‘Concurrent delays’
North Midland v Cyden (Court of Appeal) [2018]
It will often be the case that delays are not caused just by one reason. This case concerned an example of so called ‘concurrent delays’ i.e. delay caused by two or more reasons acting at the same time.
Facts:
Cyden engaged North Midland to build a house in Lincolnshire. The completion date was 18 June 2010. North Midland were delayed partly by their own fault and partly by matters which were the responsibility of the employer. They claimed an extension of 198 days but were only granted 9 days’ grace because of poor weather.
The “prevention principle” can apply where a contract is silent as to whether a particular act of prevention by an employer entitles a contractor to an extension of time. The prevention principle is a doctrine which dictates that a party to a contract may not enforce a contractual obligation against the other party where it has itself prevented that party from performing that obligation on time.
Here the parties had included an express clause entitling the contractor to an extension of time for a “Relevant Event”, including a delay caused by the employer. The extension of time clause included the following additional bespoke wording:
“…any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor is responsible shall not be taken into account…”
Relying on this clause Cyden deducted substantial liquidated damages in respect of the delay.
The High Court agreed with Cyden. The court concluded it was “crystal clear” that the additional wording in the extension of time clause meant that the contractor was not entitled to an extension for concurrent delays.
The contractor appealed.
Decision:
The Court of Appeal upheld the original decision. It “fundamentally disagreed” with the contractor’s view that the “prevention principle” could be relied upon to strike out additional wording in an extension of time clause dealing with concurrent delay.
In the present case, the parties included an express extension of time clause which entitled the contractor to an extension for an act of prevention by the employer, subject to an exception where there was concurrent delay. If this exception had not been stated, the contractor may have been entitled to an extension for concurrent delay following the case of Walter Lilly v Mackay dating from 2012. The only question was whether the wording was sufficiently clear to reverse that result and the Court of Appeal concluded that it was.
Points to Note:
- The Court of Appeal’s decision is not particularly surprising given that the English courts are generally minded to give effect to the express wording of a contract over and above a term which might otherwise be implied into a contract. The ‘prevention principle’ is exactly that, an implied term. The Court of Appeal made it clear that, for example, unlike the rule against penalties, the prevention principle is not an overriding rule of public or legal policy.
- The parties to a commercial contract are typically free to agree an allocation of risk as they see fit. It would have been perfectly possible to allocate the risk of concurrent delays differently with the effect that the contractor would have escaped liability for the liquidated damages.
- It is always wise to consider very carefully the different breach scenarios that might potentially arise and try to allocate responsibility expressly.