Legal Wise by MdME | Assessment and recovery of damages: be mindful

José Espírito Santo Leitão*

Last Wednesday, the 23rd of August 2017, started as just another stormy August morning. However, by the time the clock struck eleven, the little-noticed cyclone had begun to take its terrible toll on the city’s people and infrastructure.

Skyscrapers trembled with the awesome force of rain and wind, going up to a maximum of 200 km/h, cars parked outdoors flipped, windows shattered, even century- old trees were uprooted from the soil as if they had been freshly planted. Infrastructure and working sites were blown away, behemoth-sized cranes bended like straws, while bamboo scaffolding disassembled and dropped from the skies, revealing the considerable damage to private and public infrastructure, that will take considerable time and resources to repair. Macau’s inner harbor was completely submerged by flood waters and the entire city lost power and water supply for at least half a day, with certain parts of the city still suffering from water and power shortages. The aftermath of Typhoon “Hato” was worse than any apocalypse scene we could have ever imagined and left an everlasting imprint in the heart and mind of every Macau citizen.

But while the human and emotional damage will take time to mourn and assess, time can be as inclement as the weather and the infrastructure industry cannot dwell on the storm, particularly in regard to public projects.

Indeed, and regardless of the severity of the typhoon, the law makes no distinction between storms and it is of vital importance that contractors (both public and private) be mindful of their entitlements in these cases and aware of the requirements they must meet to recover their losses.

Regarding private contracts, contractors should review the contract terms and ensure that there are no specific formalities for assessment and claim of damages in these cases. As a matter of caution, contractors are also advised to inform owners at once of the damages, their extent and impact (financial and incompletion time) as opposed to deferring these matters to final account stages.

Conversely, public construction contracts, which are f are regulated by Decree- Law No. 74/99/M, are subject to a very specific (and draconian) regime for assessment and recovery of damages in these cases. While extension of time should be granted automatically, this would not be the case regarding losses and damages, which must be claimed in a timely fashion in order to be recoverable by contractors.

As such, and under this regime, contractors are advised in the strongest possible terms to notify the owner within five days counting from the date on which the damage occurred, for the owner to come to the work site and inspect it for assessment.

Thereafter, the owner’s representative should prepare a report with its finding and the contractor is entitled to file its request for compensation immediately with this report, or 10 days after, and should present in this claim its basis for compensation and financial requests- to the extent that they can determined at the time – and may also dispute the owner’s finding as set out in this report.

If the owner refuses to carry out this inspection, the contractor may carry it out itself, within the same time period and with the assistance of two witnesses, and prepare a report for submission to the owner.

Failure to follow this procedure will result in forfeiture of any rights to claim of these damages. The Macau Government has been increasingly strict in its enforcement of this provision and denial of claims that are not compliant with these proceedings, although it would be only fair if public authorities were to extend to the public the same type of understanding and patience that the public has shown them in view of the unpreparedness and clumsy reaction shown before, during, and in the aftermath of the storm.

Typhoon “Hato” may have dimmed the lights of our city, but cannot extinguish them. While it may take Macau a long while to recover from the most traumatic encounter with tropical storms in its recorded history and to fully recuperate from all the material damages and losses, its citizens have showed their endurance in time of crisis, by volunteering in massive numbers to help clean out the streets, by providing water and food for those in need and by standing strong when tragedy strikes. These gestures have far exceeded the isolated instances of speculation and profiteering and, if combined with what we hope to be the ability of the Macau Government to learn from its shortcomings, we have full reason to believe Macau will rise back again, better and stronger than before.

*Partner, MdME Lawyers