Concurrent Delays, Global Claims

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Walter Lilly –v- McKay No. 2 CILL (2011) BLR [2012] 503 TCC Akenhead J

Facts

Mr McKay and his associates acquired a site for residential development.  We reported that Decision earlier this year in which the important question whether legal professional privilege covers claims consultants was settled.

The case went on to full Trial with the builder, Walter Lilly, seeking an extension of time and loss and expense.  The EOT claim was complicated because some of the delays ran concurrently with each other.

HELD:

Concurrent delays:

1.  Where one event would entitle the Contractor to time but the other would not, then if they are concurrent, the Contractor gets the benefit.  The Judge refused to apply the Scottish approach (City Inn –v- Shepherd Construction [2010]).

Conditions Precedent:

2.  The Court ruled that clause 26 of the 1998 JCT form requiring a notice with supporting information to be given in order to ascertain loss and expense is a condition precedent.  It was also ruled that this had been complied with and the condition therefore satisfied.  In determining how much information needs to be given to satisfy the condition, it was legitimate to bear in mind what knowledge and information the architect already had.  (In other words one does not need to tell the architect what he already knows).  Also it might be legitimate to delay giving such notice until the losses claimed for had actually been incurred.

Global/Total Cost Claims:

3.  In the absence of any contractual provision about global claims the Contractor needs to establish on a balance of probabilities (1) that the events occurred which entitle him to loss and expense (2) that those events did actually cause delay and disruption and (3) that this caused the loss and expense.  In other words, the Courts are adapting a pragmatic approach; if they find that events are likely to be causative of delay, then they will look to ascertain what that delay is.

Commentary

a) Concurrent causes of delay – assuming that a contractor is e.g., delayed concurrently by adverse weather, which justifies an extension of time, but also by a shortage of labour which does not, we now have a definitive ruling that the contractor will get an extension of time though he would have been prevented by that lack of labour from proceeding, even if the weather had been favourable.

b) The Court has further indicated that common sense will be applied to notification provisions.  The growing tendency of employers to insist that the obvious is stated to them before payment will be made may be regarded as unjustifiable by the TCC Judges.

c) Mr McKay and his advisers argued that a global claim was not allowable in circumstances where the Contractor could not attribute specific items of delay or expense to specific causes.  They had to rely upon a whole bundle of causes which he said had lead cumulatively to a “globality” of time delay, and also of loss.  The Judge reviewed the relevant authorities.  Global claims are sometimes called total costs claims.  Speaking of global claims for loss and expense the Judge stated that the Claimant needs to demonstrate, on the balance probabilities (1) events occurred which entitle it to loss and expense; (2) that those events did cause delay and/or disruption; and (3) that such delay or disruption caused it to incur loss and/or expense and/or damage.  It was open to the Contractor to prove these 3 elements in any way, and by whatever evidence would satisfy the tribunal.  There is no set way for contractors to do this.

d) Although there are obvious evidential difficulties in many global claims which a Claimant will have to overcome, there is nothing in principle wrong with making a total or global cost claim.  Clearly this case will be studied closely by claims consultants, construction lawyers, commercial managers, architects and engineers everywhere. It appears to indicate a fundamental policy shift in the TCC.  In future the unthinking dismissal of a claim just because it is “global” will be unsustainable.

For more information, help or advice please contact Rob Langley on 0191 211 7975 or email[email protected].