Citation(2000) 12 SAcLJ 456
Published date01 December 2000
Date01 December 2000

1. Owners’ Architects/Engineers (A/Es) in all countries habitually delay reaching extension of time decisions until a very late stage of the project, or even after completion (the threat to impose liquidated damages being frequently used in hard-nosed negotiations with the contractor over other disputed matters). This is grossly unprofessional, as well as unfair to contractor and client alike. The contractor needs to know where he is on an extension of time application at a relatively early stage, so as to balance the cost of recovering lost time against the possibility of suffering liquidated damages when deciding, in the event of an adverse decision, whether or not to re-programme the work and recover the delay; while in a genuine case of delay the owner is entitled to the protection of an early liquidated damages deduction from payment certificates as they become due before eventual practical completion. On the other hand, there is also considerable hypocrisy (often concealing an agenda designed to overturn the liquidated damages provisions altogether) underlying many contractor complaints of delayed A/E extension of time certifications, since such delays are often very welcome in real life to contractors whose progress has been bad by postponing any immediate threat to their cash flow. Attention to these various opposing background factors has been drawn in Hudson1. These same considerations inevitably pose real difficulties for draftsmen of construction contracts (which, as in other matters, are frequently not resolved with conspicuous success). This same background can obviously also justify findings of waiver, by one or other party, of the strict contractual notice and time requirements.

2. The scheme of the Singapore Institute of Architects (SIA) Contract in this situation is to require an initial application by the contractor giving notice of a delaying event within 28 days of its occurrence (unless the architect has previously indicated an intention to extend time). This initial notice is required by clause 23(2), and is expressed as a condition precedent for obvious practical reasons. The architect is then required to reply signifying his “in principle” acceptance or rejection of the application within a further month (this, not expressed as a condition precedent, will serve to alert the contractor to the likelihood of rejection and so enable him to decide between his various programming options). Clause 23(3) then requires a later “as soon

as” decision by the A/E on the length of each individual ground of extension (again not expressed as a condition precedent), and finally a “roll-up” so-called “Delay Certificate” giving a final extended completion date as soon as the last period of extension has expired and the work should be complete. This last is a condition precedent for liquidated damages to be deducted from any later payment certificate. As is by now well-known, the SIA Contract in the general payment context opts for a tightly regulated system of “temporary finality”, designed to enable contractors to obtain summary judgment without argument on interim certification, subject only to expressly permitted set-offs and later arbitration or litigation2.

3. These “temporary finality” and liquidated damages provisions have been interpreted (and in the writer’s opinion correctly and sensibly applied in accordance with the contract spirit and intention) by the Singapore Courts in three recent cases where the Delay Certificate was in two cases issued at a very late stage in circumstances suggesting tactical motivations of owners or their A/Es in response to claims for substantial sums due on outstanding interim certificates. Thus in Tropicon Contractors Pte Ltd v. Lojan Properties Pte Ltd3 contractors, more than two years after eventual completion, claimed summary judgment in September 1987 on twelve unpaid certificates. Two months later the architect issued a whole new set of seventeen interim certificates disallowing previously granted extensions of time on the ground of failure by the contractor to give the initial notices in time, and notionally deducting sums by way of liquidated damages in those new certificates, while also issuing a Delay Certificate and a new general monetary certificate showing a net sum due to the employer after allowing for the resulting liquidated damages. On the basis of its now revised...

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