NZS3910:2013 in COVID Times

NZS3910:2013 is a schedule of standard form conditions of contract for incorporation into construction contract documents provided by Standards New Zealand. It contains a number of clauses that deal with situations of delay or cessation of works. However, it was not designed to deal specifically with a pandemic, and so how these clauses may be applied to the consequences of Covid-19 are open to interpretation. Here we consider some of the ways that relevant NZS3910:2013 conditions may be interpreted in the context of the Covid-19 pandemic.

Clause 6.7.1 provides for circumstances rendering “necessary” the suspension of the whole or part of the Contract Works by the Engineer. Such a suspension will constitute a Variation which entitles the Contractor to an extension of time and for compensation for time-related costs.

A Level 4 Lockdown will be considered a “necessary” suspension and be treated as a Variation. If a lower Alert Level hinders, but does not cease, the Contract Works, the Contractor may inform the Engineer that it considers the delay and/or increase in its Cost to be a Variation. Crucially, though, the Engineer must approve such a Variation.

Clause 10.3.1(f) provides that the Engineer shall grant an extension of time (but not compensation) if the Contractor is fairly entitled to an extension by reason of “any circumstances not reasonably foreseeable by an experienced contractor at the time of tendering and not due to the fault of the Contractor”. This may be applicable in cases where tendering took place before the Covid-19 outbreak in New Zealand in 2020. However, if tendering took place after this time, and especially if after the nationwide lockdown of April-May 2020, it is likely that further lockdowns would be considered reasonably foreseeable. However, it could be argued that Delta was not reasonably foreseeable – though this may be a stretch.

Clause 5.11.10 provides that if a change in law occurred after the closing of tenders which caused a delay or other increase in the Contractor’s Cost then it will constitute a Variation and entitle the Contractor to an extension and compensation for time-related costs. If a tender has closed before the enactment of any Covid-19 related legislation in 2020, then this clause may be applicable. However, if tenders closed later in 2020 or in 2021 then it is questionable if every Covid-19 Public Health Order made since then would be considered a new by-law under this clause.

Ultimately, NZS3910:2013 was not drafted with the specific occurrence of a worldwide pandemic in mind. Consequently, its conditions are not perfectly adapted to the circumstances of these Covid times. As such, it is advisable to write specific Covid-19 conditions into any contract based on NZS3910:2013.