The old adage, “the early bird catches the worm” is often applied in our day to day lives and is equally relevant in application to the construction industry. When dealing with claims, it’s always best to prepare thoroughly, to be ahead of the game and anticipate what you need to do to strengthen and reinforce your position when motivating and proving your claim, such as for example, the keeping of contemporary records of events and the surrounding circumstances that gave rise to the claim in question. “He who has the records wins!”
The need for contemporary records and questions regarding such
Under Clause 20.1 in the FIDIC Red Book¹ when regarding the Contractor’s claim; “The Contractor shall keep such contemporary records as may be necessary to substantiate any claim, either on the Site or at another location acceptable to the Engineer. Without admitting the Employer’s liability, the Engineer may, after receiving any notice under the Sub-Clause, monitor the record-keeping and/or instruct the Contractor to keep further contemporary records.
The Contractor shall permit the Engineer to inspect all these records, and shall (if instructed) submit copies to the Engineer.” (Emphasis added).
In the matter of NIPDEC v NHIC², some questions of law were raised by the arbitrator. The questions were, among others, as follows:
“1) Whether on a true construction of clause 20.1 of FIDIC: “Contemporary records” means in clause 20.1, records produced at the time of the event giving rise to the claim, whether by or for the contractor or employer?
2) Whether on a true construction clause of the FIDIC: where there are no contemporary records, the claim fails?”
Both questions were discussed and answered by the arbitrator and the court’s decision is discussed below.
The definition of contemporary records
In order for the contractor to keep contemporary records, there first needs to be an understanding of what “contemporary records” actually means. Defined in the Collins dictionary, ‘contemporary’ is “living or occurring in the same period of time”. The definition of ‘records’ is “an account in permanent form especially in writing, preserving knowledge or information about facts or events”3 . In the NIPDEC matter, what contemporary records meant was discussed in order to establish the true intent and meaning in accordance with the FIDIC contract. When the separate meanings of each word are combined, we understand that contemporary records are the written or permanent form of knowledge which has been recorded contemporaneously with the events giving rise to the claim. Therefore, there must be a certain degree of “contemporaneity”4 meaning that there has to be sufficient connection between the information and the events to which it relates5.
Keeping contemporary records
As stated in clause 20.1 it is the contractor who is responsible to keep the records. The clause neither discusses the origin/purpose of these contemporary records nor from whom they are necessarily to be sourced. The main factor discussed is that contemporary records belonging to either the contractor or employer, are records that help motivate and quantify a contractors entitlement to claim regardless of how they were created or from whom they are received at the time of the event in question giving rise to the claim as well as how or by whom they were created 6.
A question which no doubt will have occurred to the reader, is whether or not your claim will fail if there are no contemporary records kept to substantiate your claim? As stated in clause 20.1, the engineer inspects such records that the contractor has kept readily available7. In regards to the insufficient reports affecting your claim, NIPDEC stated, “Failure by a contractor to keep such records does not prevent recovery on the claim but is to be taken into account in its assessment insofar as it may have prejudiced or prevented a proper investigation of the claim”8. Therefore the lack of contemporary records in itself does not cause the claim to fail9.
In answering question 2 of the NIPDEC case, the court held that contemporary records are evidential documents regarding the event or circumstance in question. Clause 20.1 also sets out that in a claim for any extension of time and/or additional payments, the contractor has the responsibly to give such notice to the engineer with a description of the event or circumstance giving rise to the claim within a time period of 28 days of the contractor becoming aware of such. If this has been ignored then there shall be no liability on the part of employer10. The arbitrator (in the NIPDEC matter) was of the view that the 28 day notice period was a condition precedent to recovery but that failure to comply with the other requirements under the clause was not and would accordingly not lead to failure of the claim11.
These different breaches are treated separately. Failure to comply with the 28 day notice period results in the contractor losing the right to make the claim.
Failures regarding other requirements such as
- “a) the keeping of contemporary records;
- b) allowing inspection of those records by the engineer and
- c) providing a detailed claim at least 14 days after the initial notice
are only to be taken into consideration insofar as it may have prejudiced a proper investigation of the claim. In other words, these only apply in the stage of assessment12.” If particulars (i.e., the contemporary records) substantiate only part of a claim then the claim will be reduced accordingly13.
In order for a claim to have a solid foundation, contemporary records are vital to your success. Integrating these records together with a retrospective delay analysis and a cause and effect matrix is our recommended methodology for presenting both a claim motivation as well as quantification.