Lenient Approach to Conditions Precedent

Obrascon Huarte v HM Attorney General for Gibraltar [2014] EWHC 1028. TCC Akenhead

Facts

Obrascon was carrying out a major contract for a road tunnel under the Airport for the Government of Gibraltar.  Delays occurred and the Contractor sought an extension of time.  Clause 20.1 of FIDIC Yellow Book required the Contractor to give notice to the Engineer describing the event or circumstance giving rise to the claim “as soon as practicable and not later than 28 days after the contractor became aware or should have become aware of the event or circumstance“.

Clause 20.1 goes on to say that if the Contractor fails to give notice of a claim within the period 28 days then time for completion shall not be extended, also the Contractor shall not be entitled to additional payment, and the employer should be discharged from all liability in connection with the claim.

Held

1. The Judge stated (at paragraph 312) “I can see no good reason why the clause should be construed strictly against the Contractor and (rather) can see reason why it should be construed “reasonably broadly”, given its serious effect on what could otherwise be good claims.”
2. Nevertheless the Judge was not impressed by the information produced by the Contractor and found that on the facts he was only entitled to 1 day’s extension.

Comment

Mr Justice Akenhead is one of the most important and active TCC judges sitting on major construction disputes.  He decided that contractor’s awareness for notifying purposes would be broadly interpreted.  Lateness in notifying was for the Employer to prove (313).  He has given clear indication that the current trend to use conditions precedent harshly against contractors to defeat what would otherwise be good claims is increasingly risking judicial hostility. In Multiplex v Honeywell Mr Justice Jackson held that conditions precedent could be a useful and legitimate administrative device.  It seems that parties should be careful however to abusing such clauses.

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