Loss and expense recovery depends on notice discipline before valuation begins.
Loss and expense is often approached as a factual and valuation exercise: what caused the delay, what additional cost was incurred, and how is that cost evidenced? Those questions matter. But they are not the whole analysis. In many construction contracts, recovery also depends on whether the contractor has followed the contractual machinery that preserves entitlement in the first place. Before the parties reach a detailed valuation argument, the dispute may first become a notice, procedure and compliance dispute.
The dispute in ISG Retail Ltd v FK Construction Ltd followed an adjudication in which FK had obtained an extension of time and prolongation costs. ISG then sought declarations that FK had failed to comply with an alleged condition precedent to loss and expense recovery. The court declined to determine the issues through Part 8 because questions around notice compliance, waiver and estoppel were likely to involve substantial disputes of fact. That made the case commercially important because it showed how delay-related recovery can move quickly from what happened on site to whether the contractual route to recovery was properly preserved.
Why the case matters
The importance of the case lies in the separation between delay in fact and recovery under the contract. A contractor may have suffered real disruption. It may have incurred additional preliminaries, extended site management costs, inefficient working, additional labour, plant or supervision costs, or other prolongation-related loss. But if the contract requires a particular notice, timing, form or substantiation pathway, the paying party may argue that the claim has not been contractually preserved. That argument can become powerful. It allows the paying party to resist recovery not by denying that the project was delayed, but by challenging whether the contractual route to recovery was properly opened. The commercial risk is therefore not only whether the contractor can prove the cost. It is whether the contractor can show that the right to recover that cost was kept alive during delivery.
This is why notice provisions should not be treated as routine administration. They are part of the commercial machinery of the contract. In some cases, they may operate as strict conditions precedent. In others, they may not be fatal in themselves, but poor notice discipline can still weaken causation, credibility and proof. Either way, notices are not peripheral. They shape the recoverability of the claim.
The contractor risk
For contractors, the risk usually arises during live delivery. Project teams are often focused on maintaining progress, managing the employer relationship and solving operational problems. Notices may be delayed because the team does not want to appear adversarial, because the commercial consequences are not yet fully known, or because the project team assumes the issue can be dealt with later in the final account.
That approach is dangerous. A notice does not always need to contain every later detail to be commercially useful. Its purpose is often to identify the event, preserve the entitlement and open the contractual pathway for further particulars as the consequences develop. Waiting until the full financial impact is known may mean waiting too long.
Loss and expense claims are particularly vulnerable because they require both entitlement and proof. The contractor must connect the relevant event to the period of delay or disruption, then connect that period to the cost claimed. If the notice record is weak, the payer may argue not only that the claim was not contractually preserved, but also that the causal chain is unclear or that the claimed cost has not been properly linked to the event relied upon. That is how a genuine commercial loss can become a disputed, weakened or unrecoverable position.
What contractors should control
Contractors should identify notice requirements before the project begins and manage them as part of the project control system. The question is not simply whether the contract contains an extension of time clause or a loss and expense clause. The contractor needs to understand when notice must be given, what the notice must say, whether particulars must follow, whether updates are required, who must receive the notice, whether the clause is expressed as a condition precedent, and how the notice mechanism interacts with the payment, variation, delay and final account provisions.
That analysis should then be connected to the project record. Programme updates, allocation records, labour and plant data, site diaries, photographs, instructions, RFIs, meeting minutes, correspondence and valuation material should be organised so that the loss and expense claim can be explained by reference to three linked questions: what happened, what delay or disruption did it cause, and what cost consequence followed? Without that structure, the contractor may have a genuine grievance but not a strong recoverable claim. The project team may know that the works were affected. The commercial team may know that cost was incurred. But unless the contract and the records connect those points coherently, the later claim may be vulnerable. That vulnerability is often created before the dispute exists, at the point when notices, particulars and contemporaneous records should have been managed with greater discipline.
Legalbuild’s view
For Legalbuild, ISG v FK reinforces a central point about delay, disruption and loss and expense work: recovery is not secured by proving cost in isolation. It is secured by maintaining the contractual route to that cost while the project is live. Notices, particulars, programme records, cost records and correspondence are not separate administrative tasks. They are the infrastructure of the later claim. The strongest contractor position is built before the dispute crystallises. If notices are issued late, particulars are incomplete, records are fragmented or causation is left to be reconstructed at final account stage, the contractor gives the paying party room to attack both entitlement and proof. By contrast, where the contractual machinery is understood from the outset and the evidence is organised as events develop, the contractor is better placed to convert a real commercial loss into a recoverable contractual claim. Loss and expense should be managed as a live entitlement process, not a retrospective claim-writing exercise.
Loss and expense should therefore be managed as a live entitlement process, not a retrospective claim-writing exercise. The objective is not simply to record that delay occurred. It is to preserve the contractual route, substantiate the consequences and build the evidential position while the facts are still live.
Case reference: ISG Retail Ltd v FK Construction Ltd [2024] EWHC 878 (TCC).
