Walter Lilly & Co Ltd v Mackay  EWHC 1773 (TCC) – 11/7/12
A recent judgment has ended once and for all the long-running debate over who takes a hit when both parties in a contract have contributed to delays.
Giles Patrick Cyril Mackay (1st defendant) set up a special purpose vehicle of DMW Developments (2nd defendant) to build three high-end properties in London. Separate traditional JCT contracts were ultimately placed for each of the three dwellings, the third of which was being carried out for Mr. Mackay.
In 2004, DMW appointed Walter Lilly and Company Limited (“WLC”) as main contractor to build Mr. Mackay’s luxury home. The contract value being £5.3m
Justice Akenhead described the project as “a disaster waiting to happen”, primarily because that little or no design work had been completed by the contract stage. The design, led by Mr. Mackay’s consultant design team, effectively took place during the construction phase, resulting in many severe delays to WLC’s progress of the works.
The contract completion date was 23 January 2006 but the Works did not reach Practical Completion until August 2008.
By the time of practical completion, the parties were in serious dispute in relation to matters of defects, extensions of time, payment (including loss and expense) due to WLC, and liquidated damages deducted by DMW. A substantial claim was issued by WLC, which was met by a counterclaim from DMW. The Judge held that the Claimant was entitled to the extension of time. Most of the major causes of delay were found to be design related, for which the Claimant did not have contractual responsibility.
As to alleged concurrent delay, the Judge held that where delay had two or more effective causes, one of which entitled the contractor to an extension of time, the contractor would be entitled to a full extension of time under the JCT contract. The Judge did not apportion the delays and rejected the approach of the Scottish court in City Inn Ltd v Shepherd Construction Ltd . The Judge also considered the nature of ‘global claims’ in construction cases.