Legal Q&A: Dealing with delay claims

What has changed under the new contract and what does all of the terminology mean?

The critical change surrounds the relevant 'events' or 'matters' within the contract, which are now listed much more comprehensively than before.

Put simply, relevant 'events' are those circumstances in which a subcontractor is prevented from undertaking work and can therefore claim for extra time allowance, while 'matters' are events that are deemed to allow the subcontractor to also claim for financial compensation. These most often occur due to a breach of contract by the contractor.

What are the implications of these changes?

Historically, contractors have been able to simply award a gross total of time to all the claimed events listed by a subcontractor. Under the new provision, much more detail is required with contractors expected to clearly identify the extension of time (EOT) that is attributed to each individual event. A more considered review of the circumstances is therefore required of the contractor prior to awarding any EOT.

Additionally, this creates an added responsibility for the subcontractor of supplying and recording the necessary information surrounding 'events'.

What must a contractor consider in assessing a subcontractor's extension of time claim?

Contractors must ensure that any requests for information and programme analysis made of a subcontractor are wholly reasonable, taking into account the relative size of the subcontract against the value of the claim. In turn, the subcontractor must be able to demonstrate that the relevant 'event' for which they are claiming has had an impact on the work being undertaken and caused them a delay on the critical path for their section of works.

I've already granted an extension of time - do I have to pay for loss or expense?

No, not in all cases. There are eight 'events' under the subcontract that are known as neutral events. For this particular type of 'event', subcontractors can claim for an EOT, but are not entitled to loss or expense. Even in the case of periods of EOT in which financial entitlement may exist, subcontractors still have to prove that loss or expense was incurred as a direct result of the particular 'event' or 'matter' taking place.

I have just received a claim for loss/expense - what are my obligations?

Under the JCT Sub Contract there is no obligation for contractors to agree the value within a fixed time period - unlike the EOT which must be granted within 16 weeks. Contractors take note however -the final sum is expected to be calculated eight months from the date when the subcontractor provides all the necessary information.

Notwithstanding the above, the contractor has an ongoing monthly obligation to ascertain the value of a subcontractor's work and any payment notice has to specify what the amount of payment relates to and how the figure was calculated. Failure to properly assess the amount of loss or expense properly applied for on a monthly basis could lead to adjudication.

Can contractors discard a claim for being late?

In essence, the answer is 'no'. The language used in the JCT Sub Contract only requires claims to be submitted "as soon as reasonably apparent" and there are no fixed time scales within which the subcontractor must operate. The only time limit in place is the stipulation that subcontractors must provide details of all sums claimed by four months after practical completion and this in itself is not a condition for entitlement. Any attempt to bar a claim on the grounds of it being late is therefore unlikely to succeed.

The subcontractor hasn't performed - can I rely on this to defend the claim?

It is true that a breach of contract by the contractor for which EOT is claimed can often coincide with a failure by the subcontractor making the claim. This should be identified in the EOT assessment, however, and is unlikely to apply when defending a claim.

But the subcontractors' own responsibility for delays should still be considered when calculating the amount of loss or expense to be awarded. After all, it still must be demonstrated that the relevant 'matter' has financially affected the works and caused additional loss or expense. This must involve proving to the reasonable satisfaction of the contractor that these costs are directly linked to the 'relevant event or matter' and not to its own failings.