Participants in the construction industry should note that as of 12:01 am today (July 19, 2021), the NSW government has banned (with few exceptions) carrying out work on construction sites in various parts of greater Sydney (including the Blue Mountains, the Central Coast, Wollongong and Shellharbour).
As most modern construction contracts provide that a contractor (or subcontractor) is only entitled to an extension of time (EOT) in the event that the contractor (or sub-contractor) complies with a detailed notification and complaints process (often requiring notification and complaint within 2 working days of a delay), it is essential that you immediately and urgently review your contracts to ensure claims are notified and made in a timely manner and in the correct format.
Failure to notify and claim EOTs in a timely manner could:
- Prevent you from claiming and EOT in connection with the “break”; and
- You may be exposed to claims for damages relating to the period covered by the “break”. Such an outcome could be disastrous as we simply don’t know at this point how long the “break” will ultimately last.
In addition, you should also review your contracts to see if you might be entitled to additional charges due to the “break”. Again, as in the case of EOT, failure to notify and make a claim as required by your contract, could mean that you are not entitled to the extra money that you might have otherwise claimed.
Finally, the “break” is not only a problem for contractors and subcontractors. In cases where a construction contract allows for the granting of a discretionary EOT (whether by a superintendent or another party), then the principal may (depending on the specific terms of the contract) be obligated to ensure that the Superintendent (or other party) grants such an extension. For example, if a project is covered by an unmodified AS4000-1997; we think it is quite defensible that such discretion could be exercised in favor of a contractor / subcontractor given the foreclosure of the construction industry. Of course, this could have implications for the principal in terms of paying additional fees.
The above is not to say that a business approach to resolving “pause” issues should not be pursued in appropriate cases, but we specifically wish to note that such an approach should not blind parties to their own. contractual obligations in terms of notifications and complaints, as obtaining such obligations can be disastrous from a financial point of view. In other words, we do not recommend that the parties engage in negotiations and sit idly by and not give an opinion when they are entitled to do so.