Matrix Concepts (Central) Sdn Bhd v Ar LIM Yoke Tiang (WA-22C-23-02/2017)

DOCUMENTS AND COPYRIGHTS The Client shall have the absolute right to make use of all documents, specifications, etc prepared by the Design Architect of the said Project. Upon termination, the Architect shall deliver at least one original copy / Certified True Copy or photocopy of all relevant documents including specifications, computations, and drawings (in CD format) to the Client within fourteen (14) days.” (emphasis added) [15] The case of Ong Chin Seng v Chop Lean Kooi Motors [1955] 1 MLJ 177 was cited by the Plaintiff in support of their proposition that the Defendant cannot assert any lien over the Documents as follows: 6 “…The defence was that the Defendant was exercising his common right of lien. I here quote paragraphs 704, 708 and part of paragraph 709 from pages 560, 561 and 563 of Halsbury’s Law of England, 2nd edition, Volume 20: “To establish a general lien arising by usage in a particular case, for instance, in a particular locality, the usage must be certain and reasonable and so universally acquiesced in that every one the trade knew of, or on inquiry could have as ascertained, its existence. To establish a general lien of this nature there must be satisfactory evidence of numerous and important instances of its exercise: if the evidence is sufficient to establish the usage. The parties are presumed to be aware of, and are bound, by the usage. The question whether the lien exists is one of the fact. A particular lien arising by agreement on property deposited overrides the general lien of the depositee on such property arising by virtue of usage. A particular lien is the right to retain goods in respect of which charges have been incurred until such charges have been paid: if the owner of the goods is willing to satisfy such charges, the goods cannot be retained until payment of the general balance due to the person having the particular lien. As general lien may arise from general usage or by express contract, it follows, a fortiori, that particular lien may arise in the same manner.” 7 I had no evidence, much less satisfactory evidence of numerous and important instances of the custom defendant stated was in existence and adopted by him.” [16] Whilst the two Clauses in the Letter of Appointment do clearly state that the Defendant shall issue Letter of Release to the Plaintiff within 7 days upon termination pursuant to Clause 11 and the Defendant shall also deliver the Documents to the Plaintiff within 14 days upon termination pursuant to Clause 13, the question is whether that obligation of the Defendant as an Architect is nevertheless qualified by the Architects Rules 1996. [17] It is a fact that the Plaintiff issued a Notice of Termination dated 2.11.2016 to the Defendant and received on 7.11.2016 by the Defendant. Therefore the termination was effected on 6.12.2016 and with that, according to the Plaintiff, the Defendant should have issued the Letter of Release latest by 17.12.2016 and deliver the Documents latest by 30.12.2016. [18] The Plaintiff took the view that the sum of RM2,843,342.12 invoiced for the first time by the Defendant to the Plaintiff is not owing by them but, if at all, by IRDK to the Defendant based on the letter of appointment issued by IRDK to the Defendant. The Defendant, had at all material time, looked to IRDK for payment. The Defendant via his letter dated 7.5.2015 requested from IRDK to pay for the said outstanding fee which had been outstanding since 26.3.2015 (page 79 of CBOD 1). [19] It was further argued by the Plaintiff that the contractual relationship between Plaintiff and Defendant only arose on 25.5.2015 when the Letter of Appointment to the Defendant was issued. As such all fees alleged to be outstanding before 25.5.2015 cannot be contractually binding on the 8 Plaintiff to pay the Defendant as the services rendered were to IRDK. The Plaintiff concluded that the Defendant had made the claim against the wrong party as the Defendant should have claimed against IRDK. [20] Learned counsel for the Defendant, on the other hand, submitted that the Defendant had not breached the Letter of Appointment and in particular Clauses 11 and 13 because the Plaintiff should pay the Defendant the outstanding fees for work done and also fees incurred for additional works not provided in the Letter of Appointment. It was further submitted that the Defendant had a lawful lien over the Documents to recover the outstanding sum due and owing to the Defendant under the Architects Rules 1996. [21] To support the contention that the Defendant had a lien over the documents the Defendant referred to the English case of Hughes v Lenny

5 M & W 183 as follows at 186: “.....the work having been done by the plaintiff unless there had been an express contract that it should be delivered without payment, then there is no authority that he was bound to deliver....” [22] I do not think that Clauses 11 and 13 require the issuance of the Letter of Release and the delivery up of the Documents to the Plaintiff upon the expiry of the requisite dates without the need for the Plaintiff to pay the Defendant the outstanding fees due. [23] After all the parties had agreed to incorporate Clause 10.2 into the Letter of Appointment which provides as follows: “10.2 All other terms and conditions of your engagement for this Project where not expressly mentioned herein shall [be] in accordance with those stipulated in the Board of Architects Malaysia-Conditions of Engagement. In the event of any discrepancy, the terms and conditions stated herein shall take precedence.” 9 [24] In the absence of a clear and unequivocal exclusion of the relevant provisions of the Architects Rules 1996, I would agree with the Defendant that Rule 19 and Rule 22 of the Conditions of Engagement of an Architect, Part One, Third Schedule to the Architect Rules 1996, would apply for they provide as follows: “Appointment of another Architect.

In the event that the Memorandum of Agreement between the Architect and the client is terminated for a reason not due to the fault of either party, the Architect shall, subject to the rights of either party in respect of antecedent breaches of the Memorandum of Agreement between the two parties, charge the balance of fees for architectural consultancy services rendered up to the stage of termination together with all reimbursable charges, and after the full settlement of all fees and charges due from the client, the Architect shall issue a letter of release to the client and the client shall be entitled to appoint another Architect to continue with the project provided that the requirement of a letter of release may be waived at the discretion of the Board. Delivery of documents upon termination.

Upon the termination of the Memorandum of Agreement between the Architect and the client and the full settlement of all dues or upon the receipt of an acceptable guarantee of payment, the Architect shall deliver to the client copies of drawings, specifications and other documents relating to the project that are in the possession of the Architect.”(emphasis added) 10 [25] I do not see a conflict between Clause 11 and Rules 19 and 22 of the Conditions of Engagement of an Architect, Part One, Third Schedule to the Architect Rules 1996. It is not expressly provided for that the Letter of Release and the delivery of the Documents are to be made irrespective of the outstanding fees not been paid. [26] Neither is Clause 13 of the Letter or Appointment inconsistent with Rule 20 of the Conditions of Engagement of an Architect, Part One, Third Schedule to the Architect Rules 1996 which reads:

“Copyright in respect of works executed by the Architect

(1) Where the Architect has rendered architectural consultancy services up to and including the Contract Documentation Phase and has received his due fees, the client shall be entitled to reproduce the design for the purpose of implementing the project provided that the project is on the site on which the design was originally prepared.” [28] Based on the fees already paid as set out in the Letter of Appointment it would appear that the Plaintiff had paid for the original Drawings up to the Contract Documentation Phase which would cover the approval of the original Drawings and Plans by the relevant authorities 11 though the Defendant is now asserting that there was still the sum of RM2,843,342.12 originally owing by IRDK to him which the Plaintiff is now liable to pay, having taken over the Project from IRDK. With respect to the fees for work done in the revised Drawings and Plans based on a density of 120 units per acre, that had not been paid. [29] It may fairly be said that there is no point in providing for “The remuneration of the Architect upon termination shall be computed without any delay”, if not for the purpose of expediting payments. Both Clause 11 and Rule 22 can be read harmoniously and ought to in this case so that the interests of the Developer client and the Architect as a professional are protected. [30] The Defendant would have a lien over the drawings, specifications and other documents relating to the Project in his possession by relying on the above statutory provision. [31] The Defendant had on 2.11.2016 issued an invoice for RM2,843,342.12 which sum is derived from the fees owing from the previous developer IRDK to the Defendant and another invoice for additional work done for the Plaintiff for the sum of RM362,257.88 based on the increase in density to 120 units per acre. [32] Learned counsel for the Plaintiff referred to the case of T.R. Hamzah & Yeang Sdn Bhd v Lazar Sdn Bhd [1985] 2 MLJ 45 where the Architect had refused to issue the Letter of Release until all the fees were paid. The Federal Court observed as follows at page 48 and 59: “…I am told that no architect will take over from another without a letter of release from the outgoing architect. One can see that this letter is a very important document for without it a builder or an owner 12 of land will have difficulty in employing another architect to replace the one that has left…” “…We do not think in the circumstances the court would allow the architect to withhold the letter of release. To do so would, in the words of Widgery, F.J. in Blair v Osborne & Tomkins mean “that the architect can hold the client to ransom” [33] However the facts in the instant case are different in that parties had agreed to fall back on the Architects Rules 1996 where a term is not expressly mentioned in the Letter of Appointment. There was clearly no mention that the Letter of Release shall be issued irrespective of the balance fees not paid. There was also nothing mentioned that the Documents shall be released even though the balance fees have not been paid. [34] Generally where there are fees outstanding, and this may be disputed at that stage, the Defendant as the Architect would have a right to hold on to the issuance of the Letter of Release and the delivery of the Documents until the fees are paid or that an acceptable guarantee for payment of the fees is given. [35] The fear that the client may be held to ransom is addressed in Rule 19 itself where it is provided that the Board of Architects may waive the requirement of a Letter of Release in accordance with General Circular No. 2/2007 issued by the Board of Architects which provides the Guidelines on Letter of Release. [36] There is an elaborate procedure for Mediation and Arbitration too in the event of any dispute between the Architect and the Client as provided in Rule 23 and 24. 13 [37] If it should later be held that the fees are not due and payable then the Client may have a cause of action for wrongful withholding of the Letter of Release and the delivery of the Documents. Whether the Defendant can claim against the Plaintiff the sum of RM2,843,342.12 being the balance of the Defendant’s fees for work done by the Defendant for IRDK before the Sale and Purchase Agreement between Plaintiff and IRDK was entered [38] Learned counsel for the Plaintiff referred to Article 2 of the SPA which stipulated that both parties are to mutually determine the Project Consultant Costs expanded by the Vendor, IRDK. See page 226 of CBOD 1. [39] The evidence led was that on 27.5.2015, the Plaintiff paid to IRDK the architect’s consultancy fee of RM1,100,000.00. See page 36 of CBOD 1 which showed the total reimbursement sum of consultancy fees are paid by Plaintiff to IRDK (in which the aforesaid architect consultancy fee is part of the included cost) pursuant to the SPA. As to whether there is still an outstanding sum of RM2,843,342.12 owed by IRDK to the Defendant which the Plaintiff had agreed with IRDK to pay the Defendant, that is to be more appropriately litigated in a suit to be brought by the Architect against IRDK where IRDK may want to bring the Plaintiff here as a Third Party there. In this suit IRDK is not a party and only DW3, Ramasamy A/L Muthusamy, the Managing Director for IRDK had come to give evidence. [40] Article 1.4 of the SPA between the Plaintiff and IRDK provides the following conditions precedent: “Article 1 Condition Precedent This Agreement is expressly conditional upon the following four (4) conditions precedent: 14

1.1……….

1.2……….

1.3……….

1.4 Termination of consultants The Vendor terminating and/or discharging, all consultants appointed by the Vendor for the Project and shall deliver to the Purchaser the original copies of all the relevant letters of release. Such early termination costs for work done in accordance to the existing contract shall be borne by the Purchaser as part of the Reimbursement Costs. However any extraordinary and/or additional termination costs incurred shall be solely borne by the Vendor.” [41] As the services of the Defendant as an Architect for the Project had been terminated by IRDK as confirmed by DW 3, one would have expected all outstanding professional fees of the consultants for the Project to have been sorted out or at least agreed in writing in the SPA or some contemporaneous correspondence or documents. No clear evidence of that had been produced. [42] Both PW 1 and PW 2 testified that they were unaware of a further sum of RM2,843,342.12 still outstanding from IRDK to the Defendant. There was nothing mentioned in the SPA or the contemporaneous documents that this indeed was the sum owing that the Plaintiff had now agreed to bear and discharge the debt. DW 3 agreed under cross-examination that there was no novation of the debt owing to the Plaintiff though the word loosely and inaccurately used had been the word “assignment”. What was meant was an agreement by the Plaintiff to discharge the liability of IRDK to which the Defendant had agreed. 15 [43] At the very least one would have expected this to be found in the Letter of Appointment if indeed there is the amount of RM2,843,342.12 still outstanding which the Plaintiff had agreed with IRDK to pay the Defendant. However the Letter of Appointment only referred to the sum of RM1,100,000.00 paid by the Plaintiff to IRDK which had been taken into account in the new fees structure agreed by the Defendant. The Letter of Appointment on the fees structure is reproduced below: “5. SCHEDULE OF PAYMENT The payment of Professional Fees for the above mentioned Project shall be made upon the completion of each Stage of Work described in the table to the satisfaction of the Client except for the Contract Implementation and Management Stage whereby the fees due under this Stage shall be paid progressively in equal monthly installment (or any other prior agreement) over the duration of the building contract period. The Stages of Payment are as follows: STAGE OF PAYMENT Stage of Payment for each phase of the Project (Including Infrastructure works) % of Fee Amount (RM) Cumulative Workdone upto 20th May 2015 5.1 Upon approval of Schematic Design & Concept - - -

5.2 Upon completion of Design Development to enable other Consultants to commence with their design 15% 540,000.00 15%

5.3 Upon approval of Building Plans 30% 1,080,000.00 45%

5.4 Upon completion of tender documents ready for tender 10% 360,000.00 55% 16

5.5 Upon issuance of Letter of Award to the selected contractor 5% 180,000.00 -

5.6 From commencement of works to issuance of Certificate of Practical Completion (fees to be paid progressively monthly in accordance to the duration of contract) 30% 1,080,000.00 -

5.7 Issuance of Certificate of Completion and Compliance (CCC) 5% 180,000.00 5.8 Expiry of Defects Liability Period & CMGD and Final Accounts 5% 180,000.00 - Professional Fee 3,600,000.00 Note on Cumulative Workdone up to 20th May 2015: Professional Fee = RM 3,600,000.00 Agreed Cumulative Workdone upto 20th May 2015 @ 55% = RM 1,980,000.00 Less Previous Payments made by IRDK Ventures Sdn Bhd = (RM1,100,000.00) RM 880,000.00 Add Agreed One-off Lump Sum Reimbursement = RM 300,000.00 RM 1,180,000.00 Add 6% GST = RM 70,800.00 Balance Payment to be made by Matrix Concepts (Central) Sdn Bhd = RM1,250,800.00 [44] I am quite certain that if the Defendant had agreed to look to the Plaintiff for the payment of his balance fees of RM2,843,342.12 and to release IRDK of this balance sum outstanding, there would have been 17 something in writing to that effect. The fact that there is no mention and only a mention of the sum of RM1,100,000.00 is both telling and troubling. There is some merits in the argument of the Plaintiff that this is a fit case where oral evidence should not be introduced to vary the written terms in the Letter of Appointment with respect to agreed fees and the stage payment under section 91 and 92 of the Evidence Act 1950. [45] The Plaintiff further referred to the Federal Court case of Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229 at page 233 to bolster its contention that this claim of the Defendant is misconceived. The Federal Court in explaining the logic behind the rule against the admission of parol evidence opined as follows: “Section 92 specifically excludes evidence to contradict, vary, add to or subtract from any of the terms of a contract in writing, except in any of the situations spelled out in the provisos thereto: see, Inter alia, Foo Tock Lim v Piong Liew [1963] MLJ 67 and Siah v Tengku Nang [1964] MLJ 43F. ......... Its contention therefore for the admission of the parol evidence which won the approval of the learned judge was that not all the terms had been incorporated in the agreement. If this contention so generally stated and understand had any foundation at law, then it would be open to any party to a litigation concerning an agreement to say that the agreement which is the subject matter of the dispute did not contain all the terms thereof and seek to introduce such terms or even terms which might not even have been within the contemplation of the other party. No agreement would then be safe from being re-written by one party in a court of law.” [46] There was no tripartite agreement between the three parties wherein 18 it is expressly stated that the Plaintiff would be bearing the liability of the outstanding fees of RM2,843,342.12 owing from IRDK to the Defendant and that IRDK would be released from this liability to the Defendant. [47] I noted that the evidence of DW 3 is that the Plaintiff had agreed with IRDK that the Plaintiff would pay this outstanding fees. [48] There are thus 2 issues here. The first is whether the Plaintiff had agreed with IRDK to bear the payment of RM2,843,342.12 being the outstanding sum still owing from IRDK to the Defendant. The Defendant had invoiced IRDK for this payment and had sent repeated reminders to IRDK for payment. There is no evidence that the said invoice had been cancelled. The said sum was not included in the agreed quotation and structure of fees in the Letter of Appointment between the Plaintiff and the Defendant which the Defendant had accepted. The Defendant only raised this for the first time after the termination of his appointment by the Plaintiff. The evidence does not add up and show on the balance of probabilities that the Plaintiff had agreed with the Defendant to pay this outstanding fees. [49] The second issue is this: even if the Plaintiff had agreed with the Defendant to so bear this sum of RM2,843,342.12, that is an agreement to be enforced between the Plaintiff and IRDK and under the doctrine of privity of contract, only the parties to the contract may sue each other for breach. The Defendant here is an outsider though he may be the one receiving the benefit under the contract between the Plaintiff and IRDK, if there was one. [50] At the risk of over stating the obvious the Court of Appeal in Tsang Yee Kwan v Majlis Perbandaran Batu Pahat [2011] 8 CLJ 913 at page 914 reiterated as follows: 19 "The doctrine of privity established that only parties to a contract incurred rights and obligations under the contract. Third parties could not sue or be sued under a contract." [51] Likewise the Court of Appeal in Boustead Naval Shipyard Sdn Bhd v Dynaforce Corporation Sdn Bhd [2014] 5 CLJ 533 at page 561 said: "[64] ...Bluntly put only the parties to the contract have enforceable rights and obligations under the contract. ... [70] As an established principle of contract law, the common law doctrine of privity of contract stands for the simple proposition that, 'no one but the parties to a contract can be bound by it or be entitled under it.'” [52] The cases of Sigma Elevator (M) Sdn Bhd v Isyoda (M) Sdn Bhd & Anor [2016] 10 MLJ 635 and Bond M&E (KL) Sdn Bhd v Isyoda (M) Sdn Bhd; Brampton Holdings Sdn Bhd (Third Party) [2017] MLJU 376 illustrate the conundrum when a proper tripartite or novation agreement is not properly entered into to allow a beneficiary not a party to an agreement to sue the parties to the agreement. [53] The Defendant is not without his remedy as DW 3 had admitted that this amount is owing to the Defendant by IRDK but only that the Plaintiff had agreed to pay this amount to the Defendant. The Defendant is at liberty to commence an action against IRDK for his outstanding fees for clearly his contract was with IRDK and he had invoiced IRDK for that. In fact the Defendant himself agreed that he could sue IRDK if he had wanted to. [54] There is no agreement that the Defendant had agreed to release IRDK of its liability and to look to the Plaintiff for this payment. The fact that this outstanding sum of RM2,843,342.12 was raised for the first time after 20 the termination of the Letter of Appointment by the Plaintiff speaks volume of the Defendant’s conduct. Such a conduct smacks of an afterthought. [55] This is not a case falling under section 42 of the Contracts Act 1950 which reads as follows:

“Effect of accepting performance from third person When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.” [56] The Defendant had not pleaded as such nor had they submitted on the applicability of section 42 of the Contracts Act 1950 to the factual matrix of this case. [57] The Plaintiff is thus not liable to the Defendant to pay this sum claimed of RM2,843,342.12. Whether the Defendant had done work for the Plaintiff which is outside the scope of the Letter of Appointment which justifies a separate billing of RM342,347.48 and in particular the increase in density up to 120 units per acre [58] Clause 4.5 of the Letter of Appointment is clear in that the agreed professional fees shall be inclusive of design amendment and submission for approval to increase the Project density of not more than 110 units per acre (page 27 of CBOD 1). [59] The Defendant is bound by the Letter of Appointment in that any increase in the original density of 80 units per acre up to 110 units per acre upon the Plaintiff’s instruction would not attract any further charge on his fees. [60] The fact that work is done and presentation made cannot be disputed as there were clear instructions from the Plaintiff to the Defendant for the 21 revisions to be done. The evidence of PW 1 Mr Ho provides the rationale for the need to increase to 120 units per acre as follows: HO Because based on 60 units per acre, right, so the units’ minimum size at that time talking about almost 2,000 sq ft. If based on that as the price itself, let’s say RM500.00 per sq ft, you see talking about RM1 million per unit. In that location, we think, right, sure they don’t have the market for it. So the project sure to fail. So that’s why we look at that, to make the thing to be more practical, you need to increase the density. To make a small unit, to ensure that the price to be lower to be affordable. To be able until the market can accept it. So need to be make it to be viable. That’s why this one also we informed YTT Architect Defendant about it, our intention, also the same intention also, right, we also informed IRDK. That’s why in IRDK the condition precedent is talking about the density as well. [61] Even though no submission was made to the authorities that is no justification for not paying the Defendant for the additional work done and more so when the increase to 120 units per acre required a massive change in the drawings from 2 towers to 3 towers with the structures now standing on a different plinth. [62] I agree with learned counsel for the Defendant that under the Letter of Appointment it was intended for the Defendant to continue with the balance of works that the Plaintiff had taken over from IRDK up to a density of 110 units per acre, that is to proceed to amend to a higher density based on existing Majlis Perbandaran Subang Jaya’s (“MPSJ’s”) approval and on the existing foundation works done on site after the completion of the SPA between the Plaintiff and IRDK. 22 [63] I find merits in the Defendant’s submission that the agreed contractual fees was premised on the same foot plinth because at the time of the appointment of the Defendant there was no discussion of further units other than that was already agreed upon as evinced in the Minutes of the Client Consultant Meeting 1 & 2 of 12.6.2015, at pg 356 of CBOD, at item (6) Construction Works, wherein an extract reads as follows: “C2) PHASE 2 PILING OF PODIUM & APARTMENTS a) works by previous contractor b) remaining works to be tendered and completed and c) continuing works from left over works after C2-b) completion ......” [64] I can accept the argument of the Defendant that, after the Letter of Appointment was issued by the Plaintiff on 25.5.2015, the conduct of the business by the Plaintiff was different, i.e based on the existing approval the Plaintiff anticipated and calculated works was for the additional increase of 20 extra units per acre featuring another 2 to 3 floors in addition to the existing high rise Block A in Phase 1 and to add another 2 to 3 floors to phase 2 of Block B to bring up to 100 to 110 units per acre. [65] However Design Brief 5 issued by the Plaintiff on 9.5.2016 (page 156 to 158 of CBOD) was based on a different set of criteria of up to 120 units per acre in 3 blocks based on the unit distribution in 691 units required by the Plaintiff’s marketing department with the existing MPSJ’s approval of 28 units Link Villa to be totally omitted (pages 11 to 24 of DBOD-1). [66] The Project had already commenced with the completion of the piling works which had a certain fixed foot plinth and was in continuation of the earlier project by IRDK and therefore it was not anticipated that there will be a different foot plinth. The fees should be different as the Defendant had 23 carried out and completed the works for a fresh design of three (3) tower blocks as instructed by the Plaintiff which would entail a different foot plinth. [67] I agree with the Defendant that he had done the work as per the Design Briefs and that it was an upscale design and a revamping of previous design, which clearly suggests that it was not intended to be done gratuitously nor was it within the present scope of work in the Letter of Appointment. The Plaintiff witnesses have not given evidence on the issue of whether the Defendant had done extra works and therefore the evidence of the Defendant that additional work had been done based on a different foot plinth had not been rebutted and is presumed to be true. [68] Learned counsel for the Defendant relied on the case of Takako Sakao v Ng Pek Yuen & Anor [2009] 3 MLRA 74 in support of the above proposition. [69] Upon termination the Defendant was required to issue its final account of fees to his Client the Plaintiff as required under Rule 18 of the Conditions of Engagement of an Architect, Part One, Third Schedule to the Architect Rules 1996 as follows: “Architect to submit accounts.

The Architect shall submit his accounts to the client for the balance of fees due together with any other outstanding claims for reimbursable charges not later than thirty days from the date of termination of the Memorandum of Agreement.” [70] This the Defendant had done by his letter dated 2.12.2016 at page 45 CBOD 1 and the invoice for RM342,347.48 is at page 47 and 49 CBOD 1. [71] The said invoice at page 49 specifically referred to work done being “ADDITIONAL WORKS DONE FOR 2 NEW DESIGN PROPOSALS at 120 units density for 3 tower blocks in May 2016.” 24 [72] In fact the one at page 47 CBOD 1 is entitled “STATEMENT OF ACCOUNT(FINAL)” and the one at page 49 CBOD 1 is entitled “FINAL ACCOUNT /part 2 for Payment of Works Done new LOA”. [73] I find the sum invoiced of RM342,347.48 to be reasonable for the additional works done and I would allow only this claim of the Defendant in the Counterclaim. [74] As there was this sum of RM342,347.48 owing by the Plaintiff to the Defendant, the Defendant was justified in not issuing the Letter of Release and the delivery of the Documents until his reasonable fees had been paid. Whether the Defendant was entitled to claim the sum of RM 8,571,060.00 for the balance fees for the additional work done [75] I agree with the Defendant that as the construction was already in progress (meaning that piling works already done) any variations to the works would result in additional fees being charged by the Defendant for the additional work done. [76] Learned counsel for the Defendant submitted that Rule 23 (6) of the Architect (Scale of Minimum Fees) Rules 2010 would apply. It provides as follows: “Where there are variations to the works at any time during the course of construction which results in an increase to the original contract sum, the fees for the services rendered by the architectural consultancy practice shall be as specified under paragraph 23(1)(b).” [77] However there was no agreement on the additional remuneration of the Defendant and the new drawings and designs were still at a very early stage of presentation to the Plaintiff and the Plaintiff had not approved the new drawings and design for purposes of submission to the authorities. 25 There was some indication by the Defendant of his additional fees as can be seen at pages 193 to 197 of CBOD 1. The Defendant had indicated in the said letter of 4.10.2016 that he would not be agreeable to the Plaintiff’s proposal on his fees. [78] The Plaintiff had earlier stated that they will provide a Supplementary Agreement in the Plaintiff’s letter dated 29.9.2016 at page 50 & 51 of CBOD 1 for the extra works done. However the Plaintiff terminated the Defendant after that, preferring to engage their own Architect. [79] It is incumbent on the Defendant to get from his client the Plaintiff, a written agreement in respect of his remuneration before proceeding to render his professional services and more so when it is going to be outside the scope of the original Letter of Appointment. This the Defendant did not do. [80] Rule 7 of the Conditions of Engagement of an Architect, Part One Third Schedule to the Architects Act 1996 provides as follows: “Rule 7. Client’s Agreement 1) An architect shall obtain the written agreement of the client in respect of his remuneration for architectural services to be provided by him pursuant to subparagraph 1(1) within sixty days from the date the notification regarding such remuneration is duly served on the client. 2) Notwithstanding subparagraph (1), where the client’s agreement in writing is not obtained within the period as stipulated in subparagraph (1) but the client agrees by his conduct to the conditions of engagement and the scale of professional fees and charges, the client shall for the purposes of subparagraph (1) be considered to have agreed to 26 such conditions of engagement and scale of professional fees and charges.” [81] This is not a case where the client in the Plaintiff could be said to have agreed to the Defendant’s various proposals on his fees and based on the 3 options on fees proposed by the Defendant in his letter of 4.10.2016. These options on fees were not based on the Scale of Minimum Fees Rule as prescribed by the Board of Architects. [82] In fact the Defendant had all along dealt with the Plaintiff not along the line of the Scale of Minimum Fees Rule prescribed by the Board of Architects and had shown himself to be amenable to negotiating a lump sum fee. This is not unexpected in a case where in a competitive market one has to try to anchor in the work and secure the project. [83] It is certainly not a case where the Plaintiff with respect to their conduct could be said to have agreed to the Scale of Minimum Fees as can be seen from the Lump Sum quote in their Letter of Appointment issued to the Defendant when they bought over the project land from IRDK which quote was duly accepted by the Defendant. [84] In fact the above conduct of both the Architect and the Client on the ground and in practice would militate against the default position found in Rule 29(1) of the Code of Conduct and Conditions of Engagement under Part IV of the Third Schedule to the Architects Rules 1996 which reads: “Conditions of Engagement.

(1) Except with the prior approval of the Board given for special reasons, an Architect shall only enter into an agreement for architectural consultancy services according to the Architects (Scale of Minimum Fees) Rules 2010, the Conditions of Engagement in Part 27 One of the Third Schedule and the Memorandum of Agreement in the Part One of the Fourth Schedule.” [85] I am not impressed and certainly not persuaded by the Defendant’s recalculation of his professional fees based on what he castigated as a fresh revelation from the Plaintiff on the cost of construction upon which he would base his fees when they claimed for damages including financing loss and the loss of profits. He had also referred to what he claimed as a refreshed fee entitlement based on the statutory entitlement under the Architects Act 1967 and the rules made in the Architects (Scale of Minimum Fees) Rules 2010 since the Plaintiff is now dissociating themselves and refusing to pay him the fees outstanding from IRDK which IRDK said the Plaintiff had agreed to pay the Defendant. [86] That, I must say, was what triggered the Defendant to amend his Counterclaim to claim for his revised fees based on the Architects (Scale of Minimum Fees) Rules 2010. [87] The relevant portions of his Amended Counterclaim and his evidence extracted from his Witness Statement are reproduced below: “Part# 5 is a counterclaim arising from the Ex-parte Injunction, where the SPA is provided only in March 2017, seen for the first time by the Defendant and set his counterclaim as below in tabulation; To compute an Architect’s Fee, the applied formula and calculation is as follows: 28 ARCHITECTS (SCALE OF MINIMUM FEES) RULE 2010 Cost of Work 1 X Fee Rate in % 2+3 X (0 to 100) % Work done = Fee Claim Ref 1: PART I - PRELIMINARY, Rule 2 in interpretation, Rule 4 Cost of Works, shall exclude

(A) Operating equipment or machinery that are not an integral or essential part of the

(B) Administrative expenses by the client;

(C) Costs incurred by the client under an agreement between the client and architectural consultancy practice;

(D) Interest on capital employed during construction,

(E) The cost of raising money required for carrying out construction of the works; and

(F) The cost of land and way leaves; Ref 2: PART II-ARCHITECTURAL CONSULTANCY SERVICES Rule 6 (a), Basic Services Rule 7 (a),(b),(c),(d),and (e). Rule 8 to Rule 12, Ref 3: PART III-SCALE OF MINIMUM FEES Rule 23 (1) (ii), category 2 of the Schedule in BUILDING TYPES, 29 The Cost of work was derived from the given GDV at RM550 Million, then taking away the Profit Projection of RM 110 Million and known land cost of RM95 Million, giving a balance of RM 345 Million, allow 30 Million or 9% for consultants fees, management fees and contributions to authorities, leave a value of RM315 Million. FEE RATE is computed based on Rule 23 (1) category (ii), 1st portion: RM 112 Million. The provision rate is RM 4,837,500.00; plus 2nd portion: Fee for RM 112 Million above, is at the rate of 3.25% X RM203 (315-112) Million = RM 6.5975 Million The Total Basic Services FEE is RM 4,837,500.00 …..(1st portion) + RM 6,597,500.00…..(2nd portion) RM 11,435,000.00… (Total Project Fee) ......... The Fee entitlement is computed as follows: FEE for the Project is revised to where the original sum is now varied with an enlarged plinth, with 3 blocks or 3 tower-setting in instruction for 120 units density per acre, is RM 11,435,000.00. Contract Documentation is 70% Stage entitlement, at Rule 27. Payment for Fees for Basic Services, Schematic 15% + Design Development 30% + Contract Documentation 25% = 70% of total fee payable, 30 The Counterclaim entitlement = RM 11,435,000.00 X 70% = RM 8,004,500.00 before added GST, excluding additional works rendered prior to and effective unto the LOA upon conclusion of SPA dated 21.4.2015 revealed to the Defendant later than on 6.4.2016, the conclusion date but verbally afterwards in subsequent meetings with Plaintiff’s Ms Tan and Mr Sui, and then Mr Ho. The fee Claim in # 1 for RM 2,843,342.12 for previous work done under IRDK, as in Part # 2(3) above RM 406,560.00, protraction and additional work done applying a time cost multiplier, Architects (Scale of Minimum Fees) Rules 2010; Rule 5 Multiplier, Rule 6 (c) Additional Services, Rule 14 (e) exceptional negotiations and protracted involvement services, Rule 19 (b) & 19 (c), Rule 25 Fees for Additional Services. With reference to DW 1, Supplementary Witness Statement:

Please refer to page 360, please tell the court the content on minutes of meeting? This is Client Consultant Meeting No 3 of 03.07.2015, attended by all project consultants and the plaintiff’s representatives, chaired by Dato Lim Kiu Hock on Plaintiff’s instruction to proceed to KM Re-submission application on TOD incentives & JPBD’s approval by 1st week of Aug 2015 after the LOA2 was signed on 25.05.2015. 31 The works done as per Plaintiff’s instruction ( DESIGN BRIEF 1 ) was based on 80 units per acre density as reflected in CCM minutes of meeting in item f1) to f6) discussed. This instruction was followed by email from Mr Sui in page 171-172 on 5 Aug 2015, when the he appended KM submission checklist. The Plaintiff had also wanted to amend the 28 villas into Townhouses. The designs could be seen in page 327 to 340 and better color prints in the CD provided in item 62 of CDB. ...... ........

Please refer to page 174 of email dated 26.11.2015, please explain what is the design brief ? The Plaintiff now via Mr Sui from Seremban’s HQ‘s management superseding Dato Lim, issued a DESIGN BRIEF ( 2 ) for Phase 1 & Phase 2, as follow : “Our Management had confirmed to adopt the following design brief for this development moving forward as well as for the KM resubmission purposes” The density was targeted at 452+10 units = 462 units/ 5.67acres = 80 units per acre, wherein Phase 1 consist of 452 units of various sizes of condominium apartments in overall NFA of 600,160 sq.ft, and Phase 2 consist of 10 bungalows in an overall built up area of NFA at 253,078 sq.ft The Phase 2 of 10 bungalows translated shall be 25,308 sq.ft per unit in built up. I found that was unusual as it was equivalent to 32 31 units of single storey in a 20 ft x 70 ft terrace houses, and I stopped at that.

Could I refer you to page 175 & 176, please explain? This was an email instruction from Mr Sui on 30.12.2015 informing of his HQ’s management decision on “latest composition (DESIGN BRIEF 3) of Phase 1 (Block A & B) for early digestion & preparation until final confirmation is obtained from his management to proceed further ” Now as provided in page 176, 442 units is equivalent to 442/5.76 acre = 76. 7 units per acre. Phase 2 was not mentioned. I was confused on the directives given and had enquired from Mr Sui. There was no answer given.

Please refer to page 178 & 179 on emails exchanges between the Plaintiff’s Mr Sui’s email from Mr Sui on 07.03.16? In page 179, it was a Design work requested by Mr Sui verbally and when completed emailed by Defendant’s assistant on 80 units per acre at 1.16pm on 07.03.2016 The works done on these designs could be seen in page 327 to 340 and better color prints in the CD provided in item 62 of CDB. In page 178, and by 6.54pm of even day, the Plaintiff informed of his management‘s decision on (DESIGN BRIEF 4) comments transmitted via pages 180 to 186, on latest revised plans for my further input and amendment, and in addition , it was reported that 33 the Plaintiff wish to adopt the described details for the proposed development. In page 178, and by 4.41pm of 09.03.2016, the Plaintiff had replied indicated unit D to face pool view but facing East, & etc.

Please refer to page 156 & 157, please explain? This is a DESIGN BRIEF (5) issued by Mr Sui on 09.05.2016 following a meeting with my subordinate in Plaintiff’s Seremeban HQ on 06.05.2016 in page 325-326. The design brief asked for 120 units per acre with a proposed unique facilities i.e. contiguous jogging track and etc, using Option 1 to continue.

From the above Design Briefs (1 to 5), what are your comments? The plaintiff had displayed a series of commercial indecisions that were beyond my understanding, as they are experienced developer. For Design Briefs identified as 1, 2, 3, 4 – they were instructed prior to the conclusion of SPA, that is outside the LOA2 on record. For Design Brief 5, the stipulation in the LOA2 was for 110 units per acre, however, the Plaintiff had issued instruction based on 120 units per acre. As the intent of Design Brief 5 had required a total revamp of design, it is not a continuation exercise of the intent of LOA2 anymore. Thus the works of 120 unit per acre that required 3 towers were beyond the scope of LOA2. To maintain existing piling foot plinth as originally required had to change. 34 The Cost & Fees Structures was separately proposed by me in page 158 & 47 The foot plinths in page 11 & 12 of CDB 2, with respective floors were computed as cost factor, arriving at a total cost of RM 7.91 million ( at 2.6% of 304 million ) for this new design. It was conveyed to the Plaintiff via email of page 158 As in # 2 (4) above RM 160,000.00, a lump sum derived for, under the Plaintiff’s instruction, additional work done above and Basic Services with new email instructions of the Plaintiff fro 120 units density with 3 Tower layout design on 9.05.2016 (at pg 191 of CBOD), after a meeting on 6.5.2016 (at pg196 and 107 of CBOD), including 3D animated walkthrough as evinced in item 62 of CBOD, therein contained in a CD. Applicable provisions as for item #2 (4), Architects (Scale of Minimum Fees) Rules 2010; Rule 5 Multiplier, Rule 6 (c ) Additional Services, Rule 14 (c ) exceptional negotiations and protracted involvement services, Rule 19 (b) & 19 (c ), Rule 25 Fees for Additional Services. Total Claim of RM 8,571,060.00 + RM 2,843,342.12 + 6% GST, and interests due whereof to be determined by the Court.” [88] As stated what had been redrawn based no doubt on the Plaintiff’s instruction was still at a very preliminary stage. In fact it was at most at the 35 “Schematic Design Stage” where based on the structure of “Stage Payment” as it relates to each phase of the Project in the Letter of Appointment no payment is due at this stage. Under Rule 8(e) of the Architects (Scale of Minimum Fees) Rules 2010, this “Schematic Design Phase” includes “preparing and submitting drawings and other necessary documents to the relevant approving authorities for either town planning approval or approval in principle as required under any relevant laws.” The Defendant had not adduced any evidence that this stage had been completed. [89] As for the “Design Development Phase” it includes under Rule 9(b) of the Architects (Scale of Minimum Fees) Rules 2010 “preparing working drawings and submitting the same together with all the necessary particulars to the relevant approving authorities to obtain building approval”. Again no evidence adduced that this had been done. [90] As the building approval had not been obtained the next stage could not be proceeded with in the “Contract Documentation Phase” under Rule 10 of the Architects (Scale of Minimum Fees) Rules 2010. Therefore there is no justification to charge based on 70% of the Revised Fees as provided for under Rule 27(1) of the Architects (Scale of Minimum Fees) Rules 2010. [91] From the evidence adduced it is clear that the matter did not proceed beyond the preliminary drawings and presentation to the Plaintiff. The Plaintiff rejected the Defendant’s Sketch Designs of 120 unit per acre and the fact is well within the Defendant’s knowledge as can be seen in the Plaintiff’s letter dated 29.9.2016 (pages 50-51 of CBOD 1) and Defendant’s letter dated 8.9.2016 (pages 37-39 of CBOD 1) when both letters are read together. The relevant part of the Plaintiff’s letter is reproduced below: 36 “D. Pertaining to your 2 new Sketch Design presented to us on 25th May, 2016, we wish to state that the subsequent submission of the 2 Sketch Designs was based on your request to which we accommodated at the expense of prolonging our submission date for the Development Order. However, we had conveyed to you that the said proposal was declined as it did not meet our above-mentioned objectives.”(emphasis added) [92] The Plaintiff was not keen to proceed based on the revised Drawings and Plans and so had decided to terminate the services of the Defendant as allowed for under the Letter of Appointment. [93] The Defendant is of course entitled to charge the Plaintiff for the additional work done and he had indeed done that soon after his termination and for which this Court had agreed that he is entitled to the sum invoiced then of RM342,347.48 for this additional work which did not proceed past the “Schematic Design Stage”. [94] This Court is further fortified that this is a reasonable amount for which Judgment was allowed on the Counterclaim of the Defendant as the Plaintiff themselves had also undertaken that they would not be using the Drawings and Schematic Design in any event. Whether the Plaintiff had proved the sums claimed as damages for the Defendant’s breach of the Letter of Appointment under the loss of financing cost and the consequential loss of profit until 7.7.2017 [95] Assuming for a moment that I had been wrong in holding that the Defendant had not breached the Letter of Appointment and that there was a reasonable fees owing by the Plaintiff to the Defendant which entitled the 37 Defendant to withhold the issuance of the Letter of Release and the delivery of the relevant Documents, the question then is whether the Plaintiff had proved the damages claimed. [96] The Plaintiff stated that the purchase price of the Project was fixed at the price of RM95,000,000.00 where RM55,000,000.00 is financed through CIMB Islamic Bank Berhad (pages 250-284 of CBOD 1). As such, the Plaintiff suffered the financing loss at the rate of 7.1% per year based on the calculation as pleaded below: Financing Loss Per Day = RM55,000,000 = x x = RM10,698.63 per day [97] Hence, with the late issuance of the Letter of Release by the Defendant for 205 days, the Plaintiff suffered the total financing loss of RM2,193, 219.15. [98] The Plaintiff supported the figure and calculation by reference to the Letter of Offer from CIMB Islamic Bank Berhad (page 250 CBOD 1) and the testimony given by PW2. [99] However there was no evidence adduced by the Plaintiff that they then tried to catch up on lost time as it were, to quickly submit their new Drawings and Plans through their new architect the moment the Letter of Release was issued and the Documents delivered to the Plaintiff. There was also no evidence led as to when, if at all, a new architect had been appointed and when the new Drawings were submitted for approval of MPSJ, if indeed they had been submitted. 38 [100] The Plaintiff relied on their loan of RM55 million from CIMB Islamic at an interest rate of 7.1% per annum but this had not made been made known to the Defendant at the point with the Letter of Appointment was issued to the Defendant. The loss of RM 2.1 million as calculated in paragraph 47 page 23 of the Plaintiff’s Reply Submission is too remote, and not naturally arising from the breach and not proved. See section 74 and 75 of the Contracts Act 1950. [101] The Plaintiff then said surely there must be some holding costs based on the purchase price of RM95 million for the Project but again this claim is fanciful and speculative as there was no evidence led that the Plaintiff was rushing to submit their Drawings and Plans for approval of the relevant authorities and that there was substantial delay occasioned thereby. [102] In fact the Plaintiff did not move the Court on an urgent basis as soon as the 30 plus 7 days were over after the termination of the Letter of Appointment. The termination was on 6.12.2016 and the Writ and Statement of Claim were filed only on 20.2.2017. [103] The Plaintiff was claiming from 14.12.16 (7.11.16 + 30 days + 7 days) to 20.7.2017 (when the Letter of Release and the Documents were delivered to the Plaintiff) giving a total of 205 days of delay. [104] However the application for the mandatory injunction was filed only on 20.2.2017; on 2.3.2017 the ex-parte application was heard and a consent order recorded on 13.6.2017. [105] There was a lack of urgency on the part of the Plaintiff until the Defendant threatened to withdraw the earlier approved plans from MPSJ. In other words the Plaintiff was content to wait and see how the market would develop until the Defendant put them on the defensive. 39 [106] The Court can take judicial notice of the fact that land in the Klang Valley and especially in Puchong can only appreciate in value with the passage of time. The delay, if any, in the launching of the Project can only help to increase the price of the condominium units and if I may add, with the abolishment of GST since 1.6.2018, this may well be a further savings to the Plaintiff if they are developing serviced apartments in their project. [107] On the balance of probabilities the Plaintiff had not proved the damages arising out of the loss of financing costs. [108] There was also the loss of profits claimed by the Plaintiff as follows:

Gross Development Value of the Whole Project : RM550,000,000

(ii) Less : Estimated Total Cost of the Whole Project : RM440,000,000 Gross Profit : RM110,000,000

(iii) Gross Profit for 3 years are around RM110,000,000

(iv) Gross Profit per year : RM110,000,000 3 = RM36,666,666

Loss of Gross Profit per day : RM36,666,666 365 =RM100,456-62 per day [109] Therefore learned counsel for the Plaintiff argued that the Plaintiff had suffered the loss of gross profit of RM20,593,607.10. 40 [110] It would appear that the Plaintiff was trying to make the Defendant suffer irreparably in the sense of teaching the Defendant an unforgettable and painful lesson which might well finish him off as an Architect. [111] This claim under loss of profits is even more speculative and fanciful compared to the earlier claim for financing loss. It cannot be gainsaid that the land is still there and the profits, perhaps even at a higher amount, would be grossed in as and when the Plaintiff should decide that the time is both ripe and right to launch after their revised Drawings and Plans have been submitted for approval of the relevant authorities. [112] As I said before there was no evidence adduced with respect to the steps taken after the issuance of the Letter of Release to show conclusively that had the Letter of Release been issued earlier then the steps now taken by the Plaintiff could have been done earlier and much time dissipated through refusal of the Defendant to issue the Letter of Release could have been saved. [113] In a manner of indirect admission that there was no evidence of the Plaintiff’s action in proceeding with the Project after the issuance of the Letter of Release, the Plaintiff submitted that the mere fact that the Project did not run after 7.7.2018 should not prevent the Plaintiff from claiming damages against the Defendant. PW 2 himself admitted that the Project had not been launched yet. Somewhat, with tongue in cheek, learned counsel for the Plaintiff submitted that this was because the situation would have changed if the Defendant had complied with the terms of the Letter of Appointment and issued the Letter of Release within the stipulated time. [114] I do not think the Court should be put to speculation on prospective postulations or permutations when there is no evidence of actual loss which must be strictly proved. To accede to the so called claim of loss of profits 41 would be to allow the Plaintiff a double claim - one now from the Defendant and another when the Plaintiff should later decide to launch their development at an opportune time in the future. [115] That is not how the law on assessment of damages is founded. I would thus dismiss the claims of the Plaintiff for damages, assuming for a moment that the Defendant had breached the Letter of Appointment. [116] In the case of Kembang Serantau Sdn Bhd v YBK Usahasama Sdn Bhd [2018] 2 MLRH 385 it was observed in paragraph 192 as follows: “The Defendant on the other hand relied on the ratio in Popular Industries Limited v The Eastern Garment Manufacturing Co Sdn.Bhd. [1989] 2 MLRH 705 as follows: “It is axiomatic that a Plaintiff seeking substantial damages has the burden or proving both the fact and the amount of damages before he can recover…” Further at paragraph 193: “In this context, I am reminded of Lord Goddar’s dictum in Bonham Carter v Hyde Park Hotel quoted with approval Thomson CJ in Lee Sau Kong v Leow Cheng Chiang, namely that: Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage: it is not enough to write down the particulars, and so to speak, throw them at the head of the Court, saying “This is what I have lost, I ask you to give me damages’. They have to prove it”. [117] The Plaintiff cited the case of Tham Cheow Toh v Associated Metal Smelters Ltd [1972] 1 MLJ 171 to support their position and proposition of 42 law. In that case, the High Court had awarded a total sum of $7,501.38 as damages for loss of profits occasioned by the appellant’s failure to supply a furnace according to specifications. The Federal Court upheld the award and observed as follows at page 173: “…The difficulty in assessing damage was also considered in Chaplin v Hicks [1911] 2 KB 786. On page 795 Fletcher Moulton LJ said: “...I think that, where it is clear that there has been actual loss resulting from the breach of contract, which it is difficult to estimate in money, it is for the jury to do their best to estimate; it is not necessary that there should be an absolute measure of damages in each case. There are no doubt well-settled rules as to the measure of damages in certain cases, but such accepted rules are only applicable where the breach is one that frequently occurs. In such cases the Court weighs the pros and cons and gives advice, and I may almost say directions, to the jury as regards the measure of damages. This is especially the case in actions relating to the sale of goods of a class for which there is an active and ready market. But in most cases it may be said that there is no recognized measure of damages, and that the jury must give what they think to be an adequate solatium under all the circumstances of the case. Is there any such rule as that, where the result of a contract depends on volition of an independent party, the law shuts its eyes to the wrong and says there are no damages? Such a rule, if it existed, would work great wrong…” 43 [118] The facts are poles apart from the instant case for there the evidence was that the smelting plant would have continued production if not for the failure to supply and deliver the furnace. Here there was no evidence of what the delay had caused other than that a new Architect could not be officially appointed but there were steps that the Plaintiff could have taken by making an urgent application to the Court and to do the necessary to mitigate their loss if any. [119] Where there is a procedure in the Rule 19 and 22 of the Conditions of Engagement of an Architect, Part One, Third Schedule to the Architect Rules 1996 to be followed in the event of a dispute on fees of the Architect upon termination of his professional services the Client cannot be heard to be complaining for not wanting to follow the procedure. [120] In fact the Plaintiff as the client may also write to the Board of Architects to grant the waiver of the requirement of the Letter of Release if the circumstance so justified and in General Circular No. 2/2007 it is provided the Guidelines on Letter of Release and the circumstances when the Board may waive the requirement of the Letter of Release being issued. See page 16 of CBOD 1. [121] There is no evidence that the Plaintiff had written to the Board for such an exemption of the issuance of the Letter of Release. [122] In fact at the hearing of the application for an injunction to compel the Defendant to issue the Letter of Release and to deliver the relevant Documents both parties could agree on the deposit of an agreed sum of RM1.62 million with the joint solicitors for the parties as stakeholders pending the outcome of this trial. As soon as the stakeholders’ sum was ready parties had opened a joint account under their respective solicitors for this purpose until the disposal of this case. 44 [123] To my mind, it was a problem that could have been resolved earlier if the Plaintiff had focused on resolving the impasse rather than waiting. The Plaintiff have only themselves to blame for the so-called delay in their proceeding further which this Court was satisfied that there was no delay that could not have been avoided by payment of the necessary security or the receipt of an acceptable guarantee of payment of the disputed fees as envisaged under Rule 22 above. [124] For the reasons given above I would have to dismiss the Plaintiff’s claims for damages. Whether the Defendant’s agreement to charge based on a lower scale of fees than that prescribed under the Architects (Scale of Minimum Fees) Rules 2010 is enforceable [125] Rule 3 of the Architects (Scale of Minimum Fees) Rules 2010 provides as follows: “Any architectural consultancy practice which is engaged by a client to perform any of the architectural consultancy services specified in Part II shall not charge less than the scale of minimum fees specified in Part III .....” (emphasis added) [126] Then there is also Rule 29(1) Code of Conduct and Conditions of Engagement under Part IV of the Third Schedule to the Architects Rules 1996 which reads: “Conditions of Engagement.

(1) Except with the prior approval of the Board given for special reasons, an Architect shall only enter into an agreement for architectural consultancy services according to the Architects (Scale of Minimum Fees) Rules 2010, the Conditions of 45 Engagement in Part One of the Third Schedule and the Memorandum of Agreement in the Part One of the Fourth Schedule.”(emphasis added) [127] As stated the objectives of the Code of Conduct for Architects under Part One, Second Schedule are stated as follows: “Objectives of Code.

The objective of the Code of Conduct is to promote the standard of conduct and self discipline required of Architect in the interest of the public.” [128] Professional bodies would have the interest of the profession to protect and rightly so. However the Architects Act 1967 and the Rules made thereunder are not binding on the client though they may seek protection under them. There is thus no sanction for the client to agree on a lower scale of fees but should the Architect concerned flout the Architects (Scale of Minimum Fees) Rules 2010 that may be a misconduct that the Board is entitled to require the Architect to show cause as to why disciplinary action should not be taken against him. [129] To say that any contract on professional fees of an Architect which is lower than the prescribed fees under the Architects (Scale of Minimum Fees) Rules 2010 would be null and void and unenforceable would be to throw the baby out together with the bath water! Whether or not a contract not in accordance with any professional rules is null and void under section 24 of the Contracts Act 1950 would depend on the words employed in the relevant rules. [130] It would mean that the Architect cannot enforce his fees altogether and recover it for work done. That would be most unfortunate and a case where the cure is worse than the disease. 46 [131] Surely the intent of the legislature and in this case the Board of Architects cannot be that of rendering the contract on fees to be void altogether for an agreement lower than the Architects (Scale of Minimum Fees) Rules 2010. To begin with there is no prohibition on the client from agreeing to a lower fee structure and there is no criminal sanction attached to either the client or the Architect for non-compliance where Fees is concerned. [132] I would follow the approach taken by his Lordship Edgar Joseph Jr FCJ in the Federal Court case of Co-operative Central Bank Ltd (In receivership) v Feyen Development Sdn Bhd [1995] 3 MLJ 313 where at p.321 it was observed as follows: “Nevertheless, the general rule is that a contract, the making of which is prohibited by statute expressly or by implication, and which stipulates for penalties for those entering into it, shall be void and unenforceable, unless the statute itself saves the contract or there are contrary intentions which can reasonably be read from the language of the statute itself. (See Holman v Johnson [1775] 98 ER 1120 at p 1121; Chung Khiaw Bank Ltd v Hotel Rasa Sayang Sdn Bhd & Anor [1990] 1 MLJ 356). However, the general rule is subject to exceptions and, at the end of the day, it is question of construction of the particular statute. This point was aptly put by Gibbs CJ in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd [1978] 139 CLR 410 thus wise: It is often said that a contract expressly or impliedly prohibited by statute is void and unenforceable. That statement is true as a general rule, but for complete accuracy it needs qualification, because it is possible for a statute in terms to prohibit a contract 47 and yet to provide, expressly or impliedly, that the contract will be valid and enforceable …Where a statue imposes a penalty upon the making or performance of a contract, it is a question of construction whether the statue intends to prohibit the contract in this sense, that is, to render it void and unenforceable, or whether it intends only that the penalty for which it provides shall be inflicted if the contract is made or performed ”. (emphasis supplied) [133] In the light of the Competition Act 2010 the professional rules of the various professional bodies governed by statutes stipulating a minimum below which the professional is prohibited from charging would appear to be an anachronism where the trend worldwide is to promote competition and to allow the consumers and clients to have a choice where fees is concerned on a willing seller willing buyer basis albeit of professional services rather than goods. [134] To allow any monopoly would be retrogressive rather than progressive. While the various professions might be slow to amend their rules to be consistent with the ethos and jurisprudence of discouraging monopoly and promoting competition, it does not prevent the Courts from looking at these monopolistic machinery managed by professional bodies established under statute from the fresh jurisprudence of fair competition and to refuse to strike down these contracts but rather to enforce it with the ardent hope that the professional bodies will adapt to the winds of change blowing through their industries in the light of the Competition Act 2010. [135] I would repeat the observation I made in Sri Palmar Development & Construction Sdn Bhd v Jurukur Perunding Services Sdn Bhd [2010] 6 48 MLJ 166 at page 176 though spoken on the context of surveyor’s fees as follows: “[27] I must confess that I find it difficult to understand why a system of scale fee is necessary to ensure and enhance the integrity of our Torrens System of title registration. The reverse might well be true: that if developers are allowed to negotiate for a lower fee in the context of bulk work, perhaps with lower fees they can come up with the money to apply for a faster subdivision of titles after the master title has been surveyed. In any event there is no way to prevent the land surveyor from refunding to the client the difference between the scale fees and the negotiated fees after the scale fees have been released to the land surveyor after completion of the title survey work. This rationale of scale fees been there in place to protect the client and the public is a mistaken notion that ought to be debunked. If it is to protect the client then the client should be given the freedom of choice both in the latitude and liberty in being able to negotiate on fees. [28] It was argued by the Defendant that public policy dictates and demands a structured scale fees scheme to ensure quality work is done for a reasonable stipend as stipulated by the Board and that one way to shun shoddy work is to secure that scale fees are paid to the Board before work commences. [29] Attractive as that argument is, it fails to take into consideration the market forces of competition and the magnanimous fervour of being a professional. Why should any profession immune itself from the market forces of free competition? If there ever was a public policy that justify an inflexibly fixed scale fees on the ground of 49 protecting clients and consumers then even public policy here is fast changing with the passage of the Competition Bill 2010 through two Houses of Parliament where when enforced as law, matters like cartel and professionals ganging-up to gag negotiation on fees with the help of their professional body and unfair monopolistic fee structures would be struck down by the Commission to be set up under the soon to be gazetted Competition Act 2010. Indeed the system and structure of an inflexibly fixed scale fees scheme would have to be set aside as being stifling and suffocating of fair competition. Why should a professional be less professional in his work merely because he has agreed to a lower scale fees? Why should he be penalised and punished and perhaps even paraded as a pariah of his profession just because he has charged a lower fee but no less professional in his work bearing in mind that until he has completed his work within the stipulated time he cannot get his fees from the Board? If a member of the profession wants to charge a lower fee because of his lower cost due to where he is operating from or because he has managed to harness technology to help him in his work, why would any member of his profession wail and wrangle his fist in protestation? Speaking of the legal profession that I am more familiar with, lawyers are known to put in more energy and effort and even exhibit more endurance in cases where they do pro bono work especially in the field of public interest litigation. A profession should distinguish itself in the high standard that it sets for its members to achieve and attain and certainly not by a non-negotiable standard and at times perceived to be steep scale fees. 50 [30] The categories of contracts which are contrary to public policy are not closed. Whilst it has been said that public policy is a very unruly horse, and when once you get astride it you never know where it will carry you (as per Borough J in Richardson v Mellisa (1824) 2 Bing 229), it has also been said that with a good man in the saddle, the unruly horse can be kept in control, it can jump over obstacles it can leap the fences put up by fictions and come down on the side of justice (as per Lord Denning MR in Enderby Town Football Club Ltd v Football Association Ltd [1971] Ch 591) In Koid Hong Keat v Rhina Bhar [1989] 3 MLJ 238, at page 241 Wan Adnan J (as he then was) adverted to a dictum in Re A Solicitor [1945]1 AER 445 which states, “the law relating to public policy must change with the passage of time, it cannot remain immutable.” Indeed what was once thought of and treasured as immutable may now be treated as inimical to fair competition and hence ignominious. In the Indian Supreme Court case of Central Inland Water Transport Corp Ltd v Brojo Nath Ganguly AIR 1986 SC 1571 at page 1612, Madon J when dealing with section 23 of the Indian Contracts Act which is in pari materia with our section 24(e) of our Contracts Act 1950 said: “It is ... clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy.” 51 Whatever may have been the main motive behind an inflexible scale fees for many a profession, that is now an anachronism and an affront to fair competition. Whilst it was once a trademark of the professions it is now fast becoming a taboo.” [136] The Report entitled “Regulatory Review Price Fixing For Professionals In Building Constructions” – Report by Malaysia Competition Commission & Malaysia Productivity Corporation, (November 2014)” is most insightful with respect to the way forward where the various professional fees of the Land Surveyors, Quantity Surveyors, Architects, Engineers and Planners are concerned. [137] Clearly, the Architects (Scale of Minimum Fees) Rules 2010 is binding only on the Architects and not the client where fees is concerned. Indeed all the General Circulars issued by the Board of Architects mentioned the binding effect of the Architects (Scale of Minimum Fees) Rules 2010 on all professional architects only but not on the third party, i.e. the developer and client. See General Circular No. 4/2010 dated 10.5.2010 at page 15 of CBOD 1. [138] It would be rather hollow an argument if not hypocritical for the Defendant to, on the one hand agree with the Plaintiff based on a lump sum professional fees freely negotiated which is lower than the Architect (Scale of Minimum Fees) Rules 2010 but on the other hand, to claim for another professional fees based on the Rules after the termination is effected. That would be tantamount to changing the goal post! [139] Granted the Defendant was upset and indeed distressed over the imminent intention of the Plaintiff to engage a new Architect to replace him as can be seen in his letter dated 8.9.2016 at page 37 CBOD 1 where he 52 had expressed his deep disappointment at the shocking revelation as follows: “..we were invited by MC [the Plaintiff] to a meeting ....required (sic) to consider the option of withdrawal purportedly to be substituted by a new architect preferred by MC. We had expressed shock and explained our potential losses and reputation (sic) hurt .....” [140] The Defendant would be estopped from claiming otherwise as he had agreed to the Plaintiff having the liberty to unilaterally terminate his services at any time and being only entitled to his balance fees for work done up to the point of termination. [141] The Federal Court in Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 at p 347, applied this doctrine of estoppel as follows: "...All that a representee (which term includes one who has received encouragement in the sense we have discussed earlier) need do is to place sufficient material before a court from which an inference may fairly be drawn that he was influenced by his opponent's actings. Further, it is not necessary that the conduct relied upon was the sole factor which influenced the representee. It is sufficient that 'his conduct was so influenced by the encouragement or representation … that it would be unconscionable for the representor thereafter to enforce his strict legal rights' (per Robert Goff J in Amalgamated Investment [1982] 1 QB 84 at p 105).” [142] The Defendant could have put his foot down and maintained his stand that he is not agreeable to a unilateral termination in which case the Plaintiff would be at liberty to decide whether to engage the Defendant to continue as the Architect for the Project. 53 [143] Having agreed to a unilateral termination at the instance of the Plaintiff he cannot now be heard to cry foul when the Plaintiff should decide to terminate the Defendant. The Defendant cannot now resile from the position he had taken on his fees quoted and on which the Plaintiff had relied and acted. [144] The case of Akitek Tenggara Sdn Bhd v Mid Valley City Sdn Bhd [2007] 5 MLJ 697 seems to suggest that the parties are still at liberty to enter into their own Conditions of Engagement and Memorandum of Agreement. The Appellant was appointed to prepare comprehensive development plan for a township. The Respondent subsequently discharged the Appellant as architect for the project as the Respondent intended to utilize the service of the architect of its new majority shareholder. The Federal Court had confirmed that the engagement remains an engagement that is inconsistent with the Conditions of Engagement under Rule 28 of the Architects Rules 1996 and such Rules shall not be applicable unless incorporated into the Contract as was observed as follows at pages 751-752: “[139] The Conditions of Engagement are backed by r 28 of the Rules. At the time when the contract was entered into, r 28 that was in force was the original r 28 that I have set out. For convenience I will set it out again:

Except with the prior agreement of the Board given for special reasons, an Architect… shall only enter into an engagement for his professional services upon the conditions in the Fourth Schedule. [140] By the manner of its wording, the rule imposes a duty on an architect to enter into an engagement only upon the conditions in the 54 Conditions of Engagement, if he fails to do so and enters into an engagement otherwise than upon the conditions in the Conditions of Engagement, he acts in breach of the rule and is liable to suffer the consequence of breach the rule, but the engagement remains an engagement that is not in accordance with the conditions in the Conditions of Engagement. The Conditions of Engagement, therefore, will apply to an engagement of an architect only through observance by the architect of r 28, the Conditions of Engagement are not incorporated into the contract. Rule 28 is not worded as a provision that makes the Conditions of Engagement directly applicable to every engagement of an architect. [141] It is interesting to note that the new r28(1) additionally requires an architect to enter into an agreement for his professional services in accordance with the Memorandum of Agreement in the Fifth Schedule, which was introduced by 1986 amendment. Paragraph 2 of the agreements in the Memorandum of Agreement say that the parties agree that “This Memorandum of Agreement, the Conditions of Engagement and the Architects (Scale of Minimum Fee) Rules 1986 shall together constitute the Agreement between the client and the Architect’ that is the agreement that incorporates the Conditions of Engagement. If an architect complies with r28(1) and enters into an agreement in the form of the Memorandum of Agreement, the Conditions of Engagement are incorporated into the agreement. if he does not comply with r 28(1) and enters into an agreement in some other form, the Conditions of Engagement will not apply unless they are expressly incorporated into the agreement.” (emphasis added) 55 [145] For the reasons given above the stand of the Defendant that the agreement on a reduced fees is not valid and enforceable and that the scale as prescribed and provided for under the Architects (Scale of Minimum Fees) Rules 2010 prevails cannot be supported and sustained. Pronouncement [146] In the upshot I had dismissed the Plaintiff’s claim and allowed the Defendant’s Counterclaim only for RM342,347.48 together with interest of 5% per annum from date of Counterclaim to date of realization. [147] The amount of RM1.62 million together with all accrued interest held in the joint stakeholders account of Messrs KF Wong & Lee and Messrs Hakim Arabi & Associates are to be forthwith liquidated and uplifted and the sum returned forthwith to the Plaintiff in exchange for the Plaintiff’s solicitors cheque for the sum adjudged in favor of the Defendant and costs. This Court was of the view that the matter should have been heard in the Sessions Court where the quantum of claim is concerned. 56 [148] After hearing parties on costs I had allowed costs of just RM20,000.00 to be paid by the Plaintiff to the Defendant, for the parties had taken up the time of this High Court unnecessarily when the matter could have been heard and disposed of in the Sessions Court and the High Court’s time released and reserved for the more intractable cases where the amount in dispute is undeniably more than RM1 million. Dated: 19 October 2018. - signed - LEE SWEE SENG Judge Construction Court High Court, Kuala Lumpur For the Plaintiff : Wong Kong Fatt and Chan Yeong Fong (Messrs KF Wong & Lee) For the Defendant : S. Chandrasegar Subramaniam (Messrs S. Chandran & Partners) Date of Decision: 12 June 2018.