What mechanism are you adopting for a Notice of Delay - Covid 19?

Question

I'm interested to know, how you and your clients have notified your contracting party on the impact of Covid 19?

Yes, it seems common discussions are on the Force majeure event and I have been made aware of some people intent on claiming a statutory change after the base date as a Relevant Event.

I do not think it is quite straightforward to secure an extension of time on those two events, since currently not all sites are closed, indeed, some firms have re-opened some sites.

I believe each site will be judged on its own merit, for example, it is hard to see how construction workers can observe the social distancing regime when constructing a tall building [workers using the hoist/lifts and staircase for 50 storey to the work face]? Indeed, just think about the canteen usage? The government themselves have given out mixed messages stating that construction should still continue.

Any views?

O. Cleghorn MCInstCES · Accepted Answer

Good evening

I think to answer this the reasons for a notice of delay ( under a JCT DB 2016 system) should be explored. The conditions allow for a Contractor to notify if progress of the work has or is likely to be delayed by a Relevant Event, and as you say the two main heads of claim there are the change of legistlation and force majeure. If a Contractor issues a notice on either grounds but no delay actually happens, then no EOT need be awarded. If a Contractor issues a notice of delay and delay happens due to either of the Relevant Events occuring, an EOT may be due, depending on the criticality of the delay. However I share your view that this is likely to be a far from straightforward situation and in my view many Contractors, in spite of notices, are going to struggle to actually achieve an EOT. Some of the reasons for this are
1. Has force majeure happened to the main contract, as in many cases Contractor Sub-Contract out their obligations and if a key Subcontractor defaults due to Coronavirus or not as the case may be, then that is not necessarily or automically an event of force majeure under the main contract, I am informed, as the event that may have interrupted the main contract would be a Subcontractor, not necessarily the actual effect of a force majeure on the main contract. This could he particularly problematical for a Contractor where other Subcontractors have remained on site, or identical trades have remained at work on other sites, opening questions about the Contractors choice of Subcontractor.
2. It seems plauisble to argue that if sites have closed in order to stop the spread of a disease, that existing HSE and CDM regulations were merely being complied with by the Contractor, and as such a shut down is the Contractors risk.
3. A Contractor has a duty to minimize delay were it can, and in the face of other Contractors remaining at work whilst one decides to close, it may be possible for an Employer to argue that their certain Contractor did not do all it could to remain open and as such there was no critical delay due to the Coronavirus, but perhaps just concurrency of delay at best, and many industry-standard amendments preclude EOTs in the event of concurrency of delay.
4. How can a Contractor request any EOT, or how can the Employer award, on the basis of a Relevant Event when the situation is ongoing? In the unamended JCT DB 2016 the period of suspension is 2 months and if that happens either party may terminate, it does seem like this may circumvent the need for an EOT in some cases but again it would be a brave Contractor to end a contract on the basis of an alleged force majeure for example with no current established case law on the matter.
5. Who's to say Coronavirus actually caused a specific set or indicidence of absence causing delay to the works? If a site is running and yet key personell are off sick, with a lack of nationwide testing and many not going to hospital it is certainly plauisble that an argument could be raised as to whether this was Coronavirus or just seasonal flu for example. With the burden of proof on the Contractor, this points to good record keeping - of the medical kind on this occasion.
In conclusion I think the path to an EOT will be more than difficult for a lot of Contractors and Sub-Contractors alike, which is why we are recommending that Contractors notify using the available potential Relevant Events that you mentioned, and keep their options open.

What mechanism are you adopting for a Notice of Delay - Covid 19?

Extension-of-time

Delay

Andrew Crawford

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