Wrongful Termination of Professionals

The star of 30th August 2007 reported the Federal Court decision in allowing the appeal of Arkitek Tenggara Sdn Bhd against developer Mid Valley City Sdn Bhd.

The facts of the case were were that in April6, 1984 Akitek Tenggara (AT) were appointed by MVCSB for a proposed comprehensive development opn 5 lots of land at Jalan Penghulu Mat, Kg Abdullah Hukum, KL. Their services were terminated in November that year. It claimed that the termination were unlawful as it was neither in breach of an express term or implied term of the agreement with the developer. Thery claimed professional fees and damages for wrongful termination of its services as an architect, and a breach of a contract.

MVCSB grounds for terminating 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 had implied that the architect can be terminated if the project was aborted or delayed.

In December 1988 MVCSB wrote to LAM seeking assistance in seeking a letter of release from AT as well as to arbitrate for the fees amount. A month later LAM replied and advised MVCSB that if it really intended to terminate the architect's services, it should write a letter to AT clearly stating its intent.

In May 1999 the KL High Court awarded AT RM7.7m in fees due and damages and loss of profit. Unhappy, MVCSB appealed and in 2005 the Court of Appeal overturned the High Court ruling. AT appealed to the Federal Court and Justices Abdul hamid Mohamed, Abdul Aziz Mohamad and S Augustine Paul unanimously allowed the appeal.

Whatever the gounds of the ruling, the morale here is that work done must be paid, even if you want to abort the project. Time and money spent must be reimbursed.