Out-Law / Your Daily Need-To-Know

NSW court: evidence of causation vital to successful delay claim

Out-Law News | 12 Nov 2019 | 11:19 am | 2 min. read

Contractors seeking damages for delay must be able to provide sufficient direct evidence of the cause and impact of that delay if they are to be successful, the Supreme Court of New South Wales (NSW), Australia has indicated.

The court dismissed a claim by property developer White Constructions Pty Ltd (White), which had sought damages from subcontractors PBS Holdings Pty Ltd (referred to in the ruling as SWC) and Illawarra Water and Sewer Design Pty Ltd (IWS) in connection with the late approval by the water authority of the design of sewerage infrastructure at a new property development. The judge found that White could not establish breach of contract by SWC or IWS on the evidence it provided to the court.

The case is seen as being particularly interesting as each side's delay expert used different delay analysis methods, arriving at drastically conflicting conclusions. The court ultimately dismissed the "impenetrable" reports of both experts, after calling on a third expert for assistance.

Yong Neng Chan

Senior Associate

The judgment highlights that delay claims founded on weak direct evidence of cause and impact of delay may face difficulties.

In his judgment, Justice Hammerschlag said that it was "not inevitable" that either expert's preferred method of analysing delay would turn out to be "the appropriate one for use in this case".

"[The third expert's] advice demonstrated that the complexity that has been introduced is a distraction," the judge said.

"[The third expert's] opinion, upon which I propose to act, is that close consideration and examination of the actual evidence of what was happening on the ground will reveal if the delay in approving the sewerage design actually played a role in delaying the project and, if so, how and by how much. In effect, he advised that the court should apply [a] common law common sense approach ... The only appropriate method is to determine the matter by paying close attention to the facts, and assessing whether White has proved, on the probabilities, that delay in the underboring solution delayed the project as a whole and, if so, by how much," he said.

White therefore had to prove that the whole project would have been completed by the original date specified but for the delay to the approval of the final design of the sewer; and that the delay prevented other works from reasonably proceeding in the meantime. However, it was unable to do so. The only direct evidence it was able to present came from the site foreman who described the works as "delayed, piecemeal and disrupted". However, this evidence was "couched in generalities" and "incapable of founding any satisfactory specific findings of delay".

"This case demonstrates the importance of paying close attention to the actual facts rather than opinions about what the evidence establishes," the judge said.

Construction disputes expert Yong Neng Chan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said that the judgment showed "causation is king in proving delay claims".

"The judgment highlights that delay claims founded on weak direct evidence of cause and impact of delay may face difficulties, and also serves as a reminder of the importance of contractors documenting delay events and impacts contemporaneously," he said.

It was also notable that the judge denounced the use of the UK Society of Construction Law (SCL) Delay and Disruption Protocol (Protocol) as a "holy grail for acceptable delay analysis", Chan said.

"This remark joins a chorus of preceding case decisions across the commonwealth that recognise the Protocol, whilst a useful guidance document, has room for improvement," he said.

The methods put forward by the parties' chosen experts in the case, 'collapsed as built analysis' and 'as planned versus as built analysis', are among the six methods listed in the Protocol, which the judge in this case described as having "apparently been accepted into programming or delay analysis lore".

However, Justice Hammerschlag ruled that "for the purpose of any particular case, the fact that a method appears in the Protocol does not give it any standing, and the fact that a method, which is otherwise logical or rational, but does not appear in the Protocol, does not deny it standing".