It is common to find standard forms of building contract, i.e. the PAM2006/18 come with the version of with and without Quantities. The general contents of these forms may have been similar but the salient difference of the form with Quantities are such that the tender has been called based upon the Quantities drawn up by the respective Quantity Surveyor QS named in the contract and shall be used as the basis for valuation and variation purposes as far as quantities are concerned, but not qualitative such as the ‘standard of quality’ compliance to the ‘approved building plans’ and as such which shall conformed to the drawings, to the ‘satisfaction of the architect’[1].

It came as a surprised when in most of the ‘educational and public talks’ either for the purpose of training future professional architects or otherwise, practitioner speakers whom are deemed to be ‘experts’ on the fields of ‘contract administration’ often echoed the following statement, “In the event of a discrepancy between the drawings and the Bills of Quantities BQ, in the ‘with Quantities’, BQ takes precedent over Drawings, while the ‘without Quantities’, Drawings take precedent and the Bills or the Schedule of Rates are to be treated as reference only”.

I had the privileged of discussing these matters with some ‘living fossils’ of practicing architects and their views as far as the ‘intend and purpose’ of the PAM forms are concerned, are as the followings:
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1. The original ‘intend and purpose’ of the PAM Forms, since the ‘RIBA – JCT days’, had been to enable the ‘architectural design intent’ as per the architectural drawings to be built by the builder.
2. In the early days, QS were employed by the contractors to translate the architectural drawings into BQ to enable suppliers and other contractors to quote. The basis of any BQ has and always been the ‘drawings’.
3. As the ‘interpretation of the drawings’ and the further ‘translation of the drawings’ into BQ had been executed by the QS, meant different versions of BQs may be produced by various contractors thus making evaluation of the tender price, difficult as it is no longer ‘apple to apple’ comparison.
4. As a result, QS has taken a ‘consultative role’ to produce a standardized BQ for the contractor to price. The elevation of the QS from an ‘employed role’ in the contractor’s office to a ‘professional consultant’ has since been taken placed and the production of the standard forms of building contract i.e. the PAM Form with Quantities and in the 2006/18 version with the ‘QS named in the contract’ has sealed its roles and obligations.
5. With the inclusion of the Quantities in the standard form, the issue of ‘translation of drawings’ into BQ has not been entirely resolved. The issue here is, when a discrepancy is found between the drawings and the BQ, which item is to be taken as precedent? The drawings or the Quantities?
6. The original ‘intend and purpose’ of the PAM forms, had been to enable the architectural drawings to be built by the builder has ‘never been displaced’ or compromised. The sole purpose of a contract is to enable the contractor to deliver its work in accordance to the drawings, the ‘approved drawings’ to be more précised.
7. The BQ, as in the ‘with Quantities’ form, or the ‘schedule of rates’, as it is termed in the ‘without Quantities’ form, had always been referred to for the ‘evaluation of Quantities and pricing purposes’, not the ‘qualitative aspect of the work’.
8. Therefore, regardless of the nature of the form be it with or without Quantities, the drawings [always] take precedent. In the event, in both forms, should a discrepancy arise, the drawings shall take precedent over the BQ or the ‘schedule of rate’. The contractor still has the obligation to ‘construct based on the drawings’, simply because, the drawings take precedent.
9. However, in ‘with Quantities’, any omission on the Quantities that was ‘failed to be picked up’ from the drawings were deemed to be a ‘variation’ as far as the Bill is concerned and the contractor shall be duly compensated for a reason that the contract was priced based on the ‘Bills’.
10. Whereas in the ‘without Quantities’ form, any omission in the contractor’s Quantities that was ‘failed to be picked up’ from the drawings were deemed solely the contractor’s own fault not constituting a variation and he shall not be compensated unless is proven, otherwise, for a reason that the contract was priced based on the ‘Drawings’.

Having considered such, the statement that “In the event of a discrepancy between the drawings and the Bills of Quantities BQ, in the ‘with Quantities’ contract, BQ takes precedent over Drawings, while the ‘without Quantities’, Drawings take precedent and the Bills or the Schedule of Rates are to be treated as reference only” is quite ‘misleading’.

It should be said that, “In the event of a discrepancy between the drawings and the Bills of Quantities BQ, in both forms, the Drawings take precedent over the Bills/Rates. In the case of ‘with Quantities’, any omission in the Bills shall be deemed a variation while in the case of ‘without Quantities’, any omission in the contractor’s Bill shall be of its own default not constituting a variation, unless proven, otherwise.”
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It is noted that the contractor is not responsible to ‘check on the consultant’s drawings’ for error reflected as in cl.1.4 PAM2006, “[…] If contractor finds discrepancy […]”, the onus is for the architect to decide accordingly via its instruction. Cl.3.1 PAM2006 further clarified that, “[…] in the event of any conflict or inconsistencies [referring to discrepancy][…] the priority in the interpretation of such documents shall be in the following descending order […]” and cl.3.1(d) the Contract Drawings was prioritized above cl.3.1(e) the Contract Bills. Rather strange that both PAM Forms with/without Quantities have the ‘Bills’ included.

This essay is strictly for educational use only and it does not constitute ‘legal advice’ and should not be relied upon to advice clients on legal matters.

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[1] This term has been rendered as ‘a farrago of obscurities’ by expert liked the late Prof. Vincent Powell Smith but in this context it shall mean in compliance to the ‘approved drawings’.

Welcome to MCO 04 from 28.04.2020 to 12.05.2020. Having gone through the 3 phases everybody in the construction industries are looking at the ‘crystal ball’ to see ‘when it is going to end’, what is the ‘exit plan’ and more importantly, how to face the ‘new normal’. While some is in ‘consolidation’, ‘downsizing’, ‘closing shops and claim frustration’ or ‘forge ahead’, it is no longer a question of ‘extension of time’, but who is going to pay for the ‘extra costs’ of ‘moving ahead’, while some contract provided the provision of ‘mitigation of delay’ vested upon the contractor to ‘forge ahead’, at whose costs? That is a question…

The PAM Form 2006 provided at least 4 routes to go about, or it could be more, but let’s look at this 4 possible ways to maneuver the delirium of post-MCO ‘new normal’…

Foremost, the force majeure exit plan. Everyone is chanting force majeure, from the President of PAM to our minister. What is this force majeure? Unlike other standard forms of contract, the PAM2006 has been very explicitly defined force majeure to include epidemic[1]. A question may arise, what is the different between an epidemic and a pandemic. Covid-19 was declared a pandemic. Does it automatically qualify as a force majeure? If the minister says so, where is the ‘gazette’? Sorry, forgot, the parliament too is in ‘lock down’. So, it remains a theoretical question at the moment. Having said that, based on an advisory from the President of PAM to the Architect to render and only to ‘recognize’ any EOT application under this force majeure while omitting the rest of the ‘other possibilities’ in the absent of a ‘national gazette’ automatically classifying the MCO as a force majeure, regardless of how the ‘contract is formed’, would any rational mind construe such as being ‘just’? Notwithstanding that the next, possible event to take place is to instruct the contractor to ‘mitigate delay’ by applying to MITI to resume work during MCO. The next logical question is, who is going to pay for the extra-costs and expenses incurred to fulfill MITI’s ‘strict conditions’, having to note that a force majeure is a ‘neutral event’ not due to anyone’s fault yet, the contractor may have to absorbed all costs and risk arising from its action of ‘mitigating delay’ to work during MCO, for all purpose that the contractor is still liable to indemnify against the employer for any breach[2].

Second, the ‘changes to the law’ exit plan. There are possibility to rely on a change in the ‘law governing the construction industry’ as an exit plan to forge ahead with a view to be compensated[3] for loss and or expenses arising from this ‘changes to the law’.[4] Reminded by the fact that MCO was invoked under two existing legislation namely the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1967, where is the ‘changes to the law’? The respective Local Authorities PBT is still relying on the power and jurisdiction under the Street Drainage and Building Act 1974 for administration of the MCO. Unless otherwise via an Act of Parliament such as those mirrored against our neighboring Singapore’s the COVID-19 Act 2020, such can be construed as ‘changes to the law’ exit plan with a view to be compensated for loss and or expenses besides EOT.

Third, the ‘Stop Work Order’ Architect’s Instruction AI exit plan. This is a ‘novel idea’ that some Architect friends actually say, “[…] you need a ‘spine’ or alternatively, a ‘steel ball’ to issue such an AI for such, you may not get another project from your Client, post-MCO” Acknowledging the fact that by virtue of this simple AI, it has placed upon the shoulder of the Architect that arising from this act, alone, he has caused the contractor to ‘stop work’[5], ‘discontinue work’ or ‘temporary halt work’ on site, for reasons only best known to the architects, thus the notion of the ‘satisfaction of the architect’. Under such circumstances, the PAM2006 form allows the contractor to be compensated[6] with loss and or expenses together with the relevant EOT, subject otherwise to any ‘mitigation of delay’ required by the contractor. At least such appear to be ‘fair’ to both parties and the most ‘noble act’ to have been performed by the Architect, without ‘fear and favor’, avoiding dispute in any manner foreseeable. Sorry, how many Architects actually do so?  

Finally, the ‘Government’s Stop Work Order’ exit plan. Having to ‘toe the line’ some Architects may be ‘smart enough’ to circumvent the ‘conundrum’ by issuing a rather ‘vague’ AI such as “You are herewith instructed to comply with the Government of Malaysia’s Order for MCO” In other words, the Architect has instructed the contractor to ‘follow government’s instruction’ not its ‘instruction to stop work’, brilliant! For obvious reasons, now the contractor has been placed in a ‘doubtful situation’ as can such AI be construed as a ‘stop work order’ enabling them to claim EOT and ultimately, loss and or expenses? It appears to be that the contractor is ‘statutory bound’ to comply with the government’s instruction and thus entirely and mandatory ‘self voluntarily’ that has nothing whatsoever to do with the ‘employer or its agent’. Another facet is to look at arising from the MCO, the contractor cannot carry out its work and not the force majeure arising from the pandemic as the MCO is the causa causans to the course of the ‘damages’ in the entire ‘matrix of causation’. However, it is interesting to note that the PAM2006 allows for loss and or expenses arising from a delay due to a ‘stop work order’ from the government, subject otherwise that such is due to the ‘omission by the employer or its agent’[7]. Having said that, the ‘burden of proof’ falls squarely upon the shoulder of the contractor and the ‘sufficient of proof’ is on balance that the Architect has ‘failed to discharge’ its duty, thus the omission. Voila! Under the ‘strict liability rule’ and having a ‘close proximity’ in terms of reasonable ‘duty of care’ for the Architect towards the contractor, it is easily for the contractor just to mount a claim that the architect ought to have issue an AI for ‘stop work’ but it didn’t thus the omission of a reasonable ‘duty of care’ that has violated their rights under the contract.       

When the dust settles, we are able to see more clearly and rationally the entire spectrum of the effects of the MCO towards the continuity of work in the ‘new normal’ society. The legal construct of the ‘standard forms’ may have been ‘blinded’ by so many possibilities that has not been taken into consideration when the parties sealed the contract. The best possible way is a call to the government, instead of reliance on the obscure version of force majeure that only the ‘Frenchman’ knows what it truly meant, to pass an Act of Parliament mirrored  the Singapore’s COVID-19 Act 2020 and ‘ctr-alt-del’ any ‘contractual omissions’ for a ‘level playing field’ for a ‘new normal’ future.
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Having wrote these as a personal reflection or opinion, not as a ‘lawyer’ or a legal counsel, as disclaimer, never take this writing of mine, to be your ‘legal advice’. You should seek appropriate ‘legal advice’ for your own situation. I am not liable for the accuracy of facts and representation on this writing.        

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[1] Art7(ad)PAM2006

[2] Cl.18.PAM2006

[3] Cl.4.3PAM2006

[4] Cl.4.1.PAM2006

[5] Cl.21.4.PAM2006

[6] Cl.24.3(c)PAM2006, “Compliance to a written AI in regard to the postponement […] to be executed under Cl21.4”

[7] Cl.24.3(n)PAM2006, “[…] provided always the same is due to negligence or omission on part of the employer […]”

Having to term with the 3rd installments of the extended[i] MCO[ii] with certain services sectors such as the “professional services related to the construction industry including architects […]” allowed to conditionally operate, under a statutory-undertakings to “comply strictly to all requirements from MITI[iii], KKM[iv], MKN[v] and relevant agencies and applicable laws and regulations in this nationwide MCO and Covid19 public health and safety crisis period” In other words, it is important for architects to understand the liabilities annexed to these undertakings while keeping ‘your finger crossed that nothing bad actually happened while in operation’. When such ‘undertakings’ are required, it simply means to say, ‘you are on your own and whatever you do in the contrary will be against the public policy’ as in the advisory, “ACPs are cautioned that should any of the staff gets infected by Covid-19 during work, MITI shall require for the whole office operations to be shut down immediately. The company will be responsible to bear all costs related to addressing the infection. It may involve the costs of testing and to quarantine the staff in contact with the infected person as directed by KKM, and other relevant government authorities.” The same is applied to the contractor, while the developer is ‘off the hook’, due to the ‘indemnity clause’ in most Building Contract, notably the PAM Form[vi].  

The recent issuance of PAM advisories[vii] are interesting on twofold. Foremost, “PAM would advise that individual Architectural Consultancy Practices (ACP) shall carefully make their own decision to consider the urgency and readiness of their practice to re-commence work”, the question most ACP would have asked, since when did PAM given a ‘statutory might’, unlike the Board of Architects LAM, to sanction ACP when to commence, halt and re-commence work? The onus is for PAM to collectively obtain a ‘blanket permit’ from MITI for its member to re-commence work. Whether the respective ACP would actually do so are entirely their choices, since a majority of the ACP are ‘small fries’ sole proprietors[viii] that do not employ a huge battalion of workers. Second, “PAM Council wishes to reiterate and emphasize our advice to continue to ‘Work From Home’ as far as possible if there is no urgent and/or essential work that are needed to be performed in the office and/or site”, in contrast to the first advisory, a ‘firm stand’ by saying, ‘no thank you, Mr. PM’, should have been taken, not to say that ‘Work From Home’ is a choice, rather a necessity.

Assuming that the choice of ‘readiness of their practice to re-commence work’ has been made by reasons of ‘pressures’ from ‘whosoever with vested interest’, the recommended guidelines from PAM are rather ‘interesting’ with significant impact to the building construction contract with particular, the PAM Form with regard to additional cost, loss and expenses L&E, regardless if the “Construction works below the value of RM500,000 whereby the main contractors are G1-G2 as certified by CIDB”. The contractor has to remodel the entire construction site with ‘Clean’ and ‘Unclean’ zones. ‘Disinfection Bay’ would have to be considered. Such remodeling of the entire site is no easy task.

Another interesting aspect of the advisory is “PAM reiterates that unless absolutely necessary, the Architect or Principal Submitting Person PSP, Resident Architect and Clerk-of-Work should monitor the project site remotely as much as possible”, application of CCTV and drone for supervision have to be in place and to be provided by the contractor, at whose cost, since these were not reflected in the preliminaries nor the contract? Remember, it was also PAM’s advisory for architects to consider such MCO as force majeure in the evaluation of EOT, having it as ‘neutral event’ that does not entitle the contractor to L&E. Wonder what happened if the area has no or weak WiFi coverage? Wonder if ‘remote supervision’ correspond to the purpose or intention of the UBBL 1984[ix] or s.70(21) SBDA 1974[x] such as “supervise the erection of the building to ensure that the erection is in conformity with the approved plans and the requirements of the provisions of this Act or any by-laws made thereunder”? How is such ‘remote supervision’ works out in terms of ‘professional negligence’ and ‘indemnity insurance coverage’ have yet to be ascertained? Remember, architects can be sued for many reasons.

Assuming that all the additional SOP[xi] is in place and the site has been remodeled with clean/unclean zones with disinfection bays in placed and all workers had to be placed in site with proper designated workers quarters, how are these workers going to don the PPE[xii] against ‘bio hazard’ with PPE against ‘construction hazard’, having to work under the ‘most unforgiving’ environment of the construction site and at the same time, observing the ‘social distancing’? What happen if the cause of the accident is the use of the PPE itself?

While most of the ACP would be having trouble logging into MITI’s webpage[xiii] to apply for the permit, in the absent of CIDB[xiv] clear guidelines and architect’s busy giving ‘instruction’ via ‘social media’, an obvious observations are these ‘written messages’ can be construed as ‘instruction[xv]’ in the eye of the law and any ‘well informed’ contractor will just have to ‘write back[xvi]’ to confirm such instruction.
While considering PAM’s advisory to be worthy, a note of thank had to be accorded to the PAM’s President’s Advisory[xvii], namely “[…] Like our civil servants […] working late into the night and through weekends to address this Covid-19 public health crisis and imminent economic challenges, PAM is also working hard to help our Architects to prevail through these difficult times”.
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Having wrote these as a personal reflection or opinion, not as a ‘lawyer’ or a legal counsel, as disclaimer, never take this writing of mine, to be your ‘legal advice’. You should seek appropriate ‘legal advice’ for your own situation. I am not liable for the accuracy of facts and representation on this writing.  

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[i] Announcement by YAB Prime Minister Tan Sri Muhyiddin Yassin on Friday 10 April 2020 to extend the MCO to 28 April 2020.

[ii] Movement Control Order MCO

[iii] Ministry of International Trade and Industry MITI

[iv] Ministry of Health KKM

[v] National Security Council MKN

[vi] Cl.7.1 PAM 2006

[vii] < https://mcusercontent.com/0f61e9c943c635f9ec3649f2a/files/c1507238-7e9f-4084-a23f-2b923b1d5a2e/PAM_Advisory_for_ACPs_on_operating_permit_to_resume_work_FINAL.pdf>

[viii] <https://drive.google.com/file/d/1M-eizVAmjNmWhgx8L4Xf7YF_GTBnEE4v/view?ts=5e853341>

[ix] Uniform Building ByLaws 1984

[x] Street Building and Drainage Act 1974

[xi] Standard Operating Procedure SOP

[xii] Personal Protection Equipment PPE

[xiii] <www.miti.gov.my>

[xiv] Construction Industry Development Board CIDB

[xv] Cl.2.0 PAM 2006

[xvi] Art.7(0) CAI, Cl2.2(a) PAM2006

[xvii] < https://mcusercontent.com/0f61e9c943c635f9ec3649f2a/files/12cdc8a9-c336-4315-ac54-137ac3c33402/PAM_Advisory_cover_ltr_PAM_President_14Apr2020.pdf>

The first line of dispute avoidance is and has always been vested upon the shoulder of the ‘contract administrator’, by default such as so provided in the PAM form of building contract, the architect. The Movement Control Order MCO, announced by the government, now entered the 2nd extended weeks had been very challenging to architects. Issuing too much instructions to the contractor may either denying or allowing them to claim for unnecessary ‘loss and expenses’ with regards to having work ‘in remote’. Issuing too little instruction, may eventually deemed to be ‘not administering the contract’ with the duty of care expected from a contract administrator. So, the question is ‘how much’ instruction suffice for this instances of the MCO?

The first instruction is ‘necessary’ to put everyone in the project to ‘unambiguously’ recognize that the work on site has been ‘halted’. This instruction is meant to be a ‘stop work order’, as some architect may consciously wanted to avoid using this term that will eventually bring about the repercussion of ‘loss and expenses’ claim by the contractor and not looking too ‘impressive’ by the employer, who in the first instance, commissioned the architect. Yet, the architect has a ‘fiduciary duty’ to discharge impartially to the parties in the construction contract and ‘being ambiguous’ may not appear to be just in accordance to its ‘quasi-arbitral’ role, risked being sued by the parties in the contract. It is very common for architect to be sued these days for whatever reasons…

In the same instruction, it is ‘highly recommended’ for the architect to instruct the contractor to put in ‘mitigation effort’ foremost, to secure the site. How about ‘avoiding delay’? How do you wish the contractor to avoid delay, when it is foremost not his fault for this MCO? ‘Mitigating delay’ in such instances may come with a ‘cost’ and ‘unsuspecting’ architect may eventually issue the second instruction ordering ‘virtual-site meeting’ as though, ‘work carried on as usual’. In the said virtual meeting, other instructions may set in such as ‘issuance of further detailing’, request for ‘mock up’ approval, materials approval and all sort of things warranted the contractor’s ‘extra effort and equipment’ to provide and to facilitate. When reality sets in after the MCO, with the contractor issuing its ‘loss and expenses’ claim, the architect will further instruct the QS to evaluate and the very common answer as expected, ‘… it is not in the contract, the contractor cannot claim’. As it is, there appear to be a ‘dispute’ arising from an ‘instruction to avoid delay’, the pertinent question is, at whose fault? Employer or the architect? Mitigation of delay now becomes ‘mitigation to accelerate’?

In some contract, a provision maybe allowed for the architect to instruct for a ‘revise work programme’ taking into account the foreseeable delay arising from the MCO. Is it sufficed for the architect to immediately issue a 14 days Extension of Time EOT and reject the contractor’s application for EOT beyond the ‘gazetted’ MCO? Just wonder, if the construction work is like any other manufacturing work where one can have a ‘start button’ to press and everything works like clockwork after a ‘stop work’, therefore the 14 days Extension of Time EOT is sufficient? You may be looking for another ‘dispute’ on this matter. Having said that, with the MCO extended, will the architect has the obligation to issue the second instruction for ‘stop work order’?

It is interesting to note, if the architect would be at liberty to pronounce that the MCO is indeed a ‘force majeure’, so provided in the contract, if any and the contractor has no other means to request for EOT, other than relying on this ‘contributing event of delay’. Looking from the ‘factual matrix’, the situation of Covid19 has warranted the government to declare a MCO, under the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1967. Arising from such MCO, construction industries were not listed as ‘essential’ thus work on site is deemed to have been ‘delayed’ due to the ‘order’, as in the MCO, or the ‘force majeure’ event, or Covid19? Which ‘contributing event’ is to be considered the ‘causa causans’ to the ‘damages’ incurred? Having said that, do you think the contractor has ‘no right’ to claim for ‘loss and expenses’ due to a ‘neutral event’?

‘Force majeure’, having its root in the ‘civil law’ jurisdiction has not been given a clear definition in the ‘common law’. Chitty on Contracts suggested “it is trite that a party relying upon a force majeure clause must prove the facts bringing the case within the clause. He must therefore prove the occurrence of one of the events referred to in the clause and that he has been prevented, hindered or delayed, as that case may be from performing the contract by reason of the event. He must further prove that his nonperformance was due to circumstances beyond his control and that there were no reasonable steps that he could have taken to avoid or mitigate the event or its consequence”[i] (emphasis added).

Although it is not a statutory right in Malaysia, the PAM 2006 form, in its attempt to clarify, has provided that “any circumstances beyond the control of the contractor caused by terrorist acts, governmental or regulatory action, epidemics or natural disasters” [ii]. The question, now is, relying on both the provision in the PAM form and the pronouncement by the President of PAM via its advisory[iii], do the contractor required to proof to be excused of its obligation under the contract so provided as in Intan Payong Sdn Bhd V. Goh Saw Chan Sdn Bhd [2004][iv]?  If so, can the contractor claimed for ‘loss and expenses’, failing which the contractor has the right to seek compensation in the court of law, outside the construe of the ‘neutral event’ so provided in the contract?

The Federal Court held that “the court is not empowered to improve upon the instrument which it is called upon to construct. Further, it is an established principle of law that a party relying upon a force majeure clause must prove the facts bringing the case within the clause”, as in CIMB Bank Bhd v Anthony Lawrence Bourke & Anor [2019][v]. Apparently, PAM may construed to have taken the role of the court or the party of the contract, to proclaim ‘force majeure’ and guided by the ruling of Intan Payong, the contractor may very well unlikely to be successful to claim ‘loss and expenses’ under ‘force majeure’.

By limiting the party in the contract to mount a claim under the proclamation of ‘force majeure’ due to its effect of ‘neutral event’, so provided by the advisory, the architect may choose to advise the party to adopt such advice with discretion and caution as a mean of avoiding dispute. Having said that, it is unadvisable for the architect to issue instruction with ‘force majeure’ prescribed, without a proper understanding of such term and its repercussion that may be brought against the parties.    

As to the question of termination under ‘frustration’ arising from the non-performance due to ‘force majeure’, the general accepted legal principle was that if a provision has been allowed in the contract for ‘determination of the contractor’s employment’ due to ‘force majeure’ reason, the contractor has to invoke such provision to determine its contract, otherwise the s.57(2) CA 1950 may be relied upon for termination and s.15 – 16 Civil Law Act 1956 CLA, provided the parties with compensation given for the purposes of the performance or partial performance of the contract.

Authorities as in Pacific Forest Industries Sdn Bhd v Lin Wen-Chih [2009][vi], provided that a contract cannot simply be ‘frustrated’, ‘merely because it becomes difficult to perform’. The Malaysian position as per Guan Aik Moh (KL) Sdn Bhd & Anor v Selangor Properties Bhd [2007][vii] provided the test of ‘termination of contract’ due to frustration but since PAM form has provided for ‘determination of the contractor’s employment’, contractor may not ‘simply’ rely on frustration to terminate under his common law provision.

Care has to be taken with regard to the MCO has resulted in the contractual obligation being made ‘radically different’ from what has been undertaken, and that it would be ‘commercially unjustifiable’ to enforce it. What is such ‘radically different’ that it would be ‘commercially unjustifiable’ to enforce it by the contractor warrant a termination? One month plus of ‘loss and expenses’ not being recognized by the architect or arising from the instruction of the architect, the contractor suffered further ‘unrecognizable loss and expenses’?

The situation here in the construction industries cannot rely upon the classical case as in Krell v Henry [1903][viii] where “an agreement for rental of a flat for two days for the purpose of watching the coronation procession was frustrated in purpose due to the postponement of the coronation”. 

Even the HongKong case as in Li Ching Wing v Xuan Yi Xiong [2004][ix] where 10 days isolation order due to the SARS outbreak was construed as ‘insignificant a period’ mirrored against the overall 2 years fixed term period of the tenancy. The 1 month plus of ‘loss and expenses’ due to MCO, in this context, may rolled into a ‘huge quantum’ in ‘unrecognizable loss and expenses’.

Even in the recent UK case of Canary Wharf v. EMA [2019][x], whether a lease held by the European Medicine Agency EMA on a premise in London used as the headquarters is likely to be frustrated as a result of Brexit? The court held that since the effect of frustration is to ‘kill the contract’, the doctrine must not be lightly invoked and must be kept within very narrow limits. It will be very unlikely for the contractor to be successful to ‘kill the contract’ due to the MCO. Such we shall witness in the Malaysian court this very near future.

As the stakeholders in the construction industries generally held on the ‘acceptable common approach’ pertaining to the legal aspect of ‘force majeure’ and ‘frustration’, the Malaysian courts may provide totally ‘unexpected’ judgement, given every contractual scenarios may differed from one another. Therefore, care has to be given by the architect to avoid any dispute from arising between the parties as any ‘unconsidered’ instruction given may, not only increased the risks between the parties, but also subject the architect to be sued for misconduct and non-impartial. Surprised that until today there is no ‘advisory’ issued by the Board of Architect Malaysia LAM, the ‘statutory body’ that is rightly to be seen issuing advisories to the architect in practice in Malaysia.

Having wrote these as a personal reflection or opinion, not as a ‘lawyer’ or a legal counsel, as disclaimer, never take this writing of mine, to be your ‘legal advice’. You should seek appropriate ‘legal advice’ for your own situation. I am not liable for the accuracy of facts and representation on this writing.  

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[i] Bale H.G. (ed) Chitty on Contracts (28th Ed. Sweet & Maxwell Ltd 1999) vol.1, p.273 – 274.

[ii] Art.7

[iii]<http://pam.org.my/images/announcements/2020/PAM_Advisory_Note_Covid 19_MCO_18.3.2020.pdf>

[iv] 1 LNS 537

[v] 2 MLJ 1

[vi] 6 MLJ 293

[vii] 3 CLJ 695

[viii] 2 KB 740

[ix] 1 HKC 353

[x] EWHC 335

As we have moved into the extended weeks of the Movement Control Order MCO, sanctioned by the Government of Malaysia, reality checks revealed that some of the industries are at the brink of collapse, one for example the construction related consultancies, i.e. architecture, see the research by Ezumi[i], forewarning the potential massive loss of jobs and revenues. This is only the tip of the iceberg.

Some friends from the legal fraternity have been asking, during this ‘lockdown’ what is the role of architect issuing payment certificate, inspection and valuation? I am duty bound by the advisory[ii] from the PAM’s president to explain that the first thing for an architect to do is to issue an instruction for ‘shutting down’ (construed as ‘stop work order’?) owing to the fact that the construction industry does not fall within the category of ‘essential industries’[iii] during this challenging time and it is a ‘blanket order’ by the government to cease all unessential work during MCO. In the words of the advisory, it states, “During this restricted period when construction works are suspended, the Contractor shall need to take all necessary measures to maintain and secure the site premises and the in-progress building works on site and ensure the construction site including all temporary works and any authorized workers’ housing on site, complies to the above Order[iv] and to all applicable building authorities regulations and do not pose any risk to health and safety.”

Whether such is to be construed as ‘force majeure’[v] has been well prescribed in most of the webinars and articles found in both FB and Linkedin, but the architect shall wisely leave such determination[vi]  to the parties of the contract as aptly pointed out that a ‘force majeure’ event does not entitle the contractor to claim for L&E[vii] under some standard form of contract, i.e. the PAM 2006/2018 Form due to ‘neutral event’.

Care has to be taken by the architects, as liked anyone else, the contractor has to continue to bear the cost of up-keeping the site, securities, utilities and maintenance of its worker quarters and machineries. These were equitable costs as real as those fees and payments that the consultants failed to collect. The architect must at all time, not only acted impartial, but must also be seen to be impartial as a contract administrator, taking the guidance from Lord Hewart’s famous statement that ‘justice should not only be done, but be seen to be done’, as in R v Sussex Justices Ex p McCarthy [1924][viii], by default, deemed to also act as a quasi-arbitrator. Failing which, the aggrieved party has every rights to claim under any court of competent jurisdiction. That is why it is not only a ‘challenging time’ but a very ‘interesting time’  also for dispute resolutions.

When the architect and its fellow teammates had issues going to work and coming to site, what is there for site valuation, certification and inspection especially so when work comes to a stall? Via drone or Zoom, Whatsapp, Skype or Wechat, work still can continue? Again, the better question an architect must ask, would the architect continue to issue AI for construction detail issuance, knowing that the site office has been ‘lockdown’? For the contractor, such an AI would have been an omen of ‘welcome’ for some reasons over the other.

Saying such, the real ‘repercussion’ is yet to unfold, especially the idea of ‘frustration’ has been given various renditions by various parties as some may look at it as a ‘ctrl-alt-del’ button to reset everything during this unprecedented ‘golden opportunity’ while others may see opportunity for general damages beyond the hold of the contract, notwithstanding the fact that ‘force majeure’ may be in operative in a given contract. The most ‘look forward’ to be tested in court, were those agreements that has been mutilated beyond its ‘original standard form’ with L&E excluded entirely, to the ‘whim and fancy’ of the employer at the advice of the ‘contract consultants’. Indeed, a very ‘exciting time’, as well.

Having said that arising from the MCO, works on site has been halted, the meaning of ‘working days’[ix] in some contract provision or statutory provision has to be given a broader definition not just excluding weekends and gazetted holidays, especially with regard to the issuance of adjudication decision under the CIPAA 2012[x] regime, within the 45 working days mark from the time of the receipt of the reply or the response, when a reply is not served within a stipulated time frame.

Notwithstanding that AIAC has been discreet[xi] on this matter, it is of the general interest of the disputing parties in the construction industry to know this and appreciate if friends from the legal fraternity may shade some lights on this matter as well. The situation is very real as it is difficult for parties and adjudicator to compile and bundle documents or decisions let alone, serving them to the respective party 'on time', with all the ‘road blocks’ in placed. It is indeed a very ‘challenging and interesting’ time we are all living to witness, in ‘blessing’ while having to say, the future for some industry like ‘architecture’ is very ‘bleak’, the dispute resolution ‘arena’ on the other hand, would be of the opposite.

Having wrote these as a personal reflection or opinion, not as a ‘lawyer’ or a legal counsel, as disclaimer, never take this writing of mine, to be your ‘legal advice’. You should seek appropriate ‘legal advice’ for your own situation. I am not liable for the accuracy of facts and representation on this writing.
 
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[i]https://drive.google.com/file/d/1M-eizVAmjNmWhgx8L4Xf7YF_GTBnEE4v/view?ts=5e853341

[ii]http://pam.org.my/images/announcements/2020/PAM_Advisory_Note_Covid-19_MCO_18.3.2020.pdf

[iii] https://drive.google.com/file/d/19caBk9M4F5kbf-55UqYW-XfIvG6P_-ok/view

[iv] Cl23.8(w) PAM 2006

[v] Cl23.8(a) PAM 2006

[vi]http://pam.org.my/images/announcements/2020/COVID-19-Movement_Control_Order_-_PAM_Advisory_Note-03doc2.pdf

[vii] Cl24.3(n) PAM 2006

[viii] 1 KB 256 at 259

[ix] https://www.linkedin.com/pulse/how-calculate-working-day-pursuant-cipaa-2012-sr-jaspal-singh/?trackingId=4mskWYFrNUxHFeE9MUnR6g%3D%3D

[x] https://www.aiac.world/wp-content/adjudication/PDF.pdf

[xi] https://www.aiac.world/news/292/Extension-of-the-Movement-Control-Order-and-Its-Impact-on-the-AIAC

Clause 23.1(a) of the said form stated that the giving of such notice shall be condition precedent to an entitlement of EOT. In contract law, a condition precedent is an event which must occur, unless its non-occurrence is excused, before performance under a contract becomes due. Sundra and Harban (2010) opined that the contractor shall on his own volition make such a notification as part of his implied obligation under the contract… citing NJ Carnell’s Causation and Delay in Construction Disputes as an early warning system to alert the parties to some occurrence of a potential EOT and to include such notice shall be a condition precedent, would mean that the employer is circumventing the effects of the ‘prevention principle’ as it benefitted its own breach, relying mostly on London Borough v Stanley Hugh Leach (1985) and Cabinets v Hili Morden Electronics Pty Ltd (1984). Undoubtedly, failure to serve a notice would result in the loss of rights by the contractor for EOT. Such position has been the original intent by the PAM Contract Drafting Committee (2010) citing Hudson’s Ed 4.132.

Reading in tandem with Clause 23.5(b), in assessing EOT the Architect may take into account and any other Relevant Events which in the Architect’s opinion will have an effect on the Contractor’s entitlement to an EOT, apparently this clause empowered the architect to make an opinion taking into account any other Relevant Events which may effect the contractor’s entitlement of EOT. Again, the opinion of the architect is limited to the provision set forth in Clause 23.8 with emphasise on Clause 23.8(x), any other ground of EOT expressly stated in the Contract. The PAM Contract Drafting Committee (2010) stated that the architect may consider any other relevant event which the contractor has not applied as a basis for his EOT. Sundra and Harban (2010) opined that the architect must nevertheless act reasonably and that the relevant event must be those stipulated in Clause 23.8 and no more, citing two Austrialian cases of Peninsular Balmain v Abigroup Contractors (2002) and Graymark Investment v Walter Construction (1999). Apparently, Clause 23.5(b) has been drafted to excuse the compliance of a notice as a condition precedent at the liberty of the architect, upholding the prevention principle that the defaulting party cannot benefits from its own breach.  

Reading in tandem with Clause 23.10, the Architect may … after CPC review and fix a completion date later than that previously fixed … upon reviewing a previous decision or otherwise and whether or not a Relevant Event has been specifically notified by the Contractor. The PAM Contract Drafting Committee (2010) view of this clause, the architect is empowered to review EOT previously granted after CPC, taking into consideration all relevant events that may have affected the completion date irrespective of whether or not the relevant event has been considered previously or has been notified by the contractor.
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In conclusion, the architect has the power to unilaterally grant EOT to the contractor without any notice in accordance to PAM Form 2006, relying on Clause 23.5(b), to enable the architect, to uphold his opinion that the defaulting party cannot benefits from its own breach and Clause 23.10, to allow the architect a chance to make the non-obligatory final review of his own opinion with regard to the EOT previously granted. With these two clauses in placed, it would also mean that the specific performance of giving of such notice shall be condition precedent to an entitlement of EOT shall only be binding to the contractor as a procedural condition in his application for EOT to give early warning to the architect of the impending delay and not necessarily result in the loss of his rights for EOT and by extension, claims for loss and/or expense. 

Clause 36.1 of the PAM Form 2018 states, ‘Reference to adjudication is a condition precedent to arbitration for disputes under Clause 30.4. Any dispute under Clause 30.4 after the date of Practical Completion shall be referred to arbitration under Clause 37.0’ and Clause 30.4 of the same form states ‘… The Employer shall not be entitled to set-off the disputed amount until the adjudicator has issued his decision.’ and by virtues of these 2 clauses, had in one way or another, instituted that PAM may have the obligation to provide a panel of PAM adjudicators to adjudicate this matter, of which, is currently a lacuna waiting to be filled.

However, in the light of the Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012), enforced in 2014, the notion of a panel of PAM adjudicators has to be taken in accordance with the Act not taken out of the Act. Unlike the common Security of Payment Legislation SOPL where as its name suggested, is a piece of legislation to ensure that payment to the contractors are secured, the CIPAA 2012 has the term ‘Adjudication’ included as the only statutory means to dispense ‘rough justice’ in recouping any unpaid claims in the construction industry, virtually monopolize by the AIAC as the sole appointing body. PAM has no locus-standi in any Act of Parliament to do so.

Again, as in the more recent case of Mega Sasa Sdn Bhd vs Kinta Bakti Sdn Bhd and Others [2019], the plaintiff seek to set aside the adjudication decision on ground that the adjudicator’s appointment was not valid for the reason that the appointing director of the AIAC has no locus standi in view that his position as the Director of AIAC is not legitimate in accordance to the Asian African Legal Consultative Organisation AALCO Host Country Agreement. The court has yet to make a judgement on this.

One may, again asked, can parties contracting out (opt-out) of CIPAA based on the doctrine of ‘free-to contract’?  In Ranhill E&C Sdn Bhd vs Tioxide (Malaysia) Sdn Bhd [2015] and it was held that the terms of CIPAA as a legislation prohibits the parties from contracting out of its application, notwithstanding that there is no express-term within the Act. Any forms of contractual arrangement for dispute resolution would not exclude the application of CIPAA.  
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I appeal to the PAM ADR Committee to review this position as set out in this paper to reconsider the setting up of a separate appointing body of Adjudicators that may have go against CIPAA 2012.

Following the birth of a statutory adjudication scheme in the UK under the Housing Grants, Construction and Regeneration Act 1996[i] (the “1996 UK Act”), on 1 June 2015, many countries within the commonwealth had taken the similar bold steps to enact the similar Security of Payment Legislation SOPL within their own legislation. Fundamentally SOPL, as its name suggested, is a piece of legislation to ensure that payment to the contractors are secured as payment is a fundamental ‘life-line’ to any business of construction, without it the entire machinery of construction will collapse and such will create detrimental ripple effects to both the downstream and upstream of the economy. In a nutshell, the theory behind SOPL is to ‘pay first, argue later’ based on ‘rough justice’ with legally binding decision that has no ‘finality’ thus providing only temporal relief.

Prior to the eventful year of 2012, the Pertubuhan Arkitek Malaysia (PAM) has taken the initial steps to initiate a version of the SOPL for the Malaysian construction industry owing to the fact that via its collaborations with various stakeholders, especially with the Construction Industry Development Board (CIDB), various issues pertaining to non-payments to the contractors had been raised. A joint working committee has been deployed to draft the framework for this SOPL. As the matter at hand, was largely attributed to the issues faced by contractors, it was naturally befitting CIDB to take the lead[ii]. This effort has since, taken a setback when the Kuala Lumpur Regional Centre for Arbitration (KLRCA) as it was known then before it was rebranded as the Asian International Arbitration Centre (AIAC), has taken the ‘idea’ and forged ahead to be passed and enacted in the Parliament as the Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012), enforced in 2014, adopting the New Zealand’s Security of Payment Legislation model (NZ Act)[iii] with modification to suit ‘document only’, ‘fast track’ and ‘chess time’ procedural. Unlike other commonwealth jurisdictions, the CIPAA 2012 has the term ‘Adjudication’ included as the only statutory means to dispense ‘rough justice’ in recouping any unpaid claims in the construction industry, virtually monopolize by the AIAC as the sole appointing body[iv].    

In the beginning, any claims put forth by the claimant, in CIPAA, will stand an 80% chances of winning due to its ‘rough justice stance’ with no ‘finality’. ‘I will CIPAA you’, became the common phrase in town. The ‘fast and furious’ approach in dispensing rough justice via CIPAA has received various challenges in the Courts of law, notably with regards to the following issues: -
 
1) PROSPECTIVE OR RETROSPECTIVE?

Question, can CIPAA applies retrospectively or prospectively? Came 2015, as in UDA Holdings Bhd vs Bisraya Construction Sdn Bhd, CIPAA applies retrospectively[v] and take precedents over any contractual provisions that state otherwise nullified any substantive rights under the pre-existing contract agreements. However, this High Court’s decisions were later in 2018, overturned by the Court of Appeal as in the Bauer (Malaysia) Sdn Bhd vs Jack-In Pile (M) Sdn Bhd that held, the CIPAA applies prospectively and not retrospectively[vi]. What this judgment meant was, any applicable construction contracts that were entered into prior to 15th April 2014 would not be subjected to the operation of CIPAA. This matter has yet to be challenged in the Federal Court.

[Updated]: In 2019 the Federal Court, as per the ‘Jack-In Pile’ appeal, had ruled that CIPAA could only apply prospectively, i.e. it applies only to construction contracts executed after 15th April 2014, based on the following reasoning that unless expressly stated otherwise, the absence of an express provision, which can only be enacted by Parliament, CIPAA cannot operate to a construction contract entered into before such date. As a result the AIAC will no longer register payment disputes arising from construction contracts executed before 15th April 2014. 

2) CONTRACTING OUT OF CIPAA?

Question, can parties contracting out (opt-out) of CIPAA based on the doctrine of ‘free-to contract’?  In Ranhill E&C Sdn Bhd vs Tioxide (Malaysia) Sdn Bhd [2015] and it was held that the terms of CIPAA as a legislation prohibits the parties from contracting out of its application, notwithstanding that there is no express-term within the Act. Any forms of contractual arrangement for dispute resolution would not exclude the application of CIPAA.
 
3) STAY OF ADJUDICATION DECISION?

Question, can parties apply for the stay of an adjudication decision? In Subang Skypark Sdn Bhd vs Arcradius Sdn Bhd [2015], it was held that a party seeking to stay a CIPAA decision under section 16 must show credible evidence that the financial impecuniosity on the part of the other party, being the sole “exceptional circumstances” that the probable inability of repayment of the adjudicated sum that may follow from concurrent court or arbitration proceedings. The merits of the case before the arbitration or the court and the chances of success in setting aside the adjudication decision are not relevant considerations. The Court retains the discretion as to whether or not to grant a stay.
 
4) PRE-QUALIFICATION FOR STAY 

Question, can parties pre-qualify for the stay of an adjudication decision? In Foster Wheeler E & C (Malaysia) Sdn Bhd vs Arkema Thiochemicals Sdn Bhd & Another Case [2015], the Claimant sought to enforce the CIPAA decision while the Respondent wanted to apply for a stay but cannot fulfil the condition for a stay of an adjudication decision due to the elaborate multi-tiered dispute resolutions.  It was held that the expression of ‘pending final determination by arbitration or the court’, which is a condition for a stay of an adjudication decision under section 16(1)(b) of CIPAA, requires the parties to have commenced arbitration or court proceedings. For such, arbitration cases in PAM has been increased by leaps and folds, to pre-qualify for the stay of an adjudication decision.
 
5) CONDITIONAL PAYMENT

Question, can a party imposed a payment condition to another party as a reason of non-payment? A very common pay when paid, pay if paid or any form of back to back payment, probably known as conditional payment clause that is found in most construction contract, notably with regard to clause 25.4(d) of the PAM 2006 Form. Section 35(1) of CIPAA prohibits conditional payment terms and provides that a conditional payment provision in a construction contract is void. In BM City Realty & Construction Sdn Bhd vs Merger Insight (M) Sdn Bhd [2016], the plaintiff in its application to set aside an adjudication decision, argued that it was not bound to make any further payment to the defendant until a final account is determined as the contract had been determined. Relying on Econpile (M) Sdn Bhd v IRDK Ventures Sdn Bhd [2016], it was held that Section 35(1) of CIPAA prohibits conditional payment terms and construed such to be void. However, the BM City appeal is presently pending in the Court of Appeal. The High Court decision in Jack-In Pile has recently been overturned in 2018 by the Court of Appeal which held that a conditional payment clause prior to the commencement of CIPAA remains valid and is not affected by section 35. It is believed that an application is being made to the Federal Court for leave to appeal against the Court of Appeal’s decision.
 
[Updated]: Having held by the Federal Court, as per the ‘Jack-In Pile’ appeal in 2019, CIPAA could only apply prospectively thus a ‘conditional payment clause’ could effectively be enforceable for any construction contract came before 15th April 2014.  

6) ZERORISING A PARTY’S CLAIM

Question, can the adjudicator awards the winning party Liquidated Damages LD? In Tenaga Poly Sdn Bhd vs Crest Builder Sdn Bhd (unreported), it was held that LD is not a ‘payment claim’ within the meaning of sections 4 and 5 of CIPAA, therefore party cannot initiate adjudication proceedings under CIPAA to recover LD. Any successful defence based on LD by a non-paying party will ‘zero-rise’ an unpaid party’s claim and no payment is to be made to the non-paying party.
 
7) NON CERTIFIED CLAIM

Question, can a party claim for payment based on progress of work that is not certified? In Bina Puri Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd [2015], the applicant sought to set aside the adjudication decision based on the argument that the payment claim was premature as the interim claims by the respondent were not certified. It was held that the adjudicator’s jurisdiction under sections 25 of CIPAA entitled him to decide or declare on any matter notwithstanding no certificate has been issued and to review and revise any certificate issued or to be issued. In the absence of certification, the non-paying party cannot deprive the unpaid party from availing the adjudication process.
 
8) EXEMPTION ORDER

Question, whether the expression encompasses construction contracts entered by statutory bodies and government-linked companies or is it to be limited to contracts entered into by the ‘Government’? In Mudajaya Corporation Bhd v Leighton Contractors (M) Sdn Bhd [2015], it was held that for it to fall within the meaning of a ‘Government construction contract’, it must be one where the government, be it the Federal or State, is a party to it.
 
9) CONSULTANCY CONTRACT

Question, can a consultancy contract be claimed under CIPAA? In Martego Sdn Bhd vs Arkitek Meor & Chew Sdn Bhd [ 2017], it was held that architect rendering architectural services may claim his outstanding fees under CIPAA, notwithstanding the provision in the Architect’s Act. CIPAA applies to consultancy contracts which provide purely consultancy services. This judgement was re-affirmed by the Federal Court on 1st August 2019.
 
10) INTERIM OR FINAL?

Question, can the adjudicator determine on Final Account Claims in view of the ‘rough justice’ nature of CIPAA without ‘finality’? In Martego Sdn Bhd vs Arkitek Meor & Chew Sdn Bhd [ 2017], it was held that CIPAA is applicable to disputes pertaining to interim claims and to disputes relating to final claims[vii]. The Federal Court, on 1st August 2019, referred to several Singapore Court decisions where the term of progress payment was wide enough to include the final payment. As long as there are payment claims relating to a construction contract, CIPAA would apply. 
 
11) SETTING ASIDE

Question, under what grounds could the CIPAA decision be set aside? Section 15 of CIPAA provides limited grounds on which an adjudication decision may be set aside, namely:
 
(a)     The adjudication decision was improperly procured through fraud or bribery;
(b)     There has been a denial of natural justice[viii];
(c)     The adjudicator has not acted independently or impartially; or
(d)     The adjudicator has acted in excess of his jurisdiction[ix].

The effect of setting aside as in Wong Huat Construction Co v Ireka Engineering & Construction Sdn Bhd [2018], it was held that the setting aside of an adjudication decision will restore all parties to their original positions and parties are free to adjudicate.
 
12) JURISDICTIONAL LIMIT

Adjudicator’s jurisdictions are limited to matters referred to in the payment claim and payment response, as prescribed in section 27(1) of CIPAA. However, the Court of Appeal in View Esteem Sdn Bhd vs Bina Puri Holdings Sdn Bhd [2016] held that the adjudicator must now, also consider matters referred in an adjudication response even if such defences were not included in the payment response. In other words, respondent can raise new claims or defences post the payment response, allowing a possible ambush in view that the claimant has only 5 days to reply. Adjudicator who fails to consider the defences raised in the adjudication response could have acted in breach of natural justice and risked decision being set aside under section 15 of CIPAA.
 
13) DOCUMENT ONLY ADJUDICATION?

Question, can either party request for hearing?  In Permintex JSK Resources Sdn Bhd vs Follitile (M) Sdn Bhd [2018], respondent applied to set aside the adjudicator’s decision on ground that there had been a breach of natural justice as the adjudicator had failed to conduct a hearing. The court held that it is within the jurisdiction of the adjudicator to conduct a documents-only adjudication.
 
14) APPEAL ON ADJUDICATION DECISION ALLOWED?

Question, can party appeal on the adjudication decision on the ground of law? VVO Construction Sdn Bhd v Bina MYK Sdn Bhd [2017], respondent appealed against the adjudication decision under Order 55A rule 1 of the Rules of Court 2012 and it was held that under CIPAA, there is no provision for appeal. If parties are allowed to appeal, it will contravene the purpose of CIPAA in disposing rough justice. In other word, you cannot adjudicate the same matter twice.
 
15) SHIPPING AND MINING CONTRACT

In MIR Valve Sdn Bhd v TH Heavy Engineering Berhad [2017], it is held that ‘ship building’ contract is excluded from CIPAA within the meaning of “construction work”. The similar judgment is held for YTK Engineering Services Sdn Bhd v Towards Green Sdn Bhd [2017], where a shipping contract or a mining contract does not fall within the meaning of “construction work” under section 4.
 
16) OBJECTION OF ADJUDICATOR APPOINTMENT

In Zana Bina Sdn Bhd v Cosmic Master Development Sdn Bhd [2017], it was held that party who participated fully in an adjudication proceeding without raising any objection as to the validity of the adjudicator’s appointment during the proceeding was estopped from raising the objection subsequently in its setting aside application. However, in a recent case of 2019, Mega Sasa Sdn Bhd vs Kinta Bakti Sdn Bhd and Others [2019], the plaintiff seek to set aside the adjudication decision on ground that the adjudicator’s appointment was not valid for the reason that the appointing director of the AIAC has no locus standi in view that his position as the Director of AIAC is not legitimate in accordance to the Asian African Legal Consultative Organisation AALCO Host Country Agreement. The court has yet to make a judgement on this.

[Updated]: The High Court held that CIPAA does not violate Article 8(1) Federal Constitution. It also rejected the challenge, that CIPAA is a ‘usurpation of the judicial power of the court’ in violation of Article 121 Federal Constitution, reason being CIPAA is a judicial function and not a replacement of the courts' judicial power. It further affirmed that the acting director had the power and duty to appoint the adjudicator, regardless if his position as the ‘director’ has yet to be finalized.

17) EXTENSION OF TIME FOR RESPONSE/REPLY

Question, whether there was a breach of natural justice when an adjudicator refused to allow the respondent’s application for extension of time to submit a payment response? In Binastra Ablebuild Sdn Bhd v JPS Holdings Sdn Bhd [2018], it was held that it is not a breach of natural justice merely because an adjudicator, after hearing both sides, refused to allow the respondent’s application for extension of time. However, an adjudicator has the power under section 25(p) of CIPAA to extend any time limit.
 
18) CONSIDERING EXTENSION OF TIME (EOT) CLAIM BY ADJUDICATOR

Question, can the adjudicator jurisdiction extended to adjudicate extension of time EOT? Such matter arises when there is a jurisdictional challenge, as to what is the jurisdiction of the adjudicator under CIPAA?  

1. Core jurisdiction – as to where CIPAA applies
2. Competence jurisdiction – validity of payment claim and adjudication appointment and such.
3. Contingent jurisdiction – adjudicator can decide on any matter of a consequential and ancillary nature such as EOT is necessary to determine Loss and Expense as in LD. See SKS Pavillion Sdn Bhd vs Tasoon Injection Pile Sdn Bhd [2019].

 
19) LOSS AND EXPENSE CLAIMS (Read in Tandem with ZERORISING A PARTY’S CLAIM)

In Syarikat Bina Darul Aman Berhad & Anor vs Government of Malaysia [2017], it was held that an adjudicator who decided that he had no jurisdiction to decide on loss and expense claims was in breach of natural justice as such claims came within the ambit of CIPAA as these claims were due to the delay in completion of works and therefore payable as part of the amount claimable for the additional costs incurred for work. Not all loss and expense claims are within the purview of CIPAA, ie. Claim for special damages.
The test is:

1. Whether the claim is one which inevitably arises from the carrying out of the work and
2. Whether the construction contract provides for the party to be paid the amount claimed in consideration for its performance of construction work. 

 
20) PRE-AWARD INTEREST

In Milsonland Development Sdn Bhd v Macro Resources Sdn Bhd [2017], it was held that an adjudicator has the power to grant pre-award interest pursuant to section 25(o) of CIPAA.

[Updated]: In Naza Engineering & Construction v SSL Dev [2019], the High Court held that the adjudicator has exceeded his jurisdiction under s.27(1) read with s.5(1)CIPAA by awarding the 4th Pre-Award Interest Sum, of which it was not claimed in the Adjudication Claim. Also read Court’s Power to vary the Adjudication Decision.  
 
21) WINDING UP BEFORE REGISTERING ADJUDICATION DECISION

In Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd [2019] , it was held by the Court of Appeal, that a successful claimant in adjudication need not have the adjudication decision registered before issuing a statutory notice of ‘winding up’ under section 465 of CA 2016[x].

[Updated]: In ASM Development v Econpile [2019], the High Court granted an injunction restraining ‘winding up’ and held that the adjudication decision, which formed the basis of the ‘statutory demand’, had been disputed in an arbitration proceeding with cross-claims exceeding the amount in the adjudication decision on grounds that:
 

1. Nature of an adjudication decision which is "temporarily finality";
2. Adjudication decision may be enforced in accordance with Order 45 Rules of Court 2012 ‘as if’ it is a judgment pursuant to s.28(1) CIPAA, it should not be converted and be enforced as a judgment of court.
3. An injunction restraining the presentation of a ‘winding-up petition’ maybe issued, provided that the AD is disputed for a greater amount than the adjudicated sum in arbitration for ‘finality’.

 
22) [UPADTED]: COURT’S POWER TO VARY THE ADJUDICATION DECISION

In Naza Engineering & Construction v SSL Dev [2019], the High Court contemplated whether it has the jurisdiction to vary the adjudication decision to only allow enforcement of the ‘enforceable portion’ of the decision or to set aside the adjudication decision entirely. Justice Wong KK in his judgement relied on:

1. Common law cases, have to be ‘read with caution’ as there is no legislation in those countries for the court to set aside an adjudication decision.
2. S.28(2)CIPAA the court may make an order in respect to the adjudication decision AD either ‘wholly or partly’ to enforce only the part of an AD. In this matter, the court can either enforce only a part or severs the AD. Court exercising S.28(2)CIPAA as in:
   1. YTK Engineering Services v Towrds Green [2017];
   2. PCP Construction v Leap Modulation [2017];
   3. Harmony Teamwork Construction v Vital Talen [2017]
3. The court has no power to set aside a part of the AD under s.15CIPAA relying on BM City v Merger Insight [2016]. If the Parliament intended the court to have power under s.15 to vary the AD, Parliament would have to expressly provided for such analogues s.28(2).
4. The learned judge ‘disagree’ that the court has the power to set aside the AD where the adjudicator has exceeded his jurisdiction as opined in ‘Construction Adjudication in Malaysia’ due to:
   1. Syarikat Bina Darul Aman’s case, no discussion whether the courts are empowered under s.15 to set aside a portion of the AD;
   2. In BM City, the court has not sever an AD pursuant to s.15.
5. The AD was set aside entirely.

As to date, CIPAA has been plagued with crippling complexities with more and more cases brought up in court for a finality in judgement that appears to be inconsistent and unpredictable in many areas beyond the true intention of CIPAA that is in dispensing justice based on the notion of to ‘pay first, argue later’ dispensing ‘rough justice’ with legally binding decision that has no ‘finality’ thus providing only temporal relief. The initial pro-claimant outcomes had thus swing to the other side of being pro-respondent post 2017.
As more cases move up to the court, as in Leap Modulation Sdn Bhd v PCP Construction Sdn Bhd [2018], the court has gone as far as to interject the manner and efficacy of CIPAA in dispensing ‘rough justice’ and to the nature of AIAC being a ‘foreign entity’ with very little or no ‘check and balance’ self-regulation, had a monopoly grip on the dispensation of justice in Malaysia, no matter how ‘rough’ it is[xi]. The AIAC has since taken the same matter to the Federal Court to have this portion of the judgement expunged[xii].

The fate of CIPAA, while having put ‘off tangent’ from its initial purposes with more and more inconsistent and unpredictable judgements from the court, was plagued by alleged corruptions resulted in the former Director of the AIAC being replaced, based on the detailed insider content of just a ‘poison-penned’ letter[xiii].  However, in a recent case of 2019, Mega Sasa Sdn Bhd vs Kinta Bakti Sdn Bhd and Others [2019], the plaintiff seek to set aside the adjudication decision on ground that the adjudicator’s appointment was not valid for the reason that the appointing director of the AIAC has no locus standi in view that his position as the Director of AIAC is not legitimate in accordance to the Asian African Legal Consultative Organisation AALCO Host Country Agreement. The court has yet to make a judgement on this.

CIPAA in itself is a two-tier processes. Winning the first-tier as in obtaining a favorable adjudication decision is not going anywhere with regards to recouping your unpaid payment claim. Subsequent enforcement of the decision as in the second-tier, is where the challenges begin as in setting aside and stay by the court. That is going to complicate matters, while many in the legal fraternity has been advocating, forget CIPAA, let’s see you in court!   
 


[i] Craig J Enderbury, “Changes to the Construction Act: Payment certainty…uncertain terms”, Chartered Institute of Building CIOB (UK), reference from https://www.ciob.org/sites/default/files/Hill%20Intl%20CIOB%20slides.pdf

[ii] A survey was conducted to coincide with the Construction Industry Development Board’s plan to incorporate the survey’s outcomes in the Cabinet Paper which includes the Construction Industry Payment and Adjudication Bill 2006 which is targeted for submission to the Ministry of Works of Malaysia in March 2006, see M.S. Mohd Danuri , M.E. Che Munaaim , H. Abdul Rahman , M.Hanid, “LATE AND NON-PAYMENT ISSUES IN THE MALAYSIAN CONSTRUCTION INDUSTRY – CONTRACTORS’ PERSPECTIVE”, Center for Project and Facilities Management, Faculty of the Built Environment, University of Malaya. Reference from https://www.irbnet.de/daten/iconda/CIB4392.pdf

[iii] Philip Davenport, “SECURITY OF PAYMENT IN NEWZEALAND” reference from  http://www.austlii.edu.au/au/journals/AUConstrLawNlr/2002/79.pdf

[iv] The seed of discontent has been raise as to the nature of the AIAC as the sole appointing body for adjudication under CIPAA is well reflected in the judgment of Leap Modulation Sdn Bhd vs PCP Construction Sdn Bhd, see “AIAC: Judge Hamid Sultan diverged from case facts in judgment”, Malaysiakini reference from https://www.malaysiakini.com/news/465089

[v] In attempts to challenge the jurisdiction of the adjudicator appointed by KLRCA under CIPAA 2012, the respondents in at least two adjudications have taken issue with the retrospective application of CIPAA 2012 to construction contracts entered into before 15 April 2014. UDA Holdings Berhad v Bisraya Construction Sdn Bhd & MRCB Engineering Sdn Bhd (Originating Summons No: 24C-6-09/2014) (“UDA v Bisraya”) was heard together with Capital Avenue Development Sdn Bhd v Bauer (Malaysia) Sdn Bhd (Originating Summons No: 24C-5-09/2014) (“CAD v Bauer”). The applications were heard in the Construction Court of the Kuala Lumpur High Court and were decided by Mary Lim J on 31 October 2014. The grounds of judgment is reported as UDA Holdings Berhad v Bisraya Construction Sdn Bhd & MRCB Engineering Sdn Bhd & Another Case [2014] 1 LNS 1584.,  “Construction Adjudication: Prospective, Retrospective or Somewhere in-between?” reference from https://mahwengkwai.com/construction-adjudication-prospective-retrospective-or-somewhere-in-between/

[vi] Read “Bauer (Malaysia) Sdn Bhd v Jack-In Pile (M) Sdn Bhd – CIPAA 2012 applies prospectively not retrospectively”, reference from https://www.zicolaw.com/resources/alerts/bauer-malaysia-sdn-bhd-v-jack-in-pile-m-sdn-bhd-cipaa-2012-applies-prospectively-not-retrospectively/”

[vii] The Federal Court in its grounds of judgment dated 1 August 2019 in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd decided on important points of law on adjudication and final payments under a construction contract. https://themalaysianlawyer.com/2019/08/13/case-update-federal-court-decides-on-final-payments-adjudication/

[viii] See WRP Asia Pacific Sdn Bhd v NS Bluescope Lysaght Malaysia Sdn Bhd [2016], the unilateral communication of the adjudicator was found to be a material breach of natural justice.  

[ix] See Skyworld Development Sdn Bhd v Zalam Corporation Sdn Bhd, the Adjudicator had issued his Adjudication Decision one day out of time and this rendered the decision void. 

[x] Reference from https://www.zainmegatmurad.com/2019/02/20/cipaa-adjudication-466-statutory-notice-winding-up/

[xi] Reference from http://judgments.my/ca/leap-modulation-sdn-bhd-v-pcp-construction-sdn-bhd-and-another-appeal/10309 and https://www.malaysiakini.com/news/465089

[xii] Read “AIAC: Judge Hamid Sultan diverged from case facts in judgment”, Malaysiakini, reference from https://www.malaysiakini.com/news/465089

[xiii] Read “AIAC director resigns over MACC investigation”, Edge Markets, reference from https://www.theedgemarkets.com/article/aiac-director-resigns-over-macc-investigation
 

Many professionals, especially from the legal fraternity, had written about this matter but more importantly, what is the sentiment of an architect with regards to this matter? As mentioned, it is call the ‘battle[i]’ of the standard forms of building contract[ii] and as to why it is indeed, a battle, has a long stories date back to the late sixties.

As a former colonized country of the colonial British Empire, we had adopted many of the common law jurisdictions and our construction law is built upon such as its core foundation. In UK, “under the sanction of the RIBA and in agreement with the Institute of Builders and the National Federation of Building Trades Employers of Great Britain and Northern Ireland”, in the 1903 the standard form of building contract was produced[iii]. In the late 60s, the Pertubuhan Arkitek Malaysia (PAM) came together with the Institution of Surveyor (ISM) formalized the first standard forms of building contract, called PAM-ISM Form 69 closely modeled on the UK Joint Contract Tribunal (JCT) Form 63 edition. It has its fair share of backlash from the industries due to its ‘farrago of obscurities’ legal draftsmanship[iv], tested in court and throughout the years for the next 30 years withstand the storms and set many precedents in the construction law of the country. It was so widely used in the private construction sectors[v], almost everyone knows this ‘devil’, practically inside out. As being an architect, administering this ‘devil’ has been our daily jobs and without fail, one must admit, this ‘devil’ has given the architect enormous power via its archaic ‘farrago of obscurities’ terminologies, one being the personal favorite, ‘to the satisfaction of the architect’. Honestly, nobody appreciate this phrase better than the architect and if you were to rephrase it, ‘how to satisfy the architect?’ such question opens a floodgate of legal entanglements that the current legal maxim such as ejusdem-generis could not well explained such!   

While the government or the public sector adopted the Public Work Department (PWD) or commonly also known as the Jabatan Kerja Raya (JKR) 203A Form. Architects who has worked in the public sector projects would have known well the intricacies of this JKR 203A Form. The construction of this form was largely contributed from the RIBA form of Building Contract 1931 Edition. By the same token, the Institution of Engineers (IEM) standard forms of contract called the IEM Form are mainly used for engineering matters. In all purpose, most of the IEM standard forms modified from the International Federation of Consulting Engineers (FIDIC) contract[vi]. At this time, various forms were tailor suit for their purposes and failure to adopt or to advise the correct use of these standard forms will ultimately result in costly, if not ‘painful’ legal disputes.

Bombarded with the onslaughts of mounting pressures from the contractors, developers, the legal fraternities, end users and notably the government, PAM for the very first time, after 30 years, decided to make revision to its PAM 69 Form just to make it ‘relevant’ in view of its popularity among the industry players. In hope that the ‘devil’ becomes much of a lesser ‘evil’, the PAM council at that time, commissioned[vii]  its own sole council member at his own personal capacity, to redraft the PAM Form. As a result, the PAM 98 Form was born. In substance, the PAM 98 Form was an improvement to the PAM 69 Form with less ‘farrago of obscurities’ in legal draftsmanship, however, it was view as a unilateral revision (drafted by one person) without participation from the stakeholders of the construction industries and to a larger degree, ‘pro-employers’[viii]. In forms, the first issuance of the PAM 98 Form was ‘technically challenged’ and a re-launch was made in 1998. The PAM 98 Form being a relatively new form, was yet to be tested in court, but like the saying goes, is better to be with ‘the devil you know than the devil you don’t know[ix]’, through time the industry took it stock load and barrel.

The Construction Industry Development Board (CIDB) took the opportunity to make its presence felt. Collaborated with the other stakeholders (for all-inclusive policy, it was a strange sight to notice that PAM was not represented in the drafting committee) in the industry and through their newly minted Procurement Policy Committee, they came out with their very own version of standard forms called CIDB 2000 Form[x]. Differ from PAM 98 Form, any of the allied professionals such as engineers or quantity surveyors could be the named contract administrator or commonly known as the Superintendent Officer (SO). The most peculiar point of this form is the risk allocation that has been shifted to the employer, meaning, it is ‘extremely pro-contractors’. CIDB 2000 Form, conceived as the ‘knight in shiny armors’ was rarely employed in the private sector. To many of the allied professionals, especially the architects, it has since faded into oblivion[xi].

The PAM 98 Form has since continued to be the ‘preferred choice’ among the industrial players. As approaching 2006, the PAM 98 Form has since been tested in court, deliberated at length and constructively criticized by the stakeholders of the construction industries. It has come to a point that PAM needs to re-look into the PAM form again, to make it ‘watertight’. Instead of a sole member’s commissioned work, a committee was set up to undertake the revision. The new PAM 2006 Form was born with a more ‘regimented’ approach where ‘time is of the essence’ is given to almost every specific performance, failing to comply may amount to a breach. Gone were the days of archaic ‘farrago of obscurities’, such as ‘to the satisfaction of the architect’. More documentation work and liabilities were placed onto the shoulders of the architect as contract administrator. Legal implication with regards to ‘conditions precedents’ and ‘specific performance’ were introduced, almost making the architect’s ‘freedom to administer’, almost non-existence. The so called ‘devil’ was beyond recognition, making contract administration a ‘full time and painful job’ fit for a ‘keyboard administrator’ architect. Very pitiful with regards to its remuneration against the quantum of liabilities vested upon it[xii]. Strangely, recognizing the fact that failure to adopt or to advise the correct use of these standard forms will ultimately result in costly, if not ‘painful’ legal disputes, the act of omission was now, transferred to someone else probably liked the ‘poor’ architect as there was an exclusion clause finely printed in the PAM 2006 Form that read, ‘all parties must rely upon their own skill and judgement … when using this document and PAM assumes no liability to any user … in connection with such use’[xiii], classic indeed.

Came 2012, the year of reckoning with the Construction Industry Payment and Adjudication Act 2012 (CIPAA), spearheaded by the Asian International Arbitration Centre (AIAC), the construction industries were thrown to its tipping point, welcomed by the contractors, sub-contractors and to a far degree, consultants too[xiv] and shunned by some employers notably developers, any claims put forth by the claimant, in CIPAA, will stand an 80% chances of winning due to its ‘rough justice stance’ with no ‘finality’. ‘I will CIPAA you[xv]’, became the common phrase in town. No doubt that the pendulum of wining, has since shifted to the respondents post the ‘View Esteem Case[xvi]’, adjudication decisions had been making rounds in the court of law without consistent and predictable outcomes. In the matter of the PAM 2006 Form, the ‘commercial agreement to any conditional payment’ has been made void as in the ‘Econpile Case[xvii]’. Now, the newly minted, PAM 2006 Form, with regard to its clause 25.4(d) on conditional payment upon determination, has been made completely unenforceable.

In 2018, the PAM Committee that has since went into overdrive while waiting for the Federal Court’s decision on ‘Econpile Case’ did not see any light at the end of the tunnel, proceeded to account for such a decision, came with a minor revision, with complicated rewording of its clause 25.4(d) and called it the PAM 2018 Form. The content of the PAM 2006 Form, no doubt, were intact and fortified with numeral annotation rearrangement, however, more documentation work and liabilities were placed onto the shoulders of the architect as contract administrator such as having the architect to certify such breach so to allow the employer to cash the performance bond as in clause 39.5 and having the architect spelt out what were the outstanding works while issuing its CNC, almost suggesting to the contractor that ‘they don’t even know what is their work, and has to be reminded by the architect’. As the architect, one feels it is liken to use a ‘sledgehammer to nail a nail’.

The story didn’t quite end here. In the same year 2018, the Asian International Arbitration Centre (AIAC) took the PAM 2006 Form, almost word by word and adopted the same as their AIAC 2018 Form of building contract. Needless to say ‘dispute’ arise on matter of copyright and subsequently a revise AIAC 2019 Form[xviii] of building contract with a total revamp has been introduced. In this AIAC 2019 Form anyone can be the contract administrator including anyone from the legal fraternity. Without prejudice, what would you think when anyone from the legal fraternity without technically trained, administer the contract? Often one may asked, how would anyone from the legal fraternity acquire his 7 years’ experience in the construction industry? Doing litigation works on behalf of the contractors or employers accounts for such including reading up construction case laws? 

When someone[xix] pointed that in 2016, as published by the AIAC (there was no such breakdown analysis anymore), there were 363 CIPAA adjudicators and out of these, 177 were lawyers, 59 were Engineers while QS made up 51 and others accounted for 65. Architects, only 11! Does it means to say that architects were so incompetent to even pass the adjudication examination let alone competent enough to administer a construction contract? I overheard someone is telling that majority of the arbitration awards that were thrown out of court were written by ‘non-legal trained’ arbitrators. Frankly, as an architect, one cannot, not ask, as to these 177 lawyers seating as CIPAA adjudicators, where do they obtain their 7 years’ experiences in the construction industries as a fundamental prerequisite to be a CIPAA adjudicator? As an architect, one may view that having the AIAC 2019 Form, it is an avenue for the legal fraternity to acquire their 7 years’ experience in the construction industries as a fundamental prerequisite to be a CIPAA adjudicator. Not long thereafter, there could also be many from the legal fraternity, claiming to be expert in architecture, construction, engineering and so forth.

In 2017, other forms of contract such as the New Engineering Contract (NEC-4)[xx] were also making its round in the market, just a ‘keyboard button’ away that may set you back RM4,000.00[xxi] poorer. In essence NEC-4 fundamental principles of risk and costs collaborations[xxii] between the contractor and the employer was only popular in HongKong Government’s Public Funded Projects.

While penning this personal reflection of an architect’s sentiment on the forms of the building contract (now, they fashionably called it suite) the construction industries are in disarray with regards to the less predictability of the Court’s decision on CIPAA, damages such as LD and the multitudes of pitfalls contractors and employers come to face maneuvering the intricate nexus of the conditions of contract that may not necessarily reflects the parties true intentions. Contract administrators such as the architects now having to perform multiple roles that they themselves were not familiar with including the ‘devil’s advocate’ just to make sure that the building is built according to his design and intention. Why so difficult?
 

[i] ‘Battles of the Forms’ is a legal term for the common situation in which one business firm makes an offer in the form of a pre-printed form contract and the offeree responds with its own form contract, see www.fenwickelliott.com/research-insight/annual-review/2011/battle-forms. At common law, any discrepancy between the forms would prevent the offeree's response from operating as an acceptance. However, for the purpose of this article, it takes the literal meaning of the standard forms of building contract one ‘outdoing’ one another to garner a larger acceptance in the building industry.

[ii] Standard Form Contracts are agreements that employ standardised, non-negotiated provisions, usually in pre-printed forms; retrieved from www.designingbuildings.co.uk/wiki/Standard_form_of_contract

[iii] History of the JCT, retrieve from www.corporate.jctltd.co.uk/about-us/our-history

[iv] Powell-Smith, Vincent, “The Malaysian standard form of building contract (PAM/ ISM 69)”, Malayan Law Journal, (1990).

[v] It is estimated that 90 per cent of the building contracts in the private sector are based on the PAM form (Sundra, 2010), Zarabizan bin Zakaria, Syuhaida binti Ismail and Aminah binti Md Yusof ; “An Overview of Comparison between Construction Contracts in Malaysia: The Roles and Responsibilities of Contract Administrator in Achieving Final Account Closing Success”, Proceedings of the 2013 International Conference on Education and Educational Technologies (2013), retrieved from http://www.inase.org/library/2013/rhodes/bypaper/EET/EET-02.pdf

[vi] Oon CheeKeng, “Standard Construction Contracts in Malaysia Issues and Challenges”, retrieve from www.academia.edu/5722671/STANDARD_CONSTRUCTION_CONTRACTS_IN_MALAYSIA_Issues_and_Challenges_CK_OON_and_CO._Advocates_and_Solicitors_STANDARD_CONSTRUCTION_CONTRACTS_IN_MALAYSIA_Issues_and_Challenges_BY

[vii] P Kasi reported that Sundra Rajoo has offered his services in his personal capacity to complete the task of revising the PAM Formof Contract from where the late KC Cheang had left off… Council accepted Sundra Rajoo’s offer to complete the revision … for a fee of RM 30,000.00; disclosed by Ezumi, PAM Council Minute of Meeting.

[viii] … aspiration to produce a fair and balanced form of contract that would satisfy the role and to respond positively to the feedback from the industries…extract from the Background, “PAM Contract Drafting Committee, Handbook for PAM Contract 2006”, Pertubuhan Arkitek Malaysia, KL (2010).

[ix] used to say that it is better to deal with a difficult person or situation one knows than with a new person or situation that could be worse, retrieved from www.merriam-webster.com/dictionary/better%20the%20devil%20you%20know%20than%20the%20devil%20you%20don't

[x] Ong SeeLian and team; “Guide on the CIDB Standard Form of Contract for Building Work”, CIDB (2000). Retrieved from cidb.gov.my/images/content/pdf/p2p/guide-on-cidb-standard-form-of-contract-for-building-work.pdf

[xi] Although it appears that CIDB’s intention is to make the use of their forms commonplace, the question as to whether these CIDB Standard Forms will ultimately replace the existing JKR Standard Forms for the moment at least begets no precise answer, Sundra Rajoo, “Standard Forms of Contract – The Malaysian Position”, IBA Tokyo (2014). Retrieved from www.aiac.world/news/82/IBA-Tokyo-:-Standard-Forms-of-Contract-–-The-Malaysian-Position-by-Datuk-Professor-Sundra-Rajoo

[xii] The fees do not commensurate with the work done, response taken from an interview between the Edgeprop and Zulhamlee (former PAM President), “Why Malaysian architecture doesn't have to suffer from the Gucci syndrome”, EdgeProperty Lifestyle Edition (2015), retrieved from www.edgeprop.my/content/why-malaysian-architecture-doesnt-have-suffer-gucci-syndrome

[xiii] Sundra Rajoo, WSW Davidson and Harban Singh, “The PAM 2006 Standard Form of Building Contract”, Lexis Nexis Malaysia Sdn Bhd (2010).

[xiv] Consultants can claim for unpaid fees via CIPAA with reference to the judgement in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd [2016] MLJU 1827

[xv] Sounded liked ‘I will slap you’ in the Malay language – ‘sepak’ means slap.

[xvi] View Esteem Sdn Bhd v Bina Puri Holdings Berhad, read www.lh-ag.com/wp-content/uploads/2017/11/DR-e-Alert-LHAG-update-20171113.pdf

[xvii] Econpile (M) Sdn Bhd v IRDK Ventures Sdn Bhd and anor [2017] 7 MLJ 732, also read christopherleeong.com/media/3011/clo_201804_cipaa.pdf

[xviii] Read www.lexology.com/library/detail.aspx?g=98bd7c4b-8587-406b-8506-20ad2207a981

[xix] As pointed out by David Cheah in the Joint IEM MIArb RISM and PAM’s ADR course for Practitioners held in IEM on 1st Aug 2019.

[xx] See www.designingbuildings.co.uk/wiki/NEC4#Confidentiality

[xxi] Exchange rate to Ringgit Malaysia from Pound Stirling of 812.00 see https://www.neccontract.com/NEC4-Products/NEC4-Contracts/NEC4-June-2017-Edition-including-Alliance-Contract

[xxii] Read www.fenwickelliott.com/research-insight/newsletters/insight/75

Attended a talk by the Society of Construction Law, in AIAC, on the subject matter of Liquidated Damages post Cubic Electronics Sdn Bhd (in liquidation) v. Mars Telecommunications Sdn Bhd. The speakers were mostly lawyers with only one representing the contractor, MBAM. Wonder why the Architects, QS and Engineers were excluded and not represented to give their views?

The recent Federal Court position on Liquidated Damages “LD” clause, under Section 75 of the Contract Act 1950 “CA1950”, has been shifted from the position held in the Selvakumar Murugiah v. Thiagarajah Retnasam, where the Employer would still have to prove loss to a more inclusive positions where the parties’ freedom of contract were mutually inclusive especially where parties have comparable bargaining power and are properly advised.

The court has taken an approach similar to the UK Supreme Court position in Cavendish where proper credence to the parties’ own ability to assess their own commercial position and in doing so, allowing the damages clause to be used as a “permissible risk allocation tool” of the following features: - 

1.   Allow the innocent party to demonstrate firstly, there was a breach of contract and secondly, the contract contains a damages clause.

2.   By reversing the burden of proof to the defaulting party to show that the damages clause is unreasonable;

3.   Factors such as “legitimate interest” and “proportionality” when determining damages sum to be “reasonable”.

Obviously these new sets of “tests” were taken as a purely legal point of view, such as the test of “legitimate interest”, “proportionality” and “reasonableness”. The construction industries, however, posed a different sets of complexities such as: -

1.   Where the contractors were often at the receiving ends not having a greater opportunity to negotiate, especially on the quantum for LD during the tender stage, risking over-pricing and so forth.

2.   Where the contractors now have to proof that the damages, imposed by the employer, are unreasonable as for most of the time, the quantum for damages were fixed by the employer based on undisclosed methodology.

3.   Where arbitrators and adjudicators, whom were basically, technical professionals, now having to consider these new sets of “tests” of “legitimate interest”, “proportionality” and “reasonableness” in granting their decisions.

4.   Where the QS and the Architects were to revamp the entire tendering processes, now having to deliberate the methods of quantifying LD.

5.   Where the employer would now having to pass the cost, arising from the risk assessment of LD to the end user, the buyer.

As at the end of the session, there is no obvious answer as to what constitute these new sets of “tests” of “legitimate interest”, “proportionality” and “reasonableness” for immediate use by the professionals in the construction industries.
​
A passing remarks was made to PAM 2018 form with regard to Clause 22 but failed to deliberate further on Clause 22.2. A point to note, that Clause 22.2 was drafted to keep in mind that the LD stated in the Appendix is a genuine pre-estimate of loss and or damage which the employer will suffer in the event that the contractor is in breach… the parties agree that by entering into the contract, the contractor shall pay to the employer the said amount, if the same breaches due without the need for the employer to prove his loss and or damage unless the contrary is proven by the contractor.