Litigation in the technology and construction court

Adam Constable KC; Lucy Garrett and Calum Lamont

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CHAPTER 4 Delay claims

Introduction

4.1 One of the most significant problems that can occur on a construction project of any kind is delay to the works. In infrastructure and other civil projects, it is invariably very expensive: for the employer it means that the asset and therefore the revenue stream is not received when planned, and for the contractor it means he must keep his entire site operation active much longer than the period for which he priced. Sufficient delay can lead to termination for default. In shipbuilding and similar projects, the same considerations as to expense apply, and there is usually an express contractual term permitting the owner to terminate, and recover any instalments of the price previously paid, if the delay extends longer than a certain period after the delivery date. 4.2 Delay is therefore often the most expensive problem on any project. It is also one of the most common. This chapter does not deal with the substantive law relating to the perennial debate surrounding the recovery of time and money (particularly where there is concurrent delay),1 but focusses on the practical requirements of successfully pursuing and defending a delay claim. It assumes that the correct legal position under most contracts will be that:

the Malmaison approach to recovery of time and money under the contract is correct; and
in a claim for damages, the contractor has to satisfy the ‘but for’ test.

Legal requirements in relation to claiming delay

4.3 The starting point for any consideration of what is, practically, required to prove a delay claim must be the extension of time clause in the contract itself.

Extension of time clauses

4.4 The extension of time clause will almost always require that the event relied on in fact caused delay, not just to a specific activity, but to the project as a whole. A need to prove causation in fact has been held to arise under the JCT Standard Form of Contract and under the Shipbuilder’s Association of Japan standard form. Delay to the progress of the

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works overall and thus to the completion date (as opposed to delay merely to an activity) is usually referred to as ‘critical delay’.2 This is a key concept in delay claims. 4.5 It is thought that any clause which includes wording expressly referring to the need for a delay event to have caused or contributed to the delay to the relevant completion date will include this requirement, since (1) this is the natural meaning of such wording and (2) it would be commercially surprising if the parties had agreed in their contract to relieve the contractor of its obligation to pay liquidated damages for failure to meet the completion date in relation to delays which did not as a matter of fact affect the completion date. 4.6 This is the case whether the clause in question refers to a prospective or a retrospective delay analysis or is on the face of it silent on this issue.3 4.7 Any consideration of what this means in practice must start with the decision in Balfour Beatty v Chestermount Properties.4 Colman J described the purpose of the extension of time regime as follows (at 27 and 34):5

The underlying objective [of the extension of time regime] is to arrive at the aggregate period of time within which the contract works as ultimately defined ought to have been completed having regard to the incidence of non-contractor’s risk events and to calculate the excess time if any, over that period, which the contractor took to complete the works. In essence, the architect is concerned to arrive at an aggregate period for completion of the contractual works, having regard to the occurrence of non-contractor’s risk events and to calculate the extent to which the completion of the works has exceeded that period . . .

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