Proving Your Damages Claim in a Construction Project

Construction disputes often revolve around delays. Delay cases are complex and expert opinion is often sought to provide evidence. But if the expert evidence from each party is contradictory, where is the Court to turn?

 

The dispute in White Constructions Pty Ltd v PBS Holdings Pty Ltd (2019) NSWSC 1166 concerned a project involving the design and construction of sewerage infrastructure. The developer sued two of its external consultants over delays to the project. The Court, however, found that the developer had failed to establish consultants' liability. 

Key Facts

White Constructions is a developer. The two defendant sub-contractors involved were a sewer designer (IWS) and a water servicing coordinator (SWC). White Constructions requested $1.95m damages for sewerage system design delays. The parties appointed expert witnesses to support their respective positions.

The NSW Supreme Court rejected the widely different delay analyses produced by the experts appointed by the disputing parties and the methodologies on which their opinions were based. The inclusion of both those methodologies in the UK’s Society of Construction Law Delay and Disruption Protocol could not, in the circumstances, be a determinant factor in deciding the case.

The Court appointed a further expert who reported based on analysing the contemporaneous records concluding the claim could not be made out on the facts. The Court dismissed the claim.

Key Issues

1. The burden of proof

To be successful: contractor seeking damages for delay must be able to provide sufficient direct evidence of the cause and impact of the delay:

 “White says that, in breach of contract, IWS failed to prepare a satisfactory sewer design within a reasonable time and that SWC, for its part, failed to ensure that IWS discharged its obligations to do so, with the consequence that completion of the development was delayed, which caused White to suffer loss and damage.”

White Constructions needed to establish the reasons for the delay and its consequences but did not do so to the satisfaction of the Court.

2. The parties’ experts came to very different conclusions

Each side called on expert witnesses. The experts disagreed on an appropriate delay analysis methodology and the way the other expert had applied the chosen method.

The parties’ experts came to “profoundly differing conclusions” frustrating the Court.

3. The Court obtained another expert report

The judge complained that it was not inevitable that either expert’s preferred method of analysing delay would turn out to be “the appropriate one for the use in this case”.

Both experts could not be right. Nor was it inevitable that either had used the appropriate methodology for the circumstances. The Court exercised its prerogative to appoint its own expert, Mr Ian McIntyre.

4. The Delay and Disruption Protocol

The judge referred to the use of the UK Society of Construction Law Delay and Destruction Protocol as being something of a “holy grail”.

The judge cast doubt on the relevance of these commonly used methodologies saying "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 its standing." 

5. The parties’ expert opinions were not accepted

The Court accepted the opinion of the expert it had appointed. In doing so, it rejected the opinions of the experts appointed by the two parties. Instead, the Court emphasised the need to select a delay analysis method that has regard to what actually happened and produces a common-sense analysis and the causation of any actual delay:

“Mr McIntyre’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 the common law common sense approach to causation.” 

“The Court is concerned with common law notions of causation. 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.”

Contemporaneous records and factual evidence should take priority over hypothetical analysis and expert opinion that may disregard readily available facts.

6. The verdict

The Court held that on the facts White had failed to prove that the external consultants had caused the delay. The site foreman’s evidence was “couched in generalities” which were “incapable of founding any satisfactory specific findings of delay”. There was no site diary which gave a contemporaneous record of what was happening or identify what activities were being affected by delays.

What Does It Mean?

The Court applied a “common law common sense approach to causation.”  It stated that close attention should be paid to the facts of the matter rather than just relying on expert opinion. This evidence needs to specific enough to identify waiting times precisely. Generalities are not enough. Detailed contemporaneous documentation and record-keeping are required.

The Court cast doubt on the importance of commonly used methodologies and “the fact that a method appears in the Protocol does not give it any standing”.  The Protocol had at least previously provided a benchmark by which an expert’s delay analysis could be tested. It remains to see how it will be dealt with in the future.  New methods may emerge for those engaged in dispute resolution to consider.

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