2022-06-13（265）Engineering law and the ICE Contracts

2. CONTRACTOR RESPONSIBLE FOR THE WORKS “UNTIL 14 DAYS AFTER THE ENGINEER SHALL HAVE ISSUED A CERTIFICATE OF COMPLETION FOR THE WHOLE OF THE WORKS”. This change avoids any problem where the engineer backdates his certificate of completion or the arbitrator holds that the certificate should have been given earlier. It is the actual date of issue of the certificate that is relevant.

The employer will have 14 days from the issue of the certificate to make his own insurance arrangements, and the engineer should warn him (in writing) to do so. The insurers should be informed that the contractor will still be on the site, but is liable for any damage he causes (N. 7).

The requirement in sub-cl. (1) of this clause that the contractor shall take responsibility for the care of the works until “14 days after” certified completion is clear enough not to be affected by the drafting peculiarity that although sub-cl. (2) refers to damage to the works “while the Contractor shall be responsible for the care thereof” it also says that the contractor shall repair such damage so that “at completion” the permanent works shall be in good order and condition. Presumably the contractor must make good immediately any damage occurring in the 14 day extra period after completion. See the next note for a possible insurance problem where the employer takes possession of the works within the 14 day period, unless that is covered by the original policy as it should be.

3. EMPLOYER RESPONSIBLE FOR THE CARE OF ANY SECTION OR PART OF THE PERMANENT WORKS CERTIFIED COMPLETE. The employer is here made liable for damage from any cause to any part of the works certified complete. By cl. 20 (3) the employer is also liable for damage, loss or injury to the works to the extent that it arises from “a cause due to use or occupation by the Employer his agents servants or other contractors…of any part of the Permanent Works” whether or not that part is certified complete.

Moreover, a contractor’s All Risks insurance policy is intended for works in the course of construction. The insurers may be entitled to take the view that the works are no longer only a structure in course of construction if they are also being used as a store or otherwise by the employer. On that basis the cover may be invalidated for the whole works by such use.

The insurance position therefore should be reviewed very carefully in the interests of both employer and contractor before the employer is allowed to take occupation of or use any part of the works, however temporary or trivial the occupation or use may be. In any case in which it is doubtful which party bears liability the insurance should cover any liability of both the contractor and the employer; otherwise, for example, the contractor’s insurers who pay up may have a right to claim back the payment from the employer if he is the party actually responsible for the damage under the construction contract. At the least the parties and the engineer may become involved in time-consuming litigation. q 

The dangers are illustrated by the following case:

Employers allowed lessees of a factory to install equipment and store a number of reels of paper in part of a new extension to a factory being built by the defendant contractors. A disastrous fire occurred in the extension.

It was held that the contractors were liable to the employers for the damage caused even to the parts so used by the employers, although the R.I.B.A. conditions of contract which applied say that any part of the works of which the employer takes possession is at the sole risk of the employer as regards fire. r

Under this clause the engineer must warn the employer to take out his own insurance within 14 days of issue of a completion certificate for a part or section. In view of the changeover of liability it is important that any section to be taken over early is carefully defined in the appendix to tender, and that any part being certified complete is carefully defined in the certificate of completion.

For the other danger, of a disruption claim, where the employer uses part of the works before completion see p. 161.

For damage to a completed part or section caused by the contractor see N. 7.