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QUESTION
Nirvana Development sends a letter of award to Krishnan Contractor to carry
out and complete the construction of two blocks of 20 storey building.
Krishnan Contractor is very excited with the news and shows you, as his
project manager, the letter and instructs you to make preparation for the
commencement of the work. As you read the letter you realise that it does not
specify the exact date for the taking possession of the site. It further stipulates
that only the section for one of the (Block A) two blocks will be given first; the
section for the other block (Block B) will be given later and no specific date is
mentioned for that event. When you visit the site, you notice that there is a
family of squatter occupying the Block A section. You further notice that there
is a little stream flowing through the site which is not shown in the contract
documents. Your estimation for the earthwork does not include the little
stream element. Its two weeks now and Krishnan Contractor has yet to receive
instruction from Nirvana Development on the date for taking possession.
Advise Krishnan Contractor relating to all of the above issues.
ANSWER
INTRODUCTION
The site on which the construction of a project is to be carried out normally
belongs to the employer. For the purpose of the contractor to perform the
construction works, the employer must give the contractor the possession of
the site. Without such giving of possession of the site, the contractor cannot
simply enter and carry out the work. If the contractor does so without the
employers permission, the contractor is in fact committing an act of trespass
and may be liable under the law of tort.
It is not advisable for the contractor to enter the site without the employers
consent. There are many legal issues that may arise out of such illegal
entrance and occupation of the site. Particularly, the employer may be liable
as the land owner for the contractors negligent acts. For example, the
contractor may, in the performance of the work, encroach into the neighbours
land. Although the employer may finally recover from the contractor any
damages he incurs in paying the neighbour, the legal complications involved is
something the employer may wish to avoid.
Once the employer has appointed the contractor, the former must thereafter
hand over the site to the latter for him to begin with the construction of the
works. All standard forms of construction contract contain express provisions
for giving possession of site by the employer to the contractor. 1 Generally the
clauses set out the conditions and procedures for the giving possession of site.
Despite the clear express provisions in the contracts, there are many issues
that may arise out of the giving possession of site clauses.
1 PWD 2010, Clause 38.0; PAM 2006, clause 21.0; CIDB 2000, clause 17; JCT
05, clause 2.0;
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THE ISSUES
The issues that may be extracted from the facts of the case are as follows:
1) The date for possession of site is not specified in any of the contract
documents; therefore, when exactly should Nirvana Development give
Krishnan Contractor the possession of the site?
2) A portion of the site is being occupied by squatters; should Krishnan
Contractor take possession of the site in that condition, or should the
employer remove the squatters first before giving the site to Krishnan
Contractor?
3) Nirvana Development intends to give first, the section for Block A only
and the site for Block B later, can Krishnan Contractor insist on the
employer to give him the whole of the site?
4) The little stream that crosses the site is not shown anywhere in the
drawings; can Krishnan Contractor claim for extra expenses for making
the site suitable for the construction in accordance with the drawings?
and
5) Nirvana Development delays in giving possession of the site to Krishnan
Contractor for two weeks; can the contractor terminates the contract?
THE DISCUSSION
The contract for the construction of the office building between Nirvana
Development and Krishnan Contractor is a private project. Therefore, for the
purpose of discussing the issues, the clauses in PAM 2006 standard form of
contract are used as reference.
Issue One:
The date for possession of site is not specified in any of the contract
documents; therefore, when exactly should Nirvana Development give
Krishnan Contractor the possession of the site?
It is the normal practice for the contractors to specify the duration of the
contract period in the tender document when bidding for the work. It means
that, the employer knows when he selects a contractor, the duration that the
selected contractor takes to complete the whole of the construction work.
Therefore when he sends the letter of acceptance, he will be able specify the
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8 clause 21.4
9 clause 23.8(f)
10 clauses 24.3(b) or 24.3(c)
11 Rapid Building Group Ltd. v Ealing Family Housing Association Ltd. (1984)
29 BLR 5
12 supra
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13 (1987) 40 BLR 82
14 clause 21 and the Appendix
15 Tender form
16 Appendix: dates of completion of the sections, the amount of the LAD for
each section, etc.
17 Second Edition Volume 3
18 Ibid, paragraph 386
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26 clause 21.4
27 clause 2.0
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