next article will look at and explore how concurrent delay is addressed in the Australian Standard Form contracts.


Finally

If you have any queries on concurrent delay, in relation to any of the previous articles, or any other matter, please do not hesitate to contact us (Robert Gemmell: robert.gemmell@ddquantumexpert.com).


This and previous articles

This and previously published DD articles on the DD Quantum Expert website blog page are:

DD01: Why is it necessary to distinguish between delay and disruption? What’s the distinction?

DD02: A global claim is doomed to fail, unless…

DD03: Comply with the notice provisions in the contract, or else…

DD04: ‘Prevention’ causing ‘time at large’: what does this all mean?

DD05: Float: what is float, who owns the float and how is float different to contingency?

DD06: Construction project delays 101 – plus concurrency!

DD07: What is concurrent delay? An overview

DD08: Concurrent delay: it is not parallelism or pacing

DD09: Concurrent delay and the prevention principle

DD10: Approaches to assess contributory causes of delay and additional cost

[1] It is strongly recommended that you take legal/expert advice if you are unsure as to which approaches are / are not applicable in your jurisdiction. [2] Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 32 [3] Motherwell Bridge Construction Ltd v Micafil Vakuumtechnik (2002) 81 Con LR 44 [4] Royal Brompton Hospital National Health Trust v Hammond (No.7) (2001) 76 Con LR 148 [5] R. P. Wallace, Inc v United States, 63 Fed. Cl. 402 (2004) [6] SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391 [7] H Fairweather & Co Ltd v London Borough of Wandsworth (1987) 39 BLR 106 [8] John Doyle Construction Ltd v Laing Management (Scotland) Ltd (2004) BLR 395 [9] Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350 [10] City Inn v Shepherd Construction [2010] BLR 473 [11] Mirant Asia Pacific Construction (Hong Kong) v Ove Arup and Partners International Ltd [2007] EWHC 918 [12] City Inn v Shepherd Construction [2010] BLR 473 [13] IBA v EMI (1980) 3 M & W 387; 150 ER 1195 [14] DeBeers UK Ltd v Atos Origin IT Services [2010] EWHC 3276 [15] Heskell v Continental Express Ltd [1950] All ER 1033

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