Hello,
I have inherited a problem on a large industrial project where the Contractor and it would seem the Client ignore the NEC 4 rules and frankly are running roughshod over them. They do not assess CE at all or agree to new programmes showing delays that are occurring.
My client a Subcontractor has also not followed the valuation rules in regard to pricing in risk for delays in their CE’s.
The Contractors breaches are winning at least 4-1 over the Subcontractors.
They have written complaining about the lack of assessment but the Contractors approach is to offer 50% of the value in a wrap up deal on a take it or leave it basis several months after the event.
Because of the length of time all costs and prospective assessment of time and loss made in the CE’s are considerably out of date and lacking as delay and disruption continues.
In the z-clauses clause 80 liabilities has been deleted.
Considering that generally CE events cannot be revisited can we use clause clause 60.1 (14) citing the breach (es) of the Contractor to issue a new CE updating the value of the original CE’s?
We do not want to enforce agreement of the CE’s due to lack of response (and primarily because the subcontractor prospectively advised on time but sadly not money)!
Can we also argue based on recent case law (NI v Healthy Buildings for example) that a retrospective approach is taken due to these breaches? I am aware the ethos of NEC aims to avoid this to prevent a wait and see approach but this is exactly what is occurring.
Any words of wisdom would be welcome.
Thanks Derek.
The short answer is no you will not be able to use clause 60.1(14) to reassess CEs that have been implemented. Clause 66.3 (under NEC4 ECC) expressly stops this. There are very limited grounds to reassess a CE i.e. changes in assumptions, etc. You may be entitled to claim other CEs for the reasons you mentioned in your questions i.e. 60.1(6) late replies from PM, etc. but its worth noting these CE will be time barred if not actioned quickly.
I am not familiar with this case, but the NEC Contract does cover this eventuality so I would image its unlikely to be successful as an argument. This is really the same question as above and the answers is the same. NEC bars a retrospective analysis of CEs by clause 63.1. This clause set out how CE are assessed and onced the quote is accepted its not revisited. You might however have some entitlement to claim a CE under clause 60.1.(14) for the clients breaches that you have referred to, it just it will have to be assessed based on the rules in the contracts and wont allow you to reclaim loses made on other CEs not correctly assessed. Again its worth noting the right to claim a CE for client breaches can be time bar, so you need to action quickly.
Chris,
Thank you for the quick response.
I agree that the CE cannot be opened up under cl.66.3.
The problem here is that the Contractor has not made any assessment at all and so the CE have not been implemented.
The subcontractor has complained in writing about lack of assessment but has not issued a second notice a new Z clause inserts a new clause "13.10 Where a clause of this subcontract states that a failure by the Contractor to reply shall be treated as an acceptance by the Contractor, such clause shall be treated as being amended to require that the Subcontractor must submit a further notice to the Contractor setting out … In the event that the Contractor fails to reply within seven days of the receipt of the further notice referred to in this clause 13.10, the failure of the Contractor to reply shall be treated as an acceptance by the Contractor.”
There is no time bar on this new clause.
The Subcontractor realising he has not followed the rules in valuing some of the CE does not want these CE to be deemed accepted.
It seems to me that where both parties are in technical breach the contract is silent on whether the CE is valid or not?
Maybe the only recourse would be to use the W2 terms and try to negotiate out of this mess or adjudication where the the conditions give adjudicators wide powers to open up and revise any inaction of the Contractor particularly where a wait and see approach is being adopted?
Any final thoughts would be welcome.
Many thanks and regards
Derek.
Please be really careful when trying to apply legal judgements, such as Healthy Buildings. That case is regularly cited. Firstly, its a case in Northern Ireland. Where are you? It may be more or less persuasive as a result. Secondly, are you satisfied that the scenario you are looking at is sufficiently similar to the facts in Healthy Buildings that you can draw anything from that case? These are not easy questions.
So can you argue on it? The answer is yes, but is it a good idea? Much less clear, I would suggest.
As for what to do here, from what I can see the past CE’s are in the past and there is nothing to be done short of a dispute. For anything current, it looks to me like the PM could, and probably should (see clause 64.1 1st bullet) notify that they will be Assessing.