If you fail to put in a claim for loss and expense within the time period, you lose your right to claim as happened in this case
Facts
Gear Construction as employer engaged McGhee as a ground work contractor to carry out excavation and related work for the development of the Westminster Plaza Hotel in the middle of a roundabout opposite Westminster Bridge in London.
The contract incorporated the JCT Trade Contract terms (TC/C) 2002 edition with bespoke amendments. McGhee鈥檚 application 18 included a loss and expense application for 拢1,555,919.89.
Disputes arose in relation to this and Gear referred these matters to adjudication. The adjudicator decide mostly against Gear, and Gear was not satisfied with the decision, but did not challenge the enforceability of the decision.
Issue
Clause 4.21 as amended related to direct loss and expense and required the contractor, within two months of it becoming reasonably apparent to him, to make in writing a formal 鈥渇ully documented and costed in detail鈥� application. It also said that this was a condition precedent to the contractor鈥檚 entitlement.
The issue was whether this was a true condition precedent, which the contractor was required to comply with.
Decision
The Judge held that this was a condition precedent. The contractor鈥檚 compliance with it was a precondition to the recovery of loss and expense under clause 4.21. The employer, Gear, was therefore entitled to a declaration that McGhee was obliged to comply with the preconditions in clause 4.21 before it could claim loss and expense.
Comment
Conditions precedent are now being used widely in construction contracts. They are in effect 鈥渢ime bar鈥� clauses. If a party fails to comply with the requirements of the clause (to submit a claim within a certain time) then that party looses the right set out in the clause.
So, in this case if the contractor failed to submit a fully costed and substantiated claim with two months of the time when the loss and expense was or should have been apparent to the contractor then it lost its right to claim.
The right is lost even if the contractor has incurred those costs and would under normal circumstance have a valid claim. A clause like this is included in the NEC 3rd edition, and so contractors should take care to comply with these clauses either in standard forms or in amendments to standard form contracts.
Full case details:
WW Gear Construction Limited v McGhee Group Limited, [2010] EWHC 1460 (TCC), Mr Justice Akenhead
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