Shortage of Engineers and What That Means in Construction Disputes

According to the IEM president Datuk Lim Chow Hock, Malaysia is short of 50,000 experienced engineers to meet the requirements in the construction and infrastructure sectors (see http://www.thestar.com.my/Business/Business-News/2015/11/09/Malaysia-short-of-50000-experienced-engineers/?style=biz). Now, that is quite a substantial lack of talents for the industry, and such a lack impacts potential construction dispute cases.

After all, engineers would usually be the principal consultants in any construction contract. Their duties may include:

  • obtaining approvals of authorities
  • detailed designing of the works
  • preparation of tender documents
  • preparation of contract documents
  • supervision of works
  • administration of the contract and certification of works done
  • acceptance or rejection of the works
  • issuing stop-work orders
  • determining defects and calling for rectification works
  • approving rectification works
  • commissioning systems
  • resolution of final account

Can you imagine if due to a lack of engineers, any of the above works are delayed? Or worse still, inadequately carried out? For example, if the design of the works were inadequate, this could lead to severe safety issues when the building is eventually constructed in accordance with the drawings and plans. Or if the contract documentation was inadequate, this could lead to a substantial amount of variation works, which would increase the costs for the employer significantly.

Of even greater concern to employers is the fact that engineers would for all intents and purposes be construed as an agent of the employer in law (R v Peto; Wallis v Robinson; Kimberley v Dick). So whilst the employer may sue a negligent engineer, the employer on the other hand may end up being sued by its contractors for any mistake that the engineer makes.

Ordinarily, construction disputes are between employers, their main contractors, and the sub-contractors. If indeed Malaysia is facing a substantial lack of qualified professionals like engineers, it may not be long before we see lawsuits involving engineers coming into play, whether the party suing is the employer (for breach of contract or negligence), or the contractor (for negligence only).

In fact, we were retained to represent an engineer in a suit by a contractor for the engineer’s alleged negligence in his plans and drawings leading to the collapse of one part of the works. Whilst suits against professionals like architects and engineers by contractors, are still few and far in between, nevertheless this trend may well reverse in the future.

We sincerely hope not.

Kheng Hoe Advocates

Building contract and construction contract dispute lawyers
PS: If you have any building contract and construction contract related issues, I invite you to take advantage of my free one-to-one consultation to explore your next steps. There is totally no obligation on your part, and regardless whether you engage me or not, I guarantee that you will walk away with a clear idea as to where your case stands and how to take your case forward. To schedule an appointment, e-mail me with a brief description of your issue at khenghoe@khenghoe.com.

Adjudication in action

In the last post, I wrote about making claims under the Construction Industry Payment & Adjudication Act 2012. Today, I will highlight one reported decision on adjudication that came through the Courts. The case I am referring to is that of Bina Puri Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd.

The Facts

In brief, Hing Nyit Enterprise Sdn Bhd (“HNESB”) carried out some sub-contract works and submitted interim claims. Bina Puri disputed those claims because it alleges a gross miscalculation in one of the payment certificates. There is in fact a pending suit whereby Bina Puri is claiming for refund of overpayment from HNESB.

Mistakes by Bina Puri

Unfortunately, when a payment claim was raised by HNESB under the Act, Bina Puri did not file any payment response. Failure to file a payment response was indeed considered to be a dispute of the entire amount under section 6(4) of the Act. However, it limited Bina Puri to only disputing the claim without allowing them to raise the issue of their counterclaim.

Some principles set by the Court

In dismissing Bina Puri’s application, the Court also set some important principles. I will highlight two:

  1. Any challenge of an adjudicator’s decision is limited to a breach of natural justice, or a jurisdictional error only. In short, a breach of natural justice is when the adjudicator decides on an issue without allowing the affected party the right to be heard. A jurisdictional error is when an adjudicator decides on an issue beyond his jurisdiction or powers.
  2. Lack of certification of any progress claims is not a bar to adjudication. In other words, sub-contractors need not wait for certification before proceeding with a claim under the Act.

Conclusion

It is unfortunate in this case that Bina Puri’s counterclaim was not permitted to be considered due to its failure to file a payment response. In my 13 years’ handling of construction disputes, I have learned that it is always so important to cross the T-s and dot the I-s. Otherwise, something as simple as filing a response can just come back to bite you in the arse.

Kheng Hoe Advocates

Building contract and construction contract dispute lawyers

PS: If you have any building contract and construction contract related issues, I invite you to take advantage of my free one-to-one consultation to explore your next steps. There is totally no obligation on your part, and regardless whether you engage me or not, I guarantee that you will walk away with a clear idea as to where your case stands and how to take your case forward. To schedule an appointment, e-mail me with a brief description of your issue at khenghoe@khenghoe.com.