FACULTY OF BUILT ENVIRONMENT AND SURVEYING

UNIVERSITI TEKNOLOGI MARA

SHAH ALAM, SELANGOR

ASSIGNMENT 1:
PRACTICAL COMPLETION AND DEFECTS

COURSE : PROFESSIONAL PRACTICE II

COURSE CODE : BQS 609
GROUP : AP224 5H
SUBMISSION DATE : 23TH DECEMBER 2022
PREPARED FOR : SR DR ANIS SAZIRA BAKRI

Prepared By:

NAME STUDENT ID

AMIESYA SOFINA BINTI MOHD FUAD 2021459966

NUR FARIHAH BINTI ZAINUDIN 2021853458

SHEERA ERREN AFIDA BINTI KASUADINATA 2021853358

SITI NUR ATIQAH BINTI SUKRI 2021853346

 TABLE OF CONTENTS

INTRODUCTION ........................................................................................................................... 2
SYARIKAT PEMBINAAN ANGGERIK SDN BHD v MALAYSIA AIRPORTS HOLDINGS BHD ..................... 3
1.1 Background of The Case ........................................................................ 3
1.2 Fact of The Case ..................................................................................... 4
1.3 Court Decision ........................................................................................ 5
1.4 Conclusion and Lesson Learnt Related to Professional Practice ....... 6
GLOBAL UPLINE SDN BHD v MALAYSIA GOVERNMENT .................................................................. 7
2.1 Background of The Case ........................................................................ 7
2.2 Fact of The Case ..................................................................................... 8
2.3 Court Decision ........................................................................................ 9
2.4 Conclusion and Lesson Learnt Related to Professional Practice ..... 10
DUA RESIDENCY MANAGEMENT CORPORATION v EDISI UTAMA SDN BHD & ANOR ..................... 11
3.1 Background of The Case ...................................................................... 11
3.2 Fact of The Case ................................................................................... 12
3.3 Court Decision ...................................................................................... 13
3.4 Conclusion and Lesson Learnt Related to Professional Practice ..... 14
REFERENCES .............................................................................................................................. 16

1
INTRODUCTION

Practical completion can be considered as one of the most important milestones in the
construction contract. It can be described as the point at which a construction project is
complete and the certificate of practical completion (CPC) is being awarded to the respective
contractor. Accordingly, the contractor now has a duty to carry out the task thoroughly and
consistently, as well as to do it within the allotted time. If there is a high likelihood that the work
will not be finished on time and an extension is required, the CPC will be given out later in
accordance with the newly updated date (Ahamad Abdulllah, 2021). Both PWD Form 203A
(Rev.1/2010) and PAM Contract 2018 were subject to the contractual clauses pertaining to
practical completion. Clauses 39.0 and 48.0, which are based on the PWD Form, further define
the method and criteria that must be followed for practical completion as well as the
responsibility of the employer and contractor before and after practical completion (P.W.D
Form 203A (Rev.1/2010), 2010). The clauses for the PAM Contract 2018 include clause 15.0,
which describes the practical completion and faults obligation, and clause 21.0, which
specifies the date of commencement (Agreement and Conditions of PAM Contract 2018 (with
Quantities), 2018).

On the other hand, when it comes to defects, they can be categorised as any
imperfections, failings, or other faults that might be present in the building project. The
contractor has an obligation to correct any faults. In general, defects that arise during the
contract term must be fixed before the certificate of practical completion is issued, and defects
that arise during the defect liability period must be fixed before the certificate of fixing defects
is issued (Ahamad Abdulllah, 2021). It required both PWD Form 203A (Rev.1/2010) and PAM
Contract 2018 to be completed practically. Clauses 39.0 and 48.0 in the PWD Form deal with
the process and prerequisites for fixing defects as well as the contractor's responsibilities
during the defect's responsibility period (P.W.D Form 203A (Rev.1/2010), 2010). While the
PAM Contract's clauses 15.0 and 21.0 include detailed descriptions of the standards,
regulations, and other issues relating to faults (Agreement and Conditions of PAM Contract
2018 (with Quantities), 2018)

This report will look at three disputes that occurred in Malaysia in relation to the topic
of practical completion and defects. Among the cases are Syarikat Pembinaan Anggerik Sdn
Bhd v Malaysia Airports Holdings Bhd, Global Upline Sdn Bhd v Malaysian Government, and
Dua Residency Management Corporation v Edisi Utama Sdn Bhd & Anor.

2
SYARIKAT PEMBINAAN ANGGERIK SDN BHD v MALAYSIA AIRPORTS
HOLDINGS BHD

1.1 Background of The Case

The first section of this report explains the case that was filed in April 2017 in
High Court Shah Alam between the plaintiff, Syarikat Pembinaan Anggerik Sdn Bhd,
and the defendant, Malaysia Airports Holdings. According to the case statement, the
plaintiff was selected by the defendant to serve as the main contractor for the Penang
International Airport construction project. The project was divided into two phases,
including Package 1 which involved erecting a site office, a central utility building
(CUB), and carrying out airside drainage works (ADW), and Package 2 which involves
the construction or upgrading of the terminal building, transfer corridor and passenger
boarding bridge. The consultants appointed on behalf of the defendant for the project
include Quantity Surveyor from JBA-NAC, both Civil and Structural Engineering and
Mechanical and Electrical Engineering from Zaidun Leeng Sdn Bhd, Architect from
AHS Architects, and Interior Designer from Anuar Interior (M) Design.

The PWD 203A Conditions of Contract standard form used as the basis for the
main contract for the Package 2 phase, and the bills of quantities were incorporated
into the contract without any changes or amplifications. According to the conditions of
the main contract, the following documents which including the articles of agreement,
the letter of acceptance, the form of the tender, the conditions of the contract, the
contract drawings, the bills of quantities, the specifications, the summary of the tender,
and the employer's procurement policies and procedures should be regarded as
constituting the contract and should be interpreted wisely. The General Manager,
Planning and Development of the defendant corporation served as the project's
Superintending Officer (SO) in accordance with clause 1 of the main contract and
appendix.

Both Package 1 and Package 2 contracts are conventional contracts, as

opposed to design and build contracts, in which the employer provides the design,
specifications, and bills of quantities. The employer remains in charge of the designs
involved in the project, while the contractor does not participate in the design of the
works unless the contractor suggests an alternative design or an alteration to the
original design.

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1.2 Fact of The Case

The plaintiff of this cases which is Syarikat Pembinaan Anggerik Sdn Bhd has
been appointed by the defendant which is Malaysia Airport to be a main contractor for
the projects of ‘Proposed Development and Upgrading Works at Penang International
Airport, Bayan Lepas, Pulau Pinang’ for package 2 and the ‘Proposed Construction
and Completion of Site Office, Central Utilities Building and Airside Drainage Works at
Penang International Airport for the package 1. For the package 1, this project consists
of several building which are site office, CUB, and ADW meanwhile for the package 2,
it consists of main terminal building and the associated works. The original contract
price for the package 1 was RM18,300,000.00 meanwhile for the package 2 was
RM161,967,334.41 as stated in the clause 4 of the terms and conditions. However,
due to several variations and LAD impose, the total cost for the construction project
has been vary from the original price.

Generally, there are many grounds of claimed for the plaintiff towards the
defendant which separated by 2 packages. In respect of package 1 contract, the claim
that is made by the plaintiff towards the defendant is due to the contract works done
which still yet did not received the payment and certification. Besides, the claimed also
carried out due to the extensions of time as to complete the works in the package 1.
Meanwhile, in respect of the package 2, the claimed is made due to the same issue
which is the works that has been completed still did not receive the payment and
certification, the variations work done is not being paid by the defendant, there is losses
and expenses or the prolongation of cost and there is the acceleration of cost.

However, the defendant has denied the liability towards the claim that has been
made by the plaintiff and they have counterclaims for the liquidated ascertain damages
in the connection due to the failure of plaintiff to complete the construction work within
the stipulated time for the package 1 works. There are various items that is claimed by
the plaintiff where the total amount for all the claims is approximately RM 60M for both
packages. However, the employer’s counterclaim for the total amount of liquidated
ascertain damages was for about RM 9,694,000 which is for the package 1 works2.
However, after 14 days of considering to the oral and the written evidence of the
witness, the courts has allowed the claims regarding the plaintiff’s claims for about
RM2,036,521.50 in the package 1 and RM 8,642,914.73 in the package 2. Meanwhile,
for the defendant’s counterclaim, the amount that liable to be claim was only
RM750,000.00 in the package 1 work.

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1.3 Court Decision

The court ordered the defendant to pay the plaintiff RM1,286,521.50 in relation
to the package 1 after the deduction made due to the LAD about RM750,000.00 that
needed to be paid to the defendant since the plaintiff is failed to complete their work
on time and contribute to the delay in completing the ADW works in addition with 5%
of the interest rate which starting from 14 July 2014 until the complete settlement date.
Besides, in relation to the Package 2, the court also decided that the defendant are
required to pay RM8,642,914.73 towards the plaintiff along the 5% of the interest rate
start on June 2017 until the full settlement while deducting the plaintiff;s claims for
protracted costs, project expedition costs, and the financing fees.

i. Package 1 Contract

According to the court decision, the total value of work done and materials that
were delivered under this package, such as Site Office, CUB, and ADW, cost about
RM20,148,621.50 and the defendant has already paid 89.89% of the total payments
of works done towards the plaintiff which are about RM18,112,100.00. Therefore, there
are remaining payments left that need to be paid by the defendant for about RM2,
036,521.00. However, since the plaintiff is liable to the defendant in relation for the
delayed completion, the plaintiff is required to pay for the LAD charged for about
RM750,000.00 towards the defendant.

• Total value of work done = RM20,148,621.50

• Amount that already paid by the defendant = RM18,112,100.00
Therefore, the outstanding balance is RM20,148,621.50 - RM18,112,100.00
= RM2,036,521.50
• LAD charged = RM750,000.00
• Outstanding balance - LAD charged = The required payment towards the
plaintiff.
RM2,036,521.50 - RM750,000.00 = RM1,286,521.50 (with the interest at
5%pa)

As a result, the court ordered the defendant to pay about RM1,286,521.50 to

the plaintiff after deducting the LAD amount RM750,000.00 from the remaining

5
 payments that needs to be paid by the defendants RM2,036,521.50. This is because,
the defendants are entitled to obtain the LAD in relation to the ADW works from 1 May
2014 until 14 July 2014.

ii. Package 2 Contract

According to the court decision, the total value of work done and materials that
were delivered under this package consisting of the construction and improvement of
the terminal building, transfer corridor, and passenger boarding bridge that cost about
RM181,449,614.73 and the defendant has already paid 95.24% of the total payments
of works done towards the plaintiff which are about RM172,806,700.00. Therefore,
there are remaining payments left that need to be paid by the defendant for about
RM8,642,914.73 with the 5% of the interest rate annually from the 27th of June 2015
until the date of complete payment.

• Total value of work done = RM181,449,614.73

• Amount that already paid by defendant = RM172,806,700.00
• The outstanding balance is the total value of work done - payment release by
the defendant
• Therefore, RM181,449,614.73 - RM172,806,700.00 = RM8,642,914.73 (with
the interest at 5%pa)

As a result, the court ordered the defendant to pay about RM8,642,914.73 to

the plaintiff due to the work done that was carried out under Package 2. Moreover, the
High Court dismissed the entirety of the plaintiff’s claims in relation to the acceleration
cost and prolongation costs on the basis of both liability and quantum. Finally, the High
Court has awarded the plaintiff (contractor) approximately RM9,900,000.00 with the
interest as for the balance of work payments for completing the airport’s airside
drainage works.

1.4 Conclusion and Lesson Learnt Related to Professional Practice

From the final verdict by the court for this case it is concluded the reasons
behind all the disputes that happen between the Plaintiff and the defendant. The
construction work for this contract is divided by section, the Plaintiff is responsible to
complete Package 1 and Package 2 of the overall section. The Certificate of Practical

6
 Completion is issued for each section after the work has been completed in
accordance with the terms and conditions of this contract.

Related to this case the Plaintiff which is the contractor has practically
completed the contract of Package 1 without the Extension of time (EOT) for this
project but they failed to be certified or even fully paid for their work done, referred to
clause 39.5 in the PWD contract. However, Defendant denied Plaintiff's claims and
stated that Plaintiff are fail to complete the Package 1 works within the contract period.
In fact, Defendant counterclaim Liquidated Ascertained Damages (LAD) due to the
delayed completion of the Package. But the claim was dismissed for CUB works in
Package 1 referred to Clause 43 because the delay is beyond the Plaintiff's control.
Meanwhile, the counterclaim for ADW works entitled the Plaintiff extension of time
(EOT) with the LAD. So, the Certificate of Practical Completion will be issued after it
has passed commissioning tests, constructed according to the contract, all essential
services are fitted, and more.

Furthermore, for Package 2 the work has been practically completed within the
extended completion period granted by the Superintending Officer (SO). However, the
variation order by the defendant delayed the completion of the project. Plaintiff issued
the prolongation costs to Defendant due to any loss and damages incurred due to the
acceleration of works. Unfortunately, they failed to prove specific evidence to claim
such a cost. This evidence is crucial as a poof in order to avoid any dispute in a
construction contract that has been bound. This full trial was landed in court because
this case involved numerous claims and disputes with many boxes of full documents
to be carefully examined despite the existence of an arbitration clause.

GLOBAL UPLINE SDN BHD v MALAYSIA GOVERNMENT

2.1 Background of The Case

This section of the report will explain the case that was filed in High Court Kuala
Lumpur on October 30, 2015, between the plaintiff, Global Upline Sdn Bhd (GUSB),
and the defendant, Government Malaysia. Puteri Shehnaz Majid, along with Shasha
Ravindran, Cheah Teh Su and Associates, represented the plaintiff in the case, while
Khairul Fazly bin Kamarudin, Senior Federal Counsel, Attorney General's Chambers,
represented the defendant.

7
 According to the Defendant, the Government of Malaysia, Kota Kinabalu
International Airport needed to be upgraded so that larger aircraft, such as the Boeing
747-400, could operate there without restriction. Prior to that point, the airport mostly
handled scheduled flights, charter flights, and a few general aviation flights. The airport
had a single 2,988-meter-long runway, a parking area that could fit a couple of four
different types of aircraft, a passenger terminal building, a complex of air traffic control
towers, and other supporting facilities that could accommodate aircraft up to the Boeing
747-400.

There would be unrestricted operations for these larger aircrafts with the
upgrade, which included extending the runway to a length of 3,780 metres with
pavement strengths designed to cater for Boeing 747-400 with a frequency of at least
1,200 annual departures, and an extension of 1,474 m of the existing main parallel
taxiway to provide a full parallel taxiway system, and two high-speed exit taxiways.

Regarding the aforementioned works, The Global Upline Sdn Bhd (GUSB) was
contracted by the Malaysian Government to complete the tasks associated with
modernizing the Kota Kinabalu International Airport. The Works were separated into
three sections, namely Sections 1, 2, and 3, each with a different completion date and
a different rate of liquidated and ascertained damages (LAD), which were levied in the
event that any of the aforementioned sections were delayed in being completed.

2.2 Fact of The Case

The issue arises due to Plaintiff's claim of substantial completion of the first of
three sections of work it was contracted to complete for Defendant, the Defendant
refused to issue a Certificate of Practical Completion (CPC) and release half of the
money from the performance bond. Other than that, a letter by the defendant was also
received by the plaintiff which informed Liquidated and Ascertained Damages (LAD)
will be imposed on the Plaintiff if Section 1 of the work was not completed. Then,
Plaintiff asked Defendant to reconsider their decision. Instead, the defendant issued a
Certificate of Non-Completion (CNC) and terminated the contract after emphasizing
that Plaintiff are not done the whole work of Section one yet.

However, Plaintiff disagreed that before the issuance of CPC the full completion
of the work is required and as a result of Defendant's wrongful termination. It was
because Defendant have already completed 99.36 percent of the work. Although the

8
 percentage of completion is helpful, it is by no means conducive. Whether practical or
substantial completion had been achieved in any given set of facts depended on the
true construction of the Principal Agreement. The plaintiff also insisted that they be
discharged from their further obligations under other sections. The main issue is
whether Plaintiff had achieved practical or substantial completion of Section 1 as
mentioned in the contract.

2.3 Court Decision

After the court has analysed the contract, the court has decided that the Plaintiff
has completed substantially the works by the completion date. Apart from that, after
the terms of the Principal Agreement between Plaintiff and Defendant have been
through closely it mentioned that full completion is not required before CPC may be
issued. There is no need for literally, the whole of the work to be completed by the
Plaintiff, all that is required is substantial or practical completion of section 1 works. It
is the matter of degree when the portion not performed or completed is minor such that
the use of the completed works is not impeded in any material respect, then Plaintiff
nevertheless is found to have substantially or practically completed Section 1 of the
works. It was because Section 1 of the work has been completed to a satisfactory level
resulting in the issuance of a CPC and the release of half of the Performance Bond.

In fact, the Plaintiff performance of the section 1 work was not so different from
that which contracted to complete, then the work must be said to have been
substantially or practically completed. But, if the performance was very different, then
it was found that the Plaintiff had not performed follows all the specification and
agreement of the contract then the contractor is not eligible for the Certificate of
Practical Completion. Other than that, the fact that the airport is operated on an
unrestricted 24-hour basis shows that the court was satisfied that the Section 1 of the
works were substantially and practically completed which approved by relevant
authorities.

In addition, Plaintiff was responsible for a continuous obligation to carry on the

works to be completed which include Section 2 and Section 3 of the works, even
though they disagreed on the status of Section 1 works. Lastly, the LAD counterclaim
was rejected because it is wrongful and invalid. Meanwhile, for the Section 2 LAD is
invalid due to the lack of proof of loss and the Plaintiff's claim was partially permitted.

9
2.4 Conclusion and Lesson Learnt Related to Professional Practice

According to the court's verdict in this case, the importance of knowing that the
concept of full completion of works is not necessary in order for the Certificate of
Practical Completion to be issued and the contractor is not independent to absolve
themselves of their obligations in the event that the Certificate is not released. In
contrast, whether the work was substantially or practically finished by carefully
examining the contract and the evidence will be most important in determining the
outcome of a court decision or in an arbitration case.

This can be referred to clause 39.5 in PWD contract where it mentions that the
works given must be completely done in accordance with the terms and conditions
stated in the contract in order to achieve a certificate of practical completion. However,
the plaintiff in this case using a percentage parameter to show that he is entitled to
receive the CPC instead of referring to the actual contract. Although a percentage of
completion will be a good form of evidence, the facts will depend on the interpretation
of the contract and what the parties intended for a practical or substantial completion
of the works. The test that will be employed will be one of scale rather than precision
and accuracy.

Furthermore, on behalf of the government, it should be clarified that as long as

the remaining work is minor and does not impede the overall work, a certificate of
practical completion will be issued to the contractor. In this case, the court decided that
if the works completed in Section 1 are of minor nature, such that their use is not
hampered in any material way, the plaintiff must still be found to have substantially or
practically completed the Section 1 works. In this regard, clause 39.3 of the PWD
contract stated that if all of the work given passed the satisfactory test in accordance
with clause 39.5 and were only left with minor works, a CPC could be issued, and the
minor works would be completed during the Defects Liability Period in accordance with
clause 48.

Thus, in order to avoid disagreements over what constitutes a practical or

substantial completion in a construction contract, parties must be careful to draught
such contracts as precisely as possible. The best practice is to list the main works,
possibly in the form of an appendix or schedule to the contract. These procedures will
help compile an accurate and thorough record of job conditions or problems that may
occur as well as their impact on the project and may define what constitutes practical
or substantial completion of the works and to grant the contractor the right to receive
a certificate of practical completion. Additionally, by following these methods, it will be

10
 possible to coordinate and control projects effectively and make the necessary
adjustments to deal with unforeseen events.

DUA RESIDENCY MANAGEMENT CORPORATION v EDISI UTAMA SDN BHD &

ANOR

3.1 Background of The Case

The case of Dua Residency Management Corporation v Edisi Utama Sdn Bhd
& Anor is a suit that involved of claim made by the management corporation against
the developer and property manager as the result of latent defects in the construction
of condominium. In this case, the High Court Kuala Lumpur has recognised a novel
duty of care that the developers have towards the management body of the
condominium. This has resulted the management corporation to commence the suit
against both condominium’s developer and manager because of negligence that
resulted to the latent defects occurred due to the poor construction and workmanship.
This case is applied on the condominium in Malaysia which is Kuala Lumpur’s Golden
Triangle where the management team of the condominium which is Dua Residency
Management Corporation has filed lawsuit against the condominium’s developer, Edisi
Utama and the condominium’s property manager. Both companies are subsidiaries of
E&O Property Bhd which is one of a public limited company that listed in Bursa Saham.

• The Plaintiff: Dua Residency Management Corporation

• The First Defendant: Edisi Utama Sdn Bhd

• The Second Defendant: Anor

The main reason to the arise of dispute between the parties are due to three
different types of defects that occur in the condominium which are Construction
Movement Joints (CMJ) defect, swimming pool defect which is due to the poor
workmanship of water proofing and the open deck defect that causes by the
deterioration of the pointing grout at the jointing for the tiles. Moreover, the plaintiff also
has outlining on three different grounds to the commencement of suit which are the
breach of contract, breach of statutory duties and the negligence which causes to the
hidden defects of the condominium. Thus, the plaintiff claimed for all the damages as
to rectify the defect discovered.

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3.2 Fact of The Case

In 2004, Edisi Utama Sdn Bhd who is the first defendant in this case has owned
and developed a portion of land in Kuala Lumpur into a condominium building which
consist of single, duplex, and triplex units with private lifts and floor space. On 28
February 2007, Dua Residency has obtained the Certificate of Fitness for Occupation
which was issued by Dewan Bandaraya Kuala Lumpur (DBKL) and around July 2007,
all the vacant possession for 288 units of the condominium has been delivered to each
of the owners. Then the first defendant has appointed the second defendant as the
property manager as to handle regarding the maintenance and management for the
condominium. In 2008, the Joint Management Body (JMB) of the condominium has
been established which consist by the defendant and 5 purchasers of the
condominium. However, on 22 February 2008, Harshad Kapadia who is one of the
purchaser units has decided to carry out the inspection work of his unit by appointing
Architect Centre Sdn Bhd. Upon the completion of inspection, this company has
suspected that there was a water leakage at the car park area which causes by the
poor workmanship of the swimming pool and also there were crack lines appears on
the car park floor as the result of structural integrity of the swimming pool.

Subsequently, the dispute has arisen between each of the parties between
2010 to 2019 due to the various of defects that discovered in the condominium starting
with the water leakage issue from the swimming pool. Due to this problem, a meeting
was held on 10 May 2010 among the joint management committee where Joint
Management Body (JMB) has expressed their concerns regarding the leakage issue
with the other residents of the condominium. They also requested towards the second
defendant to verify whether the swimming pool has been built according to the
appropriate building specifications. Thus, several inspections were carried out by the
defendant with the engaged of JMC and the result found has revealed on several
hidden defect of the condominium which are regarding to the construction movement
joint, open deck and swimming pool.

This has led to the discussion of rectifying the defects which has agreed by
several parties but, there still have no rectification works is carried out by the
defendant. This is because the defendant argued and clarified that the property was in
a good condition when it is handed towards the new management company and the
defect occur were the maintenance issue. Consequently, due to the reluctance an
contradict statement show by each of the parties regarding the rectification of defect,
the management corporation of Dua Residency has commenced legal action in the

12
 high court against the developer as to claimed damages for rectifying the defects
occur.

In accordance with the legal action taken, the plaintiff has claimed on three
different issue which are the breach of contract, breach of statutory duty, and
negligence. All of this legal issue then was determined by the high court judge weather
the plaintiff entitled to all the claims made. For the breach of contract, the plaintiff has
claimed that the defendant has breach the contract that is made in the sale and
purchase agreements between the developer and the purchaser of the condominium
in which to provide the property that was constructed in a good workmanship and a
good quality of materials used to construct the condominium. Meanwhile, for the
breach of statutory duty, the plaintiff declared that the defendant had breach the
statutory duties according to the Uniform Building by Laws 1984 made under the
Street, Building and Drainage Act 1974 where the defendant failed to ensure that the
condominium is properly designed. Lastly, the plaintiff also claimed for the tort of
negligence where the defendant has owned a duty of care in respect of ensuring the
design, construction, and development of the condominium. However, due to the issue
occurred, it has caused the defendant to breach such duty which has causes to loss
and damage towards the plaintiff.

3.3 Court Decision

One of the factors considered for such a ruling was because the High Court
Judge noticed that the Defendant has been in continuous participation in the
maintenance and management of the condominium. Another obvious point is that the
apartments built by the developer have defective construction and workmanship in
parts of the property where the defects have progressively appeared over the years.
Three defects emerged after the further inspection was done concerning the
construction movement joints (“CMJ defects”), swimming pool defects caused by faulty
waterproofing (“swimming pool defects”) and open deck defect (“open deck defect”).

Regarding the first issue on the construction movement joints defects, the High
Court Judge has ruled that the first defendant is not liable to the plaintiff for breach of
contract. This is because there was no contractual relationship in the sale and
purchase agreement between the plaintiff (management corporation) and the first
defendant (developer). In this regard, the plaintiff has no legal standing to initiate and
sustain the cause of action for breach of contract as against the developer since the

13
 SPA for a development are only intended to govern the relationship between the
developer and the purchaser so, it is clear that the developer did not intend to extend
the benefit of the provisions in the agreements to other parties in the future.

The judge decided that the first defendant is liable against the plaintiff for
negligence in relation to the swimming pool defect that was discovered through proper
procedures in December 2015. The lawsuit was filed in October 2017, which was filed
well before the legal limitation period expired and it means that the lawsuit was timely.
Since the warranty of the waterproofing system was not specified in the construction
contract, the judge considered that the waterproofing system of the high-end
apartment is usually predicted to last 10 years. However, the waterproofing system is
defective after 3 years since the water leakage was discovered in 2010 due to the poor
workmanship in the waterproofing system.

The judge has ruled that the open deck defect did not constitute a breach of
duty by the first defendant, and they are not liable to the plaintiff. This is because there
was no evidence that the open deck’s tile joints were inspected and maintained on a
regular basis by the plaintiff since it is their responsibility for the maintenance and
management of the common facilities that was provided to the client. The open deck
is required to be maintained regularly since the tile joints of the open deck did not have
exposure to retained water, but it is repairable after regular inspection upon discovery
of their defects. Therefore, as for the award of damages, the court decided that the first
defendant was only liable for the damages of RM 1,925,000.00 as for the repair of the
swimming pool defect and the second defendant was not liable against the plaintiff for
negligence.

3.4 Conclusion and Lesson Learnt Related to Professional Practice

The parties involved in these cases which is Dua Residency Management

Corporation which is a plaintiff in these cases has commence a suit towards Edisi
Utama Sdn Bhd & Anor who is a defendant in this cases due to the breach of contract
and breach of statutory duties and negligence in rectifying the defect of the swimming
pools due to the issue of leaking water. The plaintiff has filed a litigation since the
defendant claimed that there was lack of maintenance carried out which resulted in the
hidden defects being discovered. In my opinion, if there are any defects or faults that

14
arise, it should be rectified by the relevant parties such as the contractor as the
construction work has been taken by their company. According to this issue, latent
defects have been discovered which are usually found during accomplishing the
inspection or testing. Thus, this defecation works then should be rectified by the
contractor parties as it occurs within the period of time which has been stated in clause
15.0 of the P.A.M Contract 2018

Besides, according to the information gathered from the Dua Residency

Management Corporation vs Edisi Utama Sdn Bhd & Anor we can learnt the buyers
may be able to take an action against the developer that is analogous to that of a “class
action” for any flaws in the workmanship of the contractors especially in the situation
where the defects are discovered on common property that are utilised by each and
every occupant of the building. According to this case, it may be related with clause
15.5 of the P.A.M Contract 2018, since there is a problem with the swimming pool
system since the leakage was discovered after 3 years due to the poor workmanship
in the waterproofing system. Thus, in this problem, the architect may issue the
Architect Instruction (AI) at any duration during the DLP period regarding any critical
defects that must be rectified immediately within the time stated by the Architect in
which it would be under construction’s responsibility. However, if the contractor fails to
rectify such defect within the stipulated time given by the Architect, the Employer may
appoint another person to carry out the rectification works, and such the cost incurred
will be set off by the employer which is in accordance with clause 30.4.

Moreover, this case also emphasises that the management corporation cannot
solely blame the developer for any problems that may have arisen due to the lack of
maintenance over the years since it is also their responsible in ensuring that the
common property is maintained and managed properly in order to ensure that the
occupants and the owners can enjoy its benefits. Last but not least, the concept of
negligence opens the way for aggrieved residents of such condominiums to pursue
legal remedies through additional channels in addition to those stipulated in their
contracts.

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REFERENCES

Agreement and Conditions of PAM Contract 2018 (with Quantities). (2018). Pertubuhan
Arkitek Malaysia.

Ahamad Abdulllah. (2021). Building Construction Administration (3rd ed., Vol. 1). Abdul Hadi
Ahamad.

Hock JC, T. G. (2017). Sykt Pembinaan Anggerik Sdn Bhd v Malaysia Airports Holdings Bhd.

Law, M., Lim, C., & Fong, J.: (2021). Dua Residency Management Corporation v Edisi Utama
Sdn Bhd & Anor.

Law, M., Lim, M., & Suan, T. (2015). Global Upline Sdn Bhd v Kerajaan Malaysia.

P.W.D Form 203A (Rev.1/2010). (2010). Government of Malaysia.

Abdullah, N. A. Basic of Construction Contracts PAM, CIDB, PWD and FIDIC Standard Forms

(UiTM Press). UiTM Press.

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