assignment 1

SUHAILA ENDUT MBE 141087 :MBEG 1033-PART TIME ASSIGNMENT 1

QUESTION

Smart Developer engages Clever Architect as the designer and contract administrator of his office building project. He employs Strong Contractor to carry out and complete the construction of the project. In the course of the construction, Clever Architect charges Strong Contractor for all drawings and plans supplied to the contractor for the purpose of the construction. Strong Contractor concedes to the demand so as not to delay his progress and later serves a protest notice to Smart Developer. Clever Architect contends that it is a custom in construction industry that contractors should pay for all drawings and plans supplied to them. Smart Developer is unhappy with Clever Architect’s performance and serves a notice terminating his engagement after thirty days from the date of the notice. However, Clever Architect argues that the thirty day notice is not valid. He asserts that it is the custom in the architectural services that the notice should be minimum sixty days. When Strong Contractor completes the construction and is leaving the site, he dismantles and removes the site office. Smart Developer objects the contractor’s action and insists that the site office be reinstalled.

You are required to identify the issues in the above case and advise the three parties accordingly.

ANSWER

INTRODUCTION

Architects are normally employed under standard conditions of agreement which is being set by Architects Act 1967 (Act 117)1 & Architects Rules 19962. The conditions of engagement of an architect serve several purposes3. The conditions of engagement of an architect form the details of a contract between two parties and conveniently use as there is no need to draft a specific appointment agreement. It also provides an outline for establishing the duties and scope of the professional. Thus it is a contract and subject to the rules of law. The terms within them relate to the responsibilities and services of the architects. The general conditions spell out payment clauses which govern detailed information regarding the calculation and timing of payments including refund of expenses and disbursements. According to A. Piven, expenses made in the interest of the project sometimes referred to as out-of pocket expenses4. It is identified separately from architect’s costs during the delivery of the architect’s services including reproduction of drawings. The agreement between Architect and the client may be terminated at any time by either party giving to other party sixty days’ notice or shorter period as may be agreed by both parties1. Upon termination, client is under obligation to pay balance of fees for services rendered up to the stage of termination together with all reimbursable charges1. After received payment due, Architect shall issue a letter of release to the client and the client shall be entitled to appoint another architect to continue with project1.

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1.Architects Act 1967 (Act 117)2.Architects Rules 1996

1SEMESTER 2 SESSION 2015-2016


3.Construction_Contracts_Law_and_Management-John_Murdoch_Taylor_&_Francis-20014.A. Piven, Peter, Compensation Management: A Guideline for Small Firms 1982, The American Institute of Architects

Financial Management System access via http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aiab087245.pdf

The definition of land in Section 5 National Land Code (NLC) includes; all things attached to the earth or permanently fastened to anything attached to the earth, whether on or below the surface5. The legal principle applicable is Quicquid plantatur solo, solo cedit "whatever is affixed to the soil belongs to the soil”. With something that is or becomes affixed to the land becomes part of the land; therefore, title to the fixture is a part of and passes with title to the land and therefore whoever owns that part of the land will also own the things attached. The law of fixture is stated in Holland v. Houdgson case law with Blackburn J. introduced the degree and object of annexation test6:

“Thus blocks of stone placed one on the top of another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones, if deposited in a builder's yard and for convenience sake stacked on the top of each other in the form of a wall, would remain chattels. On the other hand, an article may be very firmly fixed to the land, and yet the circumstances may be such as to show that it was never intended to be part of the land, and then it does not become part of the land.”

Degree of annexation test and purpose of annexation test is mean to decide whether the article is a fixture or a chattel7. The degree of annexation test is a test on the physical attachment of the article by looking at the degree to which an article is affixed to the land. The purpose of annexation test is a test to ask reason and intention of the item attached to the land. Blackburn J. in Holland v. Hodgson said that “But even in such a case, if the intention is apparent to make the articles part of the land, they do become part of the land”. Case law of Goh Chong Hin v. Consolidated Malay Rubber (1924) 5 FMSLR 86 has apply the principle of English Law of Fixture 7. Sproule J. said that “that English law of fixtures is applicable and referred to in Malaysia.”

THE ISSUES

Below is the list of a few issues that can be discussed from the facts given above?

1. Whether Strong Contractor is liable to pay Clever Architect all the drawings and plans supplied for the purpose of the construction? If not, can Strong Contractor get the money back?

2. Smart Developer want to terminate Clever Architect and issue terminating notice of thirty days, but Clever Architect contends the custom practice is minimum sixty days. Whether thirty days of termination notice is valid?

3. Smart Developer insists the site office be reinstalled. Does the site office is considered as fixtures or chattel?

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5. Section 5 NLC6. Holland v. Hodgson (1872) L.R. 7 C. P. 328



7. Goh Chong Hin v. Consolidated Malay Rubber (1924) 5 FMSLR 86

THE DISCUSSION

Architect’s Act 1967(Act 117) Architects Rules 1996 were used in Issue One and Issue Two, and Goh Chong Hin v. Consolidated Malay Rubber (1924) 5 FMSLR 86 were used in Issue Three as reference.

Issue One:

Whether Strong Contractor is liable to pay Clever Architect all the drawings and plans supplied for the purpose of the construction? If not, can Strong Contractor get the money back?

Referring to the Architects Act 1967 (Act 117), the contractor was not parties to the contract between the architect and the client. The contract and agreement of the architect is with the client. Therefore according to the case of Fc Seck Trading As Oversea Structural Company v Wong and Lee [1940] 1 MLJ 182, the contractor has paid the architect due to the contractor ignorance of their rights8. The court held that the architect has taken advantage of the contractor’s ignorance and the learned District Judge decided that the case cannot be put under the mistake of law if the contractor is ignorant of his right. The case also suggested that there is no proof that could contradict with written contract. The written contract between the architect and the client clearly stated the payment, reimbursable expenses and additional services compensation between the architect and the client. Therefore, in printing reproducing all documents including drawings, the architect should instead charge to the client as part of the additional expenses.

In this case, the contractor pay to the architect in order not to delay the work progress and the contractor is fully aware of their right thus they issue a protest notice to the client. Using the case of Fc Seck Trading As Oversea Structural Company v Wong and Lee [1940] 1 MLJ 182, Strong Contractor are not liable to pay Clever Architect for the reproduction of the drawings because in Fc Seck Trading As Oversea Structural Company v Wong and Lee the supplying of plans is part of the architect’s duties. However, Strong Contractor is fully aware of his right not liable to pay Clever Architect. Terrell, AG CJ quoted Mellish L.J. said in Rogers v Ingham:

"But on the other hand I think that, no doubt, as was said by Turner, L J. 'This Court has power (as I feel no doubt that it has) to relieve against mistakes in law as well as against mistakes in fact' ( Stone v Godfrey De GM & G p 90) that is to say, if there is any equitable ground which makes it, under the particular facts of the case, inequitable that the party who received the money should retain it."

It is clear that Strong Contractor is not liable to pay Clever Architect for the drawings, but Strong Contractor pay and did not contend even though they are fully aware of their rights.

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8 Fc Seck Trading As Oversea Structural Company v Wong and Lee [1940] 1 MLJ 182

Issue Two

Smart Developer want to terminate Clever Architect and issue terminating notice of thirty days, but Clever Architect contends the custom practice is minimum sixty days. Whether the issuance thirty days of termination notice is valid?

The conditions of engagement is the contract between an architect and his client and also a custom and practice as sanctioned by the Malaysian Institute of Architects and the Board of Architects. Lee Hun Hoe CJ (Borneo) said in CS Khin Development Sdn Bhd v Chung Yoke Onn9:

“In Datin Peggy Taylor v Udachin Development Sdn Bhd [1984] 1 MLJ 85 the Court considered that the 'Pertubuhan Akitek Malaysia' (PAM) guidelines should be imported because they reflected the custom or practice of the profession of the architects and could be relied upon or could be called in aid when the contingency of abandonment was not provided for in any agreement. In such a situation the Court took the view that it was right to take into account the prevailing practice of the architectural fraternity in order to give business efficacy to the contract of employment where the architect through no fault of his own had to cease his professional duties.”

The conditions provide termination of engagement item whereby termination by either party can be done by the giving of a notice of 60 days or any shorter period that may be agreed to between the parties 10.

Clause 17 (1), “The Memorandum of Agreement between the Professional Architect and the client may be terminated at any time by either party serving upon the other party a written notice of termination, where such termination shall take effect after a period of sixty days from the date of the written notice, or such shorter period as may be agreed upon between the Professional Architect and the Client”

The case law that has debate the issue of the above is Ac Ho Sdn Bhd v Ng Kee Seng (T/A Konsultant Senicipta)11. In the case of is Ac Ho Sdn Bhd v Ng Kee Seng, the termination letter of Ng is dated on 27 December 1993 and it was replied with the statement of ‘our client accepts the repudiation’ on 7 January 1994. Therefore the termination is valid even though the period is shorter than 30 days as the termination is agreed by both parties.

Issue Three

Smart Developer insists the site office be reinstalled. Does the site office is considered as fixtures or chattel?

Under the English law of fixtures, two tests derived in Holland v. Houdgson is important to justify the site office as a fixture or chattel. Degree of Annexation test includes objects either attached

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9. CS Khin Development Sdn Bhd v Chung Yoke Onn [1985] 2 MLJ 31910. Architects Act 1967 (Act 117) (Rule 29 (17)11. Ac Ho Sdn Bhd v Ng Kee Seng (T/A Konsultant Senicipta) [1998] 2 MLJ 393.

strongly or lightly or even resting by its own weight to the land. It also taken consideration the extend of the injury upon the objects removal. The more damage is caused, the more likely it is considered to be part of the land. The installation of site office are different from normal buildings since they are temporary structures and need to cater for construction during building erection. Site Office is resting by its own weight to the land and minimal connection due to the portability of the site office. Thus, the extend of injury upon the site office removal is minimal.

The other test is the Purpose of Annexation which taken consideration whether the object was meant for permanent and substantial improvement or just a temporary purposes. The intention for the site office installation is only during construction period. It is consistent as per preliminaries clause which required contractor to provide adequate site office during construction. Thus, the purpose of the site office is only meant during construction and no longer required after the construction is completed and it is obsolete.

Based on the case of Goh Chong Hin v. Consolidated Malay Rubber (1924) 5 FMSLR 86, the general principle is that all fixtures attached to the land will pass to the purchaser. Using the same principle as Goh Chong Hin v. Consolidated Malay Rubber case, the site office is not a fixture.

CONCLUSION

Referring to Issue One, Strong Contractor are not liable to pay Clever Architect the drawings, but Strong Contractor cannot get the money back due to his acknowlegdement of their rights and their case were considered mistake of law.

The conclusion of Issue Two is that the agreement between the Professional Architect and the client can be terminated by giving a written notice to other party which is in contract. The validity of the written notice is sixty days (60) from the date of written notice. Expiry of the sixty days (60), the termination will be take effect. However the period of validity can be shorten as agreed by both party. The notice of thirty days of termination by Smart Developer is not valid, and the validity of the notice is sixty days from the date of the notice.

It can be concluded that in Issue Three, site office is not attached to the land and resting by their own weight are not considered as part of the land and it is a chattel ,not a fixture. Strong Contractor are not required to reinstalled the site office.


assignment 1

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