Assignment on Construction Law

Assignment on Construction Law

 

 

 

 

 

 

 

 

 

Assignment on Construction Law

 

Issues

  1. Can the first EOT be granted?
  2. Can the second EOT be granted?
  3. If sub-clause 34.4 was not amended, then will second EOT be granted?
  4. Can third EOT be granted?
  5. Can fourth EOT be granted?
  6. Are any liquidated damages payable to Christie's Industrial by the Superintendent?
  7. Any amount of damages payable to Bourne?
  8. Completion of the table.

 

Legislations

  • Contract Law

 

Application

For the issue number (i), Bourne Contractors (BC) promised to start the construction by 5 Feb 2020 and finish it by 8th August 2020. It came to his notice that the demolition contractor, appointed by Christie's Industrial (CI), to demolish the site was still in the process of it on 5th Feb 2020. Hence, Bourne intimidated the Christies under sub-clause 34.2 about the demolition still going on at the site. He received the site on 8th Feb, to which, on 9th Feb he handed over the first extension of time (EOT) to the Superintendent about the delay of three business days in handing over of the site to him. For this, the required time of completion gets extended by three business days. The date of project completion (PC) also extended by three business days. 

Therefore, Bourne is entitled to be given the extension for his first EOT submission. Reason being that in this situation he cannot toe off the extension time asked for. It is out of his hands that the demolition site wasn’t ready as the prescribed given by him to CI. Since the demolition contractor was appointed by Christies, they are entitled to the damages to be paid to Bourne for the delay in starting of the project.

 

For the issue number (ii), the Superintendent told BC on 30th March that they shall supply the steelwork to the site on 16th April due to some errors of the steelwork fabricators appointed by the Superintendent. BC notified him that this might cause a delay in the project for nine business days. Meanwhile, the sub-contractor of BC was given the job of laying down the foundations and the ground slabs. Before this, the structural steel framing could not be done. However, due to some financial hitches with the sub-contractor of BC, the laying down of the foundation and the ground slabs remained incomplete till 16th April. The original date mentioned in the contract was of 3rd April. Due to this conundrum, the formation of the steelwork started on 17th April instead of 4th April as mentioned in the original contract.  Hence on the 17th, BC gave his second EOT report to Superintendent about the delay in the whole project for nine business days that is from 3rd to 16th April.

Therefore, concluding the issue on whether BC should or should not be given the second EOT, one can see that BC’s take on EOT is justified. Reason being, when Superintendent told BC about the delay in supply of the steelwork, BC conveyed him the assumption that the whole project would get delayed by nine business days. Therefore even though the sub-contractors could not complete the laying of foundation or ground slabs by 3rd, this is not much of an importance. As it is the laying of steelwork could not be done before 17th April, therefore the superintendent should grant the EOT of nine business days to BC.

For the issue number (iii), sub-clause 34.4 says that where there are two or more concurrent delays to the WUC and if the reason behind one of the delays is not an adequate one, then the contractor shall not be granted EOT to the extent of the delays. Concurrent delays mean, due to independent reasons, when two or more delays happen in a project during the same period. Both the delays do not have to occur at the same time, but any such delay must delay the whole project.[1] Therefore, if we interpret the given language under 34.4, so the cause of delay in the second issue by the Superintendent in the supply of steelwork and that BC's sub-contractor is causing a delay in laying the foundation and the ground slabs, so both these events count to concurrent delays. However, none of the delay caused in inexcusable because none of it was could be foreseen or towed off by either of the parties. Therefore, if this sub-clause would not be there, then also my answer would not have differed as given in issue (ii). As given in Peak Construction (Liverpool) Ltd v. McKinney Foundations Ltd (1976)[2][3], judge Salmon LJ said that extension of time should be given in cases when a delay is done partly by the contractor and partly by the employer.

 

For the issue number (iv), Appendix 1 shows that for ‘inclement weather allowance’ activity of five business days and for ‘total float’ activity for ten business days which starts after 8th August till 29th August. From 2nd to 10th July, there was a prolonged storm condition prevailing due to which the site was shut for seven business days. The third EOT sent by BC was on 12th July asking for an extension of seven business days due to which the project completion shall extend till 4th September. Even mentioning the period for inclement weather conditions in the contract, the unpredictability of weather surpasses the contractual language. Therefore even though it was mentioned that from 8th to 29th August only the weather and time float activity shall be taken into consideration, the storm which came from 2nd  to 10th July shall also be taken into consideration. Therefore the third EOT asking for an extension of seven business days should be granted to BC. 

 

For the issue number (v), on 26th June, BC contacted the superintendent asking for more detailed design information regarding the ceilings and flooring of the construction by 6th July. If the deadline is not considered then that would result in the delay of the project. The architect did not give the details until 20th July resulting in delay by three business days. Hence on 7th August, BC gave his fourth EOT claiming an extension of three business days due to delay in handing over of the internal designs. Along with that, a report of project completion which showed the deadline of project completion shifted to 7th September.

one can conclude that BC demand of EOT is valid and should be granted. Reason being that the delay in the project was caused because of delay in handing over the design by the architect with no fault of BC.  Referring Turner Corp. Ltd v Austotel Pty Ltd (1997) 13 BCL 378[4], where the Supreme Court of South Wales held that if the contractor fails to intimidate his employer about the delay in the project, that does not nullify his right of claiming EOT for reasonable events[5]. Similarly in Gaymark Investments Pty Ltd v Walter Construction Group Ltd (1999) NTSC 143[6], it was held where because of employer’s delay there is considerable delay in the deadline of the contractor, not only would it negate the provisions in the contract that limits the grant of EOTs if the employer does the delay, but also it would nullify the time-bar provisions given in the contract of construction and engineering.[7]

 

For the issue number (vi), CI had leased 3500m2 of land for Christies beach area. The lease is valid until the end of August 2018. If the construction of WUC is not done during that period, then as per liquidated damages in item 24 of Part A of Annexure, $20,000 fine shall be imposed for delay by each day. Supposing the above-mentioned conclusions, all of the four EOTs are to be granted to BC which lead to project completion by 7th September 2018. Calculating the amount of damages-

7days (counting from 1st to 7th Sept) * 20,000 (for one day) = $1,40,000.

 

For the issue number (vii), BC was supposed to complete the project by 8th August. As per the last EOT, the project completion got extended till 7th September. The amount of damages as per sub-clause 34.9, delay damages are payable to BC as per $10,000 per day subject to EOTs. Supposing all the EOTs being granted, then-

22days (counting the delay days from EOTs) * 10,000 (for 1 day) = $22,000.

 

For the issue number (viii),

EOT Claim No.

Amount of Business days claimed

EOT Entitlement

Reasons for any difference in claim and entitlement

1

3

3

None

2

9

9

None

3

7

7

None

4

3

3

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Peak Construction (Liverpool) Ltd v. McKinney Foundations Ltd (1976)

Turner Corp. Ltd v Austotel Pty Ltd (1997) 13 BCL 378

Gaymark Investments Pty Ltd v Walter Construction Group Ltd (1999) NTSC 143.

 

Bramble, B.B. & Callahan, M. T. (2010). Construction delay claims. Aspen Publishers, 2010.

Burr, A. (2016). Delay and disruption in construction contracts. CRC Press, 2016.

 

Smith Currie, (2017). Concurrent Delay – A Potent Defense For Owners and Contractors. Retrieved from https://www.smithcurrie.com/publications/common-sense-contract-law/concurrent-delay-a-potent-defense-for-owners-and-contractors/

 


[1] Smith Currie, (2017). Concurrent Delay – A Potent Defense For Owners and Contractors. Retrieved from https://www.smithcurrie.com/publications/common-sense-contract-law/concurrent-delay-a-potent-defense-for-owners-and-contractors/

[2] Peak Construction (Liverpool) Ltd v. McKinney Foundations Ltd (1976)

 

[4] Turner Corp. Ltd v Austotel Pty Ltd (1997) 13 BCL 378

[5] Bramble, B.B. & Callahan, M. T. (2010). Construction delay claims. Aspen Publishers, 2010.

[6] Gaymark Investments Pty Ltd v Walter Construction Group Ltd (1999) NTSC 143.

[7] Burr, A. (2016). Delay and disruption in construction contracts. CRC Press, 2016.

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