One question that is often repeated during a construction project, like a mantra echoing through the offices of Principals and Contractors alike, is, what does the contract say?
Take for example what might be expected when a critical delay occurs, of a type claimable under a contract, and that is outside the contractor’s control. What does the contract say? A reading of the contract may reveal that an extension of time (EOT) is available to the Contractor. The Contractor diligently submits a notice of delay, and either a delay damages or costs claim, with sufficient information, and within time. In return, the Contractor receives a favourable assessment and the Contractor submits a progress or payment claim. The project moves on.
Of course, as is often the case, things do not always go smoothly. Complex and multifaceted, construction projects present their own unique challenges. This three-part series will explore some of the nuances of construction claims to be aware of:
- Concurrent delay;
- Time bar; and
- Latent conditions.
Often, construction contracts will include EOT provisions which allocate the responsibility for certain delays to completion between the parties. The consequences may vary depending on which party will be responsible for the delay. For example:
- Where a Contractor-caused delay occurs, the Contractor may be liable for liquidated damages;
- Where a Principal-caused delay occurs, the Contractor may be entitled to an EOT; and
- Where a delay occurs that is caused by neither the Contractor nor the Principal, the Contractor may be entitled to an EOT, excluding costs.
Who, then, is responsible for ‘concurrent delay’, and what is the approach in Australia?
Concurrent delay has long been regarded as a complicated and contentious legal issue, due in part to the varied definitions assigned to it (none of which have been universally accepted), the differences between Australian standard form contracts in dealing with the concept, and conflicting case law.
In its narrowest form, concurrent delay may be defined as the occurrence of two or more independent causes of delay to completion, of approximately equal causative potency, one or more being a Principal’s responsibility and one or more being a Contractor’s responsibility, at the same time. This definition is commonly known as “true” concurrent delay (illustrated below):
True concurrent delay, however, rarely occurs, and so it is commonly accepted (among various other definitions) that concurrent delay is the occurrence of two or more independent causes of delay to completion at different times, the effects of which are felt at the same time (i.e. overlap).
Concurrent delay in Australian Standard Form Contracts
Some Australian standard form construction contracts contain express provisions that deal with concurrent delay. It is worth noting the differences between some of the widely used contracts, in their unamended form, as they will have different consequences for Contractors and Principals in the event of concurrent delay (see table below):
|Australian Standard Form Contract||Clause||Entitlement to Claim EOT for Concurrent Delay|
|AS 2124||35.5||Contractor not entitled to claim EOT to the extent that delay is caused by more than one cause of delay and any (but not all) of those causes of delay is not a qualifying cause of delay|
|AS 4300||35.5||1. Contractor not entitled to claim EOT to the extent that delay is caused by more than one cause of delay and any (but not all) of those causes of delay is not a cause of delay mentioned in clause 35.5(a) or (b);
2. Contractor is entitled to claim EOT where delay occurs after the Date for Practical Completion and is caused by one or more of the causes of delay mentioned in clauses 35.5(b)(i), (iv), (viii) and (ix).
|AS 4000||34.4||Contractor is entitled to claim EOT where delay is caused by both a qualifying and non-qualifying cause of delay, however delay shall be apportioned by superintendent according to the respective causes’ contribution|
|AS 4902||34.4||Contractor is entitled to claim EOT where delay is caused by both a qualifying and non-qualifying cause of delay, however delay shall be apportioned by superintendent according to the respective causes’ contribution|
In the absence of an express contractual provision, parties in dispute may look to judicial guidance on concurrent delay to determine the correct approach. However, it may soon become apparent that there is no uniform approach taken by Australian courts in treating concurrent delay and addressing causation. Reliance on judicial guidance, which is often conflicting, may lead to an outcome the parties had not intended.
Considerations for your next project
Project participants who are seeking to effectively consider the risks upon which they might assume when entering into their next construction contract should be minded to identify whether, or not, a contract expressly provides for concurrent delay (including how it is defined, if at all) and the consequences for the parties’ rights and entitlements, should concurrent delay occur.
Parties should consider drafting clear and unambiguous terms which reasonably allocate the risk of concurrency between the parties, creating certainty. Moreover, thoughtful drafting will serve to instil confidence on both sides of the table and avoid the occurrence of costly and drawn out legal disputes that may ultimately be subjected to the perils of an unpredictable application of legal principles in the courts.
Lamont Project & Construction Lawyers
We have the industry knowledge and experience to assist both Principals and Contractors in all major construction projects. If you would like to discuss any of the matters raised in the above article or the forthcoming series as it relates to your specific circumstances, please contact Lamont Project & Construction Lawyers.
The content of this article is for information purposes only; it does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
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