Advance Notice (Early Warning) Default by the Principal

Since 2013, NZS3910 has made 5.21 Advance Notice or 6.10 Early Warning, popular for judging whether a ‘material’ Variation or Extension of Time claim, validly noticed as a Variation or Extension of Time claim, was also noticed by the contractor “as soon as they become aware of it”.

Inevitably an assessment follows that some obscure particle of related information, known to the Contractor, triggered the Early Warning requirement long before any “in time” Variation or Extension of Time notice was given, lowering the entitlement valuation amount, proportional to the imagination of what is possible to mitigate, had Early Warning been given, “as soon as the Contractor became aware of it”.

The consequences for a Contractor’s failure to provide Early Warning are expressed within the Early Warning clause itself, but no consequence of this kind exists for any failure of the Principal (or their agents). Or does it?

The Principal, has an equal obligation to give Early Warning of Consent issues, Principal Supply issues, anything that in fact will cause ‘Material’ Delay or Cost. The Contractor relies upon full, transparent, and timely disclosure of all relevant information by the Principal.

The objective of early warning is to allow an affected party to mitigate the effects for the benefit of themselves and the other party to the extent reasonable possible. The Principal can direct change to mitigate, the Contractor can reschedule resources, issue notices of Variation and Extension of Time, but only when provided the necessary details, that can only come from the Principal, for a Principal culpable delay.

The party who holds the ‘material’ information strings must;

[1] Complete the information flow without delay under Early Warning notice requirements;

[2] Avoid ambiguity with any related communication including directions which must be clearly labelled Variation with Time Implications. This is important because matters noticed with an Early Warning, over time will change their character, when Directions flow, from those matters originally noticed, due to mitigation decisions. The children Directions from the parent Early Warning Notice, could look like the milk man’s offspring;

[3] Avoid delay in giving due notice. If the Principal issues a Direction on a ‘Material’ Delay Cost matter, and does not expressly state that the direction is a Variation with Time implications, then that is failure to give Early Warning that the Direction itself, will result in ‘Material Delays or Cost of the works, “as soon as the Principal becomes aware of it”;

[4] Failure to give any Early Warning of any information that has a ‘Material’ Delay or Cost implication is an act of prevention, a default that can be subject to the common law Prevention Principal, unless the express terms provide a remedy for the default. In this case NZS3910:2013 clause 6.2.4 or NZS3910:2023 clause 6.3.3; Failure of the Engineer / Administrator / Certifier to properly carry out their duties, allows the Contractor a recourse if the Principal seeks to benefit from their own default. These entitlement provisions reset the clock and allows for all matters to be accounted for, as if the Principal had given due notice of a material matter, “as soon as the Principal became aware of it”, just as the express Early Warning terms treat the Contractor.

If it is ‘Material’, it must be noticed, “as soon as the Principal becomes aware of it”.

The Contractor has like Obligations towards their Subcontractors. Where the information comes from the Principal to the Contractor, the Contractor must advise the Subcontractor of any ‘Material Delay Cost matter “as soon as the Contractor becomes aware of it”. Ditto any subsequent directions must be issued noticed as a Variation with Time Implications.

The Prevention principal is most commonly discussed in the context of extensions of time.

“In its most simplistic formulation, the prevention principle prevents a party, in the absence of clear terms to the contrary, from taking advantage of its own wrong.” [Alghussein Establishment v Eton College [1988] 1 WLR 587.] [Herbert Smith Freehills]

NZS3910’s entitlement to Variation and Extension of Time relief for the Principal’s agent’s failure to properly carry out their duties, is “clear terms” to set aside application of the prevention principal as a common law remedy to prevent the Principal from taking advantage of its own wrong, by, for example, denying a Variation or Extension of Time claim due to lack of notice compliance.

Stating that the Variation and EoT Notice Provisions, are there to remedy any Principal default for failure to meet Early Warning notice requirements, falls down because the Contractor has to fail to give notice in 4 weeks before being timed out, if the Contractor becomes aware of the effects of the Direction at 3.5 weeks and puts notice in for a Variation or EoT, they still miss out on 3.5 weeks of opportunity to mitigate the effects. This highlights that the damage is done from the outset of a failure to warn of ‘material’ matters, “as soon as they become aware of it”.

Does anyone believe a Subcontractor or Contractor would fail to submit a fully compliant Notice of Extension of Time, for a ‘Material’ Delay Cost matter, if they received a Direction labelled a Variation with Time implications, accompanied with all the necessary notice information available to the Principal or Contractor, including revised programme and number of days delayed, that only they can provide for their own culpable ‘Material’ Delay Cost matter?