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