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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR CIVIL SUIT NO. WA-22C-80-10/2019
/akn/my/judgment/high-court/2022/ce61b9e0-931b-48c6-bcc4-6f000166f2c6
High Court of Malaysia25 Aug 2022WA-22C-80-10/2019
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“esign consultant was paid RM80,000 out of RM220,000. To a claim for the balance, one of the defence was that the contract providing for the services is illegal being in violation of s. 7(1)(c) of the Architect Act 1967. The court there held, upon those facts, that the work of the design consultant was "mainly the prepa”
“(i) a declaration that the services rendered by the First and/or Second Plaintiff are architectural works as defined under section 2 of the Architects Act 1967;”
“hat case See Mee Chun J (now JCA) held as follows: S/N OytrKaiyTEa8HmqRd0/kRA **Note : Serial number will be used to verify the originality of this document via eFILING portal 68 “9. Section 29 of CIDB Act only provides a penalty for non registration and does not go beyond that. Hence it can be said section 25 read tog”
“herwise requires - "Architect" means a person registered under subsection 10(2); "architectural consultancy practice" means a sole proprietorship, partnership or body corporate incorporated under the Companies Act 1965, providing architectural consultancy services and is registered by the Board under section 7A or 7B;”
“g the Contract that requested the First Plaintiff to set up a Malaysian branch and collaborate with a local registered architect. [56] That notwithstanding, it is provided as follows in s. 24 of the Contracts Act 1950 (“CA”):”
“eyor providing professional services and advice under Sections 7 and 7A is further strengthened by the provisions of Section 34 of the Architects Act, 1967, and Section 25 of both the Registration of Engineers Act, 1967 and the Quantity Surveyors Act, 1967 which impose penal sanction on those who breached this prohibit”
“ilding contract was not held to be void and unenforceable notwithstanding that the unregistered contractor was in contravention of s. 25 and therefore likewise guilty of an offence under s. 29 of the Lembaga Pembangunan Industri Pembinaan Malaysia Act 1994. In that case See Mee Chun J (now JCA) held as follows: S/N Oyt”
“amated Sdn Bhd & Anor v Bank Pertanian Malaysia Bhd [2021] 8 CLJ 409; see also paragraph 13.030 of the treatise The Law of Contract in Singapore, volume (1) 2nd edition which dealt with s. 12 of the Professional Engineers Act (Cap.253, Rev 1992 Ed) that is pari materia with s. 7(1)(c) of the AA as well as the earlier c”
“services and advice under Sections 7 and 7A is further strengthened by the provisions of Section 34 of the Architects Act, 1967, and Section 25 of both the Registration of Engineers Act, 1967 and the Quantity Surveyors Act, 1967 which impose penal sanction on those who breached this prohibition. [See: B/A p.14.] Sectio”
“to verify the originality of this document via eFILING portal 54 The works of an architect can also be glimpsed from the laws or by-laws governing the construction of a building. Under s. 8 of the Sarawak Building Ordinance 1994, plans and specifications must be submitted for the approval of the local authority before”
“(iii) a declaration that the Second Plaintiff did not provide any services to any parties and the invoices issued by the Second Plaintiff are null and void under the Architects Act 1967 and the Service Tax Act 1975; S/N OytrKaiyTEa8HmqRd0/kRA **Note : Serial number will be used to verify the originality of this documen”
“Sdn Bhd (No 2) [1997] 2 MLJ 829 and Datuk Tan Leng Teck v Sarjana Sdn Bhd & Ors [1997] 4 MLJ 329).” (emphasis added) [58] Furthermore in the Singapore case of Ting Siew May v Boon Lay Choo & Another [2014] SGCA 28, Andrew Phang Boon Leong JA held as follows: “103 A second source of difficulty in relation to the law rel”
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Content
IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR CIVIL SUIT NO. WA-22C-80-10/2019
2
FALCONER CHESTER HALL (ASIA) SDN BHD PLAINTIFFS
2
SHAPADU CORPORATION SDN BHD DEFENDANTS GROUNDS OF JUDGMENT S/N OytrKaiyTEa8HmqRd0/kRA Introduction [1] This is a suit concerning the claim for architectural consultancy services fees rendered by a foreign architect jointly with its Malaysian incorporated branch. [2] The First Plaintiff is a United Kingdom incorporated private limited company involved in the business of architectural, master planning and interior design services. [3] The Second Plaintiff is a Malaysian incorporated private limited company involved in the business of architectural, engineering and other specialised constructional services. It is the subsidiary of the First Plaintiff. [4] The First Defendant is also a Malaysian private limited company involved in the business of project management and consultancy services. [5] The Second Defendant is likewise a Malaysian private limited company involved in the business of management and investment holding. S/N OytrKaiyTEa8HmqRd0/kRA Preliminary [6] In this suit, the Plaintiffs claim against the Defendants jointly and severally for breach of contract for non-payment of their services rendered as follows:
i
(i) the sum of RM2,863,090.28;
Subparagraph
(ii) alternatively, that the damages to be assessed by this Honourable Court deems fit;
Subparagraph
(iii) cost; and
Subparagraph
(iv) such further and other relief this Honourable Court deems fit. [7] The Second Defendant counterclaimed for the following against the Plaintiff:
i
(i) a declaration that the services rendered by the First and/or Second Plaintiff are architectural works as defined under section 2 of the Architects Act 1967;
Subparagraph
(ii) a declaration pursuant to section 7(1)(c) of the Architects Act 1967 that the Plaintiffs are barred from claiming fees, disbursement or other consideration;
Subparagraph
(iii) a declaration that the Second Plaintiff did not provide any services to any parties and the invoices issued by the Second Plaintiff are null and void under the Architects Act 1967 and the Service Tax Act 1975; S/N OytrKaiyTEa8HmqRd0/kRA
Subparagraph
(iv) a declaration that the deed of novation dated 30.08.2016 entered into by the First Plaintiff, Second Plaintiff, First Defendant and Second Defendant are null and void;
v
(v) an order that the sum of RM1,428,133,52 which was paid under a mistake of law by the Second Defendant to be refunded by the First and/or Second Plaintiff;
Subparagraph
(vi) interest;
Subparagraph
(vii) costs. [8] The First Defendant counterclaimed the following from the Second Defendant:
i
(i) a declaration that Shapadu Corporation Sdn Bhd (Company No.:116721-M) (“SCSB”) is liable to save harmless and keep indemnified the First Defendant i.e. LFE Engineering Sdn Bhd (Company No.: 25875-K) against all actions, proceedings, damages, penalties, costs, claims and demands and all losses sustained by LFE Engineering Sdn Bhd arising in connection with the letter of appointment dated 15.1.2016 between SCSB and LFE Engineering (“Project Management Agreement”) and the quadripartite agreement dated 30.8.2016 between the Plaintiffs, LFE Engineering and SCSB (“2016 Agreement”);
Subparagraph
(ii) an order that SCSB do forthwith pay to LFE Engineering all sums due or found to be due from LFE Engineering to the Plaintiffs in the present proceedings;
Subparagraph
(iii) interest; S/N OytrKaiyTEa8HmqRd0/kRA
Subparagraph
(iv) costs;
v
(v) any other relief that this Court deems fit and just. [9] The trial of this suit consumed 8 days on 6 to 9 September 2021 and 24 to 27 January 2022 hybrid, viz. partly via Zoom remote communication technology and partly physically in open court. [10] The trial bundles were marked as bundles A to AF including the documentary evidence in bundles B to W and AF which carried status B by consent of the parties following Yeo Ing King v Melawangi Sdn Bhd [2016] 5 MLJ 631 CA. In addition, exhibits D1 and D1(a) have been admitted in evidence during the course of the trial. [11] The Plaintiffs called the following witnesses:
i
(i) Adam Derek Clayton Hall (PW1), a director of the Plaintiffs; and
Subparagraph
(ii) Ar. Ahmad Farid bin Baharuddin (PW2), a director of RSP Architects Sdn Bhd. [12] The First Defendant called the following witnesses:
i
(i) Kok Tong Yong (DW1), project a director of the First Defendant; and S/N OytrKaiyTEa8HmqRd0/kRA
Subparagraph
(ii) Ar. Khoo Peng Lim (DW2), a director of KW Associate Architects Sdn Bhd as the First Defendant’s expert witness on the valuation of the costs of works; [13] The Second Defendant called the following witnesses:
i
(i) Sr. Kamaruddin bin Hj. Sulaiman (DW3), managing director of KAS Juruukur Bahan Sdn Bhd as the Second Defendant’s expert witness on the valuation of the costs of works;
Subparagraph
(ii) Asia binti Hj. Mohamed (DW4), group chief executive of human and shared services department of the Second Defendant; and
Subparagraph
(ii) Mohamad Ngadi bin Leber (DW5), former chief executive officer of Shapadu Properties Sdn Bhd which is a related company of the Second Defendant. [14] I also appointed Sr. Dainna binti Baharuddin (CW1), a director of Basar & Harun Sdn Bhd as the court appointed expert witness on the valuation of the costs of works. [15] After the close of the trial, the parties simultaneously furnished their respective closing written submissions in chief followed by their respective closing submissions in reply. Oral submissions of counsel and clarifications were held on 1 July 2022. S/N OytrKaiyTEa8HmqRd0/kRA [16] I thereafter deferred my decision to deliberate on the arguments put forth by them. [17] Now having duly considered all the evidence adduced as well as submissions and arguments advanced by the parties, I give my decision below together with the supporting grounds. Background Facts [18] The Second Defendant is the developer of the proposed SCSB City Village Development Project in Precinct 2, Putrajaya (“Project”). [19] In early 2014, the group executive director, Dato’ Rosthman Ibrahim of the Second Defendant met PW1 of the First Plaintiff to provide architectural consultancy services for the Project. The Second Defendant represented to the First Plaintiff that the estimated total construction costs of the Project is RM350,000,000.00. [20] Since the First Plaintiff is a foreign architect, the Second Defendant requested the First Plaintiff to incorporate a Malaysian branch as well as collaborate with a Malaysian registered architect. S/N OytrKaiyTEa8HmqRd0/kRA [21] The First Plaintiff acceded to the Second Defendant’s request and the Second Defendant hence by a letter of appointment dated 4 February 2014 (“Contract”) appointed the First Plaintiff to provide consultancy architectural services for the Project. The Contract is reproduced below: S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA [22] Consequently, the First Plaintiff further set up the Second Plaintiff on 5 June 2014 as well as entered into a collaboration agreement with RSP Architects Sdn Bhd (“RSPA”) on 18 February 2014. [23] The Plaintiffs thereafter on 30 November 2014 entered into a deed of novation and variation with the Second Defendant (“Deed”). The Deed is reproduced below: S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA [24] As the provision of the architectural consultancy services progressed on a fast track basis, the Plaintiffs issued their fee note no. 001 dated 26 May 2014 amounting to RM878,267.04 and fee note no. 002 dated 5 December 2014 amounting to RM482,752.98 which were both duly paid by the Second Defendant. [25] The Second Plaintiff through RSPA accordingly obtained the development approval order from Putrajaya Corporation. [26] Thereafter between 2014 and 2017, the Plaintiffs carried out value engineering and re-design services to increase floor space but reduce total construction costs of the Project at the request of the Second Defendant. [27] In the meanwhile, the Second Defendant by a letter of appointment dated 15 January 2016 appointed the First Defendant as the project management consultant of the project and the Plaintiffs were accordingly informed that the First Defendant would manage and coordinate with all consultants of the Project for an on behalf of the Second Defendant. [28] Subsequently by a novation agreement dated 30 August 2016 made between the Plaintiffs, First Defendant and Second Defendant (“Novation Agreement”), the First Defendant would assume all responsibilities of the Second Defendant under the Contract. The Novation Agreement is reproduced below: S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA S/N OytrKaiyTEa8HmqRd0/kRA [29] The Plaintiffs later on 31 May 2017 before the submission of application for building plan approval to Putrajaya Corporation were served with a stop work order not to proceed with further provision of architectural consultancy services of the Project. [30] As the result, the Plaintiffs issued its fee note no. 019 dated 8 May 2019 amounting to RM2,779,320.58 and fee note no. 020 of the same date amounting to RM83,769.70 totalling to RM2,863,090.28. [31] Since the Defendants failed, neglected or refused to pay the Plaintiffs the sum of RM2,863,090.28 as invoiced, the Plaintiffs therefore instituted this suit. Findings of the Court Proper Parties to the Contract [32] It is not in dispute that the Contract was initially entered into between the Second Defendant and the First Plaintiff followed by the Deed that substituted the First Plaintiff with the Plaintiffs. S/N OytrKaiyTEa8HmqRd0/kRA [33] Additionally, it is also not in dispute that by the Novation Agreement, the Contract and Deed have been novated from the Second Defendant to the First Defendant. [34] In the premises and based on clauses 16 to 18 of the Novation Agreement, I find and hold that the obligation to pay the Plaintiffs in respect of the architectural consultancy services rendered for the Project lies with the First Defendant. In other words, the privity of contract is between the Plaintiffs and the First Defendant. There is no longer any privity of contract between the Plaintiffs and the Second Defendant; see Boustead Naval Shipyard Sdn Bhd v Dynaforce Corporation Sdn Bhd [2014] 5 CLJ 533 and University of Malaya (University Malaya Medical Centre) v FBSM CTech Sdn Bhd [2018] 8 CLJ 71 Nevertheless based on clause 15 (b) of the Novation Agreement, the Second Defendant shall indemnify the First Defendant for any unpaid fees in respect of the Plaintiffs’ architectural consultancy services rendered for the Project prior to the effective date of the Novation Agreement on 30 August 2016. Effect of Plaintiffs as Unregistered Architects [35] The Plaintiffs contended that they are entitled to be paid for the architectural consultancy services rendered notwithstanding the statutory provisions in ss. 7 and 7A of the Architects Act 1967 (“AA”). In this respect, the Plaintiffs submitted the services rendered by the Plaintiffs do S/N OytrKaiyTEa8HmqRd0/kRA not fall under the ambit of s. 7(c) of the AA because the Plaintiffs collaborated with RSPA which is a locally registered architect and sanctioned by the Defendants in the Novation Agreement. In the premises, the Plaintiffs, particularly the First Plaintiff had been the main design consultant. [36] Furthermore, the Plaintiffs submitted that since the Defendants are at all material times aware and had acquiesced to the Plaintiffs albeit unregistered under the AA but collaborated with RSPA, the Defendants must accordingly be estopped from relying on the statutory provisions of the AA following Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 4 CLJ 716 FC. [37] The Defendants refuted and contended that the Plaintiffs having been unregistered under the AA plainly ran foul of the statutory requirements and cannot consequently be paid following Sami Mousawi-Utama Sdn Bhd v Kerajaan Negeri Sarawak [2004] 2 MLJ 414 CA affirming The Government of Sarawak v Sami Mousawi-Utama Sdn Bhd [2000] 7 CLJ 228 and Luxor Holdings Sdn Bhd v Hainal-Konyi
m
(M) Sdn Bhd [2006] 3 MLJ 727. According to the First Defendant, the non-registration resulted in statutory illegality following Raymond Banham & Anor v Consolidated Hotels Ltd [1976] 1 MLJ 5 and BEP Akitek (Pte) v Pontiac Land Pte Ltd [1991] 2 SLR(R) 893. [38] The relevant provisions in the AA at the material time of the making of the Contract are as follows: S/N OytrKaiyTEa8HmqRd0/kRA
1
Short title, commencement and application
Subsection
(1) In this Act unless the context otherwise requires - "Architect" means a person registered under subsection 10(2); "architectural consultancy practice" means a sole proprietorship, partnership or body corporate incorporated under the Companies Act 1965, providing architectural consultancy services and is registered by the Board under section 7A or 7B; "architectural consultancy services" means the provision of architectural consultancy advice and services pertaining to all or any of the following:
a
(a) submission of plans or drawings to any person or local authority in Malaysia;
b
(b) conceptualization, research and development of any design for the built environment;
c
(c) any survey, preparation of reports including environmental impact assessment reports, or investigation relating to the built environment;
d
(d) project programming, construction and manufacturing programming, and product design;
e
(e) planning and development services including interior design, financial advisory services, project management, contract administration and landscaping;
f
(f) preparation of feasibility studies and cost estimates;
g
(g) preparation of plans and other means of presentation;
h
(h) all services in compliance with statutory requirements;
i
(i) any other activities relating to the creation, preservation and enhancement of the built environment; … S/N OytrKaiyTEa8HmqRd0/kRA
7
Restrictions on unregistered persons
7
(1) No person shall, unless he is an Architect –
a
(a) practise or carry on business or take up employment which requires him to perform architectural consultancy services; (aa) be entitled to describe himself or hold himself out under any name, style or title –
i
(i) bearing the words “Architect” or the equivalent thereto in any other language; or
Subparagraph
(ii) bearing any other word whatsoever in any language which may reasonably be construed to imply that he is an Architect;
b
(b) use or display any sign, board, card or other device representing or implying that he is an Architect; (ba) be entitled to describe himself as a “Architect” and to use the abbreviation “Ar.” before his name and/or the abbreviation “P.Arch” after his name; or
c
(c) be entitled to recover in any court any fee, charge, remuneration or other form of consideration for architectural consultancy services rendered as an Architect.
7A
Architectural consultancy practice
7A
7A.(1) Notwithstanding subsection 7(1), a sole proprietorship, partnership or body corporate may practise as an architectural consultancy practice and recover in any court any fee, charge, remuneration or other form of consideration for any architectural consultancy services rendered by it pursuant to its practice as an architectural consultancy practice carried on by virtue of this section, if it is registered with the Board as an architectural consultancy practice and has been issued with a certificate of registration. … S/N OytrKaiyTEa8HmqRd0/kRA
10A
Registration of foreign architects
Subsection
(1) Subject to this section and such conditions as the Board may think fit to impose, the Board may, upon payment of the prescribed fee, approve the registration as an Architect of any foreign architect who is a consultant to a project, wholly financed by a foreign government or implemented under any form of arrangement with the Government of Malaysia. [39] There have to-date been numerous cases that concerned unregistered architect(s) and/or engineer(s) who claimed for unpaid fees for construction consultancy services rendered. Many concerned only unregistered local architects/engineers. However in The Government of Sarawak v Sami Mousawi-Utama Sdn Bhd (supra) that involved an unregistered company jointly owned and managed by the collaboration of an unregistered foreign architect and an unregistered local engineer, Ian HC Chin J held as follows: “If SMI and PU or SM and Abdullah Mohd Noor had claimed for the professional fees they would not be entitled since they are not registered under the relevant acts. Why, then, should the claimant be entitled to claim for the same fees under the name of the claimant when not only SMI and PU but SM and Abdullah Mohd Noor and the claimant were not registered to practice under the relevant Acts? That was the result of the decision of the two arbitrators when they sought to justify their decision by saying that the claimant was not performing but providing for the services. It is precisely that a corporate entity like the claimant cannot by themselves perform the services since such can only be performed by individuals that s. 7A was enacted to prevent the claimant from saying that they did not but someone else performed the services. If the argument of the two arbitrators can be upheld it would mean that a corporate entity need never apply for the approval to practise while allowing unregistered persons to practise under its umbrella. This would render s. 7A completely useless… … S/N OytrKaiyTEa8HmqRd0/kRA The works of an architect can also be glimpsed from the laws or by-laws governing the construction of a building. Under s. 8 of the Sarawak Building Ordinance 1994, plans and specifications must be submitted for the approval of the local authority before any person can erect any building. Under bylaw 1(2) of the building by-laws, the plan drawing or calculation must be submitted by a qualified person which is the architect registered under the Architects Act. With that understanding of the meaning of that phrase I turn to the decision of Ong Teong Pin v Sim Kwan Meng & Anor. In that case a design consultant was engaged by a principal consultant to provide an overall image of a proposed hotel, the functional arrangement of the various parts of the hotel building and also the functional arrangement of its operation aspect. The design consultant worked on the design concept in Singapore but presented and explained the same to the developer of the hotel in Miri, Sarawak. That was the work as far as the design consultant was concerned with the principal consultant following it up, like working out the detail plans and submitting the same for approval. The design consultant was paid RM80,000 out of RM220,000. To a claim for the balance, one of the defence was that the contract providing for the services is illegal being in violation of s. 7(1)(c) of the Architect Act 1967. The court there held, upon those facts, that the work of the design consultant was "mainly the preparation of design drawings" and that such work is not within the meaning of "services rendered as an "Architect"." Thus, the court there held that s. 7(1)(c) does not apply and allowed the recovery of the balance. I respectfully decline to follow that decision because an architect's work includes putting up design concept drawings as set out in the summary (4), supra. It is, not only part and parcel, but, in fact an essential part of an architect's work because it is from the concept design that the sketch design materialises so as to enable planning approval to be applied for under the building ordinance and building by-laws. Without a concept of the building, which is formed after taking instructions from the proponent of the building, you have nothing to work on or to develop it further. In this regard BEP Akitek (PTE) v Pontiac Land Pte Ltd [1992] 2 SLR 251 is more to the point and it supports the contention that assuming that the claimant had merely undertaken to provide the professional services which were done by registered professionals, nevertheless the fees are not recoverable.” (emphasis added) This decision is affirmed on appeal in Sami Mousawi-Utama Sdn Bhd v Kerajaan Negeri Sarawak (supra) where Rahmah Hussain JCA held as follows: S/N OytrKaiyTEa8HmqRd0/kRA “Having examined the arguments by both parties and given them our anxious consideration, it is our unanimous decision, that the learned Judge in setting aside the Arbitrators' Award had not interfered with the findings of fact by the Arbitrators. Instead, we are satisfied that he had come to the right conclusion when he said as follows: (at page 72 of the Appeal Record - Part A & B) "This fact makes the finding of the two arbitrators that the CSA does not require the Claimant to practise or carry on business or take up employment as architects, engineers or quantity surveyors completely untenable since it was their own pleading and therefore their case that the Claimant was formed 'to undertake the consultation work for the design and supervision of the Project'. That is a serious failure to analyse and appraise material and relevant evidence which, following the decision of Sharikat Pemborong Pertanian & Perumahan, justifies the setting aside of the award". Section 7A of the relevant Acts of Parliament clearly provides that only a body corporate which has a permit from the relevant governing professional bodies can recover "in any court any fee, charge or remuneration for any professional advice or services." Furthermore the prohibition against recovery of fees by an unregistered Engineer, Architect and Quantity Surveyor providing professional services and advice under Sections 7 and 7A is further strengthened by the provisions of Section 34 of the Architects Act, 1967, and Section 25 of both the Registration of Engineers Act, 1967 and the Quantity Surveyors Act, 1967 which impose penal sanction on those who breached this prohibition. [See: B/A p.14.] Section 34 of the Architects Act, 1967 provides:- "34(1) Any person who contravenes or fails to comply with any of the provisions of this Act or any rules made thereunder shall be guilty of an offence and where no penalty is expressly provided, shall, on conviction, be liable to a fine not exceeding five thousand ringgit or imprisonment for a term not exceeding two years or to both.
Subsection
(2) If a body corporate contravenes or fails to comply with any of the provisions of this Act or any rules made thereunder, every director, manager, secretary or other similar officer thereof shall be guilty of the same offence and be liable to the same penalty as the body corporate is guilty of and liable to, unless he proves that the offence was committed without his knowledge, consent or connivance or was not attributable to any neglect on his part." (Similar provisions are found in Section 25 of both the Quantity Surveyors Act, 1967 and the Registration of Engineers Act, 1967). We are also in total agreement with the learned Judge's finding on the decision of the two Arbitrators - when they sought to justify their decision by saying that the claimant S/N OytrKaiyTEa8HmqRd0/kRA was not performing but providing (emphasis added) for the services. This is what the learned Judge said: (at page 72 Appeal Record - Part A & B) "It is precisely that a corporate entity like the Claimant cannot by themselves perform the services since such can only be performed by individuals that s 7A was enacted to prevent the Claimant from saying that they did not but someone else perform the services. If the argument of the two arbitrators can be upheld it would mean that a corporate entity need never apply for the approval to practise while allowing unregistered persons to practise under its umbrella. This would render s 7A completely useless." … Further, we are also of the same view that such an award by the Arbitrators is clearly against the statutory provisions and the public policy which the enactment of such laws aims to achieve, i.e. to regulate the professions involved and to protect the public from unqualified and unregistered Engineers, Architects or Quantity Surveyors.” (emphasis added) [40] I have recently held as follows in Iris Corporation Berhad v S & J Partners Sdn Bhd [2022] 1 LNS 299 on the provision of consultancy engineering services pursuant to the collaboration of a related unregistered engineering entity with another registered engineering entity: “[28] It is axiomatic that every case is heavily and sensitively dependent upon its own facts in issue. [29] This case is similar to the Sami Mousawi case in that the contracting party that performs the consultancy services is an unregistered entity. However, the alter egos in the Sami Mousawi case are both unregistered individuals whereas the alter ego, LSC in this case who performed part of the consultancy services is a registered professional engineer. [30] From the evidence adduced before me, I am nonetheless satisfied and find that both LSC and the directors of LC knew that LSC, probably for tax purposes, desired to utilize SJP to carry out the civil and structural engineering services for the Project but LSC would act as the submitting qualified person required by the relevant bye-laws. Otherwise, it is inexplicable why SC Consultant is not the contracting party with LC in the first instance. S/N OytrKaiyTEa8HmqRd0/kRA [31] The applicable law, to wit, s. 7A of the REA as interpreted in the Sami Mousawi case is strict. Hence SJP being an unregistered entity is not entitled to recover any remuneration and this in my view includes fees, disbursements and service tax too. [32] In the circumstances, I find and hold that SJP is not entitled to any remuneration for engineering consultancy services rendered to IC pursuant to the Contract in relation to the Project.” (emphasis added) [41] The facts here are that the Plaintiffs who are both unregistered under the AA collaborated with RSPA which is a registered architect body corporate firm under the AA to provide the Project architectural consultancy services initially for the Second Defendant but which were subsequently novated to the First Defendant. It is not in dispute that the First Plaintiff is a qualified practising architect in the United Kingdom who substantially carried out the planning and architectural design of the Project over there. However, RSPA carried out the requisite submission for approval of the Project by the local authority. Both these services rendered by the First Plaintiff and RSPA respectively are architectural consultancy services as defined in s. 2 of the AA. [42] As to the requirement for registration under the AA for the provision of architectural consultancy services by a foreign architect, PW2 who is a registered architect testified as follows: MM Would you agree that by this collaboration with RSP, alright, that FCH UK will circumvent the requirement for registration with the board of architects? S/N OytrKaiyTEa8HmqRd0/kRA Well, I won't say they circumvent the requirement but and we’ve done so many projects with foreign architects and of course, unless they are registered locally they needed to collaborate with us, with the local architect. MM So the way to go around that is to collaborate with the local architect. That is a must, yes, correct. Is there a requirement to be sanctioned by the board of architects or LAM, the collaboration? Well, My Lord, as mentioned just now and I think we have spoken about this, if you are not registered and if any architect or anybody or any firm who are not registered locally would not be able to submit plans. So the LAM would not discourage any form of collaboration between the local architect and foreign architects because it has been done in the past. And it has been going on for a long time. So it is still, we are still doing that, we’re still continuing so they do not discourage any client appointing any foreign architects to do their proposal, their job, their design and so forth. As long as if you want it built, you need to have a local architect to submit the plans and go through the process. So we are not just an architect of submission, we have to be involved from the design process all the way until the completion of the project and so forth, My Lord. Alright. But does the board require at least to be informed of the collaboration? No, they don’t need to be informed. No need to be informed. Any guidelines on this on collaboration by the board? As far as I know, there is no specific guidelines, My Lord. S/N OytrKaiyTEa8HmqRd0/kRA I see but that is the prevalent practice as you say. Yes, correct. Alright, thank you. Additionally DW2 who is a board member of the Board of Architects testified as follows: Five questions. Now, I’ve got one question, which I need the, possibly the opinion of Sr Kamarudin. Because from your CV, I noticed that you’re a member of the Board of Quantity Surveyors Malaysia (BQSM), in a board member and also in the Board of Architects Malaysia. Because there is no witness coming from the Board of Architects, so, I would like to ask this question. But this is more relating to the Board of Architects. Now, in this case here, we have a foreign architect, that’s not registered. But at the same time, cooperating with a registered architect. What is the board’s view on this? The submission architect must be local. Alright. It’s compulsory a local architect. Then what about the other architect then? The other architects – S/N OytrKaiyTEa8HmqRd0/kRA Is it, is there a breach of a requirements of the board? This is quite a prevalent practice in Malaysia, right? The board somehow seems to have sanctioned it. Yes. Is that right? Yes, correct. [43] It is therefore apparent that the collaborative practice involving foreign unregistered architects working jointly with local registered architects on Malaysian projects is not uncommon. This collaborative practice seems to be tacitly sanctioned by the Board of Architects; hence there is no reported case of prosecution instituted against the unregistered architect pursuant to s. 34 of the AA. [44] Accordingly, the Plaintiffs contended that the provisions in ss. 2, 7 and 7A of the AA seek to regulate and prohibit those unqualified persons who purport to be registered architects. In other words, qualified but unregistered architects particularly those who work in collaboration with registered architects do not contravene or violate those provisions of the AA. [45] This contention is refuted by the Defendants who strenuously maintained that it is plain from ss. 2, 7 and 7A of the AA that any person who provides consultancy architectural services must be registered under the AA. S/N OytrKaiyTEa8HmqRd0/kRA [46] In my view, the rival contentions boil down to the construction or interpretation of the statute and the relevant principles are found in the case of Tebin Mostapa v Hulba-Danyal Balia & Anor [2020] 7 CLJ 561 FC wherein Vernon Ong FCJ held as follows: “[30] In our opinion, the rules governing statutory interpretation may be summarized as follows. First, in construing a statute effect must be given to the object and intent of the Legislature in enacting the statute. Accordingly, the duty of the Court is limited to interpreting the words used by the Legislature and to give effect to the words used by it. The Court will not read words into a statute unless clear reason for it is to be found in the statute itself. Therefore, in construing any statute, the Court will look at the words in the statute and apply the plain and ordinary meaning of the words in the statute. Second, if, however the words employed are not clear, then the Court may adopt the purposive approach in construing the meaning of the words used. Section 17A of the Interpretation Acts 1948 and 1967 provides for a purposive approach in the interpretation of statutes. Therefore, where the words of a statute are unambiguous, plain and clear, they must be given their natural and ordinary meaning. The statute should be construed as a whole and the words used in a section must be given their plain grammatical meaning. It is not the province of the Court to add or subtract any word; the duty of the Court is limited to interpreting the words used by the legislature and it has no power to fill in the gaps disclosed. Even if the words in a statute may be ambiguous, the power and duty of the Court "to travel outside them on a voyage of discovery are strictly limited." Third, the relevant provisions of an enactment must be read in accordance with the legislative purpose and applies especially where the literal meaning is clear and reflects the purposes of the enactment. This is done by reference to the words used in the provision; where it becomes necessary to consider every word in each section and give its widest significance. An interpretation which would advance the object and purpose of the enactment must be the prime consideration of the Court, so as to give full meaning and effect to it in the achievement to the declared objective. As such, in taking a purposive approach, the Court is prepared to look at much extraneous materials that bears on the background against which the legislation was enacted. It follows that a statute has to be read in the correct context and that as such the Court is permitted to read additional words into a statutory provision where clear reasons for doing so are to be found in the statute itself.” (emphasis added) S/N OytrKaiyTEa8HmqRd0/kRA [47] My task here in construing and interpreting ss. 2, 7 and 7A of the AA has been facilitated by the case of The Government of Sarawak v Sami Mousawi-Utama Sdn Bhd (supra) and affirmed on appeal in Sami Mousawi-Utama Sdn Bhd v Kerajaan Negeri Sarawak (supra) and in which I am bound by the latter due to stare decisis. Although the cases there and here are not identical in terms of the nature of the consultancy services provided, I find that the critical facts are indistinguishable in that they involve the unregistered entity who has worked in collaboration with registered entity(ies) in the project suing for unpaid fees. I therefore agree with and adopt the findings in The Government of Sarawak v Sami Mousawi-Utama Sdn Bhd (supra) and Sami Mousawi-Utama Sdn Bhd v Kerajaan Negeri Sarawak (supra) that an unregistered architect is not entitled to sue in the court of law for recovery of any remuneration whatsoever as plainly provided in s. 7(1)(c) of the AA whether construed literally and/or purposively. [48] In the premises, I find and hold that both Plaintiffs are not entitled to be remunerated as claimed by them here whether based on the Contract, Deed and Novation Agreement or quantum meruit. [49] In so finding, I am aware that the Plaintiffs alluded to that s. 7(1)(c) of the AA is different pre and post The Government of Sarawak v Sami Mousawi-Utama Sdn Bhd (supra) because of legislative amendment; thus the resultant effect of The Government of Sarawak v Sami Mousawi-Utama Sdn Bhd (supra) is inapplicable here. I have in this regard carefully reviewed them but find that the later did not alter or change the earlier provision as so judicially interpreted so as to permit S/N OytrKaiyTEa8HmqRd0/kRA unregistered architects to provide architectural consultancy, services in Malaysia. Additionally, I also could not accept the Plaintiffs argument that s. 7(1)(c) of the AA has been designed to only prohibit unregistered and unqualified but not unregistered foreign qualified architects to provide architectural consultancy services because this is evidently neither expressly so stated nor implicitly contemplated by the AA on my reading of it. [50] I am also mindful of the attitude taken by the Board of Architects in not sanctioning unregistered foreign architects working in collaboration with registered local architects in Malaysia as seen in paragraphs [42] and [43] above. However, I hold that this cannot override the true interpretation of the statute as judicially pronounced in The Government of Sarawak v Sami Mousawi-Utama Sdn Bhd (supra) and Sami Mousawi-Utama Sdn Bhd v Kerajaan Negeri Sarawak (supra). [51] By reason that the consultancy services of foreign architects are often inevitably required particularly in design concept and aesthetics as I see it, there must preferably be a provision in the AA to enable them to be registered to practice either individually or in collaboration with local registered architects, say by way of expanding s. 10A of the AA to include all Malaysian projects beyond those projects wholly financed by a foreign government or implemented under any form of arrangement with the Government of Malaysia only as presently enacted. Otherwise foreign architects practice here in Malaysia at their own peril. S/N OytrKaiyTEa8HmqRd0/kRA Resultant Consequences of the Plaintiffs’ Non-Registration as Architects [52] In view of my finding on the Plaintiffs’ disentitlement to claim in paragraph [48] above, it follows that it is unnecessary for me to assess the fair quantum of remuneration payable to the Plaintiffs by the First Defendant whether based on milestones or time costs. [53] By virtue of the plain and strict provision of s.7(1)(c) read with s. of the AA, I further hold that the doctrine of proportionality based on public policy considerations enunciated in the English case Patel v Mirza [2017] 1 All ER 191 as alluded to by the Plaintiffs to afford them some fair renumeration is unsustainable. It would in my view otherwise be a “backdoor” way to get around the statutory prohibition. [54] Be that as it may, the Second Defendant contended that the Contract is illegal and thus void by virtue of non-registration of the Plaintiffs under the AA. In consequence, the Second Defendant counterclaimed for the return of its remuneration previously made to the Plaintiffs amounting to of RM1,428,133.52 based on a mistake of law. [55] In this respect, I firstly do not find that the Second Defendant adduced any evidence to cogently demonstrate that it was indeed mistaken on the law at all material times. It seems to me to be an S/N OytrKaiyTEa8HmqRd0/kRA afterthought after the Plaintiffs launched this suit against the Second Defendant. This is because it was the Second Defendant at the time of making the Contract that requested the First Plaintiff to set up a Malaysian branch and collaborate with a local registered architect. [56] That notwithstanding, it is provided as follows in s. 24 of the Contracts Act 1950 (“CA”):
24
What considerations and objects are lawful, and what are not The consideration or object of an agreement is lawful, unless-
a
(a) it is forbidden by a law;
b
(b) it is of such a nature that, if permitted, it would defeat any law;
c
(c) it is fraudulent;
d
(d) it involves or implies injury to the person or property of another; or
e
(e) the court regards it as immoral, or opposed to public policy. In each of the above cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. [57] In Rengamah a/p Rengasamy v Tai Yoke Lai [1998] 5 MLJ 260, Augustine Paul J (later FCJ) held as follows: “It is now settled law that a contract which is prohibited by statute does not become void and unenforceable if the statute itself saves the contract or there are contrary intentions which can reasonably be read from the language of the statute itself. Section 24 of the Contracts 1950 does not apply to such a contract for S/N OytrKaiyTEa8HmqRd0/kRA the obvious reason that the statute itself has saved the contract which was otherwise forbidden (see The Batu Pahat Bank Ltd v The Official Assignee of the Property of Tan Keng Tin (a bankrupt) [1933] 1 LNS 102 [1995] 4 CLJ 300, Co-operative Central Bank Ltd (In Receivership) v Feyen Development Sdn Bhd [1955] 3 MLJ 313, Cooperative Central Bank Ltd (In receivership) v Feyen Development Sdn Bhd (No 2) [1997] 2 MLJ 829 and Datuk Tan Leng Teck v Sarjana Sdn Bhd & Ors [1997] 4 MLJ 329).” (emphasis added) [58] Furthermore in the Singapore case of Ting Siew May v Boon Lay Choo & Another [2014] SGCA 28, Andrew Phang Boon Leong JA held as follows: “103 A second source of difficulty in relation to the law relating to illegality and public policy (at least in the context of the present appeal) lies in the more specific sphere of statutory illegality. Put simply, it is not always easy to ascertain what the relevant legislative intent is. In this regard, it is of the first importance to observe that there are at least two significant principles which ought to be borne in mind. The first is an eminently logical and common sensical one: there must have been a contravention of the statutory provision(s) concerned in the first place. … 105 This leads to the second principle: a contravention of the statutory provision(s) concerned does not, ipso facto, result in the contract concerned being declared as void and unenforceable by the court. This brings us back to the question of legislative intent. As has been observed (see Illegality and Public Policy at para 13.010): After it is established that there is in fact a contravention of a given statutory provision (or provisions, or subsidiary legislation), it must then be considered whether this contravention will result in adverse civil consequences. It does necessarily follow that adverse civil consequences will follow. While there may inevitably be relevant criminal consequences for contravention (which are virtually always embodied with the statutory provisions themselves), the same is not necessarily true with respect to civil consequences. In the civil sphere, whether or not the contract itself will be rendered void as a result depends very much on the interpretation of the provision(s) themselves in order to ascertain whether or not such a drastic consequence was indeed part of the legislative intent. [emphasis in original] 106 Put simply, the inquiry is whether the statutory provision concerned is intended to prohibit only the conduct or whether it is, instead, intended to prohibit not only the conduct but also the contract as well. S/N OytrKaiyTEa8HmqRd0/kRA 107 In order to ascertain what the relevant legislative intent is, the court will generally adopt a “purposive approach” towards the construction of statutes (see generally Illegality and Public Policy at para 13.011). Where the legislative intent is clear on the face of the statutory provision itself, there is, ex hypothesi, no need for the court to engage in further analysis; as has been observed (see llegality and Public Policy at para 13.015): In other words, whilst the legislative intent remains crucial, the plain language on the face of the statute itself saves the court the time and trouble of inquiring into the intention of parliament in so far as that particular statute (or material provision thereof) is concerned. … 116 Put simply, it is important to focus on the crux of the inquiry which is whether or not the contract (as opposed to only the conduct) has been prohibited. To this end, it is unhelpful, in our view, to get caught up in semantical tangles (here, centring on the various conceptions of the concept of “illegal performance”). Where the contract is in fact prohibited, it is struck (as has already been pointed out above) at its very (formative) roots. … Such conflation can be avoided by focusing on whether or not the statutory provision(s) concerned intended that the contract be prohibited, as opposed to (only) the conduct.” (emphasis added) [59] In the premises, it is arguable whether the Contract, Deed and Novation Agreement are void and unenforceable on statutory illegality. As pointed out in Sami Mousawi-Utama Sdn Bhd v Kerajaan Negeri Sarawak (supra), the unregistered architect providing architectural consultancy services is guilty of an offence pursuant to s. 34 of the AA. This per se does not necessarily avoid the Contract and Deed as can be seen for example in Stecon Sdn Bhd v Eco Tower Sdn Bhd [2015] 1 LNS 216 where the building contract was not held to be void and unenforceable notwithstanding that the unregistered contractor was in contravention of s. 25 and therefore likewise guilty of an offence under s. 29 of the Lembaga Pembangunan Industri Pembinaan Malaysia Act 1994. In that case See Mee Chun J (now JCA) held as follows: S/N OytrKaiyTEa8HmqRd0/kRA “9. Section 29 of CIDB Act only provides a penalty for non registration and does not go beyond that. Hence it can be said section 25 read together with section 29 is not intended to prohibit contracts but to punish those who contravene the law and this is made clear by the provision of the penal consequences and nothing more. CIDB Act does not govern the legality of contracts but the regulation of contractors by way of penal sanctions. It is this Court's finding the sub contract is not void by reason of Plaintiff's non registration with CIDB.” [60] Ultimately, I hold that it depends on the interpretation of statute which is the AA here. The critical provision is s. 7(1)(c) of the AA which may result in the Contract, Deed and Novation Agreement void and unenforceable or just unenforceable but not void. In the latter respect, the unregistered architect is hence merely debarred from successfully recovering for services rendered in a court of law in spite that the employer has benefitted from those services. [61] Upon my careful consideration, I find and hold that the Contract, Deed and Novation Agreement are void and unenforceable based on s. 24(a) and (b) of the CA 1950; see Maple Amalgamated Sdn Bhd & Anor v Bank Pertanian Malaysia Bhd [2021] 8 CLJ 409; see also paragraph 13.030 of the treatise The Law of Contract in Singapore, volume (1) 2nd edition which dealt with s. 12 of the Professional Engineers Act (Cap.253, Rev 1992 Ed) that is pari materia with s. 7(1)(c) of the AA as well as the earlier cases of Raymond Banham & Anor v Consolidated Hotels Ltd (supra) and Skilling John B v Consolidated Hotels Ltd [1979-1980] SLR (R) 86. Consequently, it is unnecessary to delve into the distinction and further analysis as to whether it is the contract or conduct thereof that is statutorily illegal. S/N OytrKaiyTEa8HmqRd0/kRA [62] Since the Contract, Deed and Novation Agreement are void, it follows that s. 66 of the CA is attracted, viz:
66
Obligation of a person who has received advantage under void agreement or agreement that becomes void When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.
a
(a) A pays B RM1,000 in consideration of B's promising to marry C, A's daughter. C is dead at the time of the promise. The agreement is void, but B must repay A the RM1,000.
b
(b) A contracts with B to deliver to him 250 gantangs of rice before the 1st of May. A delivers 130 gantangs only before that day, and none later. B retains the 130 gantangs after the 1st of May. He is bound to pay A for them.
c
(c) A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B engages to pay her RM100 for each night's performance. On the sixth night A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract. B must pay A for the five nights on which she had sung.
d
(d) A contracts to sing for B at a concert for RM1,000, which are paid in advance. A is too ill to sing. A is not bound to make compensation to B for the loss of the profits which B would have made if A had been able to sing, but must refund to B the RM1,000 paid in advance. [63] As to the refund of the sum of RM1,428,133.52 which was paid under a mistake of law by the Second Defendant, I had found in paragraph [25] above that the Second Defendant has enjoyed the benefit of having obtained the development approval order of the Project from Putrajaya S/N OytrKaiyTEa8HmqRd0/kRA Corporation by virtue of the services rendered jointly by the Second Plaintiff and RSPA. Consequently based on illustration (b) of s. 66 of the CA, the refund is unrecoverable. [64] Be that as it may, Zulkefli Ahmad Makinudin PCA also held as follows in CME Group Bhd v Bellajade Sdn Bhd & Another Appeal [2018] 10 CLJ 147 FC: “[23] The learned judges of the Court of Appeal in their judgment appeared to have considered the issue as to whether the defendants in the present case was aware of the illegality at the time when the agreement was entered into with the plaintiff. On this point the provision of s. 66 of the Contracts Act 1950 ("CA") was referred. … [24] In order to invoke s. 66 of the CA, the invalidity of the agreement should be discovered subsequent to its making and it only applies where a party enters into an agreement under the belief that it was legal, and not where the illegality was known from the beginning. (See Ahmad Udoh & Anor v Ng Aik Chong [1969] 1 LNS 4; [1969] 2 MLJ 116).” (emphasis added) [65] However in view of my findings in paragraph [63] above, I find that the Second Defendant is further precluded from resorting to s. 66 of the CA. Thus, the Second Defendant’s counterclaim for the refund must accordingly fail too. [66] Finally and by reason of my finding in paragraph [52] above, I further find and hold that the First Defendant’s counterclaim against the Second Defendant is unnecessary as well as unsustainable and must accordingly be discarded. S/N OytrKaiyTEa8HmqRd0/kRA Conclusion [67] For the foregoing reasons, the Plaintiffs’ claims are dismissed. The First Defendant’s counterclaim against the Second Defendant is also dismissed. The Second Defendant’s counterclaim against the Plaintiffs is allowed in respect of prayers (i) and (ii) only. In view of the unique facts here, the Plaintiffs shall pay the First Defendant costs of RM25,000.00 subject to the usual allocator and the rest, each party shall bear its own costs. Dated this 25 August 2022 t.t. LIM CHONG FONG JUDGE CONSTRUCTION COURT 1 HIGH COURT KUALA LUMPUR S/N OytrKaiyTEa8HmqRd0/kRA COUNSEL FOR THE PLAINTIFFS: KAMRAJ NAYAGAM (FANG KAI LOON WITH HIM) SOLICITORS FOR THE PLAINTIFFS: MAH-KAMARIYAH & PHILIP KOH COUNSEL FOR THE FIRST DEFENDANT: SAW WEI SIANG (MICHELLE TEOH ZI YEN WITH HIM) SOLICITORS FOR THE FIRST DEFENDANT: NETHI & SAW COUNSEL FOR THE SECOND DEFENDANT: DATO’ MURALEE MENON (TANWEI TING WITH HIM) SOLI CITORS FOR THE SECOND DEFENDANT: JAFFAR & MENON S/N OytrKaiyTEa8HmqRd0/kRA
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