Most project managers and contract administrators are busy – you have dozens of moving pieces on your hands, sometimes across multiple projects. So typically, the highlight of your day is not sitting down to read a contract and figure out what timeframes and notice requirements you have to meet!
Beyond that, contracts are trending more onerous these days, especially when it comes to notices and time bars.
Some contracts might even require you to draft and submit a whole claim document containing lengthy explanations and enclosing substantiating documents, all within 48 hours of “becoming aware” of a claim.
Preparing these notices in accordance with the contractual requirements may simply be unachievable, especially when you’re delivering multiple complex projects all at once.
I didn’t submit my notice in time!
So with everything going on, it’s an unfortunate reality that at some point either you or someone in the critical chain of command will miss a line in the contract that says:
- if you don’t submit your extension of time claim within 28 days of becoming aware of the delay; then
- you shall forever be barred from the claim.
Normally, many parties to contracts just submit their extension of time claim as soon as they can and manage to make it out the other side through discussions with the other party. And if all is going well, this often works.
However – that doesn’t mean it’s best practice.
Lets say that this particular extension of time follows a pretty intense delay – obviously, not caused by you – that you initially didn’t think would have that much of an impact but, as things go, has now turned out to be quite a problem.
You now see that you’re going to have to splash out a lot of cash to keep people, resources, materials and equipment on site for a lot longer than you thought, all of which could have been used on other projects, and ultimately serves to erode or even eliminate your profit on this one.
So, you quickly put in a delay cost claim alongside your extension of time claim to capture all these costs that you don’t really want to be paying.
This time, however, the other party rejects your extension of time claim and your delay cost claim – just because you were late! A strict application of the contract would be in their favour – you are barred from any entitlement to the claim.
Because of the sheer scope of the costs, this time you can’t seem to resolve the matter in discussions with the other party. Instead, they seem frustrated and uncooperative, especially when any delay could mean that the whole project is behind time, and they haven’t been able to communicate this up the chain.
Looking forward, the courts likely won’t be on your side either in these situations. Courts will regularly take a strict approach when dealing with time bars. The basic thought process being that time bars are there for a reason, and companies are capable of entering into contracts of their own accord, even if some of the terms of those contracts are strict or perceived to be unreasonable.
So, what can we do now?
Well let’s start by looking at what else might have happened earlier in the project.
I definitely told them about the delays previously, just maybe not in a formal letter
Justice Pagone in the Victorian Supreme Court case of BMD Major Projects Pty Ltd v Victorian Urban Development Authority once said, “A stricter construction would encourage, if not compel, contractors to be more concerned with anxiously satisfying a formal temporal requirement of notification rather than to explore the underlying needs and circumstances of the situation”. A common-sense approach one might think.
In that case, the plaintiff had provided four letters that the defendant said weren’t sufficient to give notice of the plaintiff’s claim because they failed to meet the strict requirements of form specified in the contract.
The court disagreed and held that, if you’ve substantially complied with the contract requirements then you can still be entitled to your claim. To say otherwise would “fly in the face of the legitimate expectations of ordinary business people”.
So, if you can’t strictly comply then let’s first look to see if you have sent any letters, emails, notices or even verbally advised the other side of the delay as it occurred and within the time required.
We can then try to make the argument that those earlier communications substantially complied with the contract provisions, and that you still met the underlying intention of the clause, being to notify the other side of the delay and its potential costs.
But the other side didn’t follow the contract either…
How is it reasonable and consistent for the other side to throw the contract at you at the very last minute when, for the whole duration of the project, they didn’t follow the contract either?
Well, it’s not!
Fortunately, the courts have recognised this possibility too.
Let’s say the other side knows about the contract requirements and time bars but says to you “don’t worry about them, just keeping doing the works, we’ll sort you out later”.
Firstly, don’t believe them – always comply with the contract and put in your notices.
Secondly, you’ve got some good starting evidence there to start putting together an argument that the other party has waived their right to require strict compliance with the relevant contract terms. Now let’s not get too excited about this, because it’s not as simple as it sounds.
In fact, we will need to prove a course of conduct (i.e., a pattern), that the other side had repeatedly and continuously shown that it did not require compliance with the contract.
Evidence showing this includes things like:
- emails or meeting minutes from the other side making promises that it was OK for you to keep working and not worry about submitting notices or claims;
- the other side approving claims you have previously submitted but which were not formally claimed or made in compliance with the contract (especially if they do not note the non-compliance and reserve their rights about strict compliance in the future); and
- the other side failing to issue assessments of claims within the times required, or otherwise regularly comply with the terms of the contract.
We then put all the above together to try and demonstrate that the other side waived its rights to now point to that time bar clause after not pointing to that exact clause (or at least other, similar clauses) time and time again.
This constitutes what we call in the legal world, ‘waiver and estoppel’. Because the other should be (e)stopped from relying on the strict notice requirement where it has waived its rights to do so.
BUT don’t think of this as your get out of jail free card – it’s very much not so.
In fact, it’s a difficult argument to establish and relies heavily on the evidence you have available. It’s a technical area of the law that your lawyers will need to grapple with in any dispute, so be prepared to be asked for evidence of the kind we’ve described above.
It can also be a big distraction from all the other vitally important things you could be getting on with instead of sitting in a room with us going through all your emails and documents.
Lastly, it just creates another hurdle to get over before we even start talking about the actual substance of the delay claim itself, like:
- what the delay was;
- that you were entitled to claim an extension of time for the delay;
- the quantum of the delay; and lastly
- how much you should be paid for the delay, if you have a delay cost entitlement.
In saying all this, if you do have good evidence and want to keep fighting for your claim (which we assume you do) then this is something we can help with.
Practical Tips on Time Bars
First – know your contract, know the forms, know the time restraints that you and your project team need to comply with. This goes for all the relevant people in the project team, including those on site.
Second – implement a chain of command and allocate sufficient authority to ensure that these contract terms are met during project delivery.
Third – always follow the contract, irrespective of what your head contractor or principal says. If they complain then they can amend the contract and remove the requirements from it.
Fourth – keep all available evidence, including written confirmations of any discussions which indicate any time of delay or notice.
If you keep these simple rules, you will put yourself in the best possible position if things should turn south later.
