Court decision reinforces need for Australian contractors to comply with notice requirements for extension of time claims

In the case, BSF and HCPS were engaged to develop and construct, respectively, a solar farm and a gas fired power station in the Northern Territory on or before 1 July 2021. Both contractors submitted three EOT claims each between 20 April 2021 and 5 August 2022, totalling 865 days between them. 

In November 2022, Rimfire issued an invoice for liquidated damages, rejecting each of the EOT claims for failure to comply with notice requirements, specifically under Clause 5 of the contract which required BSF and HCPS to provide (among other things) “detailed particulars of the Extension Event” and identify “the consequences or the likely consequences of the delay.” 

The EOT claims issued by BSF and HCPS each noted that the extension event had been due to “connection works delay” caused by the electricity network operator, PWC. Under the contract, connection works delay was only valid as an extension event “to the extent such delay is not caused by the EPC Contractor” or “the Owner [the party claiming the EOT]”. 

The Court, concerned with the specific contractual requirement to allow Rimfire to assess the EOT claims, was not willing to accept on face value statements that the delay was not attributable, even in part, to the parties making the claims and noted that “the absence of any explanation, supported by evidence, that the delay claimed was not a delay caused by the EPC Contractor or the Owner is fatal to the respondents’ submissions and to the validity of the EOTs”. 

“The simple fact of the matter is that one looks in vain for evidence, anywhere in the EOTs or in any of the correspondence that accompanied or surrounded them, of the extent to which the delay claimed was not caused by the EPC Contractor or the Owner,” the Court said.

“The mere fact that the EOTs and surrounding correspondence mentioned delays by PWC was not sufficient to satisfy (or obviate) the further requirement to explain how or why those delays were not in turn caused by the relevant EPC Contractor or Owner. In cases such as the present, where the parties to an infrastructure project must coordinate between themselves to progress a significant number of iterative tasks in parallel, there is a clear need to identify precisely how or why a delay by one party is not ultimately attributable to, or caused by, the failures of another party.”

Gemma Thomas, an expert in construction disputes at Pinsent Masons, said: “This case serves as a timely reminder to contractors to tick off the checklist of requirements specified in their contract when seeking extensions of time.” 

“To avoid repeating the mistakes of BSF and HCPS, contractors should ensure that precise identification of the extension or delay event, including any available evidence of the event, is recorded in the relevant notice and that the claim includes particulars or evidence that shows the delay was not caused by the contractor seeking the EOT,” she said.

“Contractors should also ensure that notification is given as soon as the contractor becomes aware of the event which might reasonably be expected to result in delays and that the claim includes sufficient information to enable the principal, or superintendent, to readily assess the claim”