Concurrent delays

Barnes v Blackburn BC (High Court) [2022]

Visits the issue of ‘concurrent’ causes of delay and the importance of following strictly the procedure for issuing notices of termination under a contract

Facts:

The dispute related to a contract for the construction of a bus station in Blackburn (the “Contract”). Blackburn with Darwen Borough Council (‘the Council’) terminated the Contract by way of termination notice for alleged delays on the part of Barnes. After Barnes entered into liquidation, the administrators brought a claim for wrongful termination.

One of the key issues to be considered by the court were so called ‘concurrent delays’ i.e. two or more causes of delay operating at the same time, one the responsibility of the contractor and one the responsibility of the customer. Barnes had claimed extensions of time (‘EOT’) on the basis of delays caused by the Council. The question was whether the delays for which the Council was responsible were offset by Barnes’ own failures such that no, or a more limited, EOT was due.

Clause 8.4 provided that the Council was permitted to give the contractor a default notice in specified events, including where the contractor without reasonable cause wholly or substantially suspended the carrying out of the works and where it failed to proceed regularly and diligently with the works. If the contractor continued the specified default for 14 days then the Council might terminate within 21 days or, if the default was repeated by the contractor, within a reasonable time of such repetition. The contract expressly provided that the contractual termination provisions are “without prejudice to any other rights and remedies of the employer”.

A termination notice was served by the Council on the 4th June 2015. It identified that Barnes had (a) failed to proceed regularly and diligently with the works; and (b) substantially suspended the carrying out of the works. As an alternative to contractual termination, the notice said that it was to take effect as an acceptance of repudiatory breach. At the point when the notice was served, Barnes had essentially stopped work.

Decision:

The court said that the law on concurrent causes of delay is now settled. The court summarised the law as follows:-
subject in each case to the precise wording of the contract

(i) a contractor is probably entitled to an extension of time if the event relied upon was an effective cause of delay even if there was another concurrent cause of the same delay in respect of which the contractor was contractually responsible; and

(ii) a contractor is only entitled to recover loss and expense where it satisfies the “but for” test. Thus, even if the event relied upon was the dominant cause of the loss, the contractor will fail if there was another cause of that loss for which the contractor was contractually responsible.

In other words, different rules apply to claiming an extension of time as compared with recovering financial losses where there are concurrent delays.

The court decided that two causes of delay were concurrent. The court found Barnes was entitled to an EOT of 119 days but was only entitled to claim additional costs for 27 days i.e. after deducting the period of delay for which it was responsible.

However, the court held that the Council was entitled to terminate the contract under the contractual termination provisions for delay related default and to accept Barnes’ delay-related breaches as repudiatory. It was therefore entitled to treat the contract as discharged, to remove Barnes from the site and to engage replacement contractors to complete the work. This meant that Barnes had no prospect of recovering any sums, since any entitlement it might have established under a final account analysis would be extinguished by the Council’s right to recover and set off the cost of having the contract completed by replacement contractors.

A repudiatory breach at law occurs when “the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contact”. The Council was perfectly entitled to “serve a notice of termination under the contract termination provisions and, in the alternative, [give] notice of acceptance of the claimant’s repudiatory breach”.

Barnes was making it clear through words and conduct that it was not willing to procced regularly or diligently with the works and, to the contrary, had substantially suspended works, unless or until the Council conceded to its demands for a substantial EOT significantly beyond its true entitlement and a blank cheque to reduce the extent of the delays. Barnes was not entitled to either.

The Council failed to follow the correct procedure under the contract as regards service of the notice of termination (on the day when it excluded Barnes from the construction site it had only served the notice via email and in person at the site). Such methods were not in accordance with the notice provision which required notice to be given by hand or by recorded delivery at Barnes’ registered office. Although the evidence suggested that the notice had also been served by recorded delivery at Barnes’ registered office, the clause made it clear that such notice was only effective two business days later – it had therefore jumped the gun) and had failed to terminate the contract in accordance with the contractual termination provisions. It was not sufficient that the notice was in fact brought to Barnes’ attention. However, that did not invalidate the effectiveness of acceptance of the repudiatory breach and nor was the termination notice itself repudiatory. That was because the court had found the Council to be substantively entitled to terminate in accordance with the contract. The court said that being removed from the site two days earlier than it would have had to leave anyway was not prejudicial in that there was little or no adverse impact on Barnes.

Points to Note:

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