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!
Postscript (2): Further s.7Covid-Act HC tests:
 Malaysian Federal Court in SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor  1 CLJ 177; Ginma Industries Sdn Bhd v Xin He Feng (M) Sdn Bhd  MLJU 1675
 Ravichanthiran A/L Ganesan v Lee Kok Sun (2021) MLJU 1876
 Armada Petroleum Sdn Bhd v Alam Maritim Resources Bhd 
Postscript: As at to date [Sept 2021], there were very limited case-law demonstrating the operation of the Covid-19 Act. So far courts had demonstrated that settlement agreement entered post termination of a tenancy fall outside the Act; tenancy agreement expired within the publication of the Act, with prior notice to renew and eventually terminated, such agreement is deemed to have been validly terminated; a consistent breach of payment obligations prior to the Act, will not be protected by the Act; the Act provides protection to future ability to fulfil obligations and not existing obligation to pay; and the Act provides extension to the time-bar to sue.
 WPP Business Services Sdn Bhd v Cosmopolitan Avenue Sdn Bhd  MLJU 1042: s.7 Covid-19 Act
 Ang Pi Kui & Anor v Lee Wee Teck & Anor  1 LNS 58: s.10 Covid-19 Act
 Pilecon Engineering Bhd v Malaysian Trustees Bhd  MLJU 1167
 Armada Petroleum Sdn Bhd v Alam Maritim Resources Bhd 
 Uni Construction & Realty Sdn Bhd v Tersaim Lall 
Having to term with the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill (“COVID Bill“), the reality of “Building Contract is ‘pregnant’ with disputes”, are very-very real. Not only that the Parliament, via its sovereignty- within the three-pillars of democracy, has in-interim, ‘re-wrote’ the contracts for the parties, not even by the courts, in certain ways, coupled with multiple ‘flip-flop’ conundrums from the Government of the day, impacted the construction industries with ‘gapping’ trench that the construction industries stakeholders are having difficulties to fill.
These ‘lacuna’ opportune upon many ‘fringe-parties’ to institutionalise their ‘relevancy’ from promoting mediation as not a dispute-avoidance mechanism but a dispute-resolution that has no statutory-bites; to ‘creatively’ re-package ‘new-professionals’, i.e. ‘facilitative-negotiators’ to assist parties to ‘re-negotiate’ their existing-contract, often making them-murkier; the traditional core-consultants, i.e. the Architects, Engineers and QS having to find ways to ‘salvage’ the unprecedented-events as they are the parties that were hit the most, with the contract-terms that had never foresee such pandemic, at such a scale.
The Covid-Bill has left many questions unanswered; came rather-late when the damage has already been done; ‘tapestry’ and temporal in nature with no ‘statutory-solutions’ in place, even mediation is non-mandatory. There also arise for the fact that many agencies are running to provide ‘mediation’ as dispute-resolution provider, with or without a single-idea as to the real issues faced by the construction-industry stakeholders, central on the cardinal-issues of payment and time. Similarly, there are other quarters that question the ‘conflicting-interest’ and the effective roles of the Architects, Engineers and QS as ‘mediators’ for construction-related matters, especially those projects under their watch. Who on earth, would not have been in a better position, for dispute-avoidance in the first place, if not for the role of the Architect, whom from the onset has been ‘statutorily-empowered’ to self-regulate; statutorily-regulated; and in common law provision, the impartial certifier? Do the industry wish to re-invent the wheel, perhaps by introduction of another breed of specialist, ‘neutral-evaluator’ to provide ad-hoc ‘instant-expert’ non-binding recommendations for non-technical mediators to mediate dispute, thus additional costs and time required?
Furthermore, a facilitative approach in the construction industries is a ‘waste of time’. “A strictly facilitative mediation seems like such a waste of time. If they are in dispute and at gridlock it doesn't provide any avenues for resolution except further discussions which presumably they've already exhausted which is why they are still in dispute avenues.” Some legal fraternity recognise such, as a way to mitigate, another new-breed of professionals are brought into facilitative-ly re-negotiate existing-contracts of the parties; often mutilating standard-forms beyond its recognisable-forms into ‘bespoke-contract’, possibly untested, ambiguous and so much foreign to the Architects, Engineers or QS to administer.
As to the existing standard-form, i.e. PAM-Form has provided ‘force-majeure’ a civil-law jurisdiction clause that is so foreign in our common law traditions; where applications become rather awkward as the pre-condition of ‘epidemic’ has narrower ambit compared to ‘pandemic’ of a global-scale, thus the question in law, should ‘pandemic’ be construed as ‘epidemic’ as envisioned by the parties when they enter into their contract, or entirely unforeseeable that such an unprecedented change in the contract conditions warrant repudiation under ‘frustration’? We have yet to see the findings of the court, although PAM has been too-quickly to conclude such; impacting many contractors ‘desolate’ without any recourse for loss and or expenses which are very-very real. Mirrored the advice from the JCT, which is absent in the long-awaited PAM-advisory, it was instead suggested that as a matter of procedural-rule, within the stipulated conditions of the contract, the Covid-19 situation shall be viewed as pre-governmental intervention and governmental intervention.
In situation of pre-governmental intervention, if the site has been affected by Covid-19, it is deemed to fall within the provision of force-majeure, a neutral-event qualifies for EOT but not loss and expenses. Whereas, with the governmental intervention, i.e. the MCO, CMCO or others, it is a compulsory-order from the government, thus delay-prevention is no longer a choice of the contractor, warrants EOT with automatic loss and expenses. This is a ‘just, fair and reasonable’ approach in extra-contractual, i.e. tort relationship governing this industry, without to succumb for any ‘maverick’ or novel approach such as ‘good faith’ that is not the ‘overarching principle’ of our common law. Having to say that, we have really yet to see any substantive, concrete, workable and detail proposals from PAM on the interim-measures for contract administrator to work on immediately especially on procedural-matters, leaving the substantive-issues to be agreed upon by the parties, failing which, again arbitration, adjudication and the court, are the only options; of which technical mediation as provided by PAM shall easily have avoided such disputes.
A lot have been spoken thus far, but political-will to act upon such has yet to be seen. There is no walking the talk at the moment, unfortunately.
 Linden Gardens Trust Ltd v Lenesta Sludge Disposal Ltd  1 AC 85, per Lord Browne-Wilkinsonat, p.105E
 <https://www.parliament.uk/about/how/role/sovereignty/>: Mirrored that of Westminster
 Arnold v Britton  UKSC 36, per Lord Neuberger, p.18
 <https://en.wikipedia.org/wiki/Non_liquet >: In law, a non liquet (commonly known as "lacuna in the law") is any situation where there is no applicable law. Non liquet translates into English from Latin as "it is not clear"
 P.II,Covid-Bill: 18 Mar 2020 - 31 Dec 2020
 Cl.9,Covid-Bill: use of the word “may”, the mediation option is voluntary
 S.24.A.UBBL 1984
 Housing Development Act 1966 HDA: Reg.11,Cl4.P.2
 Sutcliffe v Thackrah  AC 727
 RICS’s ACRE-Model of Evaluative Mediation
 Facilitative Negotiator, mooted by MMC Bar-Council Malaysia
 Some Institutional Administered Arbitration only administer dispute based on the standard-form that the institute has published.
 Article 7(ad)PAM2006
 Treitel, Frustration and Force Majeure, (3rdEd.,2014), 7-001
 Caparo Industries v Dickman  2 AC 605
DISCREPANCY BETWEEN THE DRAWINGS AND THE BQ, WHICH TAKE PRECEDENT?
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’.
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:
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.”
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.
 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’.
Interesting enough the conundrum of MCO has been given another, "garnishes of the stale plate" as the stakeholders are all 'surfing in the dark', where more questions are remained unanswered. Although something interesting I noticed from the webinar, 'Kisah Benar', the lawyers are exploring unchartered territory relying on the following logic:
Foremost, cl.11.1, PAM 2018 requires "[Variation] means the alteration or modification [...]" and with regards to cl.11.1(d), "Any changes to the provision of the contract" [may also take into consideration the saving effects of the COVID ACT]; with regards to, cl.11.1(d)(i), "Any limitation of working hours", by token imposed upon by the MCO, compliance to SOP, FMCO and the sorts. Cl.11.7, "[Variation] has caused [...] contractor to incur additional expenses"; cl.11.7(a), "[Written] Notice to the Architect", and vested upon the Architect to ascertain accordingly.
Secondly, this move away from the reliance on cl.4.2, "inconsistencies between the [Documents] and any laws regulation [...] give to the Architect a written notice"; on the pretext that the MCO, FMCO and compliance to SOP, is a changes in the law that has not been contemplated by the parties before, thus the 'discrepancies'; although lawyers find difficulty to reconcile this, owing to the fact that most lacked the site-experiences.
Thirdly, the 'tipping point' between cl.11.7 and cl.4.2, is cl.11.7 require the Architect's Instruction as condition precedent and cl.4.2, has a 'deeming-effect', in absence of an AI. So, the question is will the Architect stands to lean towards the contractor to issue an AI to invoke cl.11.7? Highly unlikely ...
MCO 04 – NEW NORMALITY BITES
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. 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.
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 for loss and or expenses arising from this ‘changes to the law’. 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’, ‘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 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’. 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.
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.
 Cl.24.3(c)PAM2006, “Compliance to a written AI in regard to the postponement […] to be executed under Cl21.4”
 Cl.24.3(n)PAM2006, “[…] provided always the same is due to negligence or omission on part of the employer […]”
DISPUTE AVOIDANCE DURING MCO – WHAT ARCHITECT CAN OR CANNOT DO?
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 [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 [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 [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 [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 [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 [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 [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.
[i] Bale H.G. (ed) Chitty on Contracts (28th Ed. Sweet & Maxwell Ltd 1999) vol.1, p.273 – 274.
[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
Movement Control Order MCO from the Lens of an Architect
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 [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.
[iv] Cl23.8(w) PAM 2006
[v] Cl23.8(a) PAM 2006
[vii] Cl24.3(n) PAM 2006
[viii] 1 KB 256 at 259
Can the Architect unilaterally grant EOT to the contractor without any notice in accordance to the PAM Form 2006?
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.
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.
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  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  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
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