Building Contract Claims

568 Pages·2008·2.1 MB·english

by  David Chappell

Building Contract Claims
Building Contract Claims
Fourth Edition
David Chappell
Vincent Powell-Smith
& John Sims
(cid:1)IngramlightPropertiesLtd&JohnSims1983,1988
ThirdEdition(cid:1)DavidChappell,IngramlightPropertiesLtd&JohnSims1998
FourthEdition(cid:1)DavidChappell,IngramlightPropertiesLtd&JohnSims2005
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FirstEditionpublishedbyGranadaPublishing1983
Reprinted1984
ReprintedwithminoramendmentsbyCollinsProfessionalandTechnicalBooks1985
SecondEditionpublishedbyBSPProfessionalBooks1988
Reprinted1989,1991
ThirdEditionpublishedbyBlackwellScienceLtd,1998
FourthEdition2005
LibraryofCongressCataloging-in-PublicationData
Chappell,David.
Buildingcontractclaims/byDavidChappell,VincentPowell-Smith,
JohnSims.–4thed.
p.cm.
Rev.ed.of:Powell-Smith&Sims’buildingcontractclaims.3rded./
DavidChappell.c1998.
Includesbibliographicalreferencesandindex.
ISBN1-4051-1763-X(hardback:alk.paper)
1. Construction contracts–Great Britain. 2. Breach of contract–Great Britain. 3. Actions and
defenses–Great Britain. 4. Damages–Great Britain. I. Powell-Smith, Vincent. II. Sims, John,
1929-III.Chappell,David.Powell-Smith&Sims’buildingcontractclaims.IV.Title.
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ISBN1-4051-1763-X
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Contents
Preface ix
Acknowledgements xii
Contract abbreviations xiii
PART I 1
1 Introduction 3
1.1 Structure of thebook 3
1.2 Definitions 3
1.3 The basisof claims 8
1.4 Architect’s and contract administrator’s powers
and liability to thecontractor 10
1.5 Quantity surveyor’s powers 14
2 Time 18
2.1 Timeof theessence 18
2.2 Timeat large 19
2.3 Extension oftime clauses incontracts 21
2.4 Concurrency 24
2.5 Acceleration 29
2.6 Sectional completion 34
2.7 The SCL extensionof time protocol 36
3 Liquidated damages 42
3.1 The meaning and purpose of liquidated damages 42
3.2 Liquidated damagesor penalty 43
3.3 Liquidated damagesas limitation ofliability 48
3.4 Sums greaterthan a genuine pre-estimate 49
3.5 Liquidated damagesas anexhaustive remedy 50
3.6 Injunction 54
3.7 Liquidated damagesin relation to loss 56
3.8 Wherethere isno breach ofcontract 57
3.9 Calculation of liquidated damages 59
3.10 Maximum recovery ifsum is a penalty 61
3.11 Maximum recovery ifliquidated damagesdo not apply 63
3.12 Bonusclauses 65
4 Basisforcommon law claims 67
4.1 General 67
4.2 Impliedterms in buildingcontracts 69
4.3 Variation of contract 74
4.4 Omission ofworkto give it to others 75
vi Contents
4.5 Extra work 76
4.6 Possession ofsite 78
4.7 Site conditions 82
5 Direct loss and/or expense 86
5.1 Introduction 86
5.2 Direct versusindirect 87
6 Potential heads ofclaim 91
6.1 Basic principles 91
6.2 Two basic claims situations 93
6.3 Foreshortenedprogramme 96
6.4 The ‘knock-on’ effect 98
6.5 The more common headsofloss 101
6.6 Costof a claim 131
7 Causation 132
7.1 Theory 132
7.2 Useof networks 134
7.3 Float 136
8 The global approach 140
9 Substantiation of claims 148
9.1 Principles 148
9.2 Nature of supporting evidence 151
9.3 ‘Scott Schedule’ 155
PARTII 157
10 Extension of time underJCT standard form contracts 159
10.1 Extension oftimepositionunderJCT 98 159
10.2 Extension oftimepositionunderIFC 98 190
10.3 Extension oftimepositionunderMW 98 195
10.4 Extension oftimepositionunderWCD 98 197
10.5 Extension oftimepositionunderPCC 98 203
10.6 Extension oftimepositionunderMC 98 208
10.7 Extension oftimepositionunderTC/C 02 212
10.8 Extension oftimepositionunderMPF 03 217
11 Liquidated damages under JCT standard form contracts 221
11.1 Liquidated damagespositionunderJCT 98 223
11.2 Liquidated damagespositionunderIFC 98 225
11.3 Liquidated damagespositionunderMW 98 226
11.4 Liquidated damagespositionunderWCD 98 227
11.5 Liquidated damagespositionunderPCC 98 228
11.6 Liquidated damagespositionunderMC 98 229
11.7 Liquidated damagespositionunderTC/C02 231
11.8 Liquidated damagespositionunderMPF03 232
Contents vii
12 Lossand/or expense underJCT standardformcontracts 233
12.1 Introduction 233
12.2 Under JCT 98 234
12.3 Under IFC 98 262
12.4 Under MW98 268
12.5 Under WCD 98 270
12.6 Under PCC 98 277
12.7 Under MC 98 280
12.8 Under TC/C 02 281
12.9 Under MPF 03 284
13 Variations 287
13.1 Introduction 287
13.2 The baseline 288
13.3 Billsofquantities 289
13.4 Functions of thearchitect andthe quantity surveyor 292
13.5 Variations position under JCT 98 293
13.6 Variations position under IFC 98 322
13.7 Variations position under MW98 330
13.8 Variations position under WCD 98 332
13.9 Variations position under PCC 98 345
13.10 Variations position under MC 98 347
13.11 Variations position under TC/C 02 348
13.12 Variations position under MPF 03 358
PART III 363
14 Claims under GC/Works/1 (1998) 365
14.1 Introduction 365
14.2 Valuation of instructions 365
14.3 Prolongation anddisruption 369
14.4 Extension oftime andliquidated damages 373
15 Claims under ACA 3 382
15.1 Introduction 382
15.2 Monetary claims under ACA 3 383
15.3 Architect’sinstructions 390
15.4 Extension oftime andliquidated damages 395
15.5 Claims onthe final certificate 407
16 Claims under NEC 408
16.1 Introduction 408
16.2 Compensationevents 409
16.3 Delay damages 435
17 Sub-contract claims 437
17.1 Introduction 437
17.2 Sub-contractform NSC/C 437
17.3 Domestic sub-contract form DSC 454
viii Contents
17.4 Sub-contractconditionsfor sub-contractors named
under IFC 98 (NAM/SC) 467
17.5 The IN/SC form of domestic sub-contract for use
with IFC 98 472
17.6 The Works Contract/2 for use with MC 98 473
17.7 The ACA form of sub-contract 483
APPENDICES 489
AppendixA: Example of build up ofcontractor’s entitlement to
reimbursement ofdirectloss and/or expenseunder JCT 98,
clause 26 491
AppendixB: Extension of time and money claims underDOM/1 514
Tableof cases 524
Tableof standard form contract clauses 536
Index 544
Preface
Itwaswithpleasure,fleckedwithtrepidation,thatIacceptedtheinvitation
to enlarge thescopeand updatethethird edition of thispopular book.
Muchoftheoriginaltextwasretainedinthethirdedition,butupdatedin
the light of recent case law; the number of case references was almost
doubled and, at the wish of the late Professor Powell-Smith, footnotes
were included; a change which has proved very popular. Some restructur-
ingtookplacewithinchapterstoestablishacomprehensiblesystemofsub-
headingsandafewtopics,suchasliquidateddamages(thesubjectofmany
disputes), global claims, causation and concurrency, were given greater
importance.Thescopeofthebookwasextendedtoincludemorecontracts.
With the fourth edition, the opportunity has been taken to carry out
further fundamental changes to the structure of the book, bringing general
principlestothebeginningofthebookanddealingwiththeirapplicationto
specific contracts later. The text has also been substantially revised and
almost ahundredadditional casesadded.
The latest contract editions current at the time of writing replace the
previous (mainly 1980) editions and some new contracts have been added:
the JCT Construction Management and Major Project contracts, the JCT
Standard Form of Domestic Sub-Contract and the Engineering and Con-
struction Contract. Not all contracts have been covered. A deliberate deci-
sion had to be made to omit some in favour of others, because of space
constraints.
Asbefore,thestylehasbeentousetheJCTStandardForm(JCT98)asthe
basisand highlight important differences in the other forms. In some cases
therearefewsimilarities.TheJCTareworkingonagreatlychangedversion
ofJCT98whichisexpectedtobepublishedin2005.Forsometimetocome,
however, claims will continue to be made on the basis of the JCT 98 form.
For the same reason, extensions of time and money claims under DOM/
1havebeenkeptasAppendixB.JCT63,whichlurkedintheappendicesof
the previous edition, has finally been removed. At the time of writing, the
latest official amendments have been takeninto accountas follows:
Main contract forms:
JCT 98 Amendment 5
IFC 98 Amendment 5
MW 98 Amendment 5
WCD 98 Amendment 5
PCC 98 Amendment 5
MC 98 Amendment 5
TC/C 02 Amendment 1
x Preface
MPF03
GC/Works/1 (1998)
ACA3 2003 Revision
NEC 2000 Amendment
Sub-contractforms:
NSC/C Amendment 4
NAM/SC Amendment 4
DSC/C Amendment 1
DOM/1 Amendment 10
DOM/2 Amendment 10
WC/2 Amendment 5
ACA/SC 2003 Revision
Reference has also been made to the Housing Grants, Construction and
Regeneration Act 1996and the ArbitrationAct 1996 where appropriate.
It should be noted that in the reproduction and commentary on the JCT
standard forms, for brevity ‘Architect’ is used to stand for ‘Architect/Con-
tract Administrator’. Throughout the book, the masculine pronoun and its
derivatives have been used for convenience; they should be taken to mean
‘he’or ‘she’ etc. as appropriate.
Building contract claims are a unique combination of law and practice –
the proper preparation and evaluation of building contract claims requires
knowledgeofbuildingpracticeasmuchasoflaw.Thisbookattemptstoset
out some of the principles which underlie the whole subject. Readersmust
notassumethatstandardcontractformsarehandbooksofrulessufficientto
themselves; they are contracts like any other and they must be read and
interpreted against the general background oflaw.
In my experience, many claims are ill-founded, often because the basic
principles are misunderstood. Loss of money or lack of profit is not alone
the basis of a claim, although it is usually the trigger. The contractor’s
entitlement is founded in the terms of the contract and in the general law
to which it relates and if a particular contract term confers on a contractor
the right to reimbursement of direct loss and/or expense, he is entitled to
invokethemachinerylaiddowninthecontract inordertoobtainamounts
properly due.
The book is addressed to all parties involved in construction. It is not
alwayspossibletogiveadefinitiveanswertoeveryquestion,eitherbecause
the courts have not considered the matter or because there have been
apparently conflicting judgments. Where there is doubt, the doubt is ex-
pressedand, if practicable, Ihave taken aview ofthe situation.
One of the great perks of writing a preface is that it provides the oppor-
tunitytothankthepeoplewhohaveassistedme.ThelateProfessorVincent
Powell-Smith LLB(Hons), LLM, DLitt, FCIArb, DSLP, MCL, FSIArb, and
John Sims FRSA, FRICS, FCIArb, MAE, were responsible for the first and
secondeditionsandtheirnameshavebeenkeptasco-authorsinrecognition
of this although little of the original text now remains. Derek Marshall
LLB(Hons), MRICS, MCIOB, MCIArb, was responsible for the redraft of
Preface xi
Appendix A for the third edition and it formed a solid foundation for the
extensive revision I have undertaken for this edition. Michael Dunn
BSc(Hons), LLB, LLM, FRICS, FCIArb, kindly read my first draft of Part
1 of thisbook and made a great manyuseful suggestions.
I have endeavoured to state the law from available sources at the end of
May 2004.
David Chappell
Wakefield May 2004