By Dr Samer Skaik
In the construction industry, disputes often arise when the Employer occupies or uses part of the works before the formal Taking Over Certificate (TOC) is issued. This situation can create challenges for Contractors, especially regarding their rights and obligations. This blog post addresses the Contractor’s remedies when such an occurrence happens, guided by FIDIC 1999 provisions.
Context and Key Dates
In a hypothetical scenario, the Contractor issued a notice for handing over part of the work on 15th October 2023. The Engineer agreed to initiate the TOC process for Section 1 on 1st November 2023, contingent upon the submission of as-built documents as required by the Particualr Condictions of the contract. The Contractor partially provided these documents in April 2024. Despite sending reminders in December 2023 and January 2024 to expedite the TOC issuance, the Engineer had not yet issued the certificate. On 10th January 2024, the Employer took over the keys and began using part of the work, but no official TOC was issued. The Contractor believes this premature use resulted in additional costs, particularly related to an extended Defects Liability Period (DLP).
Contractual Framework and Obligations
Under the Particluar Conditions of the contract, Clause 10.1 was amended to impose oblgiatinos on the Contractor to hand over as-built documents before receiving the TOC. However, once the Employer begins using part of the works, as per Clause 10.2, that portion is deemed to be taken over as of the date of occupation or use. This shift in responsibility implies that:
- Responsibility Transfer: From the date of occupation (10th January 2024), the responsibility for the care of that part of the works transfers from the Contractor to the Employer. The Contractor is no longer liable for the maintenance and security of that section.
- TOC Issuance: Although the TOC was not issued formally, the use of the works by the Employer can be treated as a form of taking over. The Contractor may request the Engineer to issue a TOC for the portion of work already occupied by the Employer. This request is justified since the prerequisites for issuing the TOC, as outlined in Clauses 4 and 10.1, become irrelevant once the Employer has taken possession of the works.
Remedies for the Contractor
If the Contractor incurs additional costs due to the Employer’s premature use of the works, the Contractor is entitled to certain remedies:
- Notification and Claim: According to Clause 10.2 and Sub-Clause 20.1 of FIDIC 1999, the Contractor must notify the Engineer of any additional costs incurred due to the Employer’s early occupation. These costs can include expenses related to an extended DLP or any other consequential costs not covered by the initial contract.
- Compensation for Costs: The Contractor is entitled to compensation for these additional costs plus a reasonable profit. This provision ensures that the Contractor is reimbursed for any extra expenses incurred due to the Employer’s actions, beyond what was originally anticipated in the contract.
Key Points to Remember
- Immediate Actions: The Contractor should document and report any extra costs resulting from the Employer’s early use of the works promptly to the Engineer.
- TOC Request: Even if the TOC has not been issued, the Contractor can still request its issuance for the occupied section.
- Cost Recovery: Ensure that any additional costs incurred due to the premature use of the works are properly quantified and claimed as per the provisions in Clause 10.2 and Sub-Clause 20.1.
By understanding and leveraging these provisions, Contractors can better manage the challenges associated with the premature use of works and ensure they receive appropriate compensation for any additional costs incurred.