quigg golden - coronavirus: dealing with it under the public ......dealing with covid-19 under the...
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Coronavirus: Dealing with it under the Public Works Contracts
Construction Law | Dispute Resolution | Procurement | Training
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Webinar Housekeeping
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Agenda
• Force Majeure
• Frustration
• Current Government Guidance
• The Contract Mechanisms
• Main forms, minor works, short form
• Standard conditions of engagement
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Force Majeure
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Force Majeure
What is force majeure?
• Under Irish law, there are limited remedies available to parties when a contract becomes impossible to perform
• To get around this, parties usually include an express term on how such a scenario will be dealt with should it arise
• They do this by adding what is commonly know as a “force majeure” clause into the contract
• These clauses typically cover exceptional scenarios that are outside of the control of both parties such as epidemics, war, natural disasters etc.
The law likes contracts
So add in a clause
Which deals with those exceptional scenarios
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Force majeure is a creature of contract
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Force majeure is not a recognised legal
doctrine in Irish law
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The Public Works Contracts do not have force majeure clauses
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The Doctrine of Frustration
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The Doctrine of Frustration
What is frustration?
• A legal doctrine whereby parties to a contract are discharged from further performance under the contract
• In Irish law, principles set out in McGuill v Aer Lingus (1983):
• For the classic statement of the doctrine, see Davis Contractors v Fareham UDC (1956):
(1) the “frustrating event” must not be caused by one of the parties;
(2) the contract must not make provision for the event; and
(3) the frustrating event must render further obligations radically different.
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The Doctrine of Frustration - Illustrations
Metropolitan Water Board v. Dick Kerr & Co (1918)
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The Doctrine of Frustration - Illustrations
Unlucky Firm Limited v Luckless City Council (2021)
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Dealing with Covid-19 under the PWC
• CF1 – CF5 are all materially the same
• CF6 (the short form) is slightly different
• Clause 4.5 = Instruction to suspend = CE
• No provision for order of public authority
• Clause 4.8 = Notification requirements
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Dealing with Covid-19 under the PWC
Is it a CE or DE?
Notify it Deal with it
Cl 4.1
HSE
OGP
Dealing with Covid-19 under the PWC
Sub-clause 4.1 Co-operation should be used as the vehicle to assess the likely impact of the
Covid-19 response measures on the progress of the works, the issues currently arising and any
potential mitigating measures that can be taken. Where the issues arising are linked to the impact
of Covid-19 response measures the Employer should adopt a proactive and collaborative
approach to address the issues
Link to DPER Guidance Note
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Dealing with Covid-19 under the PWC
Co-operate, Co-operate, Co-operate
Mandatory obligation, the parties SHALL co-operate
4.1.2(5) = to minimise the effects of suspension
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Dealing with Covid-19 under the PWC
Delay Events Compensation Events
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Dealing with Covid-19 under the PWC
Is Covid-19 a Compensation Event?
• Look at Schedule 1K
• 1K.1 = ER gives a Change Order
• 1K.3 = ER suspends work under clause 9.2
• 1K.7 = ER fails to deal with impossibility under clause 4.5.4 (CF1/3 only)
• 1K.8 = Employer does not allow access under clause 7.1
“an instruction... to change constraints…”
Dealing with Covid-19 under the PWC
It is important to ensure that the oversight, supervision and inspection roles continue and where this is not possible, or if for any reason the works cannot be executed in compliance with health and safety regulations, it may be
necessary to close the site for a period of time.
…any decision to close the site will be taken in consultation with the Employer. Should it arise the ER should direct the Contractor to suspend
the works under sub-clause 9.2.
Link to DPER Guidance Note
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Dealing with Covid-19 under the PWC
Unpacking Clause 9.2 – Suspension
• ER directs Contractor to suspend
• Contractor MUST do it;
• Protect, store and secure + maintain insurances
• ER directs Contractor to resume
• Contractor due Contract Sum adjustment & EoT (if clause 10 complied with)
• Suspension > 3 months
• Contractor may ask for permission to recommence
• If no permission within 28 days
• Contractor may give termination notice - see cl 12.4(2)
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Dealing with Covid-19 under the PWC
Is Covid-19 a Delay Event?
• Look at Schedule 1K (again)
• 1K.15 = Delay caused by the order of a public authority
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Entitlement?Entitlement? Entitlement?No Entitlement?
Dealing with Covid-19 under the PWC
What if works are suspended (CE), then a law is passed (DE)?
Time
Delay due to suspension
ER suspends under 9.2 = CE
Government order to close = DE
Clause 10.7.2
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Dealing with Covid-19 under the PWC
Who should notify?
• Look at clause 10.3
• 10.3.1 = Contractor must notify the ER
• 10.3.2 = CONDITION PRECEDENT
• Notification requirements• Be issued within 20 Working Days
• Meet clause 4.14 requirements
• Prominently state clause 10.3
This is a clause 10.3 notification
Note clause 9.3.1
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Dealing with Covid-19 under the PWC
Also remember Contractors…
• Compensation Event and Delay Event adjustments are only available if:
The Contractor makes all reasonable efforts to avoid and minimise the adverse effects
of the Compensation Event / delay
See clauses9.3.2(2)
10.1.1(2)
Dealing with Covid-19 under the PWC
…it is suggested that the ER make use of sub-clause 10.4 Proposed Instruction by requesting
the Contractor for a proposal to address the particular issues as they are identified under
sub-clause 9.3.
Please note that the use of sub-clause 10.4 is without prejudice to the Contractor’s other
rights under the contract.
Link to DPER Guidance Note
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Dealing with Covid-19 under the PWC
Unpacking clause 10.4 – Proposed Instruction
• ER may direct Contractor to make proposals for a proposed instruction
• Only a proposal… do not implement
• Within 20 Working Days, Contractor should provide
• Proposal + proposed adjustment to Contract Sum
• Clause 9.3 information regarding delay
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Dealing with Covid-19 under the PWC
How should a Covid-19 Compensation Event be assessed?
• Just like any other Compensation Event
• Look at clause 10.6 (money) and 10.7 + 9.3 (time)
• 10.6.1 = If work is similar to rates…
• 10.6.2 = if work is not similar to rates, or different conditions…
• 10.6.3 = fair valuation based on rates for similar work
• 10.6.4 = labour, plant & materials
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Dealing with Covid-19 under the PWC
How should a Covid-19 Compensation Event be assessed?
Time
Current P Contractor’s cost = €150k
Altered P
Date for Substantial Completion
Contractor’s cost = €250k
Date for Substantial Completion
€∆ = 100k 6 months
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Dealing with Covid-19 under the PWC
How should a Covid-19 Compensation Event be assessed?
• Just like any other Compensation Event
• Look at clause 10.6 (money) and 10.7 + 9.3 (time)
• 10.7.1 = Delay cost only if CE (not DE)
• (1) = Delay costs = expenses
• (2) = Delay costs = daily rate of delay cost
Does 10.7.1(2) apply
Per Site Working Day
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Dealing with Covid-19 under the PWC
How should a Covid-19 Compensation Event be assessed?
• Just like any other Compensation Event
• Look at clause 10.6 (money) and 10.7 + 9.3 (time)
• 10.7.3 = delay for a period of 7 or more consecutive non-working days
Contractor entitled to “expenses” unavoidably
incurred
Capped at daily rate of delay cost (Sch 2D)
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Dealing with Covid-19 under the PWC
Assessing the time & money impact of Covid-19
• Normal rules apply, Contractor’s must prove:
• That an event occurred
• That it caused a loss
• The value of the loss and/or expense
Records, records, records
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Dealing with Covid-19 under the PWC
When to the termination provisions kick in?
• When one of the reasons for termination apply AND the correct procedure is followed
• Potential reasons in the near future:
• Cl 12.4(4) – work suspended under clause 9.2 (and right has arisen)
• Cl 12.5.1 – termination on election
• Termination sum
• Works properly executed + partially complete work + reasonable costs of removal
• NOT DAMAGES
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Dealing with Covid-19 under the PWC
Onboarding
Relationship
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Dealing with Covid-19 under the SCoE
• Impact depends what stage you are at
• Follow HSE guidance
• Clause 4 = notice to suspend (talk about it first)
• Client pays “Percentage of Stage Fee for Suspension” = stated in Schedule B
• Half due with notice, rest after suspension ends
Dealing with Covid-19 under the PWC
The continued attendance of the various members at meetings is to be facilitated as far as possible by
remote means such as video conferencing. Where this is not possible please ensure that the HSE
Guidance is followed.
Under no circumstances should the service continue if the level of resources are such that they
impact on key health and safety requirements. Should this arise, having exhausted alternatives, the
client should suspend the service in accordance with Clause 4 of the Conditions of Engagement.
Link to DPER Guidance Note
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Recap
• Force Majeure
• Frustration
• Current Government Guidance
• The Contract Mechanisms
• Main forms, minor works, short form
• Standard conditions of engagement
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That’s all folks!
William BrownBEng (Hons) MSc Dip.Law MIEI ACLCM ACIArbSenior Associate
[email protected] William Brown
Admiral_Brown