PAM-PRACTICE NOTES 3-2020, MY POINT OF VIEW…
Update: I wrote this article way back in January 2021, as a response to PAM’s Practice Advisory No.3 on Contract Administration by the Architect should also include ultra vires obligation such as re-negotiating contracts for the parties. The findings of KL Eco City Sdn Bhd v Tuck Sin Engineering & Construction Sdn Bhd & Anor, ultimately seals the fate of the Architect not to move beyond its obligation under the contract.
YA Dato Lim Chong Fong holds:
“ Unless actual authority is conferred, the architect as agent of the employer in a construction contract generally does not have the ostensible authority to waive the contractual rights of the employer in respect of conditions precedent such as on notice requirement as held in City Inn Ltd v Shepherd Construction Ltd (supra). Actual authority can be specifically conferred where expressed in the construction contract; see Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd . There is however no waiver provision found in clause 23 of the PAM Conditions.”
“ In the premises, I find and hold from the evidence adduced that the Architect did not have either actual or ostensible authority to waive the condition precedent set out in clause 23.1(a) of the PAM Conditions.”
On this instance, the HC held that the Architect must always maintained its role as the Employer’s Agent and an impartial certifier to the Contractor and must never attempt to change the conditions of the contract, i.e. by acting ‘lenient’, to waive and by any means that will be taken or construed as changing the terms of the contract breaching the fundamental of parole evident rules. Under this basis, PAM’s Practice Advisory No.3 has ‘grossly erred’ and required immediate retraction and amendment.
 , second trench judgement to KL Eco City Sdn Bhd v Tuck Sin Engineering & Construction Sdn Bhd & Anor  1 LNS 360
 3 MLJ 126 and  2 MLJ 70 CA
PAM has taken a bold step to invite both current presiding judges of the High Court and Federal Court, YA. Dato’ Lim Chong Fong (HCJ) and YA. Dato’ Mary Lim Thiam Suan (FCJ) to moderate a public forum - ‘Surviving Post Covid-19 – A Common Sense Approach’. In the said forum, I am attracted by the PAM Past President, Datuk Ar. Tan Pei Ing’s revelation on the ‘PAM-Advisory’, now made available to members as PAM-Practice Notes 3-2020. The question remain is whether such an advisory, mandating the Architect as contract administrator CA, to facilitate parties to the contract to ‘alter’ their contract, doubling up as a ‘contract-negotiator’ to re-negotiate their existing-contract, to account for the Covid-19 scenario?
Let’s investigate further what the ‘advisory’ says. One, PAM contract has existing ADR clauses that parties can utilise. What is most surprising is – ‘the mediation process can be lengthy and costly’ … it means to say, PAM’s mediation are ‘lengthy and costly’? Or mediation, in general are ‘lengthy and costly’? Both the Covid-19 Mediation Scheme and the AIAC is offering pro-bono mediation scheme, how costly can that be? Furthermore, it usually takes a few days (the most, 2-days), to sort out a mediation session, beyond that is simply futile. There must be basis and justification to state as to why mediation are ‘lengthy and costly’?
Second, in the ‘advisory’, the CA/Architects should (rather meaning, shall being mandatory), ‘take a practical approach to mitigate dispute’. What is mean by ‘practical approach’? An ‘illegal-approach’, i.e. ultra-vires approach, can also be practical. What is ‘mitigating-dispute’? Dispute-avoidance or dispute-resolution? The latter is provided for in the contract, while the former is entirely something-else, implied rather than expressly provided for in the contract. When read together with BIPC joint advisory notes, ‘consultants are encouraged to […] facilitate […] explore options […] balance their respective interest […]’, meaning to assist parties in ‘renegotiating’ their contracts on a ‘good-faith’ basis. Also note the use of the word ‘encourage’, i.e. non-mandatory, as compared to PAM-Advisory, uses of the term ‘should’. Again, the PAM-Advisory mandated that ‘Architects should encourage contractual parties […] with the objective of preserving common-interest as opposed to insisting on strict contractual-rights’. As to how one defines, ‘objective of preserving common-interest’ as ‘good-faith’ is a matter of parties’ discretion but to insist on Architects to ‘opposed to insisting on strict contractual-rights’, is absolutely, uncalled-for, or to put it in another words, architect ‘must’ unilaterally act ultra-vires as a matter of ‘practicality’? This is where the ‘trouble will arise’, for architects …
 PAM-Practice Notes 3/2020, p.1
 PAM-Practice Notes 3/2020, p.2
The position in law is Good faith, best endeavours and fair dealing - In many legal system, law of obligation recognises that contract has to be formed in bona fide i.e. ‘good faith’, but not with the English law. Some cases may have been held against mala fide i.e. ‘bad faith’. English law do not recognise, the contracting party has to act in good faith. As to the reason why, traditionally, contract starts from ‘rugged individualism’, parties had to look after themselves in striking a bargain. English law prefers to develop incrementally and a ‘broad general principle’ would generate too much uncertainty. Effect should therefore be given to expressly assumed obligations to act in good faith. Such as an ADR clause requiring party to seek resolution in good faith. A duty of good faith has to be expressly stated to be enforceable. With court support. However, in recent cases, English law has been seen to be ‘hostile’ towards the doctrine of good faith, although attempt to recognise such doctrine is intrinsically driven.  Without reliance to such doctrine, some cases are ‘difficult to reconcile’. To put effect on this doctrine, the term of good faith has to be expressly stated. Alternatively, court may imply a term comprising good faith. Sometimes, not possible to imply such term. In situation of a reduction in obligation, unduly onerous obligation, creating redundancy clauses and with unintended consequences. Thus the meaning of good faith will depend on its context. This was the case in where a long-term PFI contract contained an express obligation of good faith, the court held that the trust has be in ‘material’. Similarly, a term requiring the parties to “co-operate with each other in good faith” was interpreted as requiring a party not to exercise its discretion in an arbitrary, capricious or irrational manner. Unlike the NEC contract, PAM Form has no basis on ‘good-faith’.
 Interfoto v Stiletto  Q.B. 433
 Arcos v EA.RonaasenAC470
 Walford v Miles2AC128
 Gold Group v BDWEWHC1632(TCC)
 Compass v MidEssex HospitalEWCACiv200
 Emirates v Prime MineralEWHC2104(Comm)
 Shaker v VistajetEWHC1329
 Petromec v PetroleoEWCACiv891
 YamSeng v International-Trade Corp.EWHC111(QB)
 First Energy v Hungarian Bank2Lloyd’sRep194,196
 Chelsfield v Qatari DiarEWHC1322(Ch)
 Fujitsu v IBMEWHC752(TCC)
 Myers v KestrelEWHC916
 Greeclose v National Westminster BankEWHC1156(Ch)
 Hamsard v BootsEHC3251(Pat)
 Portsmouth v EnsignEWHC1696(TCC)
 MSC Med.Shipping v Cottonex AnstaltEWCACiv789
 Walford v Miles  2 A.C. 128: Whether and to what extent the law of contract recognises enforceable obligations as to the way in which the parties are to behave? Where the parties act in a manner which conveys an intention to be bound, can there be an enforceable obligation to negotiate in good faith?
 Medirest v Mid Essex NHS Trust  EWHC 781 QB
 Mid Essex v Compass Group  B.L.R. 265 at 280
Three, the ‘advisory’ expressly mandated, ‘Architect should […] in guiding the negotiation between parties […] fair-resolution [meaning, good-faith basis]’, emphasis added. It is crystal clear that the ‘advisory’ mandated the Architect to facilitate parties to renegotiate their contract, in its capacity as a ‘para-legal’ professional, failing which, could the Architect be sued as legal-advisors, in this context of discharging its role?
Fourth, the law holds that Immunity of certifier – in earlier case, certifier has immunity only to be overturned later, that certifier has no immunity as he holds a duty of care both as the agent to the employer and an impartial certifier to the contractor. Immunity only applies where there was dispute which called for a judicial decision such as adjudication and arbitration. When the ‘advisory’ calls for ‘Architects are encouraged to be more lenient […]’, and ‘leniency’ is never an expressed ‘jurisdiction’ of the CA, it placed the Architects in very awkward ‘illegal’ positions, as to mean, having to consider that the PAM form has not taken a foreseeable circumstances of a pandemic, Architect could now take a ‘more lenient’ view to grant EOT, even when such is against the provision of the contract? How, sensible is such with regards to all the other roles as an impartial certifier, now subjected to challenge?
 Chambers v GoldthorpeKB624
 Sutcliffe v ThackrahAC727
 PAM-Practice Notes 3/2020, p.2, item 1
Fifth, Loss and Expenses in the ‘advisory’ is stated that if on the basis of force-majeure, it cannot be granted, but and again, contradicted by the following, ‘parties agree that the costs […] should be shared’, meaning the entire contract has to be rewritten and Architect has this role to renegotiate the term for the parties … and the same can be said, to the rest of the contractual procedural-terms, if not taken with extreme-care, would rendered the architect acting ultra-vires as both an impartial-certifier and an agent of the employer.
 PAM-Practice Notes 3/2020, p.2, item 2
Concluding, given the prima-facie meaning of the ‘advisory’ now, architects are empowered to facilitate parties of a PAM-Form Contract to renegotiate their contractual terms; and failing to exercise this ‘new-positions’ with care, will opens up ‘new-avenue’ for the architects to be sued and hopefully, with the current position of L3 Architects Sdn Bhd v PCP Construction Sdn Bhd  1 LNS 1321, Architects in Malaysia can be spared and have ‘immunity’ to do what it wishes …
 < http://www.davidyek.com/adr/architect-has-no-duty-of-care-to-the-contractor-the-malaysian-approach>
Truly honoured to have senior and well known architectural practitioners to read my opinion on ‘matters affecting the profession’ in https://www.facebook.com/davidyekarchitect/posts/3003622449872587 and it is valuable that the comment given to me really inspiring, especially to younger-practitioners. It is a pity that he did not ‘comment’ directly in the comment section. After much persuasion, he agrees that his comment be made anonymously, and I truly thank him for his generosity and kind gesture:
Read your review of the PAM advisory. I don’t want to comment on the contents because I think you had thought through the issues and while there are areas I might have slightly different take, it is better than a lot of opinions floating around.
I had one observation to make.
In all the publicised force majeure cases that come across before this advisory or indeed this pandemic, one party to the contract declare force majeure and state his basis for doing so. And then state the consequences of his declaration. So far we all assume that because the pandemic occur a force majeure event is in play. My considered opinion is force majeure has to be declared by one or both of the parties to the contract and the other party or indeed parties if more than one contract is involved; can dispute the declaration.
I note your scepticism about architects being empowered to help parties to re-negotiate terms of contract and if I read it right, I will also add I agree that it is dangerous grounds we are encouraging architects to go on. Especially if they had not familiar with what they in for. Architects who will intervene as an ad hoc mediator are usually quite sure of what the limits of their contribution should be. I hope we had not encouraged some to bite off more than they can chew.
Truly, hope that younger generations of architect ‘walk this path’ carefully, as the advisory is, in my mentor’s word, ‘not-gospel’ … Have a nice day, folks!
ARCHITECT HAS NO DUTY OF CARE TO THE CONTRACTOR – THE MALAYSIAN APPROACH
When parties to a dispute, received its decision, be it arbitration or adjudication, the losing party may be disgruntled and look for every avenue to recoup its losses; one possible mean is to find fault with the consultant, mainly the architect; for negligence as an impartial-certifier. The case whether a Main-Contractor can sue the Architect for being negligent is addressed by the Appeal Court, in PCP Construction Sdn Bhd (“PCP”) v L3 Architects Sdn Bhd (“L3”) where the judgement of the HC was unanimously upheld, dismissing PCP’s claim.
Against the context that L3 has no-contractual relationship with PCP, the ‘classical-textbook’ test in tort for negligence is taken, i.e. whether L3 has a duty of care towards PCP; whether the L3 has breached the said duty of care; and whether the breach by L3 has caused the PCP to suffer losses. For such, the Session-Court held that there was indeed a duty of care vested on L3; and an appeal was follow through in the HC; on two grounds, one, there is no duty of care vested on L3 and two, there is no actual-loss incurred.
The English position was clearly dealt with in Sutcliffe v Thackrah, that the Architect enjoys no-immunity. In Arenson v. Casson Beckman Rutley, it was held that “there was no reason of public policy to treat the respondent valuers’ task […] to the general rule of liability for negligence whereby immunity is granted to judges and arbitrators.”
In Pacific Associates v Baxter, it was held in contrast to Arenson; where courts should be slow to superimpose an added duty of care upon a party when the relevant rights came under a contractual framework that provided for the same; persuasively abided by Malaysia’s court; that scrutinises the meaning of ‘proximity’, based on the facts and circumstances of each case, “as such, the concepts of voluntary assumption of responsibility and reliance are seen as important factors to be established for purposes of fulfilling the proximity requirement […]might lead to an indeterminate liability being imposed on a particular class of defendants, thus leading to policy issues.” 
HC in PCP v L3, took the view that Thackrah and Pacific were of different contexts, i.e. architect sued by the employer, and should not be persuaded to follow; and held that L3 are not liable for claims for ‘pure economic loss’ in negligence when PAM-Contract has defined rights and liabilities of each party; and notwithstanding the findings of Saga Fire Engineering v Lee Yee Seng, where the consultants owed a duty of care to the contractor and were liable for the losses suffered; the Appeal-Court decided to agree with HC’s judgment.
Arising from this judgement, it appears that when it is said that the PAM-Contract has defined rights and liabilities of each party, especially with regard to the Architect as impartial certifier and an agent to the employer, wouldn’t that automatically implied that the Architect has a duty of care in tort to the Contractor? Nope? Then, this is good-news, as Architect can thus, do what they wish!
Merry Christmas and a Happy New Year!
 L3 Architects Sdn Bhd v PCP Construction Sdn Bhd  1 LNS 1321
  2 All ER 159
 Credit Guarantee Corp Malaysia Bhd v SSN Medical Products Sdn Bhd  2 MLJ 629; Bodibasixs Manufacturing Sdn Bhd v Entogenex Industries Sdn Bhd  9 MLJ 417
 Lok Kok Beng v Loh Chiak Eong  7 CLJ 1008
 Shah Alam High Court Civil Suit No. BA-22C-10-02/2017
Short answer is - in earlier case, certifier has immunity only to be overturned later, that certifier has no immunity as he holds a duty of care both as the agent to the employer and an impartial certifier to the contractor. Immunity only applies where there was dispute which called for a judicial decision such as adjudication and arbitration. Good Luck, Architect!
 Chambers v GoldthorpeKB624
 Sutcliffe v ThackrahAC727
DYA+C is set up by Ar. DAVID YEK TAK WAI to undertake resolution of commercial disputes through ARBITRATION and ADJUDICATION, specializing in CONSTRUCTION PAYMENT DISPUTES.
This is an educational blog. We do not guarantee, confirm nor warrant the accuracy of the information and facts stated therein. Read at your own 'risk'.