The case concerns a total subcontract.
The judgment is comprehensive and the Court of Appeal deals with many subquestions. The case originally consisted of two separate cases that were joined for joint consideration.
The most important issues concern time-related requirements, and these are the ones we focus on in particular. This applies to claims for rigging and operation during extended construction time, claims for plunder and heft, as well as the wrongful use of the contract object and the consequence this had in relation to the general contractor's claim on daymulch.
The dispute was between a general contractor and a total subcontractor in technical subjects, and the contract was based on NS 8417.
Briefly about the agreed construction time - background
Since the dispute concerned time-related claims, it is central to account for the parties' agreement, and subsequent changes to the deadline.
Paragraph 11 of the contract stipulated that the commencement on the construction site and the final deadline should take place in accordance with “convergent propulsion”.
The contract was dated 16.10.2020, and the minutes of the contract meeting on 15.10.2020 were taken as a contract document. So did two progress plans drawn up by the builder.
In the minutes of the meeting, the handover after the end of the trial operation was set to 1.2.2022, while the builders' progress plans indicated the handover date to 31.12.2021.
In other words, there was a contradiction between the various documents of the contract.
After the conclusion of the contract, the general contractor prepared a progress plan, where the takeover date was set at 1 — 22 February 2022.
The general contractor stated that this plan was in agreement with the general subcontractor, but the latter disputed it. There was nothing in writing to substantiate the general contractor's quotation.
Later, the general contractor notified the deadline extension for various conditions, and the general contractor also notified the builder about the deadline extension. After the developer admitted the extension of the deadline, a new progress plan was prepared dated June 3, 2021, which showed, among other things, that the total subcontractor would start its works on July 19, 2021, while the final works would take place in the period 3.1 — March 29, 2022.
The completion date for the total subcontractor's works was not defined.
Some of the works of the total subcontractor were taken over on 30 March 2022 when the builder took over parts of the overall building, while the rest of the works of the general contractor were taken over successively by the developer taking over the remaining parts of the building in use on April 2022 and 4 November 2022 respectively.
The total subcontractor made a current claim for a deadline extension of up to 150 days. The requirement was divided by 40 days deadline extension for conditions that occurred during the design phase where the parties engaged in an interaction with the builder, while 110 days applied to the construction phase (phase 2).
Conclusion of the Court of Appeal with regard to the agreed deadline
The general contractor stated that the final deadline had been agreed to be 15.3.2022 and referred in that regard to his informal agreement with the builder.
Even if the builder and the general contractor had entered into such an agreement, the Court of Appeal did not find that this was proven to apply also to the total subcontractor. The latter had not been involved in the negotiations between the builder and the general contractor, or in any other way given its acceptance to such an agreement.
Instead, the Court of Appeal concluded that the total subcontractor's closing date was 29.3.2022, as evidenced by a revised progress plan dated 3.6.2021.
Total subcontractor's request for extension of deadline
The general subcontractor did not accept his request for a deadline extension for phase 1 (the preliminary project), but on the other hand, he was granted his claim for a 110-day deadline extension for phase 2 (the construction phase).
The latter claim consisted of two partial claims of 60 and 50 days respectively.
The first partial claim was justified by a lack of access because neither “dense construction, casting of floors in basements, epoxy treatment and drying of floors in basements or dust bonding in ceilings and walls” was carried out within the deadlines resulting from the revised progress plan dated 3.6.2021.
The second partial claim was based, inter alia, on “lack of dust binding/ painting of ceilings and walls in several empty, missing epoxy on floors, ongoing drying of hole covers and lack of access via the atrium”.
Both partial claims were based on delays caused by other, side-ordered contractors for which the general contractor had responsibility and risk.
The Court of Appeal took as its basis the first paragraph of NS 8417 paragraph 18.2, where it is stated that the general contractor shall “provide for admittance” for a total subcontractor.
The court also took as its basis the first and second paragraphs of NS 8417 paragraph 22.3, where it is stated that the general contractor shall provide the physical work base”at your disposal” for a total subcontractor, and has the risk that this is such a total subcontractor “I had reason to worry.”.
The Court of Appeal agreed with the district court's assessment that the total subcontractor was entitled to expect that “the floor of the areas was molded, that the areas had dried out after casting and that the walls and ceilings were finished painted or that the floors were epoxy coated”. In this regard, the Court of Appeal held that this order of work also followed from the progress plan of June 3, 2021.
In its defence, the general contractor claimed that epoxy treatment of floors was carried out in zones, and that the general contractor “at all times had access to zones that were pre-processed”.
According to the Court of Appeal, this was not sufficient and it resulted in the total subcontractor being delayed because one “had to move equipment from zone to zone”. In this regard, the Court of Appeal laid particular emphasis on the fact that the works of the general subcontractor “To a lesser extent than other subjects' work may take place over zones, the establishment of ventilation ducts and the pulling of cables, etc., being space-pervading work operations”.
Accordingly, the Court of Appeal concluded that it was “clear probability preponderance that” total subcontractor “was delayed with the installation of aggregates and other equipment, guides, main features and hidden installations in basements as a result of delayed preparation of floors, walls and ceilings”.
On the other hand, the Court of Appeal commented that the total subcontractor appeared “to have had an expectation of working fairly undisturbed with their installations”, but that this was hardly “unusual at the conclusion of a major construction project”. Accordingly, the Court of Appeal concluded that this was something to be reckoned with.
Nevertheless, the Court of Appeal concluded that the total subcontractor had “shown to concrete conditions beyond the ordinary and foreseeable that delayed their work both before and after the building was put into service, and that the estimate of 110 days deadline extension is substantiated and probable”.
It may be worth bearing in mind that the Court of Appeal also made an assessment of whether the total subcontractor had complied with the obligation to coordinate under NS 8417 paragraph 21.4, first paragraph.
On page 18 at the bottom, the Court of Appeal writes that “(S) the arrangement obligation implies, among other things, that the general subcontractor must find that its own production cannot necessarily take place continuously and uninterrupted and without other actors present at the construction site”.
The Court of Appeal concluded that the duty of coordination had been discharged. On page 19, the Court of Appeal writes, inter alia, that a general subcontractor must: “accept any changes and disruptions along the way. However, the obligation of coordination under the standard is limited to what is foreseeable at the time of the contract. What is foreseeable must be assessed on the basis of a sober assessment of the project as it appeared to the parties at the time of the contract, cf, inter alia, statements in Rt-1999-922 page 931”.
About the total subcontractor's requirement for rigging and operation during extended construction
Total subcontractor was entitled to extended construction time for 110 days starting from 29.3.2022.
It was clear that rigging and operation consisted only of management tasks because the general contractor had been responsible for most of the rest of what is normally included as part of rigging and operation.
In calculating the claim, the parties appeared to have agreed on the basis on which the Court of Appeal also relied, namely that the measurement should be “based on rig chapter and original construction time”.
At the time of the assessment of the claim, the total subcontractor had “calculated the daily rate by dividing initial management costs by the original construction time, and multiplied the daily rate by the number of days extended construction time”, and this allowed the Court of Appeal to reason.
In this case, there was no basis for deducting up and downrigging costs since there were only management costs that were baked into the rig record.
About the total subcontractor's claim on plunder and heft
The Court of Appeal took as its starting point the HAB judgment in which the Supreme Court expressed in section 56 that “claims for additional compensation for plunder and heft are actualized “when the aggregate economic effects on the contractor go beyond what could reasonably be expected from the tender basis and for which it has not already been compensated””.
The Court of Appeal even concluded that the works of the total subcontractor, which were originally planned to be carried out “in autumn 2021, was shifted to winter/ spring 2022, so that work piled up during this period and that the use of the building affected the execution”.
The court also relied on timely evidence in the form of an email dated 14.12.2021 from the general subcontractor in which the employment situation was described as follows:
“We are going to perform several thousand hours in the basement on an allotted 4 weeks schedule and we see that as very difficult (read impossible) to achieve”.
Furthermore, the Court of Appeal referred to the District Court's judgment, where it is stated that there were also several videos from relevant areas that were timed, and which substantiated the general subcontractor's account of the facts.
This mentioned as an input on the importance of contemporary evidence that can substantiate the explanations that are later given to the courts.
The Court of Appeal then concluded that the general contractor had the risk of the conditions imposed on the general subcontractor “a series of disturbances”. On the other hand, the Court of Appeal found “no evidence that disturbances were due” the total subcontractor. It may be that this one had “underestimated the complexity”, “misprojected or projected inadequately” or been guilty of “significant misjudgments of calculated staffing needs”.
In the judgment on page 19, the Court of Appeal also explained the requirements imposed on the general subcontractor's obligation to coordinate, and wrote in that regard that there was nothing to indicate that the total subcontractor had originally submitted to a “abnormally compressed output for the piping, electro and ventilation centre price”.
Subsequently, the Court of Appeal moved on to consider whether there was a causal relationship between the circumstances relied on by the general subcontractor as the basis for its claim for plunder and heft, and the expenses claimed to be reimbursed.
The claim was based on “a calculation of inefficient hours multiplied by the contract's hourly rate of NOK 700 is added hours for bass and administration, as well as legal assistance, and increases in housing expenses”.
The court concluded that there were disruptions and inefficient operations as a result of the general contractor's circumstances, and that almost all of the general subcontractor's activities during the period in question had been affected.
The Court of Appeal also stated “It would be virtually impossible to identify every single work operation that has been affected.”.
Furthermore, the Court of Appeal writes that If “requirements were to be made to identify each individual work operation, it would be too high and make it impossible for an entrepreneur to win in such a situation. It appears in this context to the HAB judgment section (86)”.
As proof of the claim, the total subcontractor provided timesheets that the individual employees had kept. In these lists there was no indication that the hours had accrued as a result of plunder and heft. They only indicated what works had been carried out.
Regarding the failure to specify what was possibly the plunder and heft, the Court of Appeal stated that it will be difficult for the individual employee to even “assess how inefficiently the person concerned is working at all times” and consequently one cannot require the individual to attempt to indicate this in their timesheets.
In sum, the Court of Appeal concluded that the total subcontractor had limited alternative ways of calculating its claim.
As in the Slemdal School case, the court emphasised that the total subcontractor had transmitted its calculations to the general contractor shortly after they had accrued.
True, they were handed over after only one month, but they were valid for a period of three months.
In the Slemdal school case, the documentation for the additional consumption of time as a result of plunder and heft was submitted monthly.
As in the Slemdal school case, the Court of Appeal made an assessment of whether the hours claimed were substantiated by evidence, and in that regard placed great emphasis on the fact that the observations of more consumption had taken place “while production was in progress”. In other words, the Court of Appeal concluded that the total subcontractor had brought timely evidence that substantiated the claim of plunder and heft.
Specifically, the observations consisted of estimating the number of weeknights each week as “went away” in plunder and heft, at the same time that the Court of Appeal admitted to the total subcontractor a certain “degree of discretion”. Furthermore, the Court of Appeal writes that the estimates “also show that the more people that were put into construction site, the more inefficient the production was”.
In the Slemdal School judgment, the total subcontractor itself deducted a share of the additional consumption of hours in the understanding that some of the additional consumption was self-inflicted. The general contractor in this case did not do that. Consequently, the Court of Appeal itself made a deduction from the claim on the grounds that it was “basis for some discretionary reduction in the claim as a result of self-inflicted inefficiency”.
In total, the Court of Appeal made a deduction of about 3.7 million. Of this, self-inflicted inefficiency accounted for only 0.5 million.
In total, the total subcontractor was awarded NOK 7 million in compensation for plunder and heft.
About wrongful use
As mentioned at the outset, the contractor successively applied the contract work without an initially agreed partial takeover.
For the total subcontractor, this meant that the completion was disrupted and far more burdensome, which in turn was a contributing reason that the total subcontractor was able to comply with the requirement for plunder and heft.
The builder's use requirement also had a consequence in relation to the general contractor's requirement for daily mulch from the total subcontractor.
The general subcontractor had argued that it was not obliged to pay daycare on the grounds that the works were unlawfully put into use on 30 March 2022.
The Court of Appeal referred to NS 8417 paragraph 36.1, first paragraph, where it is stated that the (whole) subject of the contract is to be taken over by a takeover transaction. The court also referred to NS 8417 paragraph 37.5, first and second paragraphs, where it is stated that also parts of the subject matter of the contract may be taken over. The prerequisite is that this is discussed with the general subcontractor in advance, and that it takes place at a takeover business.
Last but not least, the Court of Appeal of NS 8417 referred to paragraph 38.1, first to third paragraphs after which the use claim represents a breach of contract.
The Court of Appeal came to the conclusion that the builder took over 50% of the contract subject on 30 March 2022 after talks between the parties, and that this had a deadline-breaking effect for both the general contractor and the total subcontractor.
For the remaining parts, however, the Court of Appeal did not find that talks had been conducted with the total subcontractor. The Court of Appeal cited, among other things, a letter from a general subcontractor dated 1.4.2022 stating that this statement of the use claim was unlawful, and notified the following;
“We therefore require that the use of the contract object cease by April 4, 2022 if the requirement for daycare is not in writing and expressly waived today. If it does not cease within the said period, the time limit for the entire subject matter of the contract shall exceed: (General Contractor) and an eventual daymulk of the entire subject of the contract ceases to run”.
The Court of Appeal upheld the total subcontractor's claim that the use was unlawful, and subsequently concluded that any daymulkt ceased to run on 4 April 2022.
Since the Court of Appeal had already accepted a deadline extension of 110 days from the agreed deadline of March 30, 2022, the total subcontractor was acquitted of the general contractor's claim on dayleave.
