John Doyle Construction Ltd v Laing Management (Scotland) Ltd

JurisdictionScotland
CourtCourt of Session
Judgment Date11 June 2004
Docket NumberNo 55

EXTRA DIVISION

Lord Macfadyen

No 55
JOHN DOYLE CONSTRUCTION LTD
and
LAING MANAGEMENT (SCOTLAND) LTD

Contract - Construction contract - Delay in completion - Global claim for loss and expense - Causation - Whether all factors causing delay required to be attributable to defenders

Process - Pleadings - Relevancy - Commercial action - Causation of loss in global claim - Whether pursuers had relevantly averred causal links and heads of loss

The pursuers were appointed as works contractors by the defenders in relation to a works package (WP2011) in a construction contract for which the defenders were management contractors. The contractual conditions were based on an amended form of the Scottish Works Contract (Mar 1988). The pursuers had previously been appointed as works contractors in relation to an earlier works package (WP2010). Work on WP2011 was delayed, and the pursuers claimed an extension of time. A number of factors were involved in the delay, including late issue of drawings and information, bad weather and a previous delay in the completion of WP2010. The pursuers raised a commercial action in the Court of Session for decree of declarator that they were entitled to an extension of time, decree ordaining the defenders to procure the ascertainment of their loss and expense incurred as a result, decree ordaining the defenders to procure the final adjustment of the contract sum, and for payment of the balance due. The defenders challenged the relevancy of the pursuers' averments, submitting that the success of a global claim such as that made by the pursuers was periled on the proposition that all the factors relied on as causing the delay were matters for which the defenders were legally responsible, and could not be maintained in the present action where one factor which had contributed to the delay was the previous delay by the pursuers in completing WP2010. After debate the commercial judge held that it was critical to the pursuers' case that none of the causes of delay was attributable to their fault, but did not exclude the averments about the previous delay in completing WP2010 from probation on the ground that it was artificial to withhold from the court knowledge of circumstances which might have contributed to the delay in WP2011. The commercial judge further held that the pursuers' averments of loss and expense were relevant, and allowed a proof before answer. He reasoned that where there were concurrent causes of a delay, the manner in which each of them should be viewed in determining whether the causes for which the defenders had no liability played a material part in causing the global loss should be assessed after proof before answer, and in any event, evidence properly led at the proof might afford a basis for an award of a lesser sum than the global claim (John Doyle Construction Ltd v Laing Management (Scotland) Ltd 2004 SLT 678). The defenders reclaimed. The pursuers contended that the claim was a modified total cost claim, rather than a global claim in the fullest sense.

Held that: (1) if a global claim is to succeed the contractor must eliminate from the causes of his loss and expense all matters which are not the responsibility of the employer, but it may be possible to identify a causal link between particular events for which the employer is responsible and individual items of loss (para 14); (2) the question of causation must be treated by the application of common sense to the logical principles of causation, and where an item of loss results from concurrent causes, and one of those causes can be identified as the proximate or dominant cause of the loss, that will be treated as the operative cause and the person responsible for it will be responsible for the loss (para 15); (3) even where the events for which the employer is responsible are not the dominant cause of the loss, as where the causes are truly concurrent, it may be possible to apportion the loss between the causes for which the employer is responsible and other causes, provided the events for which the employer is responsible are a material cause of the loss and that the apportionment is based on the evidence, for which there must be a foundation in the pleadings (paras 16-18); (4) the pleadings in a commercial action must give fair notice of the facts relied on together with the general structure of the legal consequences said to follow; in a cause involving causal links between events and losses, the events should be set out comprehensively, but the general proposition that the causal links exist will usually be sufficient (para20); (5) the pursuers' claim was not a global claim in the sense of a total cost claim, but was confined to uneconomic labour costs, and the method of calculation of their claim was relevantly pled (paras 29-31); and reclaiming motion refused.

JOHN DOYLE CONSTRUCTION LTD raised a commercial action for various orders and for payment against Laing Management (Scotland) Ltd. The cause called before the commercial judge (Lord Macfadyen) for a debate on the relevancy of the pursuers' claim for loss and expense, on 6 and 7 December 2001 and 4 January 2002. On 18 April 2002 the commercial judge allowed a proof before answer on the whole pleadings. The defenders reclaimed.

Cases referred to:

Alexander v Cambridge Credit Corp Ltd (1987) 9 NSWLR 310

Boyajian v United StatesUNK 423 F 2d 1231 (1970)

John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty LtdUNK (1996) 82 BLR 81

Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society LtdELR [1918] AC 350

Lichter v Mellon-Stuart CoUNK 305 F 2d 216 (1962)

Merton, London Borough of v Stanley Hugh Leach LtdUNK (1985) 32 BLR 51

Phillips Construction Co Inc v United StatesUNK 394 F 2d 834 (1968)

Wharf Properties Ltd v Eric Cumine AssociatesUNK (1991) 52 BLR 8

The cause called before an Extra Division, comprising Lord MacLean, Lord Johnston and Lord Drummond Young for a hearing on the summar roll, on 22, 23 and 24 April and 18 November 2003.

At advising, on 11 June 2004, the opinion of the Court was delivered by Lord Drummond Young -

OPINION OF THE COURT -[1] The defenders were the management contractors appointed to carry out the construction of a new corporate headquarters for the Scottish Widows' Fund and Life Assurance Society, their employer being a company known as Edinburgh Construction Services Ltd. The project was divided into a number of distinct works packages. These included works packages known as WP2010 and WP2011. By an agreement dated 14 September and 28 November 1995 the pursuers were appointed works contractors in respect of WP2011, which consisted of certain works on the superstructure of the building. The present claim relates to that works package. The pursuers had previously been appointed works contractors for WP2010. The contractual conditions that applied to WP2011 were an amended form of the Scottish Works Contract (March 1988), and were contained in an agreement between the parties dated 14 September and 28 November 1995.

[2] The pursuers aver that they began work on WP2011 on 25 September 1995. According to the construction programme agreed between the parties, the work on WP2011 should have been completed 28 weeks later, on 7 April 1996. In fact practical completion of WP2011 was achieved after 50 weeks, on 7 September 1996. In the present action the pursuers claim that they are entitled to an extension of time of 22 weeks for completion of WP 2011, and to a revised completion date of 7 September 1996. They further seek decree ordaining the defenders to procure the ascertainment of the pursuers' loss and expense incurred in consequence of delay and disruption in the completion of the contract works, and decree ordaining the defenders to procure the final adjustment of the contract sum. Finally, they conclude for payment of £4,807,144.16. That sum is said to represent the balance due by the defenders to the pursuers after taking account of the pursuers' loss and expense in consequence of the delay and disruption and the final adjustment that is said to be necessary to the contract sum. The issues that were in dispute in the present reclaiming motion related to the calculation of the loss and expense that is alleged to have been suffered by the pursuers in consequence of delay and disruption in the completion of the contract works, that delay and disruption having been caused, it is said, by events for which the defenders were responsible.

Decision at first instance

[3] After sundry procedure, the action proceeded to debate in the Commercial Court. The debate dealt with two main issues. First, the defenders contended that certain averments made by the pursuers about the effect of WP2010 on the completion of WP2011 were inconsistent and irrelevant, and should accordingly be excluded from probation. Those averments were to the effect that 'due to the foregoing late information, and to restricted access to the work area owing to delay in Work Package 2010, the Pursuers were prevented from making a meaningful start until 12 February 1996, some ten weeks later than planned'. On that basis, the pursuers claimed an extension of time in respect of WP2011. The Lord Ordinary held that it was critical to the pursuers' case on this matter that none of the causes of delay to WP2011 was attributable to their fault. The pursuers had been granted an extension of time in respect of WP2010, but the delay in completion of WP2010 that had an impact on the start of WP2011 included a period after that extension. Consequently the pursuers' averments on this matter were irrelevant. In addition, the Lord Ordinary held that an agreement that the parties had concluded itself prevented any reliance by the pursuers on delay in the completion of WP 2010 beyond the extension of time that had been granted. Nevertheless, the Lord Ordinary did not exclude the averments in question from probation, on the...

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