Client Hotel Ltd & Contractor Construction Ltd
Client Hotel and Contractor Construction are in a JCT Intermediary Building Contract with Quantities (2016) for the construction of a hotel in Brighton, UK, by August 2019. During the final phase of the construction works, Client Hotel had to provide the detailed design for air conditioning and cabling by Contractor Construction, as informed in clause 2.11. The Client provided late instructions for such installations in June 2019, 6 weeks after the contractual scheduled date. The late instructions were listed as a Relevant Event under clause 2.20.
Contractor Construction had subcontracted the services of cabling and air conditioning, under clause 3.5, to Subcontractor Systems Ltd. Without informing the Client’s Architect of the blatant impact of the late instructions, Contractor Construction, fearing further delays in the completion date, immediately ordered Subcontractor Systems to finish the works. Contractor Construction then issued an extension of time against the client under clause 2.19 – Adjustment of Completion Date, in July 2019.
Clause 2.11.1 says:
2.11.1 Where, in the opinion of the Contractor, any instruction, or other item, which, in the opinion of the Contractor, constitutes an instruction issued by the Architect will require an adjustment to the Contract Sum and/or delay the Completion Date the Contractor shall not execute such instruction (subject to clause 2.11.4) unless he shall have first submitted to the Architect, in writing, within 10 working days (or within such other period as maybe agreed between the Contractor and the Architect) of receipt of the instruction details (…) If the Contractor fails to comply with any one or more of the provisions of clause 2.11.1, where the Architect has not dispensed with such compliance under clause 2.11.4, the Contractor shall not be entitled to any extension of time under clause 2.19.
With the new instructions from the Client, Subcontractor Systems suffered an impact in the completion date of the services of air conditioning and cabling with Contractor Construction. Before executing the works, Subcontractor Systems issued an extension of time against the main contractor, as well as variations and new prices due to the specificities of the late client’s instructions. Confident that the claim against Client Hotel under clause 2.19 was evident, Contractor Construction accepted Subcontractor Systems’ adjustment of completion date, accepted the variations and agreed to pay for the costs incurred because of the client’s delay. In August 2019, Contractor Construction sent the list of variations to Client Hotel, informing that the new quantities and prices would also impact the completion date.
Contrary to Contractor Construction’s expectations, Client Hotel issued a Liquidated Damages claim via formal correspondence, informing the contractor’s obligation to pay LaDs as in clause 2.23.
Client Hotel and Contractor Construction had a meeting in September 2019. As there was no agreement, the contractor sent the notice of Adjudication, as per right guaranteed in the HGCRA and the Scheme for Construction Contracts.
Following the Dispute Resolution proceedings in Contract and Statute, Client Hotel and Contractor Construction must present their claims and/or counterclaims.
Relevant Events – event that causes a delay, which is caused by the client. It entitles the contractor to claim extension of time.
Relevant matter – expense and loss compensation caused only if example late instruction provided by the client