November 25, 2019

A decision of the New South Wales Supreme Court has confirmed that the “common law common-sense” causation test is to be preferred when evaluating competing delay analyses.

In White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] NSWSC 1166, a developer of a 100-lot subdivision in the Illawarra region of New South Wales contracted a sewer designer and a water servicing coordinator to carry out the design and installation of sewer infrastructure.

Part of the design and installation obligations involved obtaining statutory approvals, including Sydney Water’s approval of the sewer design. Sydney Water rejected the initial design proposal as not fit for purpose, and several months passed before a subsequent design was approved.

The developer filed proceedings in the NSWSC against the designer and water servicing coordinator for $1.9 million for breach of contract, alleging that their failure to produce a sewer design acceptable to Sydney Water within a reasonable time caused delay of nearly 8 months to the completion of the project and additional unnecessary costs.

During the course of the proceeding, the parties each relied on expert delay analysis reports. The developer’s expert employed an ‘as-planned versus as-built windows analysis’, whereas the sewer designer and water servicing coordinator’s expert used the ‘collapsed as-built (but for) analysis’. Both methodologies are referred to in the Society of Construction Law’s Delay and Disruption Protocol.

The experts reached different conclusions, prompting the Court to appoint an expert programmer to assist with the evaluation of the competing analyses. The court-appointed expert opined that neither party’s expert evidence was superior because they both failed to substantiate the factual assumptions underlying the delay analysis.

Hammerschlag J criticised the excessive complexity of the expert report tendered by the developer, observing that the assessment of whether delays to the sewer design approval had in fact affected the project’s critical path required “close consideration and examination of the actual evidence of what was happening on the ground.”

In finding for the sewer designer and water servicing coordinator, His Honour:

  •   placed reliance on contemporaneous records that showed the progress of the works;
  •   noted that the inclusion of a delay analysis method in the Protocol alone was not determinative of its weight; and
  •   held that the developer had failed to discharge the burden of proving that the delay was in fact caused by the alleged breaches of contract.

This decision highlights that the courts may not be persuaded by a highly technical and complex programming analysis where it fails to closely examine the actual facts happening “on the ground”. Irrespective of the method of delay analysis employed, the courts will apply a “common law common-sense approach to causation”, requiring plaintiffs to establish facts in support of their delay analysis.

Contemporaneous documentation provides the best record of both the impact and cause of delays to project completion. Contractors should therefore endeavour to record and maintain information relevant to delay events as they occur over the life of a project.

The full decision can be found here.

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