An Appeal Court decision in the long running dispute between City Inns and Shepherd Construction was issued on 22 July.
For background, City Inn’s hotel in Bristol was constructed by Shepherd Construction back in 1998 under an amended JCT Contract and the works were completed nine weeks after the completion date.
A replacement architect was appointed two months prior to the completion date and this architect awarded Shepherd Construction an extension of time of four weeks, resulting in liability for liquidated damages for the remaining five week delay. A challenge to the architect’s award was made by City Inns and Shepherd Construction.
Delay, liquidated damages and loss and expense claims became the subject of court proceedings in Scotland.
The Issues included:
- The application of a “condition precedent” clause to the contractor’s entitlement to an EOT.
- How you treat concurrent employer and contractor delay events in an EOT and loss and expense claim.
- Whether architects have the power to waive the procedural requirements of the building contract.
What did the Court decide?
In the lower court these questions were decided in Shepherd’s favour as set out below. The Appeal Court although generally upholding the decision, had some different views as to the correct approach- as shown in italics:
- The condition precedent clause only applied to instructions that varied the works, not those that were simply late - The Appeal Court has confirmed this position (although giving a dissenting view as to why)
- The lower court was very keen on apportionment of time and money in cases of concurrency of culpable and non-culpable delay. This was seen as a departure from the SCL Protocol on Delay and Disruption – The Appeal Court has tried to simplify this approach with one of the judges reverting to a “fair and reasonable” estimate of the effect of the delay event rather than by reference to concurrent culpable events.
- The condition precedent clause was simply a procedural requirement which the architect had the power to waive - The Appeal Court did not consider this to be a procedural requirement so no waiver by the architect was possible. However waiver had occurred through the actings of the employer.
The proper approach to delay analysis being one of commonsense was not challenged on appeal.
What does this mean for you?
First, Look out for the operation and effect of condition precedent clauses - they may get tighter. Second, the SCL Delay and Disruption Protocol approach re concurrency is still in favour and will continue to be used. Third, when undertaking delay analysis keep it simple - stick to the facts and adopt a commonsense approach.
Finally, although an Appeal from the Scottish Courts is not binding in England, it will be a persuasive authority.
Louise Shiels is an associate at Dundas & Wilson