How to deal with post-CNC delays?
In the celebrated case of Balfour Beatty Building Ltd v Chestermount Properties Ltd (1993), there were variations issued by the architect during the period post-CNC. The contractor argued that the effect of such variations would be to render time at large- this would entitle the contractor to complete the works within a reasonable time and disentitle the employer from imposing LDs.
In the alternative, the contractor argued that the effect of post-CNC variations is to allow the contractor an EOT calculated on a “gross” basis- i.e. calculated from the time the variation was issued. This would effectively wipe out previous delays of the contractor.
The learned Judge disagreed, and applied EOT on a “net” basis- i.e. calculated from the date of CNC. By this approach, the completion date was moved, although it still ended at a point in time earlier than the date the variation was issued.
This is also the approach adopted under the current PAM 2006 Form in Clause 23.9. The current Clause 23.9 says that where “a Relevant Event occurs after the issuance of the CNC, the Architect shall grant an extension of time. The extension of time granted shall be added to the Completion Date of the Works or any section of the Works.”
Such a clause as it now stands makes it quite apparent that the Architect has no discretion when a Relevant Event occurs after CNC. This makes perfect sense because every delay post-CNC is critical, at least in so far as the Contractor is concerned as the Contractor would be liable for LDs for every day of delay.
It is hoped that the proposed PAM Form 2018 will not change the current position, otherwise it would be most detrimental to contractors.
Kheng Hoe Advocates is a law firm focused on construction disputes and construction arbitration in Malaysia. For any queries, e-mail firstname.lastname@example.org.