WHO OWNS THE FLOAT?

CONCURRENCY AND DOMINANT CAUSE.

Presented by Bill Barton
If you have any queries from this presentation please contact Bill Barton at
billbarton@bartonlegal.com
The material in this paper has been prepared solely for the benefit of delegates on this course. It is designed
to be an integral part of the presentation and does not necessarily stand on its own. It must not be used for
giving advice in any shape or form. The author and Barton Legal accept no responsibility for loss or
consequential loss occasioned to any person acting or refraining from action as a result of this material.
All rights reserved. No part of this material may be reproduced, stored in a retrieval system, or transmitted
in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the
prior written permission of the author.
Barton Legal
www.bartonlegal.com
The Prevention Principle
This principle is referred to throughout the discussions about extensions of time, float and
dominant cause. The two leading cases which identify and explain this principle are
Trollope & Colls and Multiplex;
it is long settled that in building contracts and in other contracts too when there is a
stipulation for work to be done in a limited time, if one party by his conduct it may be
quite legitimate conduct, such as ordering extra work renders it impossible or
impracticable for the other party to do his work within the stipulated time then the one
whose conduct caused the trouble can no longer insist upon strict adherence to the time
stated. He cannot claim any penalties or liquidated damages for non-completion in that
time Lord Denning Trollope & Colls.
1
Contra Proferentem
This is the principle whereby a clause is read narrowly and against the party that drafted it, usually the
employer, where the terms are ambiguous. It is applicable to extensions of time because it is used in the
interpretation of extension of time and LAD clauses.
It is interesting that the leading cases make very similar reading to Lord Denning in Trollope;
The principle is laid down in Comyns Digest condition L (6), that where one party to a contract is
prevented from performing it by the act of the other, he is not liable in law for that default; and, accordingly,
a well-recognised rule has been established in cases of this kind, beginning with Holme v Guppy ((1838); 3 M
& W 387) to the effect that, if the building owner has ordered extra work beyond that specified by the
original contract which has necessarily increased the time requisite for finishing the work, he is thereby
disentitled to claim the penalties for non-completion provided for by the contract Lord Esher MR Dodd
v Churton. However, the more recent approach has been the combining of thoughts from prevention and
contra proferentem principles, as within the decision in Multiplex, where it was stated by Jackson J that;
(i) Actions by the employer which are perfectly legitimate under a construction contract may still be
characterised as prevention [i.e. acts which it has prevented the contractor from performing and which
cannot be relied upon to hold the contractor to a specified completion date], if those actions cause delay
beyond the contractual completion date.
(ii) Acts of prevention by an employer do not set time at large, if the contract provides for extensions of time
in respect of those events.
(iii) In so far as the extension of time clause is ambiguous, it should be construed in favour of the contractor
2
3
Time at Large
Time at large results from the application of the prevention principle
which provides that no party may require the other to comply with a
contractual obligation in circumstances where that party has itself
prevented such compliance. If the employer has prevented the
contractor from carrying out the works on time according to the
original contractual completion date (and the contract does not
provide for how that delay is dealt with), the employer cannot insist
that the contractor meets the original date for completion.
4
Different Contracts
Most building and engineering contracts contain express provision for adjustments to the
completion date to be made in certain circumstances, which allow the contractor to claim
an extension of time to complete the works, although it will be up to the contractor to
establish its entitlement. There are two types of delay for which the contractor may be able
to claim an extension of time;
Employer delay; the JCT Standard Building Contract 2005, rev 2 2009 refers to delay by the
employer (clause 2.29.6) as;
any impediment, prevention or default, whether by act or omission, by the Employer, the
Architect/Contract Administrator, the Quantity Surveyor or any of the Employers Persons,
except to the extent caused or contributed to by any default, whether by act or omission,
of the contractor or of any of the contractors persons.
5
Delays that are not the contractors responsibility
Other delays, not caused by the employer, may entitle the contractor to
an extension of time, such as those caused by strikes, force majeure, or a
shortage of materials and labour. While the contractor does not cause
such a delay unless there is an express provision in the contract for an
extension of time, in such circumstances these delays may be at the
contractors risk.
6
Gross Entitlement Rejected
In Balfour Beatty the Court dealt with the contractors argument that an
extension of time should apply from the date of receipt of the instructions
that caused the delay, irrespective of whether the contractor was in culpable
delay at the time of the instruction (a so called gross entitlement). The
Court rejected that approach.
7
The Malmaison Argument
In Malmaison, Dyson J held that an employer under a building contract could argue
both that;
a relevant event did not cause (or was not likely to cause) a delay
the delay was, in fact, caused by something else (such as an event for which the
contractor was culpable).
8
Concurrent Causes
In addition, Dyson J held that if there are genuinely two concurrent causes of the same
delay;
one of which is a relevant event and the other is not, then the contractor is entitled to
an extension of time for the period of delay caused by the relevant event notwithstanding
the concurrent effect of the other event. Thus to take a simple example, if no work is
possible on the site for a week not only because of exceptionally inclement weather (a
relevant event), but also because the contractor has a shortage of labour (not a relevant
event), and if the failure to work during that week is likely to delay the works beyond the
completion date by one week, then if he considers it fair and reasonable to do so, the
architect is required to grant an extension of time of one week. He cannot refuse to do so
on the grounds that the delay would have occurred in any event by reason of the
shortage of labour.
9
City Inn v Shepherd
Before delving into the varying detailed judgments that were handed down in
this matter I would make the following points;
1. This is a Scottish case thus persuasive but not binding on English Courts.
2. City Inn commenced proceedings the claim was then for some four weeks
extension of time that they were seeking to claim back together with loss
and expense worth around 125k.
3. The proceedings were commenced in 2000 but the trial was only completed
in 2007 and the appeal decision issued in 2010.
4. This was a guaranteed maximum price contract.
5. The contract was SBC JCT 1980 Private with quantities of which the current
version is SBC 2005 Ed Rev 2 2009 (SBC O5).
6. There were 17 grounds of appeal although ground 17 was not pursued.
10
City Inn v Shepherd
7. Grounds 1 7 concerned the operation of clause 25 (EOT) and clause 26 (loss and expense).
Grounds 8 and 6 dealt with clause 13.8 the bespoke amendment, which was intended as a
condition precedent to entitlement to extension of time. Grounds 8 to 11 also dealt with
interpretation of clause 13.8. Grounds 12 to 16 dealt with the issue of the waiver of clause 13.8.
8. For the purposes of this discussion we are only looking at grounds 1 7 but as to the balance of
the Appeal you should note that;
a) clause 13.8 did not cover all of the architects instructions (this raises drafting issues; review
issues and the application of terms)
b) the architect is presumed to know and understand the terms of the contract they are
administering (thus liability issues; third party liability of consultants to e.g. the contractor).
c) silence by one party could give rise to the inference of a waiver on the part of the employer
(site meeting minutes; conditions precedent; notice generally; information given to be
recorded).
9. It was concerned with the assessment of a fair and reasonable extension of time
under a JCT Standard Form of Contract where there was concurrent delay caused by
relevant events and matters that the contractor was also responsible for. The Court
held that in those circumstances, the decision maker could apportion delay between
the relevant and other event.
11
City Inn v Shepherd
10. In his judgment, Lord Osborne, on hearing the appeal summarised the position in
Scotland as;
In the first place, before any claim for an extension of time can succeed, it must plainly be
shown that a relevant event is a cause of delay and that the completion of the works is likely
to be delayed thereby or has in fact been delayed thereby. In the second place, the decision
as to whether the relevant event possesses such positive effect is an issue of fact which is to
be resolved, not by the application of philosophical principles of causation, but rather by the
application of principals of common sense. In the third place, the decision maker is at liberty
to decide an issue of causation on the basis of any factual evidence acceptable to him. In
that connection, while a critical path analysis, if shown to be soundly based, may be of
assistance, the absence of such analysis does not mean that a claim for extension of time
must necessarily fail. In the fourth place, if a dominant cause can be identified as the cause
of some particular delay in the completion of the works, effect will be given to that by
leaving out of account any cause or causes which are not material. Depending on whether
or not dominant cause is a relevant event, the claim for extension of time will or will not
succeed. In the fifth place, where a situation exists in which two causes are operative, one
being a relevant event and the other some event for which the contractor is to be taken to
be responsible, and neither of which could be described as the dominant cause, the claim for
extension of time will not necessarily fail
12
Conclusion
In conclusion the delay was the result of concurrent causes. None of the causes of delay
can be regarded as a dominant cause. Each of them had a significant effect on the
failure to complete timeously. In those circumstances the correct approach is in my
opinion clear from the authorities that the fact that delay has been caused by matters to
which the contractor is responsible will not deprive the contractor of his rights to claim an
extension of time for delay caused by a relevant event. Put another way, that involves a
determination of the aggregate period within which the works as ultimately defined
should have been completed having regard to the incidence of relevant events. That
determination must be made on a fair and reasonable basis as required by the contract.
In a case such as the present where there is a true concurrency between relevant events
and events that involve contractor default, apportionment will frequently be appropriate.
13
Monarch Steamship
This is referred to because of the comments of Bedlam L J who stated that;
Causation is a mental concept, generally based on inference or induction from uniformity
of sequence as between two events that there is a causal connection between them The
common law, however, is not concerned with philosophic speculation, but is only
concerned with ordinary everyday life and thought and expressions
14
Lord Osbourne-His Summary
Lord Osborne helpfully summarises his interpretation of concurrent and I can do no better than
to quote him in full;
[49]One of the problems in using such expressions as concurrent delay or concurrent delaying events
is that they may refer to a number of different situations. Confining attention for a moment to concurrent
delaying events, which may be taken to mean relevant events and other events, or causes of delay, which
are not relevant events, there would seem to be several possibilities. Such events may be described as
being concurrent if they occur in time in a way in which they have common features. One might describe
events as concurrent on a strict approach only if they were contemporaneous or co-extensive, in the sense
that they shared a starting point and an end point in time. Alternatively, events might be said to be
concurrent only in the sense that for some part of their duration they overlapped in time. Yet again, events
might be said to be concurrent if they possessed a common starting point or a common end point. It might
also be possible to describe events as concurrent in the broad sense that they both possessed a causative
influence upon some subsequent event, such as the completion of works, even though they did not overlap
in time. In other words, they might also be said to be contributory to or co-operative in bringing about
some subsequent event. It appears to me that one of the problems in the present case is that language
such as that under consideration here has been used in different senses at different times. It therefore
becomes important in the interest of clarity, to try to disentangle this confusion.
To summarise, Lord Osborne believes that in the absence of a dominant cause, it is acceptable for delay to
be apportioned between a relevant and non-relevant event.
15
A Definition
Where two constructions of an instrument are equally plausible, upon one of
which the instrument is valid, and upon the other of which it is invalid, the
Court should lean towards that construction which validates the instrument.
16
Multiplex
However, as Jackson J stated in Multiplex, the prevention principle does not apply if the
contract provides for an extension of time in respect of the relevant events. Where such a
mechanism exists, if the relevant act of prevention falls within the scope of the extension of
time clause, the contract completion dates are extended as appropriate and the builder
must complete the work by the new date, or pay liquidated damages (or accept any other
contractual consequence of late completion).
17
The Experts Analogy Mr Bob Breeze
In rejecting the prevention principle the Court examined causation and referred to the
helpful example given by SDMS expert Mr Breeze, where he stated that;
Assuming (as is in fact appropriate in the present case) that the contractor is many months
in delay by reason of his own default. The employer decides a week before the (original un-
extended) contract completion date that he wishes a wall to be painted blue instead of the
contractually specified red. At the time of the instruction, because of the contractors
delays, the wall is not even built yet. The paint will take 5 weeks to procure but will still
arrive before the completion of the wall and the date upon which the contractor would
require the paint in line with his delayed progress. Mr Swans analysis would appear to
entitle the contractor to 4 weeks extension of time (by adding 5 weeks to the date of
impact, and comparing with the original contract completion date). However, I would
suggest that common sense tells the observer that such an extension was neither fair nor
reasonable, where the employers actions have not actually delayed the progress of the
contractor by a single day.
[263] In my judgment Adyards approach is wrong as a matter of both principle and
authority. It is also contrary to common sense, as the above example illustrates.
18
The Courts View
The Court also helpfully set out at paragraph [277] that:
It is to be noted that this example involves a relevant event which caused a period of
actual delay to the progress of the works no work could be done for a week due to the
weather. If that is established then the contractor is entitled to his extension of time even
if there is another concurrent cause of that same delay. A useful working definition of
concurrent delay in this context is a period of project overrun which is caused by two or
more effective causes of delay which are of approximately equal causative potency see
article Concurrent Delay by John Marrin QC (2002).
19
The Courts View
The Court stated that:
[286] City Inn was an extension of time rather than a prevention principle case, but in
so far as Lord Carloway was suggesting in his judgment that it is not necessary to show
that the relevant event is an operative cause of delay to the progress of the works, it
does not reflect English Law. As set out above, the English law authorities in relation to
extensions of time under the JCT form and similar contracts are clear that it must be
established that the relevant event is at least a concurrent cause of actual delay to the
progress of the works.
20
Summary
1. Erosion of prevention principle
Basically, the Commercial Court would not allow a situation where despite the
existence of a contract, the application of a legal principle would entirely remove
one partys rights.
Secondly, given the existence of the contract, the Court set out to apply the
contractual terms.
Thirdly, the Court will interpret and apply those terms in such a way as to make
them work.
21
Summary (contd)
2. SDMS sensibly applied the judgment in Malmaison in arguing that;
there was not a relevant event which caused the delay; but that if there was a
relevant event it was the culpability of the shipyard.
22
Summary (contd)
3. The Court approved the judgment of Balfour Beatty and Malmaison, and specifically
disapproved the dissenting judgment of Lord Carloway in City Inn.
4. The Court provided a definition of concurrent delay as being a period of project
overrun which is caused by two or more effective causes of delay which are of
approximately equal causative potency.
23
Conclusion
It is beholden upon the parties to apply common sense.
English Law requires that for a contractor to obtain an extension of time then the
relevant event relied upon must be at least a concurrent cause of actual delay to the
progress of the work.
Courts do not like fancy arguments and complicated programmes.
Courts are not keen on clever arguments about dominant cause. Probably, especially
from lawyers. Courts are happy to apply old principles of law such as prevention and
contra proferentem but only in very limited circumstances.
The shipyard had basically thrown in the towel by the end of their case and they must
have regretted not doing so at the beginning. Did they try mediation?
24
Conclusion
Apply common sense and honesty to your claim for an extension of time.
Is there a relevant event? Are there really concurrent delaying events? Are you really
able to identify and prove a dominant cause?
Do not make your case out to be more than it really is.
25
Concurrent Delay- but is it?
If it has four legs, a big long nose and floppy ears and thick grey hide
and stands 12 feet high it is probably an elephant and not a mouse. You
can make it sound like a mouse, but it will still be an elephant.
WHO OWNS THE FLOAT?
CONCURRENCY AND DOMINANT CAUSE.
Presented by Bill Barton
If you have any queries from this presentation please contact Bill Barton at
billbarton@bartonlegal.com
The material in this paper has been prepared solely for the benefit of delegates on this course. It is designed
to be an integral part of the presentation and does not necessarily stand on its own. It must not be used for
giving advice in any shape or form. The author and Barton Legal accept no responsibility for loss or
consequential loss occasioned to any person acting or refraining from action as a result of this material.
All rights reserved. No part of this material may be reproduced, stored in a retrieval system, or transmitted
in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the
prior written permission of the author.
Barton Legal
www.bartonlegal.com