A substantial amount of dispute in construction litigation and construction arbitration revolves around the issue of extensions of time, which is co-related to the issue of liquidated damages. A common question is whether it is a condition precedent for the contractor to give notice in order to claim extensions of time? In other words, if the contractor fails to give notice, does he lose his right to claim for extension of time?
The first factor to consider would be the contractual clause itself. By reading the clause, does it render a notice as a condition precedent?
Cases which have considered the contractual provisions and held that giving notice is a condition precedent would include:
a. Bremer Handelsgesellscahft mbh v Vanden Avenne-Izegem (House of Lords case, but not a construction contract);
b. City Inn v Shepherd Construction (the Court held that where the contract provides for the notice to be a condition precedent, then unless the architect waives the requirement of notice, the failure by the contractor to serve a written notice would disentitle him to any extension of time).
On the other hand, there are cases which do not consider the notice as a condition precedent notwithstanding the contractual provisions, such as:
a. Stanley Hugh Leach v London Borough of Merton (the architect has a duty to the contractor and the employer to grant an extension of time nevertheless, in order to preserve the employer’s rights to liquidated damages);
b. Maidenhead Electrical Services v Johnson Controls (failure to comply with notice requirement did not render the claim to be invalid).
But what if the employer is the cause of delay? For example, through acts of prevention. Is it right to penalise the contractor for failing to give notice when it is the employer who delayed the works?
An interesting discussion on this point developed in the Australian jurisdiction as follows:
- In the case of Turner Corporation Ltd (Receiver and Manager Appointed) v Austotal Pty Ltd, the judge held that even though the delay was caused by the employer, the contractor could negate the delay simply by giving notice and applying for extension of time. Hence, the failure of the contractor to give notice caused it to lose its right to extension of time.
- But in Gaymark Investment Pty Ltd v Walter Construction Group Ltd, the Court went on to consider that if the delay was caused by the employer, allowing the employer to impose liquidated damages would mean that the employer is benefitting from its own breach, which is not allowed. Therefore, in circumstances when the delay is caused by the employer, the lack of notice is not fatal even if notice is a condition precedent.
- This idea was further entrenched in Roberts v Bury Improvement Commissioners, when the Court held that even if a notice was a condition precedent, and even if the contractor lost its right to extension of time due to failure to give notice, if the delay was caused by the employer, then the contractor can actually claim against the employer for all losses suffered as a result of the delay by way of a common law claim in damages.
In summary, delay in giving notice is not fatal unless the contract is expressly clear on the matter. Even then, it becomes arguable if the delay is caused by the employer itself.
If you have any questions with regard to a construction dispute or a building contract dispute, feel free to contact us. We are a firm of construction lawyers based in Kuala Lumpur. We have undertaken work in KL, Selangor, Kedah, Penang, Perak, Johor and Pahang. We have also handled arbitration work in Singapore and Seoul, South Korea. You can email us at email@example.com.