Thursday August 30, 2007

19-year wait for damages

PUTRAJAYA: After waiting 19 years, an architect firm will finally receive RM7.7mil in damages for wrongful termination of its services as the architect for the developer of one of the country’s biggest shopping malls.

Federal Court Justices Abdul Hamid Mohamad, Abdul Aziz Mohamad and S. Augustine Paul unanimously allowed Akitek Tenggara Sdn Bhd’s appeal against developer Mid Valley City Sdn Bhd.

The three-man bench also ruled that the Malaysian Architects Board (LAM) was only empowered to hear and determine disputes relating to professional conduct and not between an architect and the client as there was no statutory provision authorising the Board to do so.

Akitek Tenggara was appointed by the developer for a proposed comprehensive development of five lots of land at Jalan Penghulu Mat, Kampung Haji Abdullah Hukum, in Kuala Lumpur.

It claimed that the termination of its services via a letter dated Nov 11, 1988, was unlawful as it was not in breach of an express or implied term of an agreement with the developer.

Akitek Tengarra claimed professional fees and damages for wrongful termination of its services as an architect, in breach of a contract or agreement between them.

Mid Valley City’s ground for terminating the service was that the project had been aborted and it pleaded that its right to terminate the contract was implied by law.

It also said that the letter of appointment dated April 6, 1984, had implied that the architect’s services could be terminated if the project was aborted or delayed.

On Dec 13, 1988, Mid Valley City Sdn Bhd, formerly known as Bandar Incorporated Development Sdn Bhd, wrote to LAM seeking assistance in obtaining a release letter from Akitek Tenggara as well as to arbitrate the fee dispute.

About a month later, LAM replied and advised Mid Valley City that if it really intended to terminate the architect’s services it should write a letter clearly terminating its services.

On May 11, 1999, the Kuala Lumpur High Court awarded the firm RM7.7mil in damages saying Akitek Tenggara was entitled to compensation and damages for work done to date of termination and the loss of net profits on the abandoned work or uncompleted services lost by reason of the breach.

Unhappy, Mid Valley City appealed and in 2005, the Court of Appeal overturned the RM7.7mil award of damages for breach of contract but allowed the RM2mil claim for work done up to the date of termination.

In his judgment, Justice Abdul Aziz Mohamad said there was no provision that gave LAM the competency to decide the lawfulness or otherwise of the termination of the services or engagement of an architect by his client, which was a question that would arise only in a contractual dispute.

Justice Paul, in his judgment also agreed that LAM’s decision was of no effect as it was not competent to decide on the lawfulness or otherwise of the termination of an architect by his client.

He said the Mid Valley City’s intention to terminate the services of the architect as the new majority shareholders wanted to use the services of their own architect with a new development plan was brought by the act of developer itself.

News

Thursday August 30, 2007

19-year wait for damages