AN EXPERT WRITES...
Delay analysis – a return
to common sense?
Recent developments in
establishing causation in fact
Introduction
The Protocol
There have been dozens of books, hundreds
of articles and thousands of debates about
how delay analysis should be carried out
when looking at a construction project
from a retrospective point of view to try to
determine exactly what caused a delay to
the completion date. A committee set up
by the Society of Construction Law (SCL)
produced, after much debate, the Delay
and Disruption Protocol (the ‘Protocol’)
which was published in October 2002. This
was welcomed by many in the construction
industr y as a valiant attempt, in its own
words, to ‘provide useful guidance on
some of the common issues that arise on
construction contracts’. This erstwhile
document tried to cover both live projects
and also the forensic approach to be
adopted in circumstances where a dispute
had arisen and even where such a dispute
had been referred to a formal procedure for
resolution such as arbitration or litigation.
It did of course come with a number of
health warnings on the packet. For instance,
it clearly stated that ‘it is not intended that
the Protocol should be a contract document.
Nor does it purport to take precedence over
the express terms of a contract or be a
statement of the law’. However, these
warnings in the author’s view seem to have
been often overlooked or ignored and the
Protocol has been used in disputes to try to
support an argument that a delaying event
does not in fact have to delay overall
completion of the project to entitle the
contractor to an extension of time. Further
explanation is required.
The Protocol Guidance suggests at section 3
the way in which applications for extensions
of time (‘EOT’) are to be assessed during
the course of the project. This has, however,
been extended by common usage by
independent experts and consultants when
addressing a retrospective critical path
analysis of a delayed project in a dispute
resolution process.
In particular, clause 3.2.6 of the Protocol
states that that the Updated Programme
should be the primary tool used to guide
the Contract Administrator (‘CA’) in
determining the amount of the EOT. The
EOT should be granted to the extent that
the employer risk event is predicated to
prevent the works being completed by the
‘then
planned
prevailing
contract
completion date’.
The Protocol recommends that in
deciding a contractor’s entitlement to an
EOT, the adjudicator, judge or arbitrator
should, so far as is practicable, put him/
herself in the position of the CA at the
time when the employer risk event
occurred. The above approach is often
referred to as an entitlement to an EOT.
The
Protocol
even
suggests
this
entitlement approach should be applied
in cases where there are concurrent
delaying events, that is, where two or more
delaying events arise at different times,
but the effects of them are felt (in whole
or in part) at the same time.
This can be represented graphically as in
Figure 1 below:
44
Bob Breeze
Stapleton International,
London and Darlington
CONSTRUCTION LAW INTERNATIONAL Volume 7 Issue 2 June 2012
Figure 1 – The entitlement approach
In the above example, the contract works are
already running late and the contract
completion date will not be met. The prevailing
completion date when the employer risk event
occurred was five days after the contract
completion date. However, the Protocol states
that it is the impact on the contract completion
date which is to be analysed. In the above case,
this would give rise to a three-day EOT; that
being the period by which the employer risk
event over-runs the contract completion date,
despite the fact that the contractor was already
going to be five days late and in fact no further
delay occurred as a result of the employer risk
event in question. Perhaps it is time for the
SCL Protocol now to be updated to reflect
current thinking?
Recent authority
This point was aired in the case of Adyard Abu
Dhabi v SDS Marine Services [2011] EWHC 848
(Comm) where the Commercial Court had
to determine whether SDS could rescind two
shipbuilding contracts and reclaim the sums it
had paid to Adyard. Adyard had commenced
proceedings, arguing that SDS could not rescind
as SDS had caused delays to the project. Adyard
also argued the prevention principle but the
Court found against Adyard in that respect. The
Court also had to consider whether Adyard had
proved that SDS had in fact caused the delay to
the project in any event.
Causation in law and fact
Adyard’s case was that causation was established
by showing that the duration of the employer’s
risk event (a minor variation in this case to
two sliding doors) went beyond the original
contractual sea trial date (which was equivalent
in this case to the delivery date), regardless of
what other events may have been delaying the
works and whether or not the variation did have
any impact on the actual progress of the works.
CONSTRUCTION LAW INTERNATIONAL Volume 7 Issue 2 June 2012
In his judgment, The Hon Mr Justice Hamblen
stated: ‘If, for example, a two day variation was
instructed the day before the sea trials date, and
was a variation of a type which would need to be
completed before sea trials, then, if there was an
extension of time clause Adyard would be
entitled to a one day extension of time, or, if
there was no such clause, Adyard could rely on
the prevention principle.’
Adyard submitted that this was the correct
approach regardless of what other events may
have been delaying the works and regardless of
whether the variation would have any impact on
the actual progress of the works. It argued that
one looks only at the event/act in question and
how it relates to the contractual completion
date. So, if the project was already in six months
irretrievable delay it would make no difference
to the causation analysis. Adyard would still get
its extension of time or be entitled to rely on the
prevention principle.
The Judge then went on to conclude that
Adyard’s approach was wrong as a matter of
both principle and authority. It was wrong in
principle because in essence Adyard’s case was
that there was no need to prove causation in
fact. On its case there was no need to prove that
the event or act caused any actual delay to the
progress of the works and a notional or
theoretical delay would suffice. It was also
contrary to common sense.
The Judge referred to the quote from the
Protocol highlighted at the beginning of this
article. In such circumstances the Protocol can,
he said, be of little assistance in relation to the
legal causation issues which arise in this case.
The parties’ experts agreed that there was no
actual delay, whether viewed prospectively or
retrospectively, caused by any employer risk
event and that the common-sense view of the
events on-site should not be ignored.
It followed that the actual delay had to be
proved and Adyard’s causation claim failed.
In a graphic form, the situation is as set out in
Figure 2 below:
45
FEATURE
AN EXPERT
ARTICLE
WRITES...
Figure 2 – The causation approach
In the subsequent case of Jerram Falkus
Construction Limited v Fenice Investments Inc
[2011] EWHC 1935 (TCC), completion of
the works was delayed by several months and
the employer, Fenice, claimed liquidated
damages. Jerram disputed this entitlement.
It argued that Fenice had prevented
completion and that there was no mechanism
in the contract for extending time in this
event since the Joint Contracts Tribunal
(JCT) clause 2.26 Relevant Event dealing
with prevention events had been deleted
from the contract. Time for completion was
claimed to be at large and Fenice could not
therefore levy liquidated damages.
Coulson J examined the leading authorities
in the area of prevention including the
Adyard case. Here the court saw a distinction
between a situation where the contractor
would not have completed by the due date
because of its own delay (where the
prevention principle would apply in respect
of a distinct non-concurrent period of
employer-caused delay) and the situation
described in the Adyard case which indicated
that if there were two concurrent causes of
delay, only one of which could be described
as employer prevention and the other was
the responsibility of the contractor, the
prevention principle could not be relied on.
Coulson J considered that the contractor
must prove that the alleged act of prevention
caused delay to the actual progress of work
and stated: ‘The contractor must be able to
demonstrate that the employer’s acts or
omissions have prevented the contractor
from achieving an earlier completion date
and that, if that earlier completion date
would not have been achieved anyway,
because of concurrent delays caused by the
contractor’s own default, the prevention
principle will not apply.’
46
Conclusion
In summary, these cases send out a clear
message that theoretical delay analysis
techniques will not do in terms of proving
causation in fact and in law. For any employer
risk event to give rise to an EOT claim it
must as a matter of fact cause actual delay
or further delay to the then prevailing
anticipated completion or delivery date and
not the contract completion date. In the
author’s view, this is a welcome return to a
common-sense approach.
Bob Breeze is Group Managing Director of Stapleton
International and acted as the independent delay
analysis expert for SDS Marine Services in the Adyard
case. He can be contacted at bob.breeze@
stapletonint.com or tel: +44 1325 488048.
CONSTRUCTION LAW INTERNATIONAL Volume 7 Issue 2 June 2012