City Inn vs Shepherd: How much sand is a snowstorm worth?

Last week I told you what one of the three Scottish Court of Appeal judges said in the latest round about extension of time in the City Inn and Shepherd dispute. I have had hurrahs, hallelujahs and hip-hip hoorays about his opinion, and a few “hang on a minute” cautions about what the other two judges said. Let’s look.

Imagine it’s August. It’s a 12-month contract on a JCT Standard Form. It’s Edinburgh. The job is in the ground. It’s snowing … odd for August. The job has stopped. There are two reasons: the groundwork subcontractor has gone bust. Then the snowdrifts stopped everything. What with snow and that groundwork outfit, four weeks is lost.

Yet the 12 months’ worth of sand is still running in the egg timer. The JCT contract puts the risk of that heavy weather on the employer. “More sand,” shouts the contractor.

The architect now operates the JCT extension of time machinery. He stumbles when he realises that it’s obvious that the snow delay is critical to the completion date – a real threat. But the loss of the subbie (a main contractor problem) was likely to delay the job anyway - easily by four weeks. He looks up what Lord Carloway said in City Inn vs Shepherd [2010]. What he said was: “It is of no moment that there was a contractor default before, during or after the weather conditions.” So if the loony weather is “worth” four weeks of sand, Lord Carloway gives the four weeks because that preserves the precious 12-month entitlement for the works. But hang on a minute; did the other two Scottish judges say that?

Lord Osborne and Lord Kingarth agreed with the trial judge, Lord Drummond Young. He said: “While delay for which the contractor is responsible will not preclude an extension of time [in JCT] based on a relevant event [the snow], the critical question will frequently, perhaps usually be, how long an extension is justified by the relevant event.”

That, to me, indicates that all the judges are saying the same thing. Is the snow a real threat to the 12 months? If so, how much of a threat? At this point the two appeal judges agree with the trial judge and bring in the phrase “apportion responsibility”. In real life, various causes of delay get jumbled together. So the notion, say these two appeal judges, is to apportion responsibility.

What does that mean? Does the architect split the difference between contractor default and relevant event? Or does “apportion” mean no extension of time for the snow because the job was already stymied by the subcontractor loss? Or does it mean an extension of four weeks because the subcontractor disappeared after the snow?

I don’t think “apportion responsibility” means any of that. I reckon all four judges are saying that where there is an interacting, overlapping series of delay events, you must somehow allocate a “worth” (my word) to the relevant event. Sometimes the worth is easy to fathom. But where there is a jumble of events including a relevant event that, by itself, hypothetically, would rob some of the 12 months, that event has to be stripped out and time apportioned to it. The judge who said the contractor’s defaults are “of no moment” is not ignoring the task of apportioning “worth”. He is doing exactly that in order to get to the bottom of the snow. Once he has apportioned time to the snow, the extension of time flows. Apportioning is nothing to do with a divvy-up; it’s about topping up that sand in that egg timer.

So what of my JCT rules? The trigger for the architect is supposed to be a notice from the main contractor whenever a delay or likely delay is apparent. That’s when the architect asks if this delay has happened, or is likely to. Then whether it is a relevant event. Then whether it is a threat to the completion date.

If the architect accepts that the relevant event is a threat,they have to fathom a fair extension of time. The tricky part is weighing the worth of that event once it is isolated from other events. That too might take expert programming opinion. Then the architect expresses his opinion on what it’s worth. I think that’s what all these learned judges are saying. Concurrent delays only get in the way of fathoming the worth of the relevant event, and are merely a question of fact and sand.

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings Temple