Good Writing Habits

We are one week away from Chinese New Year. I thought this would be a good time to stay away from heavier technical topics and present a lighter article instead on good writing habits.

A lawyer cannot escape from having to read and write a substantial quantity of documents every single day. Unfortunately, practice does not make perfect where writing is concerned. Instead, practice makes permanent all the bad habits that one has when writing. To overcome our bad writing habits, we need to be mindful of good habits that will help us write better. Here is a list of some good habits that may be helpful. These habits are not original. I have adopted them from various books and articles, and hopefully you find them helpful.

  • Start with the end. By that, I don’t mean to start with the end “in mind”. I mean to literally start with the end. State the conclusion right at the beginning. In this way, we can help readers to keep the conclusion at the top of their minds as they read our writing.
  • Plan the flow. It is simply too easy in the age of computers to start typing and hope that our flow of thought would somehow turn out to be brilliant. What we learned in primary school when we started writing essays is still relevant. We need to plan our points beforehand.
  • Shut out the world. Shut the door, silent the phone, switch off the Internet. Calls can be returned later. Colleagues can be spoken to later. Happy hour plans can wait.
  • Stay focused. Not only must we stay focused on our task, we must also stay focused on the specific point we are elaborating. If any new idea comes up, simply jot it down on a piece of paper and go back to writing the particular point you were working on.
  • Read the research beforehand. Reading the research will help you see other points which have been argued before, and how they were handled. You may have additional thoughts leading to further research before the task of writing starts.
  • Complete the section you are working on and plan your next section before taking a break. Once you start a section, push through it. And when it is completed, plan the next section before taking a break. This is so that you don’t start the next session with a blank mind.
  • Emulate good writing of colleagues and opponents. I always learn from my opponents. When I see a good cross-examination technique, I apply it immediately in my next trial. When I see a good piece of writing, I emulate the style immediately in my next piece of work. As a result, I always evolve in my approach and style.

That’s it for now. Law Alert will take a break next week for Chinese New Year. Here’s wishing everyone a happy and prosperous year ahead.

Scope of partial enforcement of adjudicator’s awards

Section 28(2) CIPAA makes it clear that the High Court can enforce an adjudication decision “either wholly or partly”. The question is, to what extent can the High Court enforce an adjudication decision “partly”?

Keating on Construction Contracts say that if there is a breach of natural justice, “the whole decision is unenforceable and it is not possible to sever the good from the bad”. With due respect, an adjudication decision may involve several different heads of claims (eg. certified sums, uncertified sums, retention monies, backcharges, interest element, etc). To adopt the view that a breach of natural justice in respect of, say the interest payable, would render the entire decision to be unenforceable would seem overly harsh, especially since breaches of natural justice would be errors on the part of the Adjudicator primarily and not errors of the claimant itself.

Hence, in Cantillon v Urvasco, the learned judge opined that if there was more than one dispute referred to adjudication, then where there has been a breach of natural justice in one dispute, that particular dispute can be severed from the other one.

That seems to make sense, in that where there are different heads of claim, and the High Court takes the view that there has been an error or breach of natural justice for one of the heads of claim, that particular head of claim can be severed and the rest of the decision enforced accordingly.

However, the question is whether the High Court can enforce partially one particular head of claim, for instance for uncertified sums?

If an adjudicator were to allow say RM1 million for uncertified sums, can the High Court turn around and say that exercising its powers in section 28(2) CIPAA, it only allows enforcement of RM800,000?

With respect, doing so would mean that the High Court necessarily has to look into the merits of the RM1 million decision, and effectively sit in appeal or re-hearing of the adjudication proceedings. It is well-accepted that a High Court does not do so, and that notwithstanding mistakes by the Adjudicator, the Adjudication Decision should generally be allowed to stand as a temporary finality pending final determination.

Hence, it is submitted that the powers of the High Court to enforce partially an Adjudication Decision under section 28(2) CIPAA ought only to be exercised in order to exclude (entirely) any particular head of claim. It ought not be employed for the purpose of reviewing the Adjudication Decision in order to allow enforcement of part of a particular head of claim, because that would essentially be the High Court sitting in appeal and/or re-hearing of the adjudication process.

We will await a suitable case to advance this proposition for the High Court’s deliberation.

Kheng Hoe Advocates advises clients in arbitration, litigation, adjudication (CIPAA) and mediation of construction disputes. We can be reached at khenghoe@khenghoe.com. 

Federal Court finally puts Selva Kumar to rest

The case of Selva Kumar a/l Murugiah v Thiagarajah a/l Retnasamy had been a cause of many an advocate’s nightmare. Once liability has been established, you must still strictly proof damage suffered, even if the contract has an agreed liquidated damages clause. Sometimes, the strict proof of damage is not so simple, and as a result, contractors who are late get off the hook just because damages cannot be proven.

We seem to be on the verge of waking up from this nightmare with the recent Federal Court decision of Cubic Electronics Sdn Bhd (in liquidation) v Mars Telecommunications Sdn Bhd. Interestingly, the case of Cubic Electronics in fact concerns the claim for refund of earnest deposit paid. However, the Federal Court took the opportunity to delve into a re-look at section 75 Contracts Act, and specifically overturned Selva Kumar.

The facts of Cubic Electronics are simple:

a. Cubic Electronics was the owner of a piece of land in Melaka together with machineries on the land. When it was wound-up, the land and machineries were put up for sale by way of open tender.

b. Mars Telecommunications made an offer to purchase the properties for a total of RM90 million, and offered an initial earnest deposit of RM1 million. The liquidator did not proceed with the open tender and accepted the earnest deposit paid.

c. Having paid the earnest deposit, Mars Telecommunications failed to sign the sale and purchase agreement within the requisite time frame. Instead, they paid a further RM500,000.00 of earnest deposit in exchange for an extension of time.

d. Mars Telecommunications subsequently paid yet a further RM500,000.00 earnest deposit for a second extension of time.

e. They subsequently paid a further RM1,000,000.00 earnest deposit and RM40,000.00 late interest payment for a third and final extension of time.

f. Even then, Mars Telecommunications did not sign the sale and purchase agreement despite the third extension of time, and consequently, the liquidator forfeited the earnest deposits paid totalling RM3,040,000.00. The property was then sold to a third party.

Dissatisfied, Mars Telecommunications sued for a return of at least RM2,040,000.00 (less the initial earnest deposit of RM1,000,000.00). Their suit was duly dismissed by the High Court.

However, on appeal to the Court of Appeal, Mars Telecommunications was successful, in that the Court of Appeal allowed the refund of RM2,040,000.00. The Court of Appeal held that following Selva Kumar and the subsequent case of Johor Coastal Development Sdn Bhd v Constrajaya Sdn Bhd, there was no evidence to show that Cubic Electronics had in fact suffered damage to the sum of RM3,040,000.00, neither was the same a genuine pre-estimate of loss pursuant to section 75 Contracts Act.

The matter therefore went before the Federal Court. The Federal Court reaffirmed the position of Linggi Plantations to the effect that in the event of a breach of contract, monies paid in advance for performance and as part-payment of the contract price is recoverable, but a deposit paid is not recoverable.

However, the Federal Court goes on to say that a deposit is subject to section 75 Contracts Act (being tantamount to an amount stipulated to be paid in the event of a breach). This is because section 75 does not distinguish between a deposit and other agreed payments or penalties.

The Federal Court then concludes that section 75 allows reasonable compensation to be awarded by the court irrespective of whether actual loss or damage is proven. Therefore, the correct approach in determining any LAD clause would be:

a. The party seeking to enforce a damages clause must adduce evidence that there was a breach of contract and the contract contains a clause specifying a sum to be paid upon breach. Once established, the innocent party is entitled to receive a sum not exceeding the amount stipulated in the contract irrespective of whether actual damage or loss is proven.

b. If there is a dispute as to what constitutes reasonable compensation, the burden of proof falls on the defaulting party to show that the damages clause including the sum stated therein is unreasonable.

In establishing the approach to an LAD clause, the Federal Court has reversed the onus now to lay the burden on the party in breach to show that any LAD clause is unreasonable, instead of the current position where the party seeking to enforce an LAD clause must nevertheless prove its actual damage or loss.

This is a welcome departure and development in the Malaysian position. Where an LAD clause is not patently unreasonable on the face of it, it flies in the face of fairness and good sense to compel the party not in breach to nevertheless jump through the hoop of having to prove its actual loss.

That does not however mean that the party in breach is without remedy.

a. Firstly, the party in breach can still seek to show that the quantum of LAD imposed is unreasonable under the circumstances; and

b. In any event, the Federal Court has not removed the discretion of the judges to determine a reasonable compensation notwithstanding an LAD clause. It is still not claimable per se, although the high bar of proof has been substantially lowered.

It will be interesting to see how this plays out in future CIPAA cases. Currently, in most CIPAA cases, adjudicators have rarely allowed LAD counter-claims to reduce the amount of claim, on the basis of Selva Kumar and the need for the developer to prove actual loss. The scenario may well change quite drastically moving forward.

Kheng Hoe Advocates advises clients in arbitration, litigation, adjudication (CIPAA) and mediation of construction disputes. We can be reached at khenghoe@khenghoe.com.

 

Can a QS be held liable to a contractor for errors in BQ?

Under the PAM Form, any errors or omissions in the Contract Bills shall not vitiate the contract, but can be corrected by the Architect or Consultant. When such errors are corrected, they may affect the price of the contract, and dealt with as a variation (either addition or omission).

However, if a contract does not provide for correction of the Bills, an error in the BQ may lead to disputes as to whether the particular item is already included as part of the contract price. In Patman and Fotheringham v Pilditch, the test employed by the Courts seems to be whether the items were “obviously required”. If yes, then the court takes the view that such items should have already been costed in despite the item not being specifically set out as a line item in the BQ. In such an instance, the contractor then bears the cost of such item.

Older cases suggest that a contractor who ends up holding the shorter end of the stick due to errors in the BQ cannot claim against the QS for such errors, because the QS was engaged by either the employer or the architect and therefore would not be liable to the contractor per se (for instance, see Priestly v Stone).

However, that may not necessarily be good law today, as surely the QS as a professional would owe a duty of care to the contractor who would have relied on the BQ prepared by the QS in preparing its tender bid. That does not mean that the BQ prepared must be perfect, but it must at the very least mean that there must not be errors of the type and magnitude that would not be common amongst QS-s exercising reasonable care and skill.

Kheng Hoe Advocates represents contractors in arbitration, litigation, adjudication (CIPAA) and mediation of construction disputes. We can be reached at khenghoe@khenghoe.com.