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a) Whether the Contractor is entitled to be paid additional monies in respect of the removal of the asbestos and, if so, what the basis of the valuation should be.

In this paper, you are required to create a report in which entails an advice to the Contractor in relation to the contractual position in terms of different situations such as the Contractor is entitled to be paid additional monies, the Contractor is entitled to an adjustment to the Completion Date, the Contract Administrator’s response to the request for an extension of time and loss, etc.

Instructions 

Assessment Scenario & Task Scenario:

Nae Pasaran Construction Limited (“the Contractor”), submitted a tender on 22 February 2018 to BigBeat Developments Limited (“the Employer”) for the refurbishment and fit out of the former E Griffiths Hughes Chemical Works (“the Works”) built in 1915 on Peru Street in Salford (“the Site”).

Following negotiations with a number of stakeholders and perspective tenants, full planning permission for a £60m conversion to transform the venue into an entertainment complex to be named “Tokyo 2020” which would include: a theatre, a 1970’s themed discotheque, restaurants, and bars (whilst retaining the existing façades and most of the original features) was granted.

Following a tender evaluation process the Employer advised the Contractor that their tender was likely to be accepted subject to the Employer getting finance in place. The Contractor commenced the Works on the Site upon receipt of a letter of intent dated 01 April 2018 from the Employer which stated:

“It is our intention to enter into a contract with Nae Pasaran Construction Limited for the refurbishment of the former E Griffiths Hughes Chemical Works. The refurbishment is to commence immediately with the strip out and enabling works (“the Soft Strip”) in accordance with the drawings and specifications attached to this letter. On condition that you take full responsibility for all unforeseen work during the validity of this letter of intent, you will be paid on a cost-plus overheads (8%) & profit (4%) basis. You should immediately mobilise to site and proceed regularly and diligently. The Guaranteed Completion Date is crucial to this project and we must open the complex at noon on 24 July 2020 to coincide with opening ceremony of the XXXII Olympiad in Tokyo, Japan”. On 27 July 2018 a JCT 2016 Standard Building Contract With Quantities (SBC/Q) form of contract (“the Contract”) was signed by the Employer and the Contractor in respect of the Works. Incorporated into the Contract Documents was a Refurbishment / Demolition Asbestos Containing Material Survey (“the Asbestos Survey”) which confirmed that whilst asbestos had been identified in the existing structure, following the stripping out of the asbestos by a specialist asbestos removal contractor (“Sedate”), all asbestos had been eliminated and the Site was certified as being “fit for reoccupation”. Included in the Contract Particulars was a Date for Completion of 23 July 2020 and the following provisions relating to liquidated damages: “...liquidated damages are £200,000 for the first day and then £20,000 per day for every subsequent day thereafter…” On 14 May 2018 the Contractor uncovered material in the basement of the Site which appeared to be asbestos. The Contractor’s construction manager immediately stopped work in the affected areas of the Site and requested an instruction from the Contract Administrator who issued a written instruction requiring the Contractor to immediately arrange tests on the suspect material and to then “…remove all asbestos containing material in order that the Works can be completed by the Date for Completion…” At the request of the Contractor, Sedate attended the Site and confirmed that the suspicious material contained asbestos fibres. Sedate advised the Contractor that due to the nature and location of the asbestos containing material they would only be willing to carry out the safe removal of the asbestos for the Contractor on a dayworks basis. On 27 July 2018, the Contractor gave notice to the Contract Administrator in requesting an extension of time and payment of loss and expense in relation to delays and disturbance to the regular progress of the Works arising as a consequence of the asbestos issues. By the time the asbestos containing material had been removed a critical delay to the Date for Completion of 10 days had occurred. At a subsequent site valuation, the Contractor’s graduate quantity surveyor included an item under the Variation section for the removal of the asbestos based upon daywork sheets signed by the Clerk of Works. Assessment Information/Brief 3 The Quantity Surveyor rejected the valuation of the asbestos removal on a dayworks basis and referred to a clause contained in the Preliminaries section of the Contract Bills which stated: “…No work will be valued on a daywork basis unless written notice of the commencement of daywork is given to the Employer…” The Quantity Surveyor pointed out that whilst notices in relation to extensions of time and loss and expense were submitted by the Contractor no such notice relating to dayworks was given by the Contractor. After completion of the Works the Contractor received a letter from the Contract Administrator responding to the Contractor’s request for an extension of time and loss and expense in relation to the asbestos matter which stated. “…I refer to your requests for an extension of time and loss and expense relating to the discovery of asbestos. Whilst I am sympathetic to your predicament I have been reminded by the Employer’s commercial director that you were aware at the time of entering into the Contract that there was asbestos in the basement. I am therefore advised that you accepted the time and money risk associated with this problem when you signed the Contract. In the circumstances I have no alternative but to reject your requests for an extension of time and loss and expense. Accordingly, as the Works achieved practical completion 10 days after the Date for Completion I have advised the Employer to deduct liquidated damages in the sum of £380,000 from your final payment…” The Contractor has recently discovered that name of the venue is now to be called “Ramoaners 2020”.

Task:

You are required to prepare a report of 2,500 words in length (the word count excludes references, bibliography and cover sheet) which provides advice to the Contractor in relation to the contractual position with regard to the following:

a) Whether the Contractor is entitled to be paid additional monies in respect of the removal of the asbestos and, if so, what the basis of the valuation should be.

b) Whether in principle the Contractor is entitled to an adjustment to the Completion Date and to payment for loss and expense in respect of the discovery of asbestos.

c) Whether the Contract Administrator’s response to the request for an extension of time and loss and expense satisfies the obligations placed upon the Contract Administrator under the Contract.

d) What the position is with regard to the proposed deduction (and level) of liquidated damages.

Your advice should be fully supported by reference to the relevant provisions of JCT SBC/Q 2016 together with relevant cases and any authorities in statute (if any) which should all be cited and referenced in accordance with the Harvard (APA 6th) style of referencing. Please also include separate lists of all cases and / or statutes (if any) referred to in alphabetical order.

On successful completion of this assessment, you will be able to:

Knowledge and Understanding

1. Demonstrate a theoretical and practical understanding of the reasons why disputes arise in the construction industry and the various mechanisms for avoiding and resolving them.

2. Explain the various principles of substantive law which are relevant to disputes in the construction industry.

3. Demonstrate an understanding of how these legal principles influence professional practice within the industry.

4. Apply relevant principles of law to a range of problem scenarios and provide articulate and logical solutions.

5. Critically evaluate the appropriateness of current professional practice in the context of relevant legal rules and identify areas requiring reform.

Transferable Skills and other Attributes

1. Become a confident, independent learner.

2. Develop further competence in the use of a range of legal (and sometimes non-legal) research sources, in both paper and electronic format.

3. Demonstrate the ability to communicate in writing and in a professional, ethical and unambiguous fashion.

4. Appreciate the broader context, legal, economic and social, within which disputes arise.

5. Solve practical problems through the application of authoritative rules of law, both substantive and procedural, with an awareness of the relationship with other areas of law


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