The Ongoing Saga of Concurrent Delay

Published bySteven Docherty

18th August 2016

• The court's decision
• The arguments
• Saga Cruises v Fincantieri

The law has never been entirely clear about how to treat two delays on a construction site, which run alongside each other at the same time but which are the responsibility of different parties.

This is called a "concurrent delay" situation.  It arises in a large number of cases, such as where the contractor delays in getting his materials to site, but the employer (or one of the employer's other contractors) fails to have the site ready on time:-

• The contractor might consider that he was entitled to an extension of time to his contract period (and extra financial payment as a result), because even if he had been ready to carry out his works, the site was not ready for him because of something for which the employer was responsible.
• On the other hand, the employer might consider that the contractor is not entitled to an extension of time (so should be liable for liquidated damages for not completing on time), because even if the site had been ready, the contractor was not ready because of something for which the contractor was responsible.

These "concurrent" delays both lead to the project completing late, but what should the payment consequences be?

The court's decision

The court decided that the ship owner's argument was the better one. 

The just found that the delays caused by the ship owners did not operate so as to cancel out the delays which were the responsibility of the shipyard, because when the ship owners' delays occurred, there were already delays outstanding which were the responsibility of the shipyard.  Therefore, the court concluded that the shipyard could not rely on a period of concurrent delay to defeat the ship owner's claim for liquidated damages.

The court's reasoning was, in itself, fairly straightforward.  The court simply found that a contractor is not entitled to the benefit of a relevant delay event which is the responsibility of his employer, if the contractor was already delayed when the relevant event occurs.  The contractor must be able to prove that the employer's delay event caused a separate delay, so the court re-stated the importance of (1) causation in considering competing reasons why a contractual deadline was missed, and (2) the timing of the various possible reasons.

This is not a straightforward area of the law, so it is important that the right advice is sought before embarking on a claim for extension of time (or, if you are an employer, before imposing liquidated damages).

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The arguments

The ship owner's argument was that, if completion of the works was already delayed because of the things for which the shipyard was responsible, then the delays for which the ship owners were responsible were not to be treated as something which would entitle the shipyard to an extension of time. 

On the other hand, the shipyard's argument was that, where there are two concurrent causes of delay, one of which would be a "relevant event" entitling them to an extension of time, and one of which would not, the contractor (in this case, the shipyard) is entitled to an extension of time for the "relevant event" notwithstanding the concurrent delay effect of the other cause of delay.

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Saga Cruises v Fincantieri

In a recent case (Saga Cruises v Fincantieri), the English High Court addressed this issue to try to bring more clarity to it. 

In this case, a shipowner (Saga) contracted with a shipyard operator (Fincantieri) for engineering and fit-out works to be carried out on one of its ships.  The works were supposed to start on 9 November 2011 and be completed by 17 February 2012.  There were various delays which the parties agreed should lead to a postponement of the contractual completion date to 2 March 2012.

However, there were other delays where there was no agreement.  In the end, the ship was not delivered back to the owners until 16 March 2012, 14 days late.  The delays included:-

• Part of the works was to involve the creation by the shipyard of new cabins on one of the ship's decks.  This work was not completed until16 March 2012.
• The shipyard was also to be responsible for installing a new decking system, but this work was not completed until 12 March 2012.
• On the other hand, the ship's owners were responsible for arranging the lifeboats.  It was discovered that there were issues about the weight of the lifeboats, which caused delays between 3 March 2012 and 14 March 2012.
• The ship's owners were also responsible for arranging for the shipyard to install additional insulation, but they did not do so as scheduled, so there was a delay between 2 March 2012 and 10 March 2012.

In this complicated factual scenario, the High Court had to decide whether to award either party damages for delay. 

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