Going underground – who bears the risk in unexpected site conditions
The discovery of an enormous unexploded World War II bomb on a construction site in Exeter at the end of February probably came as a shock both to the workers on the site, as well as to the thousands who had to leave their homes whilst the bomb was safely detonated. As part of the North Dartmoor Search and Rescue team, I was part of the emergency services involved in the evacuation of the public prior to the controlled explosion.
But what of the Contractor who found the bomb and who had to rework the ground following detonation, and the Developer whose site was closed and works were delayed whilst the bomb was made safe – whose risk was this?
Generally speaking, where the construction contract is silent on the position of unforeseen or unexpected site conditions, the risk falls to the Contractor. This is a long standing tenet of construction law dating back to the 19th century when the courts decided that in the absence of any contractual provisions to the contrary, if the Contractor promises that he will build a structure, for a price and within a certain time, that is what he must do, regardless of any unexpected site conditions and any costs arising from them.
Standard form construction contracts have various means of addressing this issue:
JCT Design & Build is silent on the issue so, as a general position unless the unforeseen condition can be categorised as one of the other Relevant Events the common law position applies.
In the specific circumstances of a WWII bomb it is our view that a Contractor could potentially make out an application for an extension of time on one or more of the following grounds:
- Under clause 2.26.4 on the basis that the bomb is either an antiquity or an object of interest or value;
- Under clause 2.26.9 as a Specified Peril (aircraft and other aerial devices or articles dropped therefrom);
- Under clause 2.26.13 on the basis that the Explosive Ordnance Disposal team will need to approve the recommencement of the Works following detonation of the bomb;
- Under clause 2.26.14 as the occurrence of a force majeure.
NEC contracts allow the Contractor to make an application for a compensation event (potentially entitling the Contractor to both time and money) where it discovers physical conditions which a which an experienced Contractor would have judged, at the date of the contract, had such a small chance of occurring that it would have been unreasonable to allow for them;
FIDIC contracts vary in their approach, with the Red and Yellow books placing the risk of ground conditions with the Employer and the Silver Book allocating the risk to the Contractor.
With advances in technology and mapping systems the issue of unexpected site conditions is a risk which can be mitigated by the parties to a construction by undertaking appropriate investigation works and studies of the site history. We always advise our clients to deal with the risk of site conditions in their construction contracts explicitly so that both parties are aware of where they would stand should the unexpected occur – avoiding the potential for unpleasant surprises and delays once the project is underway.