1. Home
  2. >

No programme? No claims notices? No problem

Human Resources, Comment

In July this year, a Scottish appeal court issued a decision which looks likely to become the bellwether for future claims by contractors for extension of time. Shourav Lahiri summarises the good news

Everywhere contractors face difficulties pursuing claims due to inadequate records. They often fail to comply with contractual provisions requiring them to give notification of their claims. A recent decision by the Scottish court in City Inns v Shepherd Construction is quite encouraging and the Indian construction industry will be able to draw valuable guidance from it.

The dispute was about late completion of a hotel in Bristol, England. The parties had entered into an amended JCT 1980 standard form of building contract and, though the project was in England, had agreed that the law of Scotland would apply and the courts of Scotland would have jurisdiction over any disputes. Shepherd had been awarded a total of 9 weeks extension of time. City Inns challenged the awards.

City Inns argued that its architect’s instructions had not caused Shepherd delay; but even if they had, Shepherd had not demonstrated through a proper ‘critical path’ analysis that Shepherd’s own defaults had also not caused the delay to completion. Shepherd argued that the architect’s instructions had caused 14.5 weeks delay, and delay from its own defaults amounted to 3.5 weeks of that period.

Hence Shepherd was entitled to 11-week extension. It said that as the original electronic programme was no longer available, its assessment of ‘critical’ delay was pragmatic and based on common sense. Interestingly, despite a contractual requirement, Shepherd had failed to give notice of a possible delay. Yet, it succeeded in its claim.

Only Shepherd called factual witness evidence during the 30-day hearing. City Inns only adduced evidence from a programming expert. Hence the court could only reasonably rely on one party’s version. Also, while Shepherd’s programming expert had carried out a fact-based pragmatic analysis of delay (as the original electronic programme was no longer available), City Inns’ expert sought to reconstruct a theoretical critical path by creating an electronic programme.

The court said that an assessment of whether an event is a cause of delay is to be carried out by applying principles of common sense; complex analysis or philosophical principles of causation have little merit. The absence of a critical path analysis would not be fatal to the claim of extension.

City Inns argued that Shepherd was already in delay due to its own defaults before any of City Inns’ instructions had an impact. Using the often quoted ‘but-for’ test of causation, City Inns said that Shepherd could not show that ‘but-for’ City Inns’ instructions, Shepherd would have completed the works on time.

The court said that a ‘fair and reasonable’ approach would be to give due regard to the delays caused by the employer’s instructions even though the contractor would have been in delay itself. Unless one event could be shown to be the dominant cause of delay, it could take into account all relevant facts and apportion liability for delay between the two parties.

The lessons

This support by the court of a factual and common sense analysis of cause and impact of delaying events is relief. A ‘critical path’ analysis is often unrealistic, artificial and expensive to carry out retrospectively. The case also underlines the value of evidence from those who were present on the job. Finally, both contractors and employers will now have to take due responsibility for their defaults.

Shourav Lahiri is a Partner at Pinsent Masons LLP. Pinsent Masons LLP has been selected as the Global Construction Law Firm of the Year 2009 by Who’s Who Legal and as one of the Top 10 international firms doing India work by the India Business Law Journal in June 2009. He can be contacted at
shourav.lahiri@pinsentmasons.com.
Pinsent Masons LLP represented Shepherd Construction in the case mentioned in this issue

Most Popular

Awards

Olympia Group announces to build up 1.1mn sq-ft greenfield it park in Guindy
The project will have a total investment of about Rs 750 crore

Conferences

Vital pre-monsoon building works resume in Maharashtra
The state government has permitted pre-monsoon work by BMC and other agencies

Latest Issue

June 2020
10 Jun 2020