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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.
Ł5 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.
This article was written for Law-Now, CMS Cameron
McKenna's free online information service. To register for
Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance
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give professional or legal advice. All Law-Now information relates
to circumstances prevailing at the date of its original publication
and may not have been updated to reflect subsequent
developments.
The original publication date for this article was
02/08/2012.
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