The Importance of Contemporary Records in Contractual Claims

Martyn Forse, Director at QSI Consultancy Group, discusses one of the most recurring issues with contractual claims in the construction industry. He elected to write on the difficulty Contractors often have in producing accurate and succinct contemporary records to support their claims (typically for time and money).  Such records may include; site diaries, minutes of meetings, progress reports, programmes, correspondence (e.g. notices of events), plant records, timesheets, photographs, purchase orders, invoices, and receipts.

“Records; Records; Records”

Like many before me, I would refer to the wise words of the celebrated Solicitor turned Author Max Abrahamson in his book “Engineering Law and I.C.E. Contracts”, first published in 1965, who famously stated that :

“A Party to a dispute, particularly if there is arbitration, will learn three lessons (often too late); the importance of records; the importance of records; and the importance of records.” [emphasis added]

The often quoted (and misquoted) words of Max Abrahamson are, some 56+ years after being first written, highly pertinent today and  relevant to all construction disputes, regardless of the Conditions of Contract that may apply.

Perhaps, the only word to add to Mr. Abrahamson’s famous statement is “Contemporary” [or Contemporaneous] when describing the records that are required in any arbitral proceedings.

In a famous case in the Falkland Islands Supreme Court, namely : Attorney General for the Falkland Islands v Gordon Forbes Construction (Falklands) Ltd (No. 2) [2003] – Citation 6 BLR 280 – a case brought under the FIDIC Conditions of Contract for Works of Civil Engineering Construction, 4th Edition, wherein the Respondent, Gordon Forbes Construction (Falklands) Ltd., contracted to complete building works in 1997 – the submission of “contemporary records” became a major issue which ultimately decided the case.

The Applicant, the Attorney General for the Falkland Islands, applied to the Supreme Court under section 45 of the Arbitration Act 1996, for a determination of a preliminary point of law on the true meaning of Clause 53 of the FIDIC Conditions of Contract and “whether witness statements could be introduced in evidence to supplement the extant of contemporary records.”

It should be explained that, like almost all other standard forms of construction contracts, the FIDIC Conditions of Contract specifically states, under clauses 6 and 53, that a Contractor must keep contemporary records in order to substantiate any claim.

On 14th March 2003, within his judgment Acting Judge Sanders stated, amongst other things, that :  

(1) “‘Contemporary Records’ in Clause 53 of the FIDIC Conditions, 4th Edition, means original or primary documents, or copies thereof, produced or prepared at or about the time giving rise to a claim, whether by or for the Contractor or Employer”. ;

(2) “‘Contemporary Records’ does not mean witness statements produced after the time giving rise to the claim where such statements cannot be considered to be original or primary documents prepared at or about the time giving rise to the claim. ;

(3) “Where there is no contemporary record to support a claim, the claim fails.;

(4) “Where there are contemporary records to support part of a claim, although not its entirety, the claim may succeed on that part of the claim which is supported by contemporary records but not the balance unless inferences can be properly drawn from the extant contemporary records to show that the otherwise unsupported part of the claim is made out.  ;

(5) In drawing such inferences the tribunal may not rely on witness statements to supplement or be substitute for what  contemporary records do not show; but it may rely on them to identify and clarify any points in contemporary records which are either ambiguous or unclear.”

The  Contractor’s Claim failed.

Other forms of contract commonly in use today contain similar provisions concerning the obligation to maintain records. For example, the NEC3 contract that is widely used at Hinkley Point C contains a number of express provisions concerning maintenance of records.  Such as;

  • Option C Clause 52 requires the Contractor to maintain the following records to support recovery of Defined Cost:
  • accounts of payments of Defined Cost
  • proof that the payments have been made
  • communications about and assessments of compensation events for Subcontractors and
  • other records as stated in the Works Information
  • Option C Clause 11.2 (25) – confirms that Disallowed Cost is cost that is “not justified by the Contractor’s accounts and records”

So my advice is to ensure that the project team includes properly trained, experienced and well qualified “Contract Administrators” or, as an alternative, employ a specialist Consultant, at the right time, to carry out the important functions of document management and record keeping.  Document management software systems are readily available in the market to facilitate the maintenance of accurate and auditable records.

I say with this with hope and good will –  and I will end with that famous [or is it infamous?] quote that all good Contract Administrators will understand and appreciate:

“The impossible I do immediately; miracles take a little longer”

Martyn Forse, QSI Consulting Ltd.

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