Construction Law/issue in Taking Over Certificate (change in Question)
The Detail of Project is mentioned herein below:
Commencement Date: 13 July 2012
Completion Date: 12 July 2013
Revised Completion Date: 12 August 2013
Total Length of Package/Road: 18.29 km
The Contractor has issued notice to take over the package on 23 July 2013; whereas, the Engineer received the Contractor's Letter/notice on 05 October 2013.
After inspection of road for TOC, the Engineer issued TOC to Contractor on 05 October 2013 and mentioned in certificate that the Works are substantially completed on 05 October 2013.
My Question is that will LD / Delay Damages be imposed on the Contractor for the days between 12 August 2013 to 05 October 2013?
The Contractor was claimed that the road is being in used by the Employer (Commuters / public) before 12 August 2013 as the Contractor was completed the Asphalt Works and mentioned the FIDIC Clause 10.2 (a):
However, if the Employer does use any part of the Works before the Taking-Over Certificate is issued:
(a) the part which is used shall be deemed to have been taken over as from the date on which it is used,
My Question is that If the Contractor is right and the TOC issued on 05 October 2013, how the Contractor will save from LD (if the LD is applicable)?
If Contractor will liable to save form LD then TOC will be revised ?
Kindly guide me in this regards.
Dear Muhammad Ali Raza,
Thank you for this question.
You have not indicated the form of contract governing the project, but I have assumed that it is the FIDIC 1999 Red Book form.
The first point I mist question is why there was such an extensive delay between the Contractor issuing the notice for a Taking-Over Certificate (on 23 July) and the Engineer receiving same (on 5 October 2013). Once that is explained my answer will be more certain and I request you advise me on this point. Until then I can give only general comment on all parts of your question.
If the delay was caused by the Engineer, then the Taking-Over will be deemed to have been 28 days after the date on which the Engineer ought to have received the request given all the circumstances.
Please explain how the notice requesting Taking-Over was communicated to the Engineer.
My second point is that a notice requesting a Taking-Over Certificate should specify the date on which the Contractor considers the Works were ready for Taking-Over. If the Contractor did make that statement the Engineer should give reasons why he considers the Works were not ready at the time of the request and why a later date will apply.
Has the Engineer explained why it has adopted the date of 5 October?
My third point relates to the use of the road from 12 August 2013. Provided that the road was open from that date and traffic was (relatively) unhindered in using the highway, it is likely that a deemed taking-over will have occurred on that date. If this is the case the contractor will be excused LDs or the amount of LDs will be reduced if any are due at all.
Even if the later date of 5 October 2013 applies, the Employer cannot simply charge LDs to the contractor. It must make a claim under sub-clause 2.5 of the Contract and await the Engineer's determination. Only then will the contractor become liable to pay them. The Employer has a discretion to waive the claim and the contractor has a right to dispute any determination by the Engineer.
I hope that this assists you. I look forward to receiving your clarification on the points requested, so that I might revisit the question and my responses.
Follow me on Twitter: @CernoOrg
For my regular industry newsletter e-mail to firstname.lastname@example.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 email@example.com (When e-mailing, please include “AllExperts” in the subject line.)