Contemporary records

It is not often that I will get the opportunity to report a case from the Falkland Islands Supreme Court, but the case of Attorney General for the Falkland Islands -v- Gordon Forbes Construction deals with a point of general interest in the management of claims.

Forbes had entered into a contract with the Falkland Islands government for the construction of the infrastructure of the East Stanley Housing Development in the Falkland Islands. The contract was based upon the FIDIC Conditions of Contract for Works of Civil Engineering Construction, 4th Edition.

Disputes arose between the parties and these were referred to arbitration. During the course of arbitration an issue arose as to the meaning of clause 53 of the FIDIC Conditions. Clause 53 sets out a procedure which the contractor must follow in the event that he intends to make a claim. This clause is reflected in the more recent editions of the FIDIC forms of contract and is also to be found in many other standard forms including the ICE 7th Edition.

Briefly, Clause 53 requires that if the contractor intends to claim any additional payment under the contract, he is required to give notice of his intention to the engineer within 28 days of the event giving rise to the claim.
The contractor is then duty bound to keep such contemporary records as may reasonably be necessary to support any claim he subsequently makes.

The engineer is given rights to inspect those records and to call for further contemporary records. The contractor is then to send the engineer an account giving detailed particulars of the amount claimed and the grounds upon which the claim is based.
Clause 53(4) concludes by saying that if the contractor fails to comply with any of these provisions, his entitlement to payment is restricted to such amounts as the engineer assesses the claim to be worth based upon whatever contemporary records are available.

Purpose of clauses
The entire purpose of clauses such as FIDIC Clause 53 is to provide a disciplined way of dealing with claims for additional payment. Claims have to be notified at the time they arise and contemporary records have to be kept and regular accounts rendered.

The whole contractual system is aimed at the early resolution of any queries at the time the claim arises, with the likelihood that plant, manpower and witnesses are still on site.
The obligations of Clause 53 fall almost entirely on the shoulders of the contractor and the wording of the contract is mandatory ? the contractor ?shall? do these things. The essential substance of such clauses is, therefore, that if there is no contemporary record to support the claim, the claim fails. Unsurprisingly, both the Falkland Islands government and Forbes Construction agreed this interpretation.

Forbes was keen, however, that the court should agree with a clarification. It wanted to produce witness statements which would help to fill in the gaps in any situation where there was a shortfall in the contemporary records.

Before answering that question, Judge Sanders felt it appropriate to clarify what was meant by the term ?contemporary record?. The term is not defined in FIDIC and it has not been the subject of judicial guidance previously.
Judge Sanders concluded the contemporary records meant original or primary documents or copies thereof, produced or prepared at or about the time giving rise to the claim, whether by or for the contractor or employer.

The making of the record does not have to be instant, and whether or not a record was to be regarded as contemporary would depend on the facts surrounding the making of that record. It would, however, be exceptional if any record could be regarded as contemporary if made more than a few weeks after the event.

Judge Sanders concluded that it would be perverse if a contractor who had failed to comply with the terms of the contract should then be allowed to produce non-contemporary records to support a claim, particularly as these could not properly be investigated by the employer at a later date.

The rights of the employer to inspect the records at the time the claim arose were fundamental to the FIDIC procedure.
This fairly strict interpretation leaves little room for contractors to manoeuvre. The requirement to keep good records of activities on site in the event of a claim remains paramount. Judge Sanders confirmed that there are, however, exceptions where witness statements may be brought into play.

If contemporary records are in some way ambiguous or unclear, it would be acceptable for the tribunal to take into account witness statements which seek to resolve that ambiguity or lack of clarity.

Judge Sanders also commented that a valid claim might exist, despite the absence of direct contemporary records, where inferences could be drawn from the existing contemporary records to show that otherwise unsupported parts of a claim were valid.
An example of this would be where the contractor claimed four weeks work by labourers, but the available contemporary records only supported a claim for weeks one, two and four.
It may be reasonable for the tribunal to infer from these records that the contractor continued to provide work for all four weeks and witness statements may be admitted in support of that contention. The tribunal would need to bear in mind however that the burden of proof in all such matters rested with the contractor.

Contract Journal

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