On 22 July 2010, the Extra Division, Inner House, Court of Session handed down its decision in the long running saga of City Inn v Shepherd Construction. All three judges in Scotland's appellate court rejected Shepherd Construction's 17 grounds of appeal in a case that has been running for the past 10 years. The decision in this case sheds further light on the often thorny issue of determining extensions of time, particularly where there is concurrent delay under standard form construction contracts, in this case, the JCT 1980 Edition standard form.
The dispute in this case concerned late completion of the construction of a hotel in Bristol, England. The parties entered into an amended JCT 80 Edition standard form contract. The contractor, Shepherd Construction, had been awarded a four week extension of time ("EOT") by the Architect and a further five weeks EOT following an adjudication. City Inn was not content with the award of either EOT and commenced proceedings in the Court of Session seeking, among other things, a declaration that Shepherd Construction was not entitled to any EOT. Shepherd Construction counterclaimed seeking an 11 weeks EOT and associated loss and expense. It was apparent from the evidence adduced at the hearing that construction of the hotel was in delay towards the end of the project. As with many construction projects, the delay analysis involved both relevant events (Employer delay) and culpable delay (Contractor delay). Accordingly, issues concerning concurrent delay had to be decided.
In the court of first instance, Lord Drummond Young decided, in summary, that:
Applying these principles, Shepherd Construction was entitled to a nine week EOT. City Inn appealed.
On appeal the majority decision was given by Lord Osborne with Lord Kingarth concurring. In his decision, Lord Osborne set out what he considered to be the correct approach in applying Clause 25 to EOT assessment as follows:
Further, their Lordships all agreed that it is not necessary to have a critical path analysis in order to determine an EOT. The court took the view that it is for the decision maker to decide whether such an analysis would assist in determining EOT. A lack of a critical path analysis is not fatal to a claim for EOT.
The decision in City Inn appears to be a vote for applying common sense and reasonableness when deciding EOT issues under standard form construction contracts, particularly when it comes to the issue of causation and concurrent delay.
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