David Thomas QC

Do time bars bite?

David Thomas QC
Keating Chambers, London

he Construction Law Reports are one of

the leading sets of specialist law reports
and the commentaries on selected decisions
by the Keating Chambers Editors are always
worth studying.
The following passage on the recent
Technology and Construction Court decision
of WW Gear Construction Ltd v McGee Group
Ltd [2010] 131 Con LR 63 made eye-catching
reading: A well known arbitrator, who must
remain nameless, is on record as saying that
he had never known a contractors claim fail
for want of notice.
The commentary went on to make the
point that the case comprised just such a
failure and that the apparently hard line
taken by the court promised others to come
if time bars are not observed in claims
procedure: the requirement to make a
timely application in writing is a precondition
to the recovery of loss and/or expense under
Clause 4.21. The Contractor simply has no
entitlement to recover such loss or expense
unless and until it has made such an
application (Mr Justice Akenhead).
That firm stance was consistent with that
taken by the Outer House of Scotlands
Court of Session in Education 4 Ayrshire Ltd v
South Ayrshire Council [2009] Scot CS CSOH
146, where Lord Glennie observed: The
same factors which point to the clause being
a condition precedent also point to the need
for any notice served in accordance with the
clause to comply strictly with its terms.
Such an approach would also be
consistent with those taken historically in
other common law countries; in Canada,
for example, in Jack Bradley (Maritimes) Ltd
v Modern Construction in 1996 and in
Australia in Wormald Engineering Pty Ltd v
Resources Conservation Co International in
1988, where Chief Justice Rogers
rationalised the upholding of a procedural
condition precedent as follows: the regime
prescribed will not necessarily work to give
complete
satisfaction
every
time.
Nonetheless, it is the best machinery that
could be devised to accommodate the
intended purpose.

Construction Law International Volume 6 Issue 3 October 2011

Those engaging in or advising on

international projects under the FIDIC
forms of contract will certainly wish to know
if the effect of the time bar in Sub-Clause
20.1 of those forms is as discussed above.
That well-known provision, which covers
both extension of time and additional
payment claims, imposes a 28-day time bar
on giving notice, which is made a condition
precedent by the words if the Contractor
fails to give notice of a claim within such
period of 28 days, the Time for Completion
shall not be extended, the Contractor shall
not be entitled to additional payment and
the Employer shall be discharged from all
liability in connection with the claim.
This provision was a significant departure
from the procedure under, for example,
FIDIC 4th (FIDIC Red Book, 4th ed, 1987),
although FIDIC had road-tested a condition
precedent time bar in the 1995 Orange
Book, where if the Contractor fails to comply
with this sub-clause, he shall not be entitled
to additional payment. FIDIC 4th had
separate procedures for claiming time and
more money respectively, Sub-Clause 53.1
(additional payment) had contained a 28day time bar, but the only sanction was in
Clause 53.4, whereby failure to comply with
the procedure limited the amount to which
the contractor was entitled to that considered
to be verified by contemporary records.
The change to a condition precedent time
bar was controversial, perhaps unsurprisingly,
among contractors representatives: Why
should the Contractor lose his entitlement
on such formal grounds? asked the then
Head of Legal Services at Skanska
International Civil Engineering in the
International Construction Law Review 1999;
unduly harsh was the verdict of the
Chairman of the Conditions of Contract
Working
Group
of
the
European
International Contractors organisation.
Part of the objection taken by contractors
was that there is no reciprocal time bar for
claims by the employer: Sub-Clause 2.5
merely requires that the notice shall be
given as soon as practicable after the
21

David Thomas QC

Employer became aware of the event or

circumstances giving rise to the claim. There
is a 28-day time limit for employer claims in
Sub-Clause 2.5 of the MDB Harmonised
Edition of the Red Book, but still no
conversion into a condition precedent by the
threat of loss of entitlement.
This lack of reciprocity may have greater
significance
than
as
a
cause
of
disenchantment. German commentators
take the view that Sub-Clause 20.1 is
disproportionately prejudicial to the
contractor and therefore ineffective
according to para 9 AGBG.
This is not the only jurisdiction where
doubts have been expressed over the
enforceability of the FIDIC provisions. In
2009, Marwan Sakr of Beirut suggested in
the International Construction Law Review that
the time-barring clauses may raise
controversies under the laws of certain Arab
countries, going so far as to suggest that
such clauses may be unenforceable under
Saudi law.
Doubts of a very different sort have, of
course, been expressed in some common
law jurisdictions, where the shadow of the
prevention principle has threatened to
produce an unintended consequence of
time bar clauses. The so-called Gaymark
principle (Gaymark Investments v Waller
Construction Group (1999)) in Australia
ensured that the employer was denied a
claim for liquidated damages because the
contractor had failed to meet the notice
requirements, thus depriving it of an
extension of time for the employers delay.
It should be noted that the English courts
are not, or not all, convinced by this
analysis. Jackson J, as he then was, in

22

Multiplex Constructions (UK) Ltd v Honeywell

Control Systems Ltd (2007), in which this
author appeared as leading counsel,
expressed his doubts as to whether this
represents English law: If Gaymark is good
law, then a contractor could disregard with
impunity any provision making proper
notice a condition precedent.
There is perhaps some dissonance, if not
irony, in the English courts giving strong
endorsements of time bars as conditions
precedent at the same time as FIDIC
appears to be re-examining its 1999 stance.
Under the 2008 Design Build Operate
Gold Book, the contractor may be able to
escape the severity of Sub-Clause 20.1 by
exercising its right to submit to the Dispute
Adjudication
Board
(DAB)
any
circumstances that it considers justify late
submission of the claim. Sub-Clause 20.1
then provides: if the DAB considers that,
in all the circumstances, it is fair and
reasonable that the late submission be
accepted, the DAB shall have the authority
to overrule the relevant 28-day limit and, if
it so decides, it shall advise the Parties
accordingly. While no decision has been
made, it is understood that the current
FIDIC review of its contracts is at least
considering extending this provision to all
the Rainbow suite forms. If that were to
be the case, time bars would be deprived of
some of their bite and the DAB would
become a significant arena for disputes as
to admissibility of late claims.
David Thomas is Queens Counsel at Keating
Chambers in London. He has a general commercial
practice with considerable expertise in construction
and engineering disputes.

Construction Law International Volume 6 Issue 3 October 2011