How can we help?


Guidance on contractor claims: extensions of time and loss and expense

A very significant recent case, Walter Lilly v Mackay [2012] EWHC 1773 (TCC) has provided the construction industry with some much needed guidance and clarity in relation to treatment of many of the common elements of construction disputes: extensions of time, concurrent delay and loss and expense.

The project, the construction of a luxury town house for Mr Mackay and his family, was labelled by Mr Justice Akenhead as ‘a disaster waiting to happen’. Design responsibility remained for the most part with the client’s architect although when construction began very little of the design had been finalised. The list of design decisions awaiting client approval grew longer as did the lists of alleged defects as the project progressed. Unsurprisingly the project fell behind programme and the relations between the parties deteriorated badly. Walter Lilly brought proceedings seeking:

  • An extension of time until the date of practical completion
  • The return of liquidated damages and sums wrongly deducted and
  • Loss and expense related to the delays on the project and unpaid value of the works.

Concurrent delays – apportionment approach rejected

Until the Walter Lilly case there was some uncertainty as to how the English courts approach concurrent delay.  Concurrent delay occurs when a contractor is in culpable delay but an employer-risk event (Relevant Event in JCT terms) occurs during the same period.  The majority of extension of time clauses provide that the architect or contract administrator should grant an extension of time which is ‘fair and reasonable’.  The English approach, documented in the Malmaison case (Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 32), had been to award a full extension of time for delay caused by the two or more event provided that at least one of them was a relevant event.  A different approach was taken by the Scottish courts in City Inn Ltd v Shepherd Construction Ltd [2010] BLR 473.  The Scottish courts decided that a contractor should only get a reasonably apportioned part of the concurrently caused delay. Before Walter Lilly, it was uncertain whether the reasoning in City Inn would apply to English cases.

The ‘apportionment approach’ was rejected and held not to be relevant to the English jurisdiction.  The Judge stated that as the majority of relevant events would amount to acts of prevention by the employer it would be wrong to deny a contractor an extension of time in those circumstances. As long as the contract in question provides for an extension of time for a “relevant event” and the contractor can prove that this event has occurred, the contractor is entitled to an extension of time.

he Scottish courts decided that a contractor should only get a reasonably apportioned part of the concurrently caused delay.

A sensible and commercial approach to loss and expense

The Walter Lilly judgment also provides useful guidance on the interpretation of loss and expense clauses. Although the clause in question related to a JCT contract the same reasoning is still of assistance when considering other standard form building contracts. The contract, like most building contracts, contained various requirements or conditions precedent for an application for loss and expense:

  • Timely application to the contract administrator must be made in writing; and
  • Supporting documentation must be provided detailing the loss or expense to enable ascertainment to be made by the contract administrator

In this case, both parties agreed that a timely written application together with supporting details were necessary for the contractor to be successful in its claim for direct loss and expense.  However, there was some debate over the extent of information required to evidence the contractor’s loss and expense claim. The employer argued that the contractor provided insufficient detail and had therefore not satisfied the requirements of the contract in relation to applications for loss and expense.

The Judge concluded it was important that the wording of the loss and expense clause was not construed against the contractor as the majority of the matters which entitle the contractor to additional loss and expense are the employer’s ‘fault’. The Judge ruled that the clauses should not be interpreted in a strict manner so as to punish the contractor for operating the loss and expense provisions of the contract.

Although the guidance provided in the judgment should not be regarded as a general rule on what must be provided in each case, the Walter Lilly judgment does offer the industry sensible advice on the approach to be taken in submitting and reviewing loss and expense claims.

It is appropriate to take into account the contract administrator’s existing knowledge and information obtained from their experience on the project.  If for example the contract administrator has received several applications for extensions of time, they should already have a substantial amount of information available.  The contractor’s application for loss and expense must enable the contract administrator reasonably to form an opinion that ‘direct loss and/or expense has been incurred or is likely to be incurred’ because the regular progress of the works has been delayed or disrupted by the actions or omissions of the employer or by events which are at the employer’s risk.

It is not necessary to provide every conceivable detail and supporting documentation which may theoretically be needed where the relevant clause states ‘such details…as are reasonably necessary for such ascertainment’. The threshold for the condition precedent can still be met if the contractor does not provide details for each pound of loss and expense.

That is because the words of the contract should be construed “in a sensible and commercial way that would resonate with commercial parties in the real world” and that the contract administrator needs to be in the position where they are satisfied that all or some of the loss and expense claimed is likely to be or has been incurred. There is no requirement for the contract administrator to be “certain”.


Whilst this decision may be seen as giving contractors more room for manoeuvre it is still important that any claims are as substantiated as they can be. Whilst the condition precedent for an application may be met by providing a less detailed claim, the contractor still needs to persuade the contract administrator to accept its estimation of the likely loss and expense.

About this article

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

  • 10 April 2024
  • Employment

New Guidance: Confidence to Recruit

The new Government guide in collaboration with the CIPD aims to give employers the confidence to recruit its workforce from a wider range of people including those who may have been overlooked in the past as a problem rather than an asset.

  • 03 April 2024
  • Employment

FAQ’s on the new Carer’s Leave Act

Beginning on 6 April 2024, the Carer’s Leave Act comes into force, meaning carers are now entitled to request 1 week’s unpaid leave to care for their dependants.

  • 26 March 2024
  • Employment

Navigating Neuroinclusion: A Guide for Employers

Over the past few years, we have seen a marked rise in awareness of neurodiversity, as well as campaigns for awareness and inclusion in the workplace for neurodiverse employees.

  • 21 March 2024
  • Employment

TUPE Podcast Series: Who Transfers?

In this fifth podcast in our TUPE Podcast Series, Amanda Glover will be focusing on ‘who transfers’ under TUPE. Looking at the definition of ‘employee’ under TUPE legislation and the tests that apply in deciding if those employees transfer.

  • 20 March 2024
  • Employment

Changes to Employment Laws from April 2024 – are you ready?

There’s a large number of employment law changes coming in April which are set to shake up the workplace. It’s crucial for employers to stay informed and prepared.

  • 19 March 2024
  • Employment

Instant Messaging in the Workplace: Factors to be aware of

Workplaces have changed beyond recognition in the four years since the first COVID-19 lockdowns. This anniversary represents an opportunity to look back at how workplaces have changed in that period, from the increased use of flexible and hybrid working, to the continuing and significant integration of more technology in office-based work.