The recent TCC case of Walter Lilly v Mackay confirms that English law takes a binary "all or nothing" approach to determining whether an extension of time ("EOT") is due under a JCT contract if there is concurrent delay.
Facts of the case
In 2004, a contractor ("WLC") entered into a contract with an employer ("DWM") for the construction of 3 large houses on the site of what was previously the Earls Court Telephone Exchange. One of the 3 plots of land was owned by Mr Mackay, who was a part-owner of DWM. The contract, which was subsequently divided into separate contracts for each property was based on the JCT 98 form. The contract price for Mr Mackay's property was c. £5 million and the date for completion was 23 January 2006.
Unfortunately, things did not progress according to plan and by the time that Practical Completion was achieved in July 2008, the relationship between WLC and Mr Mackay was notable for its animosity. Mr Mackay blamed WLC for the delays and also for what he felt were defects in the works. In the words of the judge, Mr Mackay was "and [had] been for a long time angry". WLC on the other hand, believed that it was not responsible for the delays to the works and that it was entitled to an EOT, along with relief from liquidated damages, up to Practical Completion. The case raised a number of legal issues, including whether a contractor such as WLC would be entitled to an EOT if it was delayed by the employer even if part of the delay was also caused by the contractor. In other words, is a contractor entitled to an EOT if there is concurrent delay?
The judgment
Although the judge (Akenhead J, the judge in charge of the TCC) held that none of the causes of delay were, in fact, WLC's responsibility, he also took the opportunity to review the body of case law on the subject of a contractor's entitlement to an EOT when there is concurrent delay. The key case under Scots law (which is not binding in England, although Scottish cases may be followed in England and Wales if they are seen to be cogent) is City Inn Ltd v Shepherd Construction Ltd (2010), in which the court held that where there are such concurrent causes of delay, the court will apportion liability, such that the contractor will be awarded an EOT that reflects the delay for which he is not responsible.
The position under English law, however, is much more clearly delineated. Following Henry Boot v Malmaison (1999), if the contractor can show a cause of delay entitling him to an EOT, the fact it is also concurrently in delay will be immaterial. The contractor will be entitled to a full EOT for the period of concurrent delay, but not for any loss suffered or expense incurred because of the employer's delay..
In keeping with the Malmaison approach and other recent English decisions, Akenhead J confirmed the English position, finding 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".
Comment
Whilst the judgment in Walter Lilly is in keeping with the body of English case law on this issue, in the absence of a decision from the Court of Appeal or Supreme Court, the issue remains open for further judicial interpretation. However, as the decision has come from Mr Justice Akenhead, the head of the TCC, it is likely to be considered particularly persuasive in England and Wales, even though the decision is not strictly speaking binding in later TCC proceedings.
Nevertheless, support for the apportionment approach can be drawn from the wording of the JCT form itself, which provides that where there is a Relevant Event that will or is likely to delay the works beyond the Completion Date, on receipt of the proper notices, the Architect or Contract Administrator must review the application and, if valid, award such an EOT as he "estimates to be fair and reasonable." Given the broad and non-prescriptive wording of this EOT clause, an apportionment approach – as endorsed by the Scottish courts – could arguably be available if warranted on the facts.
Reference: Walter Lilly & Company Ltd v Mackay [2012] EWHC 1773 (TCC)
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The original publication date for this article was 02/08/2012.
