Updated: Sep 30
Three infill units, Auckland's North Shore 2021
There was a time when subcontractors were never allowed to be late. It was a time when, no subcontractor dared dream of submitting an EoT claim, in part because everyone on site kept a very close eye on numerous product supplier calendars, liberally pinned up around site office walls, ensuring dates where being watched, very closely.
Today there is less gazing at wall calendars, and a greater focus on equality and respect for subcontractor’s entitlement to access, continuity of work and reasonable time provisions to deliver subcontract works. A much more inclusive work environment.
Dis-entitlement as a defence strategy against EoT Claims
For subcontractor EoT’s of 5 or less working days in duration refer SA2017 clause 10.2.2.
“The Subcontractor is not entitled to an extension of time unless:
a) they have notified the Contractor in writing that they are claiming an extension of time and stated the grounds for the extension;
b) the notice is given within 5 Working Days after the Subcontractor should reasonably have been aware of the circumstances which resulted in grounds for extension; and
c) the notice gives details of the length of extension sought.”
You can only comply with this clause as written for extensions of time that are maximum 5 working days long. On day 6 you cannot give details of the length of extension sought per 10.2.2 c) and the notice still be given within 5 Working Days after the Subcontractor should reasonably have been aware of the circumstances which resulted in grounds for extension. It’s impossible.
Then there is the back to back nature of SA2017 with NZS3910:2013, where terms set up a 20 working day cycle to repeat notices for ongoing delays. View through a NZS3910 filter, SA2017 effectively sets up a 5 working day cycle for a delay that is deemed ongoing by virtue that it is longer than 5 working days in duration.
Interpreting the subcontract EoT Notice Rules
Background fact, a Head Contractor relies upon a subcontractor giving notices on shorter time-frames than the Head Contract has to notify the Principal. Head Contract and Subcontract respective periods of notice are differentiated to allow the Head Contractor sufficient time to not be dis-entitled. It is in the subcontractors interest the Head Contractor passes claims up the line in order to facilitate the Head Contractor passing the benefits down the line to the subcontractor.
SA2017 ties itself to NZS3910:2013 and these two sets of terms must be read together, aligning the subcontract terms as much as possible with the Head Contract terms. The intentions of the parties is for the subcontract terms to be equal to the Head Contract but also complimentary to the role of the Head Contractor, so that rights to equal terms do not dis-entitle one party at the expense of the other party. No harm = no foul.
The 5 working day notice period in the subcontract is intended to prevent harm to the Contractor falling foul of the 20 working day rule in the Head Contract. Once notice of an indeterminable delay is issued, while not to be relied upon faithfully as an alternative to the best practice of issuing relevant notices liberally, further notices can be taken as read from ordinary correspondence about the subject matter. When you are aware of an issue, you cannot deny such knowledge for lack of additional formal notice.
Interpretation arguments could be eliminated if everyone issued notices every 5 working days but that seems highly impractical. Just as one could ascribe a meaning to SA2017 10.2.2 that it is not just for delays of 5 working days or less but that the requirement for the notice to gives details of “the length of extension sought” is the most import aspect of the need for notice. This means the subcontractor cannot reasonably have been aware of the circumstances which resulted in grounds for extension of “any length” until the length can be determined. In short, the 5 working day time limit for giving notice does not begin until the delay ends.
Faced with a 30 working day delay, having indeterminable length upon having knowledge of the delay commencing;
1. when did the parties intend notice to be given?
2. when did the parties intend the details of the length of the extension to be provided?
The answer could be..
1. the notice is given within 5 Working Days after the Subcontractor should reasonably have been aware of the circumstances which resulted in grounds for extension;
2. the notice gives details of the length of extension sought within 5 Working Days Subcontractor should reasonably have been aware of the circumstances which resulted in the delay ending;
3. or such other reasonable time not greater than is allowed under the terms of the Head Contract?
Dis-entitlement, for what reason?
Given all this rotates around determining when “the Subcontractor is not entitled to an extension of time” for administrative reasons rather than for reasons of fact as to whether a delay has occurred or not occurred, the courts are generally reluctant to uphold administrative denial of entitlement where Notice deficiency resulting in “no harm”, can be interpreted to mean, “no foul”. It’s a modern world.
“Celebrating 50 years of New Zealand Building Economist 1972 to 2021”
By Matthew Ensoll
Editor New Zealand Building Economist.