By Dr Samer Skaik
What happens when a contractor is blamed for missing items, NCRs remain unresolved, and an Engineer refuses to issue the Taking-Over Certificate—even after the Employer starts using the facility? This real-world scenario raises important questions about contractual liability, document precedence, and possession under FIDIC 1999.
In this post, we examine a case involving a partial handover, missing panels and modules, and lingering Civil Defense approvals. By referencing key clauses of FIDIC 1999—along with an important modification to Clause 1.5 in the Letter of Acceptance—we’ll clarify who bears what responsibility, and how contractors should respond.
1. Background: A Fire Tank, an NCR, and a Refused TOC
In this case, the Employer took over and began operating a completed fire tank in September 2024, acknowledging a snag list to be resolved during the Defects Liability Period (DLP). Later, the Engineer raised an NCR (Non-Conformance Report) and refused to issue the Taking-Over Certificate (TOC) due to three comments:
-
Comment 1: Missing control station panels for the fire alarm system
-
Comment 2: Omitted module listed in the BOQ but not shown in drawings
-
Comment 3: Civil Defense requirements not fully met
The contractor disputed these points—and rightly so.
2. Document Priority Modified by the Letter of Acceptance
Normally, FIDIC 1999 Clause 1.5 provides a general hierarchy for interpreting contract documents. However, in this project, the Letter of Acceptance specifically modified Clause 1.5, giving the Bill of Quantities (BOQ) priority over drawings and specifications. This is a crucial contractual change, and it has significant implications.
3. Who’s Liable for the Missing Materials?
✅ Control Station Panels (Comment 1):
The panels were clearly listed in the Electrical BOQ. Given the modified Clause 1.5, the BOQ now takes precedence—even over drawings and specifications. This makes the contractor responsible for the supply of the panels, regardless of whether they were shown in drawings.
Even if the panels were considered free-issue materials, Clause 4.20 obligates the contractor to verify and report any visible issues upon receipt. In either case, the responsibility remains with the contractor.
✅ Missing Module (Comment 2):
The module was also listed in the BOQ but missing from the drawings. Under the standard FIDIC hierarchy—and especially with the modified Clause 1.5—the contractor is contractually bound to supply it. No additional payment is due, since the BOQ governs the scope.
4. Civil Defense Approvals: Contractor or Employer?
Comment 3: Responsibility for Approvals
While national regulations may place Civil Defense approval on the Employer, the contract explicitly delegated this duty to the Contractor. Under FIDIC, responsibilities may be shifted contractually. Therefore, the contractor remains responsible for securing all statutory approvals, including those from Civil Defense authorities.
5. Can the Engineer Withhold the TOC?
Despite unresolved NCR comments, the Engineer is not entitled to withhold the TOC once the Employer has taken over the works. According to Clause 10.2 of FIDIC 1999, the TOC is deemed to be issued when the Employer assumes possession or begins using any part of the works.
In this case, the fire tank has been operational since September 2024, and the snag list was acknowledged. Outstanding NCR comments should be rectified during the Defects Liability Period (Clause 11.1)—not used as justification for withholding the TOC.
6. Key Takeaways for Contractors
Understand Your Document Hierarchy: If the Letter of Acceptance modifies Clause 1.5, the BOQ may override other documents—even drawings.
Treat Free-Issue Materials Carefully: If listed in the BOQ, you may still be liable—even if they come from the Employer.
Check for Delegated Responsibilities: Even legal obligations (like Civil Defense approvals) can be passed to the contractor contractually.
TOC Can’t Be Delayed Without Grounds: If the Employer takes over and starts operating, the TOC is automatically in effect under Clause 10.2.
Conclusion:
Contractors must remain vigilant about contractual amendments—especially those buried in the Letter of Acceptance. In this case, modifying the priority of documents gave the BOQ a commanding role in defining scope. Understanding that change helped clarify liability, resolve NCR disputes, and support the rightful issuance of the TOC.
When disputes arise, the key is to return to the contract—and its modifications—to assess your rights and obligations clearly.
Need Help Interpreting your contract?
At CMGuide, we help construction firms untangle contractual obligations and prepare or defend construction claims under FIDIC and other standard contracts. Contact us at admin@cmguide.com.au or visit cmguide.com.au to learn more.