How can I claim for the Delay and Disruption Caused by COVID-19?
This blog concerns how we may claim for additional time and money under the Contract for COVID-19, other than for Force Majeure which I have written a separate blog on.
The exact manner in which the effects of COVID-19 may be claimed under a contract I am sure given time will be tested by the courts, so it’s important to ensure that you do not fall at the first hurdle and be time barred due to a lack of notice. It is advisable to check your contract and notify your client to cover yourself – as in my experience, it’s better to have too many notices than not enough!
I have set out below how you may claim in principle under the Contract and have further referred to specific provisions of the JCT, where appropriate as an example. But as always, it’s the terms of your contract that matter and this blog should be used a guide for you to analyse your contract and ascertain the best course of action for you.
Pandemic as a Specified Event
Most contracts do not deal with COVID-19 or a pandemic as a specified event giving rise to an extension of time and additional reimbursement. But, it’s advisable to check the terms of your Contract, you may be one of the few lucky ones!
Change in Statutory Requirements
It may well be that the actions, instructions, guidelines and laws implemented by the government to date and going forward, may constitute a change in statutory requirements that affect the performance of your work. This is not certain at this stage, but my advice is to err on the side of caution and notify in any event to avoid difficulties at a later date.
For example, JCT Design and Build 2016 Clause 2.26.12 refers to the exercise by the UK Government or any Local or Public Authority of any statutory power which directly affects the execution of the Works. This could cover where your site is suspended or shut down, where travel restrictions or additional site restrictions are imposed and which impact on your ability to complete the work.
Change in Law
Most forms of contract include a change in law provision; if the “local” laws are changed post contract and these constitute a variation. These provisions would normally entitle you to additional time and money.
If the client instructs you to comply with social distancing rules, revised site working hours or other conditions, it may be possible that this constitutes an instruction to alter the timing or sequence of the work and therefore be a variation, entitling you to time and money.
If the works were postponed by the client, the instruction given would be similar to that in clause 3.10 of JCT D&B 2016, which also constitutes a relevant event under clause 188.8.131.52. Therefore, you would be entitled to time and money.
Prevention by the Employer
Finally, it may be that the Employer is unable to perform his obligations in a timely manner, which cause you to suffer delay and disruption. In these circumstances, his failure to approve, certify, inspect, monitor or supervise the work may hinder or prevent you from completing the work in a timely and economic manner.
JCT DB 2018 Clause 2.26.6 specifically refers to any impediment, prevention or default, whether by act or omission, by the Employer, or any Employer’s Person. As well as a common law right to claim for prevention (if an entire contract provision is not included) most Contracts include a provision to this extent and would entitle the Contractor to additional time and money. The Employer may well argue that his default is the effect of COVID-19, but its worth considering depending upon the exact words of your contract.
Issue of Notices
I previously wrote a blog on the issue of notices (click here) and I would suggest that you read this blog and ensure that your notice complies with the guidelines I set out therein.
The only caveat I would state that is, where issue of the notice is required by hand but is not possible, due to social distancing restrictions for example, then it makes sense to address this prior to the issue of the notice and agree how it will be served with the other party.
It may well be that the particular effects of COVID-19 on your projects may fall into one or all of the above potential areas of redress, but what is certain is that the effects will continue to impact construction in numerous ways, many of them perhaps not foreseeable at this stage.
Therefore, please take my advice, it’s best at this stage to comprehensively set out all potential impacts of the event whether they have actually materialized or not. A notice that is too narrowly drafted or rely on too few contract clauses can cause issues later. But also, update your notice periodically as things develop, as we all know communication is a good thing.
If you require any advice on any matter or would like us to undertake a review of your project then please contact Joseph Bond, Managing Director of Kenzie Consulting Group on firstname.lastname@example.org.