Subparagraph
(iii) failure to rectify defects. 30 12 (See paragraph 6 and 7 of Har Soon Thim’s Affidavit affirmed on 5 10.4.2017 at pages 64 to 67 and 73-75, Record of Appeal Part B & C, Vol 2). [26] The Respondent repeats the same thing in Har Soon Thim’s Affidavit affirmed on 12.5.2017 (pages 113 to 119 and 126-132, 10 Record of Appeal Part B & C, Vol 2). [27] The defect liability period (DLP) began on 16.1.2016 and the end date would be 15.1.2017. Be that as it may, the defect to be rectified by the Appellant is conditions stipulated in the CPC. The 15 Respondent’s Consultant Architect has certified that the works have been practically completed on 15.1.2016. The instruction to the Appellant to rectify the defect in the said project in our view is only applicable to the CPC where the Appellant has one year to rectify the defects. 20 [28] In the present case, the Appellant’s claim for payment is for work done certified under the Interim Certificates issued by the Respondent’s Consultant Architect. The Respondent submitted that Interim Certificates are not conclusive of the work done as 25 provided under Clause 30.8 of the condition of Contract. Unlike Clause 30.16 of the PAM standard Forms of building contract (PAM 2006 Form) it expressly states “Final Certificate Not Conclusive”. In the present case, Clause 30.8 of the conditions of Contract which is similar to Clause 30.8 of PAM 1998 Form says 30 13 “No certificate of the Architect shall of itself be conclusive 5 evidence that any work, materials or goods to which it relates are in accordance with the Contract”. [29] It is the intention of parties that the certificate of the Architect is not conclusive. Keating in the authoritative text entitled Building 10 Contracts, at page 81 says that it is a question of construction in each case to determine whether it was intended that a particular certificate should be conclusive upon the matter with which it purports to deal. Express words are frequently used such as, for example, that “the certificate of the engineer…shall be binding 15 and conclusive on both parties”. In this case, the Appellant and the Respondent accepted the terms that the certificates of the Architect are not conclusive evidence that any work, materials or goods to which it relates are in accordance with the Contract. This in our view would include the Interim Certificates issued by the 20 Architect which are the subject matter of the Appellant’s claim. [30] It is the Respondent’s contention that Interim Certificates are not conclusive evidence. Clause 30.8 expressly particularized that any work, materials or goods to which it relates are in accordance 25 with the Contract. This provision has been examined at length by Ir Harbans Singh KS in Engineering and Construction Contracts Management: Post Commencement Practice where at page 844 he says: 30 14 “Prima facie, the above provision effectively means what it 5 stipulates, i.e. the certificate is not conclusive at all on any matter whatsoever contained therein, whether it be in relation to the satisfaction of the completion criteria, the amount due, etc. Therefore, there is no finality status attached to such a certificate. For all and intents and 10 purposes, it defeats the main purpose of preparing and issuing such a document as it is of no evidential value to the contractor” [31] We agree with the opinion expressed by the writer and in our 15 view, if the Interim Certificates issued by the Respondent’s Consultant Architect are not conclusive, it defeats the purpose of issuing the certificates. We are also of the view that it will be inconsistent with Clause 30.2 which says that the Architect shall issue an Interim Certificate to the Contractor with a copy to the 20 Employer, and the Contractor shall be entitled to payment thereafter within the Period of honoring Certificates. [32] We do not see the rationale of the Interim Certificates being inconclusive of the work done at certain stages when the Interim 25 Certificates issued under clause 30.1 of the Conditions of Contract has been validly issued by the Architect without any challenge, corrected, revised or modified. Obviously, there is no error in the amount payable under Interim Certificates certified by 15 the Architect. In other words the Interim Certificates are valid and 5 the Appellant is entitled to payment of the certified amount due. [33] In the present case, it also goes against the Respondent’s conduct when the Respondent had made 3 payments on 14.3.2016, 16.5.2016 and 29.7.2016 totaling RM 1,143,149.65 10 which was made even after the Respondent had issued the CPC dated 29.1.2016 certifying that the works had been practically completed on 15.1.2016 and the Statement of Final Accounts dated 18.4.2016 (“Final Account”) was issued by the Respondent and accepted by the Appellant (see page 259 of the Core 15 Bundles of Document (Vol 2). In our view, the Appellant is entitled to the claim for payment for work done certified under the Interim Certificates No.11, 12 and 13. [34] We are very clear that the Appellant’s claim in their Statement of 20 Claim is for value of work done certified under the 3 Interim Certificates issued by the Respondent’s Consultant Architect to the Appellant totaling RM 2,684,924.55. These are progress claims. The issue is thus whether the Appellant is entitled to payments certified under the Interim Certificates. Though the 25 CPC has been issued with conditions for the Appellant to perform some works during the defects liability period, our view is that it is a separate obligation under the Contract to be carried out by the Appellant. 30 16 [35] Interim Certificates normally represent essentially an approximate 5 value of the work done at the time of its issue and may be adjusted in subsequent certificates for matters such as errors, overvaluation, undervaluation, etc.; the final date for doing so being generally the date of issue of the CPC (see Lubenham Fidelities & Investment Co. Ltd v South Pembrokershire 10 District Council & Anor (1986) 33 BLR 39; see also Fairclough Building Ltd v Ruddlan Borough Council (1985) 30 BLR 26 and Asiapools (M) Sdn Bhd v IJM Construction Sdn Bhd [2010] 3 MLJ 7). 15 [36] The Conditions of Contract for Certificates and Payment are provided under Clause 3.0 of the conditions of Contract (See pages 209 to 255 of the Core Bundles of Documents (Vol 1). Clauses 30.1 and 30.2 of the Conditions of Contract provide as follows: 20 Clause 30.1 “Certificates to be issued by the Architect under these Conditions shall be issued to the Contractor with a copy to the Employer. 25 The Architect may, by any certificate correct any error or discrepancy which has been discovered in any previous certificate, other than a Certificate of Practical Completion or the Final Certificate, which has been issued by him” 30 Clause 30.2 17 “During the Period of Interim Certificates stated in the Appendix, 5 the Contractor shall submit details and particulars to the Architect, sufficient for the Architect to consider and ascertain the amount to be stated in an Interim Certificate. Upon receipt of the Contractor’s details and particulars, the Architect shall issue an Interim Certificate to the Contractor with a copy to the Employer, 10 and the Contractor shall be entitled to payment thereafter within the Period of honoring Certificates stated in Appendix. Provided always that the Architect shall have the discretion to make interim valuations whenever he considers necessary for ascertaining the amount to be stated as due in an Interim Certificate”. 15 [37] What is clear is that a valid Interim Certificate is a condition precedent in most construction contracts for the contractor’s entitlement to payment of the certified amount due. The validity of a certificate may, however, be compromised if it can be 20 successfully challenged on grounds such as the existence of errors on its face, fundamental inaccuracies in content and computation, it not being in the correct form, it not being issued in the authorized manner or by the authorized person, it not being given in time, where the certifier acts ultra vires, where there is 25 improper pressure or influence on the certifier, where there is fraud or collusion between the certifier and the relevant party to the contract, etc. (see Ir Harbans Singh KS, Engineering and Construction Contracts management; Post-Commencement Practice, p360). 30 18 [38] Clause 30.2 states that, ‘…. the Architect shall issue an Interim 5 Certificate to the Contractor with a copy to the Employer, and the Contractor shall be entitled to payment thereafter within the Period of honoring Certificates stated in Appendix. The Appendix states that period of honoring the certificates is at monthly intervals 30 days from the date of receipt of certificate by the 10 Employer. [39] The PAM 2006 Standard Form of Building Contract by Sundra Rajoo, Dato’ WSW Davidson, Ir Harbans singh K.S at page 738 stated as follows: 15 “To elucidate the actual meaning that should be ascribed to the term, reference being made to the Construction Contracts Dictionary where at page 209, Chow Kok Fong explains it in the following manner: 20 A determination made by the duly appointed or designated certifier of a construction contract as to the sum which is due by the way of progress payment to the party carrying out the works. The determination of the amount shown on the interim 25 certificate is made either on the periodic valuation of the work done over a particular period of time or according to a schedule of fixed state installments. A certificate is typically issued at intervals prescribed under the terms of a contract. As a rule, the amount certified for payment represents only 30 19 the approximate value of the work done and is not conclusive 5 or binding on the paying party-that is, the owner in the main contract or the contractor in the sub-contract-as to the acceptance of the work or materials. The amounts certified by the way of interim certificates and paid by the owner are adjusted at the end of the contract when the final amount due 10 from one party to the other is stated in a final certificate. They have thus been described as being ‘made with a view to regulating the advances and showing how much should be paid on account; not at all showing how much was to be paid ultimately upon the final account and reckoning’, the Lord 15 Blackburn in Tharsis Sulphur & Chopper Co v McElroy (1878) App Cas 1040 … [40] The issue of an Interim Certificate by the architect to the contractor has a number of contractual effects; the principal one 20 of which is that the ‘honoring period’ or ‘Period of Honoring Certificates’ starts running as of the date of the issuance of the said certificate. This period which is stipulated in Appendix is the duration during which the employer is obliged to pay the sum stated in the Interim Certificate by the architect, to the contractor 25 (see Minter Ltd v Welsh Health Technical Services Organization (1980) 13 BLR 1). Whatever the honoring period that may be stipulated in the Appendix entry, the practical manifestation of it is by the employer paying the amount so certified to the contractor through a pre-agreed method. Should 30 20 there be an absence of such arrangement, so long as the 5 employer adopts a usual method of payment that is reasonable under the circumstances, he can be deemed to have discharged his said obligation. In most cases, there is an implied requirement for the contractor to formally acknowledge receipts of the monies involved. 10 [41] It is to be appreciated that case law has held that the Interim Certificate to the contractor is a condition precedent to payment (see Ling Heng Toh v Borneo Development Corporation Sdn Bhd [1973] 1 MLJ 23). In the case of Tuck Sin Engineering & 15 Construction Sdn Bhd v Yee Heng Manufacturing (M) Sdn Bhd [2007] MLJU 416, it was held that the issuance of the payment certificate by the architect was a pre-requisite to payment and if the contractor does not prove that such an Interim Certificate was ever issued, he would not be able to insist on 20 payment for a payment application that was never verified and for which a payment certificate was never issued. Once the Interim Certificate is issued by the architect, it crystallizes the employer’s obligation to pay and the employer should not, in the absence of a very clear intention to the contrary be lightly relieved of this 25 obligation (see Mae Engineering Ltd v Dragages Singapore Pte Ltd [2002] 3 SLR 45). Accordingly, the employer would have to honor such a certificate in accordance with the terms of the contract by reason of the certificate having a ‘temporary finality’ 21 (see Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd 5 [1989] SLR 610). [42] In L’Grande Development Sdn Bhd v Bukit Cerakah Development Sdn [2007] 4 MLJ 518, Kong Hwee Gee J at 532 stated: 10 “A certificate is in essence a statement of ascertainment and verified fact which is to be accepted as a statement of truth at face value. The interim certificate therefore constitutes a finality of the assessed value of work done by the contractor 15 which under the terms of the construction contract oblige the employer to pay the contractor the sum certified forthwith. The certificate cannot be varied or cancelled unless agreed to by both the contractor and the employer. 20 This must necessarily mean that the plaintiff in the instant case should therefore be able to receive payment in full of the sums stated in the interim certificates without having to wait for any contra payments that the defendant may be entitled to make against the plaintiff in future. The sums were due and payable 25 immediately and chargeable as a debt on the defendant. A failure on the part of the plaintiff to pay in full the amount stipulated in the certificates constitutes a breach of an essential terms of the contract upon which the plaintiff may sue 30 22 to recover as it has done in the case. It is not open to the 5 defendant to plead as a defence that it is not liable to pay on the ground that it has a claim of a much larger sum against the plaintiff which has yet to be decided in another civil suit”. [43] The above decision is in line with the Supreme Court’s decision in 10 Pembenaan Leow Tuck Chui & Sons Sdn Bhd v Dr Leela’s Medical Centre Bhd [1995] 2 MLJ 57, where it was held that: