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Delay Claims Part III: Causation and Mitigation

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Business Advice

We continue our discussion of delay claims made by  contractors, subcontractors and suppliers who might wish to argue that while they had priced their work on the basis of a specific schedule, someone they contracted with is responsible for delay on the project, such that the job took longer and they suffered increased costs.

We have previously looked at the role of contractual terms and the claimant’s original schedule in the assessment of a delay claim.  In this part of the series, we will look at the roles of causation, “concurrent delay” and “mitigation”.

Let’s assume you can show that your original schedule plan was reasonable, that you are entitled to additional compensation under your contract and that you have met the contractual prerequisites to making a claim. You still may not be entitled to additional compensation. 

First, the person you contracted with must be responsible for the delay. This occurs where that person caused the delay or assumed the delay under contract and where the delay is the responsibility of a party he or she contracted with. Thus, for  example (and, again, if the contract allows for the delay claim) the owner will generally be responsible to the contractor for delays caused by its consultants. The contractor, who can claim for those delays from the owner, will in turn be responsible to its subcontractors for the impact of those delays. Similarly, if a subcontractor causes delay, the contractor will generally be responsible to the owner, and to its other subcontractors for any impacts of the delay. 

There can, of course, be more than one cause of delay. This can be significant from a delay claim perspective. Lets say you bid a job on the basis that the client would provide information as to property lines and you start a large retaining wall along the property line. After you mobilize, it’s determined that the information provided by the client was inaccurate and the retaining wall is located on a neighbour’s property. You stop work, but  much of the job depends on the wall’s completion. 

It takes 3 weeks to resolve the issue and you think you are entitled to compensation for 3 weeks delay. The client might argue, however, that other problems also caused delay. He might argue, for example, that you ordered the wrong type of wall stone such that you would not have been able complete the wall on time in any event. Alternatively, he might argue that you were hopelessly understaffed or that mistakes you made in other parts of the job caused your schedule to slip regardless of the status of the wall. In making these types of arguments, the client is raising the concept of “concurrent delay”.  If you are yourself responsible for delay, you may not be entitled to claim compensation for the delays caused by others. At best, you might get credited for the difference in the impacts of the two (or more) delays.

The concept of concurrent delay makes the majority of your site and scheduling records relevant. The other side will be entitled to explore your progress on the job to see if you are also responsible for the delay. This can turn an otherwise simple delay claim into a more complicated dispute.

Moving forward in our analysis of a delay claim, let’s again assume that your original schedule plan was reasonable, that you are entitled to additional compensation under your contract and that you have met the contractual prerequisites to making a claim. Let’s also now assume that you did not yourself cause any delays to the project. In this circumstance, you must still meet your obligation to “mitigate”. 

We will describe the obligation to mitigate by way of the retaining wall example we have been using. Once the problem is known, you are not, obviously, entitled to have your crew simply stand-on-their-shovels for an hour, or a week, or for however long it will take to resolve the problem.  Rather, you are required to do what you can to re-sequence your work so as to minimize the impact of the delay. Also, if you have no work for your crew, you have to consider sending them home, or to other jobs, to minimize the impact to the job. This is mitigation.

When you make a delay claim, the other side will be entitled explore the extent to which you mitigated. The other side will be entitled to ask what you did to re-sequence the work and minimize or reduce the impact of the delay on the schedule.

If you believe you might have a delay claim, it is therefore absolutely vital that you begin to keep good records to track its impact. Usually this means keeping records that are more detailed than those that you would usually keep. Detailed records that allow you to show what you did on the job, day in and day out, put you in a better position to show that you did not cause any delay yourself and that you did everything you could to minimize the impacts by way of mitigation. When such detailed records are in place, the claim has a much higher chance of success than it otherwise would. 

In the next part of the series we will deal with damages for delay – with what you can claim for in terms of monetary compensation.

Robert J. Kennaley  –  McLauchlin & Associates

Rob Kennaley practices construction law in Toronto. He speaks and writes regularly on construction law issues and can be reached for comment at (416) 368-2522 or at kennaley@mclauchlin.ca. This material is for information purposes and is not intended to provide legal advice. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.

Rob Kennaley practices construction law with McLauchlin & Associates in Toronto and Simcoe, Ontario. He speaks and writes regularly on construction law issues and can be reached for comment at (416) 368-2522 or at kennaley@mclauchlin.ca. This material is for information purposes and is not intended to provide legal advice.  Also, changes in the law and its application may have occurred since the original drafting of this article and neither Rob Kennaley, McLauchlin & Associates or Landscape Management Network warrant that the information contained herein is up-to-date. Those who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.

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