T Kuhendran and Esther Tan from ZUL RAFIQUE & Partners’ Construction Dispute Resolution Practice Group, acting for the Employer (the “Claimant”) in one arbitration proceeding, have successfully obtained an Award in favour of the Claimant in the sum of RM10 million against the Principal Consultant (the “Respondent”).

As a matter of background, the Respondent (a company of architects) was appointed by the Claimant as the Principal Consultant by way of a Letter of Appointment (the “LOA”), for the master planning and detailed design for the development of a particular project in Terengganu.

A dispute arose between the parties shortly after completion of construction but prior to taking over the project for use, as a number of buildings displayed structural defects. Investigations were carried out which confirmed that the serious defects were caused by the Respondent’s failure to perform their obligations and to meet the warranties stated in the LOA. Further, in light of the serious defects, the Claimant had to appoint others to remedy the serious defects and incurred an additional cost of RM10 million in doing so. 

The main issue to be determined by the Tribunal was:

Whether the Respondent, its servants or agents were in breach of the contract under the LOA and were negligent in the performance of the services.

In answering this issue, the Tribunal would also need to determine the following issue,
Whether the Respondent’s negligence and breach of contract caused the Claimant to suffer loss and damage? If so, the amount of such loss and damage.

Upon examining all the available evidence, the Tribunal found that the Respondent is liable to the Claimant, both in contract and tort, for the loss suffered by the Claimant as a result of having to rectify the defects in the said structures. Further, the Tribunal is satisfied that the quantum of the loss and claim by the Claimant (in rectifying the defects) is genuine and reasonable, and has been proven with documentary evidence. 

In this regard, the Tribunal awarded the sum of RM10 million, being the loss incurred by the Claimant, in favour of the Claimant, to be paid by the Respondent. The Tribunal also found that the Respondent has failed to provide its counterclaim, and accordingly dismissed its counterclaim.

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For more insight into this area of law, please contact our Partners in the Construction Dispute Resolution Practice Group: 
T Kuhendran 
Michele J Chong