Chapter 4 Time bars
It is common for construction contracts to include detailed notice provisions which require a claim to be submitted within a specified timeframe. It is also common for construction contracts to include provisions which say that any failure to submit a claim within a particular timeframe will be barred from bringing any further claim. These provisions are known as ‘time bars’. Time bars are further detailed in our Chapter 11.
CMA Assets Pty Ltd v John Holland Pty Ltd [No 6]  WASC 217
- John Holland subcontracted CMA to demolish and remove several structures that formed part of a wharf at Finucane Island.
- CMA claimed that its work was delayed by, among other things, the extent of reinforcing required in the berthing dolphins.
- CMA claimed a variation for the new demolition methodology necessitated by the reinforcing required in the berthing dolphins.
- CMA did not submit any notices of delay or claim for an extension of time.
- The court held that the clause which provided timeframes to submit a claim for delay was clearly drafted so that compliance with the time bar was a pre-condition to any entitlement to an extension of time. Given that CMA did not comply with the strict requirements of the subcontract, CMA lost its entitlement to claim an extension of time.
- John Holland was entitled to reject CMA’s claim.
If the principal does not follow the process under the contract, a contractor may be entitled to a claim for a variation in circumstances where a principal, through its conduct, has foregone or waived strict compliance with and is precluded from asserting that it has not waived compliance (i.e. the principal is ‘estopped’). For example, the principal may waive strict compliance with notice provisions such that the contractor is not required to comply with the relevant time periods as to when a claim for a variation is to be issued.
The case CMA Assets Pty Ltd v John Holland Pty Ltd (No 6)  WASC 217 above sets out the relevant principles for establishing waiver and estoppel:
- the contractor and the principal acted on the basis of an underlying assumption of fact, law, or both which was certain and enforceable (the assumption);
- the contractor and the principal had the knowledge that they expressly or by implication accepted the assumption as being true for the purposes of the transaction;
- that acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them;
- the contractor was entitled to act and has, as the principal knew or intended, acted in reliance upon the assumption;
- the contractor would suffer unfairly if the principal were allowed to depart from the assumption; and
- in all the circumstances it would be unconscionable to allow the principal to depart from that assumption.
If the contractor can successfully establish that the principal has waived compliance with the provisions under the contract, a contractor could argue that the principal is precluded from relying on the provisions in the contract.