By Jo O’Dea

 

In an extension of time claim, blame for the delay was a relevant consideration when assessing what was “fair and reasonable”.

 

In CAJ v CAI [2021] 5 GCA 102, the Singapore Court of Appeal considered the issue of extensions of time in construction contracts.  If the extension of time (EOT) clause is invoked, what should the Court consider when deciding if the extension was reasonable?

CAJ v CAI:

In this case, the contractor was engaged to build a silicon plant for the owner.  The contractor went over the scheduled completion date with “fixes” and there was a dispute between the parties about the cause of these delays.  The owner commenced an arbitration claiming damages caused by the delays. The contractor claimed that the delays had been caused by the owner’s instructions – a not uncommon situation in any construction project.

The relevant construction contract had an EOT clause that allowed the contractor an extension of time if it was “reasonable and fair”.  Part of the problem was that the contractor did not claim the EOT clause was relevant until closing submissions in the arbitration. The owner objected to the late introduction of this defence but the arbitral tribunal allowed it and considered the EOT defence. The owner successfully appealed to the Singapore Court of Appeal about the arbitral tribunal’s consideration of the late EOT submissions on the basis that this was a:

  1. breach of the arbitral tribunal’s authority; and
  2. a breach of natural justice.

In deciding this issue, the Court of Appeal looked at the arbitral tribunal’s ability to determine a very late, unspecific defence submission and concluded that this was not within the tribunal’s power because it breached the principles of natural justice.  The Court held that the owner did not have a fair and reasonable opportunity to respond to the EOT defence or to present its case in response (based on the evidence that had already been submitted in the arbitral proceedings). So, when the arbitral tribunal allowed and ruled on the EOT defence in the Award, the owner was denied the right to be heard.

It is interesting to note that once the Court held the arbitral tribunal had been in breach of its duty to comply with natural justice, the Court then turned to look into the substance of the claim despite the parties’ agreement to use arbitration for dispute resolution.  The rationale for this was that the court is empowered to make consequential or ancillary orders to give effect to the setting aside of the arbitral tribunal’s decision. The Court wasn’t using “general or residual powers” in contravention of Art 5 Model Law. Rather, it used a power that flows from its express jurisdiction under Art 34(2)(a)(iii) Model Law to set aside an award, or part of it. The Court stated that if it did not look into this issue, the actual award would be “completely hamstrung” and left in limbo. The owner would then be left with the “wholly unattractive and uncommercial proposition of having to re-commence fresh arbitration proceedings, assuming that is even possible given the effluxion of time”. 

The Court then considered what it needed to look at in relation to the EOT clauses. It determined that blame was not a basis for determining who was more or less at fault for the delay. More important was a factual assessment of the factors causing the delay.  Once this is done, then any blame can be looked at to assess what a “fair and reasonable” EOT would be.  To do this, the Court looked at the responsibility of each party for the delay.  In this case, the Court considered that it had to perform a fact-based assessment to determine what was “fair”.

It is important to note that this was a decision by a Singaporean Court and different jurisdictions may take a different approach when considering how to interpret EOT clauses in construction contracts.   As with any contract, it will depend on the terms of the clause included in the relevant contract(s).

CONCLUSION

An overriding theme in all EOT dispute cases seems to be that whenever there is a delay event, “real-time” documenting of the cause and effect of the delay will help determine whether the contractor is entitled to an EOT and if so, the extent of the EOT and any time-related costs.  If the Court has to make a determination about cause of the delay and what is “fair”, this type of documentation will be more useful than any retrospective delay analysis based largely on assumptions.

An independent review of the available contemporaneous evidence may stop or reduce the escalation of any dispute. And if there is a formal claim, don’t forget to give proper notice in terms of the contract referencing the clause(s) relied on as grounds for the EOT.

 

 

 

Vicarious liability and subcontractors

By Sam Dorne Liability in tort depends upon proof of a personal breach of duty, with one true exception, vicarious liability. The law of negligence is generally fault based; a defendant is personally liable only for the defendant’s own negligent acts and omissions....

Limitation for payment claims under construction contracts

By Sam Dorne The decision in Hirst v Dunbar [2022] EWHC 41 (TCC) considers the impact of payment provisions in a construction contract, whether through contract or implied terms, and the commencement of the limitation period for payment claims under the contract. It...

BuildLaw Issue 45

March 2022CONTENTS Extensions of time in construction contracts Construction contract procedure and dispute resolution: There really is a reason to pay attention to the boring stuff Principals beware, constructive acceleration is here UK: Important announcement on the...

Testing the waters: New South Wales Supreme Court considers the prevention principle

By Hannah Aziz  Court provides further confirmation that the prevention principle can be excluded by the terms of a contract.   Introduction Following our recent commentary comparing the operation of the prevention principle in New South Wales and Victoria, the...

Construction contract or product warranty? Not all collateral warranty disputes can be adjudicated

By Belinda Green Collateral warranties might be parasitic on a construction contract, but that doesn’t automatically mean they are one. The individual wording and circumstances need to be considered. In some cases, like in Toppan Holdings Limited v Simply Construction...

When you think the amount of your personal guarantee had a limit – but it didn’t.

In a recent Court of Appeal case, Cancian v Carters [2021] NZCA 397, Carters sought to enforce a personal guarantee against Mr Canican.  The Court dismissed an argument from Mr Cancian that Carters had not notified him that that the limit on his personal guarantee had...

BuildLaw Issue 44

December 2021CONTENTS Testing the waters: New South Wales Supreme Court considers the prevention principle Adjudication enforcement by companies in liquidation: Court of Appeal raises fundamental objections Wilful breaches of contract – Do exclusion clauses and...

Leaky Home Case: Failure to obtain a building report results in reduction of damages for contributory negligence

By Melt Strydom. Apportionment for contributory negligence allows a court to share the responsibility between parties in circumstances where the test for causation and remoteness of damage justifies it. It doesn’t mean a respondent will not be held liable for...

Do payment claims for retention money ‘fit’ with the standard terms of contract in New Zealand?

By Maria Cole The New Zealand Construction Contracts Act 2002 (CCA) does not explicitly state that payment claims can be used to recover retention money. That said, it is clear the 2015 amendments to the definition of a ‘payment’ under the CCA are broad enough to...

Resolving Construction Disputes – Is Adjudication a Good Option?

By Natalia Vila.   With few exceptions, the Construction Contracts Act 2002 (the Act) applies to every construction contract relating to construction work carried out in New Zealand. Statutory adjudication under the Act is the most commonly used dispute...

BuildLaw Issue 43

September 2021CONTENTS Construction contracts: enforcement of debts due and mandatory alternative dispute resolution clauses Cost certainty for resolving building and construction disputes: extension to the BDT Adjudication Low Value Claim scheme Engineers’ corner:...

Cost certainty for resolving building and construction disputes: Extension to the BDT Adjudication Low Value Claim Scheme

By Belinda Green.   One of the main barriers to dispute resolution is cost: no one wants to risk spending more than the amount they recover. With inflation and construction costs always on the rise, BDT is extending its Low Value Claim (LVC) Scheme for...

Construction Contracts – Enforcement of Debts Due and Mandatory Alternative Dispute Resolution Clauses

By Melissa Perkin. The recent High Court decision in Hellaby Resources Services Limited v Body Corporate 197281 [2021] NZHC 554 is of particular interest in the construction sector for several key reasons: it is a rare example where a stay of enforcement of summary...

The Enforceability of Liquidated Damages Clauses

Author: Melissa Perkin  Liquidated damages clauses, a common feature of construction contracts, stipulate the amount of money payable as damages for loss caused by a breach of contract, irrespective of the actual loss suffered. A recent United Kingdom decision of the...

Building and Construction Under COVID-19 Alert Level 4

For information and guidance on what building and construction work can be done at Alert Level 4: ·       Health and Safety protocols at different alert levels, visit CHASNZ COVID-19 and working at the current alert level (chasnz.org); and ·       COVID-19 guidance...

Class-action lawsuit against Harditex cladding fails

By Melissa Perkin.  A second class-action lawsuit[1] brought by a group of 144 homeowners whose homes were clad in Harditex fibre-cement cladding, has failed. The homeowners alleged that Harditex manufacturer James Hardie, between 1987 – 2005, knowingly sold defective...

What types of disputes can be referred to adjudication?

The types of dispute that can be referred to adjudication are listed below:  Default liability claim These are claims for technical non-compliance with the payment regime under the Act. Where a valid payment claim has been served by a payee on a payer and the payer...

Important Guidance on Contract Interpretation Issued by the Supreme Court

Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85 The Supreme Court in Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85 has provided important guidance on how extrinsic evidence and implied terms are used to aid interpretation of...

What are the cost implications of challenging an arbitral award through the courts?

By Maria Cole. A recent decision of the Singapore High Court shone a spotlight on indemnity costs and when they will, and won’t, be granted following the unsuccessful challenge of an arbitral award. The decision highlighted the opposite principles in place between...

Proposed Changes to the Construction Retentions Regime

Author: Hannah Stanley, Building Disputes Tribunal Registrar Despite the introduction of the retentions regime into the Construction Contracts Act 2002 (the Act) in 2017[1], many subcontractor retentions have still been left unprotected and various gaps in the...

Show Me the Money: Seven Things to Remember When Preparing a Payment Claim

By Amy McDonald Are you still waiting on an invoice to be paid that you sent ages ago? Have you done all the work but have nothing to show for it? Unpaid invoices can have a devastating impact on builders and subcontractors. Fortunately, the Construction Contracts Act...

BuildLaw Issue 42

June 2021CONTENTS To what extent are adjudication decisions binding on subsequent adjudicators? Aussie Rules - the prevention principle and the duty of good faith What sets jurisdiction in construction disputes? Case in Brief: BNZ Branch Properties Ltd v Wellington...

Overhaul of Resource Management System

By Belinda Green.   “Urban areas are struggling to keep pace with population growth and the need for affordable housing. Water quality is deteriorating, biodiversity is diminishing and there is an urgent need to reduce carbon emissions and adapt to climate...

Experts’ duties and conflicting interests – Secretariat Consulting Pte Ltd v A Company

By Belinda Green. Experts may look to amend their terms of engagement, as the English Court of Appeal finds a conflict of interest clause applied to a global brand, despite involving separate experts in different locations, contracting via separate legal entities....

Payment Claims: using Xero to send out your invoices? Don’t forget the important notice

By Catherine Green.   Do you use Xero to send out your invoices? Make sure they are compliant payment claims under the Construction Contracts Act 2002 (Act). The default payment regime under the Act is an efficient and effective way of getting your invoices paid....

The Award of Enforcement Costs under the Construction Contracts Act 2002

By Melissa Lin and Nashi Ali. Payees intending to recover costs from payers during the course of legal proceedings may want to reconsider issuing a statutory demand in the first instance and seek an adjudicator’s determination instead. Cubo Projects Ltd v S&S...

High-Risk Cladding Banned In Multiple Jurisdictions

By Nashi Ali. Following numerous high-rise tragedies across the globe, cladding panels constructed from aluminium composite and polyethylene have been deemed “high risk” and have subsequently been banned in a bid to reduce the risk of fire spread in high-rise...

When will (and won’t) implied warranties expand the scope of works?

By Maria Cole. The New South Wales Court of Appeal confirms statutory warranties can expand a scope of works, but the bargain that has been agreed to still holds sway. Oikos Constructions Pty Limited v Ostin [2020] NSWCA 358 (Oikos Constructions) In Oikos...

BuildLaw Issue 41

March 2021CONTENTS When will (and won't) implied warranties expand the scope of works? High risk cladding banned in multiple jurisdictions Paying the price: the risk of not agreeing to the cost of construction works at the outset of a project Case in brief:...

Construction Disputes – Are they on the rise?

A survey of construction industry members by Russell McVeagh has revealed that almost 61 percent of respondents are predicting an increase in the number of disputes. Some causes of a rise are within parties’ control, such as relationships, risk allocation and contract...

BuildLaw Issue 40

In this issue we look at the basis on which interest can be claimed in construction contract disputes and we discuss the changes announced by the government in April to stimulate the construction and infrastructure sectors post COVID-19. We feature an insightful...

Bought a house – got problems – no one wants to know?

Author: Hannah Stanley, Building Disputes Tribunal Registrar As a homeowner, discovering structural defects in your home is the last thing you want and most wonder where to go from there in terms of their rights and how to remedy the situation. The Courts are often a...

Assessing sums payable in the absence of a contract: Electrix Limited v The Fletcher Construction Company Limited [2020] NZHC 918

Authored by Michael Taylor, Joanna Trezise (Russell McVeagh), and Belinda Green (NZDRC) In a decision released on 6 May 2020, the High Court ordered The Fletcher Construction Company Limited to pay its subcontractor Electrix Limited about $7.5 million, plus GST and...

BuildLaw Issue 39

In this issue we look at the government guidelines for NZS3910:2013 contracts affected by Covid-19 Alert level 4 restrictions. We discuss adjudication injunctions caused by the virus and how they may help to provide some clarity to a rather cloudy area of law. We look...

BuildLaw Issue 38

December 2019 In this issue we look at a dispute over a home renovation contract that travelled all the way to the South Australian Supreme Court, highlighting the risks of not dealing with disputes promptly. We examine the ‘Emerald Book’ released earlier this year by...

Adjudication: calculating time over the Christmas period 2019-2020

What are the non-working days over the Christmas period this year?

The builder’s right to fix

Introduction When a dispute over defective building work turns ugly, the owner is sometimes tempted to refuse the builder the opportunity of returning to rectify the defects.  There are risks in this course.  This update considers a recent NSW Supreme Court decision...

The ‘collaborative’ future of construction and infrastructure procurement

Framework Contracting, that is well planned from the outset, can be an effective tool to deliver an entire programme of infrastructure with benefits for all sides. While it is simply one way to address resource constraints and the need for fair apportionment of risk...

Case In-Brief: Hybrid contracts and the payment provisions of the Construction Act

The Housing Grants, Construction and Regeneration Act 1998 (the Act) applies to “construction operations”. Where a contract relates to both “construction operations” and non-construction operations, the question arises of how payment mechanisms apply to construction...

BuildLaw Issue 37

October 2019 In this issue, we look at a NSW Supreme Court decision in White Constructions Pty Ltd v PBS Holdings Pty Ltd [2019] which found that the claimant, despite using an expert programmer, failed to sufficiently prove that a delay by the respondent caused delay...

The Supreme Court reinstatement is not a right that can be assigned

The Supreme Court has had the final say on the status of 'on sold' earthquake damaged properties insured by IAG at the time of the Canterbury earthquakes. In a judgment released yesterday, the Supreme Court by 3:2 majority, decided that owners of on sold properties...

Contractual appendices: ignore at your peril

Recently, a subcontractor in the UK was relieved of adverse ground conditions risk, despite contract amendments that sought to allocate that risk to the subcontractor- and it all hinged on an analysis of appendices to the contract. Appending documents to a contract...

New Government Procurement Rules Announced (4th Edition)

The 4th edition of the Government Procurement Rules (Rules) were published this month. They are the good practice standards for government procurement, and were last substantially revised in March 2015. The Rules apply to all public service departments, police,...

Building Law reforms: Raising the bar across the sector

By the Minister for Building and Construction, Jenny Salesa I’m proud of our building and construction industry, and the hard-working individuals that fill the wide and varied roles that make up the sector. It’s our fifth-largest industry by GDP and fourth-largest...

BuildLaw Issue 36

July 2019 In this issue we feature an article by the honourable Minister for Building and Construction, Jenny Salesa, with an invaluable insight on the proposed Building Law Reform Programme. In Case in Brief, Jeremy Glover makes a commentary on two recent...

BuildLaw Issue 35

April 2019 In this issue, we feature an article on the warning apartment owners may take from the recent Court of Appeal decision in Body Corporate S73368 v Otway. This decision creates some financial uncertainty for owners who could now be liable for repair costs to...

When can you go to Adjudication?

Under section 25 of the Act, any party to a construction contract is entitled to refer a dispute arising under that construction contract to adjudication except where the parties have agreed to refer disputes between them to arbitration and the arbitration is an...

Alliancing: what does the new NEC4 Alliance Contract have to offer?

By Claire King Fenwick Elliott LLPIn June 2018 the NEC published its first Alliance Contract “designed for use on major projects or programmes of work where longer-term collaborative ways of working are to be created”.[1] In this Insight we examine what is meant by...

BuildLaw Issue 34

December 2018 In this issue we investigate how the new retentions regime stacked up  in its first court case, in the Wellington High Court. We look at the new NEC4 Alliance Contract, trends in Asian leisure and hospitality, liquidated damages and receivables projects,...

Neutral Evaluation Revisited

by Royden Hindle [1] Neutral evaluation is a relatively little-used tool in the dispute resolution toolbox. Certainly, it has potential drawbacks: a party who is disappointed by an evaluator’s assessment may be slow to accept the outcome, while a party who feels...