MDA Law
Northern Ireland Housing Executive v Healthy Buildings (Ireland) Limited (2014) NICA 27
Facts:
This case involved an appeal by the employer against the decision of a lower court and an adjudicator in relation to an NEC3 professional services contract for the surveying of properties in Belfast and the north east region for asbestos. Two issues were addressed by the court. Firstly whether the employer issued an instruction under the contract increasing the scope, and secondly, if such an instruction was issued, was the consultant time barred from pursuing a compensation event.
- The contract contained a detailed specification setting out how the asbestos survey should be carried out by the consultant, permitting (subject to the meeting of certain requirements) the consultant to make presumptions regarding the presence of asbestos.
- At a meeting at the outset of the contract the employer instructed the consultant that the survey should not be based on presumptions and that all properties should be properly surveyed and tested.
- The consultant issued a notice of compensation event some four months later claiming that the instruction given at the meeting and appearing in the minutes amounted to an instruction to change the scope / services which required increased surveying and testing resources when compared to what had been originally allowed for.
- There was no dispute that the instruction as appearing in the minutes of meeting was a valid instruction under the contract. Rather the dispute (insofar as the first issue was concerned) centered around whether or not the instruction gave rise to additional services or whether it was an instruction envisaged under the scope of services attached to the contract.
Argument:
- With regards to the first issue the consultant argued that it had priced the services based on it being able to make presumptions in relation to the surveyed properties. The employer’s position was simply that the instruction did not change the scope of services and could be interpreted as having been given in relation to the specification. The consultant alleged that compliance with the instruction would require approximately twice the resources than tendered for.
- In relation to the second issue the dispute centered on the interpretation of the provisions of clause 61.3 which make provision as follows: “If the Consultant does not notify a compensation event within eight weeks of becoming aware of the event, he is not entitled to a change in the Prices, the Completion Date or a Key Date unless the Employer should have notified the event to the Consultant but did not.”
- The employer’s argument was premised on the “clear commercial purposes behind the contractual provisions” requiring early notification of compensation events requiring that events be dealt with as they arise. The employer stated that the contractor should not be allowed to keep compensation events “on his back pocket” and, as it was clear that the employer did not see the instruction as one giving rise to a compensation event, should still have notified such event within the original eight week period.
Judgment:
- The court of appeal found that the instruction given to the consultant at the meeting amounted to an instruction changing the scope of services and therefore gave rise to a compensation event under the contract.
- With regards to the notification of the compensation event, the court found that the language was clear and unambiguous and that the employer should have notified a compensation event but did not. This being the case the compensation event could not be time barred.
