Obligations of the architect talk to acam - 20171026

OBLIGATIONS OF THE ARCHITECT

Secrets on Avoiding a Lawsuit

Icebreaker:Clients have the clearest

instructions

What will we cover today?

The 3 types of duties of an architect

Query:Can you identify the main

laws/rules that an architect must be aware of?

Query:Can you identify the main

laws/rules that an architect must be aware of?

● Architects Act 1967

● Architects Rules 1996

● Town and Country Planning Act

1976

● Local council guidelines

● Housing Development Act

1976 (amended 2012)

● Land Acquisition Act 1960

(amended 2016)

Contractual duties

1. Contract between Architect and Client

2. Contract between Client and Contractor

3. Contract between Contractor and Sub-Contractors (Nominated and

Domestic)

● Bear in mind express and implied terms

● Implied terms are presumed by law, custom or conduct

Primary duties of the architect

(1) Site investigation and feasibility studies

(2) Cost estimates - designing within the budget provided by client

(3) Working knowledge of governing laws in discharge of duties

(4) Administration of contract

(5) Preparation of plans, specifications and drawings*

(6) Supervision of building works*

(7) Certification of payments, completion, non-completion, CMGD, etc*

(8) Extension of time evaluation*

(9) Prevention, detection and rectification of defects*

(10)Assessment of set-offs*

Duties in tort

Meaning of “tort”

“A wrongful act or an infringement of a right (other than under a contract)”

● Negligence (“duty to take reasonable care...extends beyond contractual

obligations”- Lembaga Kemajuan Tanah Persekutuan v Mariam & Ors

[1984] 1 MLJ 283)

● Fraudulent/Innocent Misrepresentation

● Defamation

Main differences between contract and tort

Contract

● Only contracting parties can sue

● Limitation of 6 years counted from date of

breach of contract (breach may happen

even before completion)

● Can sue whether there is damage suffered

or not (but quite pointless if none)

● Damages can be limited by contractual

terms

Tort

● Anyone affected by the tort can sue

● Limitation of 6 years counted from date of

damage suffered (even if discovered

earlier)

● Cannot sue unless there is damage

suffered (except libel)

● Any reasonably foreseeable damage can

be claimed

Note: You can be liable under contract and tort

at the same time!

Dear Mr Architect (a design brief)- adapted from the Internet

Please design my house, altho I’m not quite sure what I want. Let’s plan between 5 to 8 rooms, but keep

it flexi for now so I can add or delete as I wish. When you show me the final drawings, then I will decide.

The construction cost should be less than my current place, but must not have any defects (my current

floor vibrates when I walk on it). Maintenance costs for the house must be low, so make sure you

incorporate practical measures. But make sure you use the latest design and materials so that my

house can be a showcase, yet it should blend with the furniture I bought during college. It is important

that both my wife and mother-in-law like the house- they don’t seem to agree on anything. Don’t need to

show me the small details, but remember that my wife likes blue. It’s important you focus on detailed

plans and specs now, and once I confirm, we start work IMMEDIATELY. Your design should be liked by

almost everybody in case I need to sell the house later. Also, my neighbour has a state-of-the-art sauna

that I like- can you include that without impacting the cost? I’m sure you’re thrilled to be working on

such an interesting project like mine. Looking forward to us working together!

Architects being sued- an overview

D.I.C.E.4 specific areas that an

Architect should be wary about concerning lawsuits

D- Design

I- Inspection/ supervision

C- Certification/ contract

management

E- Economic losses (area

of new concern)

D- Design Liabilities

In Voli v. Inglewood Shire Council [1963] ALR 657, an architect was made liable

for injury caused to the plaintiff as a result of the collapse of the stage designed

by the architect.

It was held by the High Court of Australia that an architect may, in appropriate

circumstances owe a duty of care in tort as regards the sufficiency of his design

and supervisory work. Such a duty can be owed to third parties with whom he

has no contract.

D- Design Liabilities (continued)

Key Observations:

● Obviously the architect can be held liable for design defects by the client

who engaged him

● BUT also by any third party who suffers damage that can be traced back to

the design fault

Aside: Can always try to blame the Engineer!

I- Inspection/supervision

In Clay v AJ Crump & Sons Ltd [1964] the demolition contractors left aside a wall that was intended to

be demolished to guard against trespassers. The architect noticed the wall and asked whether it was

safe for the wall to be left in that state, but he did not inspect the wall on his own. The wall collapsed

and injured a workman, who successfully sued the contractor and the architect.

Court held if architect has reasons to doubt the competence of a contractor, or has experienced a

higher than usual incidence of defects or lack of candor on the part of the contractor, he has a duty to

devote more careful attention to inspections.

But an architect or engineer will not be negligent just because some defects escaped his attention.

Professionals cannot watch every worker all the time. Nonetheless he must pay particular attention to

critical parts of the work at key times, particularly where it involves serious risks.

I- Inspection/Supervision (continued)

Voli v. Inglewood Shire Council [1963] ALR 657 (the collapsed stage case) also

held the architect liable for supervisory work (i.e. even if the design were good,

the supervision was not).

I- Inspection/supervision (continued)

Key observations:

● The Court recognises some leeway for professionals in terms of defects

and mistakes

● BUT the test imposed by the Court (doubtful competence, defects incidents,

lack of candor) may mean there is a duty to devote more careful attention

most of the time in the Malaysian context

The contractor who strictly follows drawings!

C- Certification/Contract Mgmt

One of the most critical tasks of the Architect, yet one of the most problematic!

● Payments

● EOTs

● Loss and expense claims/prolongation costs

● Defects and set-off assessments

C- Certification/Contract Mgmt (cont’d)

Pembinaan Leow Tuck Chui & Sons Sdn Bhd v Dr Leela’s Medical Centre Sdn

Bhd [1995] 2 CLJ 345, SC

If employer considered the architect had failed in his duty to make the necessary

deductions because of alleged defective works or materials not according to

specs resulting in over certification of sums payable, the employer could:

1. Request architect to make appropriate adjustments in another cert; or

2. Take the dispute with the contractor to arbitration; or

3. SUE THE ARCHITECT (Sutcliffe v Thackrath & Ors).


Key Observations:

● The Court allowed what was essentially a dispute between client and

contractor to flow onto architect


The same rationale would apply for the following circumstances:

● Refusing to grant EOT when appropriate

● Refusal to grant EOT results in Employer’s loss of LAD (unless instructed)

● Refusal to allow legitimate loss & expense claims / allowing too much

● Set-off assessments evaluation- too little/too much

Query:How about issuing CCC without

CPC?

● Is this practice logically

defensible?

● Do you see any danger to the

Architect who adopts this

practice?

E- Economic losses

Context:

In negligence, traditionally there must be some injury to person or asset before

an economic loss can be claimed (as a consequence of the injury).

Pure economic losses refer to claims for economic loss where there is no

accompanying injury to person or asset.

As you can imagine, the quantum for a pure economic loss can be tremendous!

(eg computing delay by projected loss of profits of hotel)

E- Economic losses (continued)

Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2

CLJ 1, FC (the Highland Towers case)

● There can be no recovery of pure economic loss against a local authority on

grounds of public policy

● But will the same consideration be extended to an architect???


Federal Court in Lok Kok Beng & Ors v Loh Chiak Eong & Anor [2015] 7 CLJ 1008

says NO.

● Policy considerations favouring local authorities cannot be extended to

cover a claim for pure economic loss against an architect


Lok Kok Beng & Ors v Loh Chiak Eong & Anor (supra)

Facts:

● Appellants were purchasers of industrial buildings who signed S&P with

developer. Respondent was developer’s appointed architect.

● Original approval by Local Authority imposed condition for compliance with

DOE requirements.

● DOE mandated for a Central Effluent Industrial Treatment System (CEITS) to

be designed by a DOE specialist and built according to specs.


● VP should be delivered within 24 months from approval of building plan

under S&P

● There was a delay of 8 years due to amendment of original layout plan and

delay in obtaining CFO

● If the Appellants sued the developer, they would at best be entitled to

interest under S&P. But instead they sued the Architect for their economic

loss for the 8 years’ delay. That is an amount that is far more than mere

interest!


Issues before the Federal Court, inter alia, were:

● Whether construction of CEITS, preparation of original layout plan incl

amendments were within the professional work of the Architect

● Whether the Architect owed a duty of care to the purchasers apart from their

duty in contract or tort to the developer? What if it is not within their

professional scope of duty?

● Whether undue delay in approval of CFO causing financial loss to

purchasers is foreseeable by Architect

● Whether FC should determine policy on extension of liability of architects to

cover pure economic loss

E- Economic losses (cont’d)

Held by FC:

● Architect not responsible for delay in obtaining approval for CFO as it is not

within scope of Architect’s professional work. The delay was not reasonably

foreseeable.

● Architect prepared layout plan and submitted in accordance with

instructions of developer and merely responsible for design, safety and

compliance with laws. Not reasonable to impose duty on Architect to inquire

in detail on the Developer’s obligations.


● There could be no action against Architect if remedy asked for was

specifically provided for in contract, otherwise it has effect of re-writing

contractual terms. Such claims must be dismissed on grounds of policy.

● Not fair, just or reasonable to impose on Architect a duty of care for a

responsibility they had not assumed or one which was not within their

professional scope of duty


● As the claim did not fall within the Architect’s scope of works, therefore it

failed.

Query:Where does that leave us?

● Has Lok Kok Beng overcome

Sy Pembinaan Leow Tuck

Chui? (question of refusal by

Architect?)

● Question of pure economic

loss vs architect left open if

within scope of works

● Be VERY WARY when there is

no express remedy in the

contract!

Which kind of architect are YOU?

Summing it all up:

Craviolini v Scholer & Fuller Associated

Architects (Arizona Supreme Court):

● Architect has no immunity as an architect,

but immune when acting as judge (quasi-

judicial/ quasi-arbiter functions)

Lundgren v Freeman (US Court of Appeal):

● Architects acting as quasi-arbitrators are

immune

● There are strong pressure for architect to

be unfair to contractor

● He is protected if he acts in good faith,

even erroneously. Otherwise, he should be

liable (even as quasi-arbitrator)

EC Ernst Inc v Manhattan Construction Co of

Texas (US Court of Appeals):

● A delay or failure to decide (rather than

timely decision making whether good or

bad) will cause an Architect to lose his

claim to immunity

That’s all folks! And thank y’all!

Brought to you by:

Chan Kheng Hoe ([email protected])

Foo Siew June ([email protected])

mailto:[email protected]

mailto:[email protected]