The decision in CMA Assets Pty Ltd v John Holland Pty Ltd
[No 6]  WASC 217, has reinforced the position that
contractors MUST comply with the terms of a contract – for
example, time and notice provisions - otherwise they risk losing
fundamental rights and claims available in the contract such as
Extension of Time claims (EOT).
The case involved a subcontract between John Holland Pty Ltd
(John Holland) and CMA Assets Pty Ltd (CMA). BHP contracted with
John Holland to upgrade and extend a wharf at Finucane Island in
Western Australia. John Holland in turn subcontracted demolition
works of a shipping berth and underwater mooring and berthing
dolphins to CMA.
In the course of undertaking the works CMA claimed that it was
delayed by several factors such as the reinforcement of the
berthing dolphins which wasn't contemplated in the subcontract,
delays by John Holland in moving a shiploader and delays in giving
CMA access to structures it was to demolish.
CMA made variation and delay claims against John Holland
however, it had failed to issue notices of delay in accordance with
the strict notice requirements of the subcontract. These clauses in
the contract were condition precedents to CMA being able to make an
EOT claim and not doing so would see those rights lost. This is the
essence of a 'time bar'.
As CMA had not complied with the strict terms of the
subcontract, the company argued that it wasn't in a position to
provide the information required by the notice requirements, a
failure to give notice does not defeat a claim in its entirety,
strict compliance with the subcontract was absurd and harsh, and
that John Holland was already aware of the delay and no further
notice was required.
Whilst the Court accepted that CMA was delayed by John Holland,
it denied its claim on the basis that CMA hadn't complied with
the notice requirements of the subcontract. The Court could not
depart from a strict interpretation of the subcontract even though
the application of the clauses were 'harsh' as otherwise it
would be contradicting the wording of the contract. As the
subcontract was not followed and the right to bring an EOT claim
was lost, John Holland was able to deny liability. The Court also
did not accept CMA's arguments that there was a mutual
departure from strict compliance as it said there was insufficient
evidence to support such a claim.
It is important that contractors comply with the time provisions
of a contract they have entered into even if they consider the
clauses to be 'harsh'. The risk in not doing so is too
great with the loss of otherwise potential valid claims.
It is critical that you understand the contract, keep good
records to be able to provide what is required by the contract and
otherwise show non-compliance by the contractor, and that you
maintain adequate contract administration practices.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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