A strict enforcement of time bar provisions

by White & Case LLP
Contact

White & Case LLP

Time bar provisions are a relatively common feature of construction contracts, but often arouse concern because they are seen to be "harsh".  A recent case from Northern Ireland confirms that notwithstanding any "harsh" operation, "clear and unambiguous" time bar provisions will be enforced.

Background

Glen Water Ltd v Northern Ireland Water Ltd [2017] NIQB 20 concerned a sewage treatment PFI in Northern Ireland, whereunder a project agreement was entered into between the water authority and a private sector contractor.

  • The project agreement entitled the contractor to make claims for compensation and/or an extension of time due to, among other things, breach by the authority of its obligations.
  • However, the project agreement preconditioned the contractor's right to compensation upon it giving 21 days' notice of a "compensation event".
  • In 2010, the contractor sought to make a claim for compensation based on the water authority’s conduct.
  • In its defence, the water authority contended that the contractor's claim was barred due to lack of timely notice of the claim.
  • The contractor, however, said that it had given timely notice of the claim, and sought to demonstrate this through meeting minutes, correspondence and the like from 2009, when the underlying issues were discussed between the water authority and the contractor.

Did these communications constitute good notice?

Good notice of a claim?

The court held that timely notification was not given, and therefore the claim was barred. In so ruling, the court:

  • noted that "[t]he burden is on the plaintiff to establish that this is a proper notification" and that, as a guiding principle, "[a] notification should be clear and unambiguous";
  • rejected the letter offered by the contractor as purported notification of claim because it did not clearly state that it was a claim, and instead merely referred to the claim event in passing and as a prospective future claim only;
  • denied that the minutes of meeting relied upon by the contractor constituted proper notification of claim.
  • held that, although it was clear that the parties had had discussions regarding a potential claim event, the contractor still ought to have notified its claim formally. This was despite the fact, as shown by an internal document provided on discovery, the authority had clearly foreseen the claim.

Thus, according to Glen Water, formal notification of a claim is strictly required, even when contemporary documents demonstrate that a party intended to submit a claim and that the other party was aware of such intention. This is because "the fact that [a party] may anticipate that a compensation event may occur does not equate to notification of an actual compensation event."

Time bar as a condition precedent

Having concluded that the purported notice was defective, the court rejected the contractor's claim by application of the time bar provision in the project agreement. The court:

  • held "it was agreed that the notification is a condition precedent. That follows because the relevant clause contains mandatory language. There is no saving provision from that."; and
  • did, however, leave the door open to the application of equitable principles such as estoppel to avoid such a "harsh" outcome, i.e. so as to prevent a party from raising a defective notice as a purely technical defence, for example where such party has proceeded on the basis of the defective notice in the past without raising any objection.

Conclusion

This case illustrates the criticality of notice of claim provisions in construction contracts. Besides reaffirming the need for a timely notification, the decision makes an important distinction between discussing the circumstances giving rise to a claim and actually notifying (pursuant to a contractual provision) an intention to make a claim. Under this approach, contractors have to comply strictly with the contractual notice requirements and cannot rely on an employer's constructive or even actual knowledge of a potential claim event to avoid their notification duties.

Although the Glen Water case did not concern a standard form of contract, the way in which the court addressed the notification issue will be relevant to standard forms that use time bars, such as NEC3 and FIDIC.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Written by:

White & Case LLP
Contact
more
less

White & Case LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.