Setting the record straight

Larry Lin discusses the importance of preparing

Larry Lin.
Larry Lin.

Larry Lin discusses the importance of preparing contemporary records to support claims.

Is it possible to avoid claims in a construction contract? In reality, no. However, there may be a contract whereby the contractor does not make any claims and so such a contract can be finalised without any claims.

Claims can originate from many different areas under a contract. They are generally for additional payment or additional time to complete.

 

In all cases, the contractor is obliged to notify the engineer/employer that a claim is being made and thereafter the contractor has to submit contemporary records to substantiate the claim further.

For example, in the Fidic Red Book, Clause 20.1 – Contractor’s Claims, states that after notifying the engineer of a claim, the contractor shall keep such contemporary records as they may be necessary to substantiate any claim. The engineer may monitor the record keeping and/or instruct the contractor to keep further contemporary records.

But what does ‘contemporary records’ mean? The word ‘contemporary’ is defined as ‘living or occurring at the same time’ in the Oxford English Reference Dictionary.

Accordingly, it can be implied that ‘contemporary records’ are records that occur at the same time when any event or circumstance gives rise to a claim.

While there have been many cases of claims being contested and terms of contract being interpreted in courts, it is surprising to learn that the term ‘contemporary records’ has not been reviewed in any English courts.

However, in the Falklands, these two words were being considered by the Supreme Court of the Falkland Islands, in the case of Attorney General for the Falkland Islands v Gordon Forbes Construction.

The case was brought by the Attorney General, who made an application for a point of law to be determined under an arbitral action. Essentially, there was a dispute concerning a construction contract between the government and the contractor over an infrastructure project in the Falklands.

In accordance with clause 53.2 of the Fidic 4th edition, it requires the contractor “shall keep such contemporary records as may reasonably be necessary to support any claim. Without necessarily admitting the employer’s liability, the engineer shall inspect such contemporary records and may instruct the contractor to keep any further contemporary records as are reasonable and may be material to the claim of which notice has been given.”

The proper interpretation of the terms ‘contemporary records’ in clause 53.2 became an issue during the arbitral proceedings. As the contractor was unable to provide the contemporary records to support his claim, the contractor submitted that in order to “fill the gaps”, witness statements were to be introduced as evidence.

The Attorney General disputed such argument and requested the arbitrator to rule against the admittance of such witness statements in lieu of contemporary records.

Feeling uncomfortably to rule on such issue, the arbitrator gave leave to the Attorney General, under section 45 of the Arbitration Act 1996, to apply to the court for a ruling.

Giving judgment to the applicant, acting judge Sanders held that: “Contemporary records meant original or primary documents, produced or prepared at or about the time giving rise to the claim, whether by or for the contractor or employer.

‘Contemporary records’ does not mean witness statements produced after the time giving rise to the claim where such statements cannot be considered to be original or primary documents prepared at or about the time giving rise to the claim.

Where there is no contemporary record to support a claim, that claim fails.

A witness statement cannot supplement, or be a substitute for, incomplete contemporary records.

Thus, such ruling would serve as a useful reminder for both clients and contractors to prepare ‘contemporary records’ at the right time and not to leave the preparation until there is no substitution.

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