Construction Law/claim

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Question
QUESTION: Dear Sir,

Our Subcontractor has a claim and it is under dispute, and he is producing a information metioning as it is for your reference showing income and outcome difference in value some 10 millione and 13 million in subsequent monthwise since last two months, my question is there any contractual impact of such information logically, since in Contract nothing is there to know any loss or profit of subcontractor.

Please advice

Regards

Mujtaba

ANSWER: Dear Mujtaba,

Thank you for this question.

It is very difficult to answer such a query without knowledge of the subcontract and of the claims being made. My comments at this time are, therefore, somewhat limited.If you have further information I will be happy to consider such and advise further.

As your subcontractor has submitted a claim the starting point is whether or not the claim is valid. If the claim is not valid, that is there is no legal or factual basis for the claim under the subcontract, the question of evidence to support an assessment of quantum is irrelevant.

Proceeding on the assumption that the claim has some validity, the evidence that the subcontractor presents to support its claim is at its own choosing. If the evidence is considered incomplete or inadequate then you can make a request for such further information as is reasonably required.

If I understand the question correctly, the subcontractor is indicating a loss in the period (monthly) of 3 million (I am unaware of the currency of payment for the contract). Of itself this information is not sufficient to demonstrate entitlement as it does not link the claimed losses to the events; nor does it attempt to establish that the loss was reasonably incurred. From your narrative I do not think this is a purely loss of profit claim, but your confirmation of this would be appreciated.


I hope that this assists you.

Kind regards,
John Dowse

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---------- FOLLOW-UP ----------

QUESTION: Please I quoted the contents of the letter " Reference with  the above subject we hereby inform you that we made huge loss amount of Sr ________ accrual basis as of 31st October for your reference"

in fact the statment of loss and profit is irrelevant with claim amount that's make me surprise whats the reason to send such information to Contractor, the calim is subject is for loss of productivity loss which has not included here, Its look like its just information to contractor that till date subcontractor has faced so much loss in subsequent 2 months, I would like to stop such statements/letter when Contractor has nothing to do with Subcontractor's loss and profit!

Please verify it
Regards
Mujtaba

Answer
Dear Mujtaba,

Thank you for this additional information.

It is for the sub-contractor to demonstrate it has suffered a loss and that the loss was caused by or is otherwise attributable to the Contractor. As a general principle, if the Contractor is delayed by the Employer and the subcontractor also suffered delay, then the Contractor becomes liable for the subcontractor's loss. Even if the Employer does not cause a delay but the Contractor delays the subcontractor, then the Contractor is still liable to the subcontractor. Only if the subcontractor caused the loss by its own actions/inaction will the Contractor not be liable.

I agree that it is insufficient evidence of a loss merely to show that costs exceeded income; however before dismissing the evidence that is presented to you I suggest that you consider whether the subcontractor is capable of formulating a claim for itself, or whether it should be guided to engage a resource which can assist it in preparing a claim.

In many cases, acting for the Contractor I have, when faced with an unsupported claim from a subcontractor which I knew to have some merit, worked with the subcontractor to produce sufficient evidence. This is helpful to the Contractor not only in progressing the project but also in building sufficient evidence to make its own claim against the Employer.


I hope that this assists you.

Kind regards,
John Dowse


Follow me on Twitter: @CernoOrg
For my regular industry newsletter e-mail to info@cerno.org, stating SUBSCRIBE in the subject line

Training and consulting services are available, bespoke to companies and individuals.
John Dowse can be contacted by e-mail to info@cerno.org (When e-mailing, please include “AllExperts” in the subject line.)

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John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

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