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2023 MarsdenLR 2377
HIGH COURT MALAYA SHAH ALAM
AZMAN KARIM & ANOR – Appellant
Versus
HASA ARKITEK SDN BHD & ORS – Respondent
[Civil Suit No: BA-22C-33-12/2016]
Architects owe a duty of care to clients, including advising on performance bonds and monitoring project compliance. Breaches can lead to liability for damages under contract and tort law.
Headnote:(A) Architects Act 1967 - Sections 2(1), 10(2)(a)(i); Architects Rules 1996 - Rule 28(1), 29(1)(b); Lembaga Pembangunan Industri Pembinaan Malaysia Act 1994 - Section 34B; Contracts Act 1950 - Section 74(1) - Breach of statutory duties and tort of negligence by architect and architectural firm in construction project - Architect failed to advise on performance bond, oversee contractor's works, and disclose cost overruns - Plaintiffs entitled to damages for breach of contract and negligence. (Paras 24-75)
(B) Duty of care - Architect's duty to exercise reasonable skill and diligence in contract administration and site supervision - Architect liable for failure to ensure compliance with contract terms and for not informing clients of material facts. (Paras 31-44)
(C) Counterclaims - Dismissed for lack of basis as plaintiffs did not unlawfully terminate contracts with contractors. (Paras 52-56)
(D) Assessment of damages - Plaintiffs awarded RM516,067.62 for cost overruns and other incurred costs with interest. (Paras 61-74) (E) Costs - Defendants ordered to pay plaintiffs' costs and partially liable for costs of the third defendant. (Paras 72-75)
The grounds of appeal are based on the assertion that the lower court erred in its interpretation and application of the duty of care owed by the defendants. Specifically, the appeal contends that the court failed to recognize that the duty of care extended beyond contractual obligations, arising instead from the nature of the relationship, conduct, and professional standards. The appeal also challenges the court’s conclusion that statutory provisions do not automatically create a tort of breach of statutory duty, arguing that the legislative intent should have been interpreted more broadly to impose liability where appropriate. Furthermore, the appeal asserts that the lower court did not adequately consider the evidence demonstrating the defendants’ negligent conduct in supervising the project, advising on costs, and ensuring timely completion, which are critical factors establishing breach of duty. The appellant contends that these oversights led to an incorrect determination of liability and damages, and thus, the decision should be reconsidered.
| Table of Content |
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| 1. factual background of the case (Para 1 , 2 , 3 , 4) |
| 2. contractual obligations and agreements (Para 5 , 6 , 7 , 8) |
A. Introduction
[1] In this case:
(1) the 1st plaintiff (1st Plaintiff) is the husband of the 2nd plaintiff (2nd Plaintiff). The 1st and 2nd Plaintiffs (referred collectively in this judgment as the "Plaintiffs") owned a two-storey bungalow erected on a piece of land with a postal address of no 15 (PT 30167), Jalan Awan Larat U8/74, Seksyen U8, Bukit Jelutong, 40150 Shah Alam, Selangor Darul Ehsan (Site);
(2) the 1st defendant company (1st Defendant) is a company which provides architectural services. The 2nd defendant (2nd Defendant), a qualified architect, is a director of the 1st Defendant; and
(3) the 3rd defendant company (3rd Defendant) does construction work.
[2] The Plaintiffs through the 1st Defendant's letter dated 4 September 2012 [Contract (Plaintiffs- 3rd Defendant) ] appointed the 3rd Defendant to be the main contractor for extensive renovation works on the Site, namely, to build a three-storey bungalow with, among others, a gazebo, swimming pool and jacuzzi (Project). The Contract (Plaintiffs-3rd Defendant) was accepted by the 3rd Defendant on 7 September 2012.
[3] This case involves the following three disputes among the parties:
(1) the Plaintiffs filed this suit (Original Action) against the 1st, 2nd and 3rd Defendants (collectively referred to in this judgment as the "Defendants");
(2) a counterclaim had been filed by the 1st Defendant against the Plaintiffs [Counterclaim (1st Defendant)]; and
(3) the 3rd Defendant had filed a counterclaim against the Plaintiffs [Counterclaim (3rd Defendant)].
[4] The Original Action, Counterclaim (1st Defendant) and Counterclaim (3rd Defendant) were tried together (Trial).
B. Background
[5] Despite the fact that the Plaintiffs did not appoint in writing the 1st Defendant to be the Project's architect (Project Architect), all the parties in this case have agreed as follows:
(1) there was a contract between the Plaintiffs and 1st Defendant wherein the 1st Defendant had been appointed as the Project Architect [Contract (Plaintiffs-lst Defendant)]; and
(2) the "Agreement and Conditions of PAM Contract 2006 (Without Quantities)" would apply to the Project.
[6] The Contract (Plaintiffs-3rd Defendant) was signed by the 2nd Defendant as the 1st Defendant's director (on behalf of the Plaintiffs). According to the Contract (Plaintiffs- 3rd Defendant), among others:
(1) clause 1 provided that the "fixed lump sum price" of the Project was RM3,988,000.00 (Fixed Contract Sum) (Clause 1 [Contract (Plaintiffs-3rd Defendant)]);
(2) clause 1(c) [Contract (Plaintiffs-3rd Defendant)] stated as follows, among others:
(a) the "Prices and Rates in the Schedule of Prices and/or General Summary of Tended" "shall be scrutinized and adjusted"" by the 1st Plaintiff but the Fixed Contract Sum "shall remain unaltered""; and
(b) "any item not mentioned in the Schedule of Prices and/or General Summary of Tender but deemed required" to meet the "intended specification/performance shall be considered as included" in the Fixed Contract Sum;
(3) according to cl 4, the 3rd Defendant would take possession of the Site on 8 September 2012 (Clause 4 [Contract (Plaintiffs-3rd Defendant)]);
(4) clause 5 (Clause 5 [Contract (Plaintiffs-3rd Defendant)]) provided that the date for completion of the Project "shall" be 12 months from the Date (Site Possession), ie., 7 September 2013 [Original Completion Date (Project)];
(5) clause 6 (Clause 6 [Contract (Plaintiffs-3rd Defendant)]) stated that if there was any delay in the completion of the Project, the
Liquidated and Ascertained Damages (LAD) was RM400.00 "per calendar day" (LAD Rate); and
(6) according to cl 17 (Clause 17 [Contract (Plaintiffs-3rd Defendant)]), time was the essence of the Contract (Plaintiffs-3rd Defendant).
[7] In accordance with cl 4 [Contract (Plaintiffs-3rd Defendant)], the possession of the Site was handed over to the 3rd De
