UNIVERSITI TEKNOLOGI MARA

SHAH ALAM

BQS 501

ASSIGNMENT 2

COURSE : PROFESSIONAL PRACTICE II

COURSE CODE : BQS 609

DATE OF ISSUE : WEEK 11

DATE OF SUBMISSION : WEEK 14

PREPARED FOR : Sr Dr. ANIS SAZIRA BAKRI

Extension of Time (EOT)

PREPARED BY:
NAME MATRIC NO. CLASS
DANIAL ILYASA JUAN BIN MOHD 2019461644 AP2245G
JOHAN JUAN
MUHAMMAD AFIQ BIN AZREN 2019293934 AP2245G

KHAIRIL WASIM BIN ZULKIFLI 2019672904 AP2245G

Table of Contents
1.0 Definition of Extension of Time..............................................................................................1
2.0 Penta-Ocean Construction v Penang development Corporation (2003).......................2
2.1 The Facts...................................................................................................................................2
2.2 Findings.....................................................................................................................................3
3.0 High Court..............................................................................................................................4
4.0 Observation and Commentary................................................................................................4
1.0 Definition of Extension of Time

Extension of Time (EOT) is a delay which could not be reasonably foreseen at the
time of contract signing. The granting of an Extension of Time relieves the contractor from
liability of damages such as Liquidated Damages from the original date of contract
completion for the period of the claim.

Time extension requests are normally claimed due to the following circumstances:

 Client Change Order requests for New/Additional Work not included in the original
contract documentation
 Latent Conditions – unknown conditions at the time of contract signing that affect the
time for delivery of the contracted works
 Adverse weather conditions

The Contractor must demonstrate that the delay/s have occurred and impact the
construction schedule affecting project completion date. That is the delay occurred/impacted
the project Critical Path.

Successful Projects assist Contractors with the tracking of progress and the
preparation of EOT Claims. We also assist Client-side with reviewing and evaluating EOT
Claims in accordance with the Contract clauses. Refer to Construction Claims services.

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2.0 Penta-Ocean Construction v Penang development Corporation (2003)

2.1 The Facts

The Plaintiff was the Contractor while the Defendant was the Employer that bound two
contracts for reclamation works, namely Contract IB-3R and Contract IB-5. Under the said
contracts, in consideration of the payment of RM66.50 million and RM55.814 million
respectively, the Plaintiff agreed to complete the Reclamation and Ancillary Works at the
Eastern Foreshore South of Penang Bridge. The Defendant appointed Consulting Engineer
(SEA) Sdn. Bhd. As the Superintending Officer (SO) for the purpose of administration of the
Contracts. Each of the Contracts contained an Arbitration Clause for resolution of disputes
arising thereunder, for example clause 54 of the Conditions of Contract.

The works under Contract IB-3R and Contract IB-5 were completed on 18th June 1996 and
10th February 1996 respectively. In the course of constructing and completing the said
works, the Plaintiff had to undertake additional works, principally in the rectification of the
poorer sub-soil condition which entailed additional costs and delayed the regular progress of
the works. Therefore, the Plaintiff claimed additional payments to be measured and valued
in accordance with the contract variation provisions and prolongation cost for the extended
time required to complete the works. The Plaintiff used the act under Section 28 of the
Arbitration Act, 1952 to extend the time.

The Defendant's contention is that all the works alleged to be additional works was carried
out by the Plaintiff showed the fact that works which the Plaintiff was obliged to carry out and
under complete under the terms of the contract and therefore did not constitute additional
works for which the Plaintiff was entitled to give the payment under the variation provisions
in Clause 24 of the Conditions of the Contract, except those payments that were approved in
the SO's letter dated 22nd August 1997.

The Plaintiff then formally submitted its claim to the Defendant through letters addressed to
the SO. After a series of correspondence between the Plaintiff and SO between years 1995
to 2001, the Plaintiff issued a Notice of Arbitration dated 17th September 2001 requiring the
dispute, to be referred to Arbitration. The Defendant refused to concur with the appointment
of an Arbitrator by its solicitor's letter dated 12th November 2001 contending that the Plaintiff
had failed to comply with Clause 54 (c) of the Conditions of Contract, which provided a forty-
five day time-limit for reference to Arbitration

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2.2 Findings

(a) The length of the delay

The Plaintiff issued its Notice of Arbitration on 17.9.01. The length of any delay
would have to be measured from the expiry of forty-five (45) days after the issuance
of the SO's decision. However it is not clear which one of the SO's letter purported to
communicate the SO's decision. In any event, the Defendant took between one and
two years from the date of the first submission of the claim on 30.10.95 and 22.5.96
to revert with its "offer".

(b) The amount at stake

The Plaintiff's claims in respect of which the Notice of Arbitration was issued with
amounts was more than RM63.0 million. Thus the consequences of the Plaintiff
being deprived of the opportunity to arbitrate its claim would be out of proportion to
any degree of blameworthiness that may be attached to the Plaintiff.

(c) The degree of blameworthiness

At all material times, the Plaintiff was under the impression that it was still
negotiating with the Defendant on its claims and that the dispute had not been
referred to the SO for a decision. Furthermore, there was no letter from the SO
which could be identified to be an express decision of the SO on the claim submitted
to the Defendant. Therefore the Plaintiff cannot be blamed for the delay.

(d) The delay no prejudice to Defendant

The Defendant in its Affidavit alleged that the extension of time could cause hardship
to the Defendant due to the following: -

i. The retirement of key personnel, support staff and the SO's Chief Resident
Engineer, would make it difficult for the Defendant to defend the claim.
ii. The difficulty in locating relevant documents.

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 iii. That the Defendant had sold numerous plots of the land at prices based on
the cost of the project, which did not take into account this claim by the
Plaintiff.

3.0 High Court

The sole issue at the High Court was whether the Plaintiff’s notice of arbitration was
issued within the 45-day time limit provided under the arbitration clause.

The High Court found that the letters from the Defendant prior to the Plaintiff’s letter
of 16th July 2001 showed that the dispute had not been submitted to the SO for his decision.

The communications between the Plaintiff and the SO prior thereto were
communications of the Defendant’s offer to the Plaintiff based on the SO recommendations.
The SO was then acting in the capacity as agent of the Defendant and not acting
independently pursuant to the arbitration clause. There was nothing in these
communications which could be clearly construed as a decisions of the SO.

The Court also found that it was only on 16 th July 2001 that the plaintiff made a
reference to the SO for a decision and the SO’s decision was clearly conveyed in its letter of
6th August 2001. Thus, the notice of arbitration dated 17th September 2001 was issued within
45 days of the SO’s decision. The time bar would only have set in on 20th September 2001.

4.0 Observation and Commentary

This case is now the Malaysian authority that has accepted the principle set out in
the English case of Monmouthshire County Council V Costelloe & Kemple Ltd 5 BLR 83 that
this type of time bar clauses can deprive contractors of the general rights at law and there
fore one must construe it with some strictness as having a forfeiting effect. It therefore
requires very unclear words and a very clear decision by the appointed person to shut the
contractors out to their rights.

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