In a recent matter regarding the redevelopment of Women’s College Hospital in Toronto, the Ontario Superior Court took a deep dive into the analysis of concurrent delays in complex, large-scale construction projects.
In its lengthy decision, the court looked closely at the implications of project delays where multiple trades are involved and embarked on the difficult task of apportioning responsibility and rewarding damages.
In complex, large-scale development projects, delays are inevitable.
With developers, construction companies and dozens of sub-trades working to complete a difficult project on a set schedule, it is only natural things will not get done on time. These situations often arise when certain components take more time than expected, which in turn impact other aspects and the project stalls as a result.
When this happens, the various parties involved often point fingers at each other regarding who is responsible for the delay and courts become tasked with the difficult exercise of determining how the resulting damages should be allocated. This is known as “concurrent delay”, and is notoriously challenging to deal with.
Schindler vs. Walsh
Such was the case in Schindler Elevator Corporation v. Walsh Construction Company of Canada, where the Ontario Superior Court ruled on a matter concerning the redevelopment of Women’s College Hospital in downtown Toronto.
The project was commenced in 2010 through a partnership comprised of Walsh Construction Company of Canada and Bondfield Construction Company Limited (“WBP”). It involved the construction of a new hospital to replace the former Women’s College Hospital as a phased demolition and building process.
WBP retained Schindler Elevator Corporation (“Schindler”) as a subcontractor for the construction, installation and delivery of all elevator operations in the new hospital facilities. Schindler completed the elevator installation in accordance with its contract and ended up commencing a claim against WBP for nearly $1 million in unpaid invoices.
WBP counterclaimed against Schindler for nearly $3.5 million (reduced to about $2.2 million at trial), alleging Schindler did not complete its work in a timely manner.
WBP claimed the delays caused by Schindler impacted the schedule for the project, which resulted in mitigation costs and contractual penalties for the late completion of the first phase. WBP also argued Schindler was liable for part of a concurrent delay on the project, alleging additional delays were simultaneously caused by other subcontractors and Schindler was on the hook for its share of the resulting damages.
Schindler denied it was responsible for any delay on the project and argued if phase one was not delivered on schedule, it was the fault of WBP and the other subcontractors. WBP therefore had to prove part of its losses were caused by Schindler’s failure to complete its work on time.
Complex, multi-faceted case
In cases of concurrent delay, a party must establish the actions of a certain subcontractor delayed the project and consequently caused the party to suffer losses.
This is typically a complex and multi-faceted exercise when numerous subcontractors are involved, as it requires a detailed breakdown of the specific delay and a determination of how certain subcontractors caused it. To do this, the court must examine project times and the cost of completing tasks in order determine which party caused which share of the delay and assign damages appropriately.
In this case, Schindler called an expert who argued that, in order for there to be concurrent delay, all independent causes of the delay have to occur simultaneously and be of the same duration. The court did not accept this approach, as requiring different causes of delay to occur at the exact same time, and for the same duration, is not practical.
Instead, the court held “[i]t is not necessary for the independent causes of delay to occur exactly at the same time for them to be considered concurrent. Indeed, it is rare that concurrent delays start and end at the same time. Concurrent delays are more commonly experienced as overlapping events.”
It was noted this was a more practical and realistic approach to reach a fair result. The method proposed by Schindler, the court held, would be overly rigid and could result in a single party being held entirely responsible for a large-scale delay on a project.
The court’s decision, and its implications
In the end, the court agreed Schindler did fail in its obligation to deliver the elevator installation in a timely manner, which constituted a breach of its subcontract. WBP was therefore entitled to some damages and was permitted to set off part of this amount against Schindler’s unpaid invoices.
However, despite the breach of contract, WBP could not prove Schindler was responsible for materially delaying the project as a whole and this aspect of WBP’s counterclaim therefore failed.
This case provides valuable insight on the nature of “concurrent delays” and how they are identified and dealt with in large-scale developments. In its 102-page decision, the court was tasked with reviewing and analyzing every nuance of the project in painstaking detail in order to determine the nature of the delay and how damages were to be identified and apportioned.
In large-scale construction projects such as the Women’s College Hospital, it is only natural to expect delays and complications. However, as this case demonstrates, determining how various delays impact the overall project is no easy task.
In order to minimize these risks, the various participants in similar projects would be wise to adopt a forward-thinking approach and cover their bases along the way. This means keeping precise paper trials as the project progresses and ensuring everyone is kept apprised and put on notice in accordance with the applicable provisions in the construction contracts.
If this sort of diligence in exercised, it could go a long way in helping to identify the cause and apportionment of liability when allegations of concurrent delay rear their heads.