JUDICIAL INTERPRETATIONS ON THE PHRASE ‘REGULARLY AND

DILIGENTLY’ IN CONSTRUCTION INDUSTRY

LEE SHIAU MEI

UNIVERSITI TEKNOLOGI MALAYSIA

JUDICIAL INTERPRETATIONS ON THE PHRASE ‘REGULARLY AND

DILIGENTLY’ IN CONSTRUCTION INDUSTRY

LEE SHIAU MEI

A project report submitted in partial fulfillment of the

requirements for the award of the degree of

Master of Science (Construction Contract Management)

Faculty of Built Environment

Universiti Teknologi Malaysia

JULY 2007

iii

To my beloved father and mother

iv

ACKNOWLEDGEMENTS

A debt of gratitude is owed to many individuals who have given me the

benefit of their unconditional help, tolerance and knowledge in writing and

completing this master project. First of all, I would like to express my highest

gratitude to my supervisor, Encik Norazam Othman for his guidance, advice and

support in order to complete this master project.

Next, my special thanks are due to all the lecturers for the course of Master

of Science (Construction Contract Management), for their patient and kind advice

during the process of completing the master project.

Not forgetting my dearest parents, brothers and sister, a token of appreciation

goes to them for giving full support. Lastly, I would like to express my special

thanks my fellow classmates, who have in their own way helped me a great deal

throughout the preparation and production stages of this master project.

v

ABSTRACT

Construction contracts usually impose an express duty on the contractor to

complete the works by a specified date or within a specific period. Many standard

forms of contract include an express obligation for the contractor to proceed

regularly and diligently with the works. Failure by the contractor to comply entitles

the employer to determine the contractor’s employment. However, there is a great

deal of uncertainty as to the exact circumstances in which a contractor could be said

to be failing to proceed regularly and diligently with the works. The employer’s

liability to terminate on failure to proceed regularly and diligently emphasizes the

importance of understanding its meaning. Hence, this research intends to identify

judicial interpretations on the phrase ‘regularly and diligently’ in construction

industry. This research was carried out mainly through documentary analysis of law

journals and law reports. Results show that there are 11 judicial interpretations for

the phrase ‘regularly and diligently’ in construction industry. Most of the cases

interpreted the phrase ‘regularly and diligently’ by considering on the quantity of

resources on site, by referring to the words itself, by schedule of works, etc. The

words may convey the actions and characters (style of the actions) of the contractor

on site in order to proceed regularly and diligently with the works. There are many

interpretations on the phrase ‘regularly and diligently’ in construction industry.

Ultimately therefore, there is absolutely no easy answer. The contractor would be

wise to remember that they must always carry out their works cautiously and always

fulfil the contractual requirements to avoid determination by the employer under the

contract.

vi

ABSTRAK

Kontrak pembinaan lazimnya mengenakan tanggungjawab yang nyata

terhadap kontraktor untuk menyiapkan kerja dalam jangka masa yang ditetapkan.

Banyak borang kontrak standard memperuntukkan kewajipan nyata bagi kontraktor

untuk melaksanakan kerja dengan mengikut aturan dan tekun. Kegagalan kontraktor

untuk meneruskan kerja dengan mengikut aturan dan tetap akan mengakibatkan

penamatan pengambilan kerja kontraktor oleh majikan. Namun demikian, terdapat

banyak ketidakpastian dalam menentukan keadaan sebenar dimana kontraktor gagal

meneruskan kerja dengan mengikut aturan dan tekun. Liabiliti majikan untuk

menamatkan pengambilan kerja kontraktor atas alasan gagal meneruskan kerja

dengan mengikut aturan dan tekun mencerminkan kepentingan memahami frasa ini.

Oleh itu, kajian ini bertujuan untuk mengenalpasti tafsiran hakim terhadap frasa

‘mengikut aturan dan tekun’ dalam industri pembinaan. Kajian ini dijalankan

melalui analisis dokumen, iaitu laporan dan jurnal undang-undang. Kajian ini

menunjukkan bahawa terdapat 11 tafsiran hakim terhadap frasa ‘mengikut aturan

dan tekun’ dalam industri pembinaan. Kebanyakan kes menafsir frasa ‘mengikut

aturan dan tekun’ dengan mempertimbangkan kuantiti sumber di tapak bina, merujuk

kepada perkataan tersebut, jadual kerja dan sebagainya. Perkataan tersebut

menyampaikan kelakuan dan sifat kontraktor di tapak bina untuk melaksanakan

kerja secara mengikut aturan dan tekun. Terdapat banyak tafsiran terhadap frasa

‘mengikut aturan dan tekun’ dalam industri pembinaan. Jadi, tiada jawapan yang

senang dalam konteks ini. Kontraktor diingatkan bahawa sentiasa berwaspada

semasa melaksanakan kerja dan memenuhi semua tuntutan kontrak agar tidak

ditamatkan kerja oleh majikan di bawah kontrak.

vii

TABLE OF CONTENTS

CHAPTER TITLE PAGE

DECLARATION ii

DEDICATION iii

ACKNOWLEDGEMENTS iv

ABSTRACT v

ABSTRAK vi

TABLE OF CONTENTS vii

LIST OF TABLES xi

LIST OF FIGURES xii

LIST OF ABBREVIATIONS xiii

LIST OF CASES xv

LIST OF APPENDICES xxii

1 INTRODUCTION 1

1.1 Background Studies 1

1.2 Problem Statement 4

1.3 Objective of Research 7

1.4 Scope of Research 7

1.5 Importance of Research 8

1.6 Research Process and Methods of Approach 8

1.6.1 Initial Study 8

1.6.2 Data Collection 9

1.6.3 Data Analysis and Interpretation 10

1.6.4 Completion 10

viii

CHAPTER TITLE PAGE

2 OBLIGATIONS OF THE CONTRACTOR 12

2.1 Introduction 12

2.2 Obligations of the Contractor 12

2.2.1 Obligation to Complete 13

2.2.2 Obligation as to Design and Quality of

Materials and Work

16

2.2.2.1 Design and Suitability 16

2.2.2.2 Materials 17

2.2.2.3 Workmanship 19

2.2.2.4 Work to Satisfaction of

Architect/Engineer

20

2.2.3 Obligation as to Progress 20

2.2.4 Obligation as to Cost 22

2.2.5 Obligation as to Defects and Defective

Materials

23

2.3 Time for Performance 23

2.3.1 Contract Provisions Relating to Time 24

2.3.1.1 Express Conditions 24

2.3.1.2 Commencement and Progress of

Works

25

2.3.1.3 Implied Provisions 28

2.3.1.4 Completion of the Works 29

2.3 Determination of the Contract 29

2.3.1 Common Law Determination 30

2.3.2 Contractual Determination 32

2.3.2.1 Determination by the Employer 33

2.3.2.2 Determination by the Contractor 35

2.4 Conclusion 36

ix

CHAPTER TITLE PAGE

3 INTERPRETATIONS FOR THE PHRASE

‘REGULARLY AND DILIGENTLY’

38

3.1 Introduction 38

3.2 Term of the Contract 39

3.2.1 Classification of Terms 39

3.2.1.1 Express Terms 40

3.2.1.2 Implied Terms 41

3.3 Interpretation of the Contracts 43

3.3.1 Rules of Interpretation of the Contracts 44

3.3.1.1 Literal Interpretation 44

3.3.1.2 The Contra Proferentum

Principle

45

3.3.1.3 The Ejusdem Generis Rule 46

3.4 Contractual Provision 46

3.4.1 JKR 203A (Rev 10/83) Form 47

3.4.2 JKR 203N Form 49

3.4.3 PAM 1998 Form 50

3.4.4 PAM 1998 Sub-Contract Form 51

3.5 Interpretations for the Phrase ‘Regularly and Diligently’ 52

3.5.1 Generally 53

3.5.2 Interpretations for the Phrase ‘Regularly and

Diligently’ from the Literature Review

53

3.5.3 Summary 64

3.6 Conclusion 71

4 JUDICIAL INTERPRETATIONS ON THE PHRASE

‘REGULARLY AND DILIGENTLY’ IN

CONSTRUCTION INDUSTRY

72

4.1 Introduction 72

4.2 Judicial Interpretations on the Phrase ‘Regularly and

Diligently’ in Construction Industry

73

4.3 Conclusion 124

x

CHAPTER TITLE PAGE

5 CONCLUSION AND RECOMMENDATIONS 126

5.1 Introduction 126

5.2 Summary of Research Findings 126

5.3 Problem Encountered during Research 132

5.4 Future Researches 132

5.5 Conclusion 133

REFERENCES 135

BIBLIOGRAPHY 140

APPENDICES 143

xi

LIST OF TABLES

TABLE NO TITLE PAGE

3.1 Interpretations for the Phrase ‘Regularly and

Diligently’ from the Literature Review

65

5.1 Judicial Interpretations on the Phrase ‘Regularly

and Diligently’ in Construction Industry

127

xii

LIST OF FIGURES

FIGURE NO TITLE PAGE

1.1 Research Process and Methods of Approach 11

xiii

LIST OF ABBRIEVATIONS

AC Law Reports Appeal Cases

All ER All England Law Reports

ALJ Australian Law Journal

ALR Australian Law Reports

ALJR Australian Law Journal Reports

App Cas Appeal Cases

B Beavan

B & S Best and Smith’s Reports

Build LR Building Law Reports

CA Court of Appeal

CB Common Bench Reports

Ch Chancery

Ch App Chancery Appeal

Ch D The Law Reports, Chancery Division

CIDB Construction Industry Development Board

CLD Construction Law Digest

DC Divisional Court, England

Const LJ Construction Law Journal

Const LR Construction Law Reports

CP Law Reports, Common Pleas

CPD Law Reports, Common Pleas Division

DLR Dominion Law Reports

Exch Exchequer Reports

Eq Equity Case

xiv

EWHC High Court of England and Wales Decisions

FC Federal Court

F & F Foster & Finlayson’s Reports

H & N Hurlstone & Norman’s Exchequer Reports

HL House of Lords

HKC Hong Kong Cases

HKLR Hong Kong Law Reports

IEM The Institution of Engineers, Malaysia

IR Irish Reports

JKR Jabatan Kerja Raya

KB King Bench

LGR Local Government Reports

LJKB (QB) Law Journal Reports, King’s (Queen’s) Bench

Lloyd’s Rep Lloyd’s List Reports

LR Law Reports

LT Law Times Reports

JP Justice of the Peace / Justice of the Peace Reports

MLJ Malayan Law Journal

NS Nova Scotia

NZLR New Zealand Law Reports

PAM Pertubuhan Arkitek Malaysia

PWD Public Work Department

PD Probate, Divorce and Admiralty Division of High Court

QB Queen Bench

TCC Technology and Construction Court

SLR Singapore Law Reports

Stark Starkie’s Nisi Prius Reports

WLR Weekly Law Reports

WR Weekly Reports

xv

LIST OF CASES

CASES PAGE

Abdul Razak Valibhoy v. Abdul Rahim Valibhoy [1995] 2 SLR

555

43

Abrams v. Ancliffe [1978] 2 NZLR 420 22

Aisla Craig Fishing Co Ltd v. Malvern Fishing Co [1983] 1 All

ER 101

45

Arterial Drainage Co Ltd v. Ratbangan River Drainage Board

[1880] 6 LR Ir 513

33, 34

Amherst v. James Walker [1983] Ch 305 (CA) 28

Baker v. Gray [1856] 17 CB 462 34

BCL Installations Ltd (formerly Barnard Contracts) Ltd v.

Balfour Beatty Water Engineering Ltd [1999] CA

113, 119, 122,

129

Bentsen v. Taylor, Sons & Co (No 2) [1983] 2 QB 274 40

Billyark v. Leyland Construction Co Ltd [1968] 1 All ER 783,

[1968] 1 WLR 471

18

Bottoms v. York Corpn [1892] 2 Hudson’s BC (4th Edn) 208,

(10th Edn) 270, CA (Eng)

14

Bower v. Chapel-en-le-Frith RDC [1910] 75 JP 122 18

Bramall & Ogden v. Sheffield City Council [1983] 29 BLR 73 45

Brown v. Bateman [1867] LR 2 CP 272 33

Brunswick Construction Ltd v. Nowlan [1974] 21 BLR 127, 49

DLR (3d) 93

23

Cammell Laird & Co Ltd v. Manganese Bronze and Brass Co

Ltd [1934] AC 402, HL

18

xvi

CASES PAGE

Carr v. J A Berriman Pty Ltd [1953] 27 ALJ 273 13

Charnock v. Liverpool Corporation [1968] 1 WLR 1498 (CA) 28

Cobert Ltd v. H Kumar [1992] 59 BLR 89 13

Cork Corpn v. Rooney [1881] 7 LR Ir 191 33

Corudace v. London Borough of Lambeth [1986] 33 BLR 20

(CA)

25

Davies v. Swansea Corpn [1853] 8 Exch 808 33

Duncan v. Blundell [1820] 3 Stark 6 18, 19

D B Bradley (Cable Jointing) Ltd v. Jefro Mechanical Services

[1988] 6-CLD-07-19

35

Faber Union (Hong Kong) Ltd v. Alabama Building

Construction Ltd [1973-1976] HKC 113

34

Francis v. Cockrell [1870] LR 5 QB 501 18

Fook Kwong Construction Co v. The District Officer, Islands

[1979] HKLR 165 (HK)

23

Garett v. Salisbury and Dorset Junction Rly Co [1866] LR 2 Eq

358

34

Gloucestershire Country Council v. Richardson (t/a W J

Richardson & Son) [1969] 1 AC 480, [1968] 2 All ER 1181,

HL

19

Greater London Council v. Cleveland Bridge and Engineering

Company Ltd [1986] 34 BLR 50

28, 59

Hamid Abdul Rashid, Dr v. Jurusan Malaysia Consultants

(sued as a firm) [1997] 3 MLJ 546

43

Hampshire County Council v. Stanley Hugh Leach Ltd [1992] 8

Const LJ 174

64

Harmer v. Cornelius [1858] 5 C.B. (N.S.) 236 19

Hancock v. B W Brazier (Anerley) Ltd [1966] 1 All ER 901,

[1966] 1 WLR 1317 , CA (Eng)

18, 19

Hiap Tian Soon Construction Pte Ltd and Another v. Hola

Development Pte Ltd and Another [2003] 1 SLR 667

96, 128

Hoeing v. Issacs [1952] 2 All ER 176 31

xvii

CASES PAGE

Hollier v. Rambler Motors (AMC) Ltd [1972] 1 All ER 399 45

Hooker Constructions Pty Limited v. Chris’s Engineering

Contracting Co. [1970] ALR 821

82

Hunt v. Bishop [1853] 8 Exch 675 34

Hunt v. South Eastern Rly Co [1875] 45 LJQB 87, HL 34

Hutchinson v. Harris [1978] 10 BLR 19, CA (Eng) 23

Independent Broadcasting Authority v. EMI Electronics Ltd and

BICC Construction Ltd [1980] 14 BLR 1, HL

17, 19

Interpro Engineering Pte Ltd v. Sin Heng Construction Co Pte

Ltd [1998] 1 SLR 694

44

James Png Construction Pte Ltd v. Tsu Chin Kwan Peter [1991]

1 MLJ 449, [1990] SLR 1132

23

Jennings v. Tavener [1955] 2 All ER 769, [1955] 1 WLR 932 18

John Jarvis Ltd v. Rockdale Housing Association Ltd [1986] 36

BLR 48, 10 Con LR 51, CA (Eng)

36

J. M. Hill v. London Borough of Camden [1980] 18 BLR 31. 33, 34, 56, 60,

66, 110, 116,

119, 122, 129

Jurong Engineering Ltd v. Paccan Building Technology Pte Ltd

[1999] 3 SLR 667

98, 99, 100,

101

King v. Victor Parsons & Co [1972] 2 All ER 625, [1972] 1

WLR 801

18

Lawrence v. Cassel [1930] 2 KB 83, CA (Eng) 18

Ling Heng Toh Co v. Borneo Development Corporation Sdn

Bhd [1973] 1 MLJ 23, FC

36

Lintest Builders Ltd v. Roberts [1978] 10 BLR 120; affd [1980]

13 BLR 39, CA (Eng)

23, 56, 66, 92,

105, 123, 128

London Borough of Hillingdon v. Cutler [1968] 2 All ER 361 52

xviii

CASES PAGE

London Borough of Hounslow v. Twickenham Garden

Developments Ltd [1971] Ch 233

26, 27, 56, 61,

62, 65, 66, 67,

69, 71, 74, 80,

83, 81, 87, 94,

95, 107, 110,

122, 127

Lubenham Fidelities and Investments Co Ltd v. South

Pembrokeshire District Council [1986] 33 BLR 39, 6 Con LR

85, CA (Eng)

36

Lyncb v. Thorne [1956] 1 All ER 744, [1956] 1 WLR 303, CA

(Eng)

18

Main Roads Comr v. Reed Stuart Pty Ltd [1974] 48 ALJR 461,

12 BLR 55

13

Marsden v. Sambell [1880] 28 WR 952 34

Mckey v. Rorison [1953] NZLR 19

Mersey Steel & Iron Co Ltd v. Naylor Benzon & Co [1884] 9

App Cas 434

31, 52

Merton London Borough v. Stanley Hugh Leach Ltd [1985] 32

BLR 51

121

Miller v. Cannon Hill Estates Ltd [1931] 2 KB 113, DC (Eng) 18

Mohan and Homes v. Dundalk, Newry and Greenore Rly Co

[1880] 6 LR Ir 477

33, 34

Moorcock [1889] PD 64 43

Myers v. Brent Cross Service Co [1934] 1 KB 46 18

National Coal Board v. William Neill & Son (St Helens) Ltd

[1985] QB 300, [1984] 1 All ER 555

14

N C Chan v Chung Lee Construction Co (Chung Kee) (a firm)

[1964] HKLR 254

34

Nene Housing Society Ltd. v. National West-minister Bank Ltd.

[1980] 16 BLR 22

13,15

Neodox v. Swinton and Pendlebury Borough Council [1958] 5

BLR 34

14

xix

CASES PAGE

Peak Construction (Liverpool) Ltd v. Mckinney Foundation Ltd

[1970] 69 LGR 1

45

Pearce v. Tucker [1862] 3 F & F 136 18, 19

Perry v. Sharon Development Co Ltd [1937] 4 All ER, CA

(Eng)

18

Petowa Jaya Sdn Bhd v. Binaan National Sdn Bhd [1988] 2

MLJ 261

102, 123, 124,

129

Pigott Foundations Ltd v. Shepherd Construction Ltd [1993] 67

BLR 48

44

Pong Wing-sbiu v. Albambra Investment Co Ltd [1965] HKLR

163, CA (HK)

18

Produce Brokers Co Ltd v. Olympia Oil & Coke Co Ltd [1916]

AC 314

42

P & M Kaye v. Hosier and Dickinson Ltd [1972] 1 All ER 121,

[1972] 1 WLR 146, HL

13

Rainer v. Miles [1981] AC 1050 (HL) 28

R B Burden Ltd v. Swansea Corpn [1957] 3 All ER 243, [1957]

1 WLR 1167, HL

36

Re Garrud, ex p Newitt [1880] 16 Ch D 522, CA (Eng) 33, 34

Reigate v. Union Manufacturing Co Ltd [1918] 1 KB 592 43

Re Walker; ex p Baxter; ex p Black [1884] 26 Ch D 510, CA

(Eng)

33

Roberts v. Bury Improvement Comrs [1870] LR 5 CP 310, Ex

Ch

33, 36

Robin Ellis Ltd v. Vinexsa International Ltd [2003] EWHC

1352 (TCC)

117, 122, 130

Rouch v. Great Western Rly Co [1841] 1 QB 51 34

R. W. Green Ltd v. Cade Bros. Farms [1978] 1 Lloyd’s Rep.

602

45

Sharpe v. San Paulo Rly Co [1873] LR 8 Ch App 597 13, 14

Shirlaw v. Southern Foundries (1926) Ltd [1939] KB 206 43

Sindall Ltd v. Solland and Others [2001] 80 ConLR 152 119, 130

xx

CASES PAGE

Smith v. Howden Union RSA and Fowler [1890] 2 Hudson’s BC

(4th Edn) 156, DC (Eng), (10th Edn) 461, 709, 711, DC (Eng)

36

Simplex Floor Furnishing Appliance Co v. Duranceau [1941] 4

DLR 260

13

Stadbard v. Lee [1863] 3 B & S 364 33

Stag Line Ltd v. Tyne Shiprepair Group Ltd, the Zinnia [1984] 2

Lloyd’s Rep 211

23

Stevens v. Taylor [1860] 2 F & F 419 34

Stewart v. Reavell’s Garage [1952] 2 QB 545, [1952] 1 All ER

1191

18

Success Well Investment Limited v. Bank of China Group

Insurance Co Ltd v. Wai Bo Construction and Engineering

(HK) Co Ltd [2000] HKCU 440

88, 119, 122,

128

Surrey Heath Council v. Lovell Construction Ltd and Hayden

Young Ltd (third party) [1988] 42 BLR 25 Con LR 68

23

Teh Khem On & Anor v. Yeoh & Wu Development Sdn Bhd

[1995] 2 MLJ 663

18

Tersons Ltd v. Stevenage Develoment Corp [1965] 1 QB 37;

[1963] 1 Lloyd’s Rep 333

45

Test Valley Borough Council v. Greater London Council [1979]

13 BLR 63, CA (Eng)

18

Thomas Feather & Co. (Bradford) Ltd. v. Keighley Corporation

[1953] 52 L.G.R. 30

32, 34

Tooth v. Hallett [1869] 4 Ch App 242 34

Tridant Engineering Company Limited v. Mansion Holdings

Limited and Others [2001] HKCU 636

106, 121, 129

University of Warwick v. Sir Robert McAlpine [1988] 42 BLR 1 19

University Court of the University of Glasgow v. William

Whitfield and John Laing (Constructions) Ltd [1988] 42 BLR

66, 19 Con LR 11

23

Viking Grain Storage Ltd v. T H White Installation Ltd [1985]

33 BLR 103, 3 Con LR 52

18

xxi

CASES PAGE

Walker v. London and North Western Rly Co [1876] 1 CPD 518 34

Wells v. Army & Navy Co-operative Society [1902] 86 LT 764 46

West Faulkner Associates v. London Borough of Newham

[1992] 31 Con LR 105

57

West Faulkner Associates v. London Borough of Newham

[1994] 71 BLR 1 (CA)

25, 26, 58, 61,

63, 65, 66, 68,

69, 70, 71, 78,

92, 95, 105,

108, 110, 119,

121, 122, 127

Williams v. Fitzmaurice [1858] 3 H & N 844 13,14

Yong Mok Hin v. United Malay States Sugar Industries Ltd

[1966] 2 MLJ 286, [1967] 2 MLJ 9, FC

36

Yong Ung Kai v. Enting [1956] 2 MLJ 98. 43

Young and Marten Ltd v. McManus Childs Ltd [1969] 1 AC

454, [1968] 2 All ER 1169, HL

17, 18

xxii

LIST OF APPENDICES

APPENDIX TITLE PAGE

A List of Malaysia Cases (Determination by the

Employer on the Ground of “Failed to Proceed

Regularly and Diligently”)

143

CHAPTER 1

INTRODUCTION

1.1 Background Studies

Construction in Malaysia spans a wide spectrum of activities stretching from

simple renovation works for private homes to massive construction projects. Every

such building activity may create its own unique set of requirements and

circumstances. The standard form of building contract is one of the key methods of

ameliorating a potentially fractious relationship to achieve a common end. A

standard form of building contract would therefore be useful in expressing the

obligation of the parties and setting out with reasonable clarity the scope of project.1

Most construction contracts specify time for performance in achieving

completion of the whole of the works and many have additional requirements for

phased or sectional hand-over.2 It is because delay in the completion of the work is

one of the most common causes of trouble encountered during administration of

1 Sundra Rajoo, “The Malaysian Standard Form of Building Contract (The PAM 1998 Form).” Second Edition. (Kuala Lumpur: Malayan Law Journal Sdn Bhd, 1999), p. 3. 2 Brian Eggleston, “Liquidated Damages and Extensions of Time.” Second Edition. (Victoria: Blackwell Publishing, 1998), p. 21.

2

building contracts. It is also one of the most justifiable causes of criticism of the

building industry.3

The contractor’s obligations begin with the obligation to construct the works

in accordance with the documents within the required time.4 The contractor’s

obligation as to time will depend upon the express term of the contract and on the

terms implied as a matter of business efficacy.5 Generally, obligations of the

contractor consists of the obligation to complete, obligation as to design and quality

of materials and works, obligation as to progress, obligation as to cost and obligation

as to defects and defective materials.6

For obligation as to progress, in the absence of express provisions, a

contractor must complete within a reasonable time. In addition to express provisions

for completion by a stated date, virtually all construction contracts, for very good

practical reason, also contain provisions requiring due diligence or expedition by the

contractor at all times prior to completion.7

Thus, the English standard forms provide that the contractor “shall …

regularly and diligently proceed with the works” and “shall proceed the works with

due expedition and without delay”, but in fact, even in the absence of such

provisions, it is submitted that there must be an implied term that contractor will

proceed with reasonable diligence.8 In some sub-contract forms the sub-contractor’s

3 Brian Bagnall, “Contract Administration for Architects and Quantity Surveyors.” Sixth Edition. (London: Collin Professional and Technical Books, 1986), p. 73. 4 John Murdoch and Will Hughes, “Construction Contracts: Law and Management.” Third Edition. (London: Spon Press, 2000), p. 147. 5 Daniel Atkinson, “Delay and Disruption – The Contractor’s Obligation as to Time.” (London: Daniel Atkinson Limited, 2001), p. 1. 6 Duncan Wallace, “Hudson’s Building and Engineering Contracts Including the Duties and Liabilities of Architect, Engineers and Surveyors.” Eleventh Edition. Volume 1. (London: Sweet & Maxwell, 1995), p. 469. 7 Duncan Wallace, “Hudson’s Building and Engineering Contracts Including the Duties and Liabilities of Architect, Engineers and Surveyors.” Eleventh Edition. Volume 2. (London: Sweet & Maxwell, 1995). p. 563. 8 Ibid., p. 564.

3

obligation to progress the sub-contract work is stated in terms that progress must be

in accordance with the progress of the main contract works.9

However, in Malaysia, there are several types of Standard Form of Contract

available to use in construction, such as PWD, PAM, CIDB, IEM and etc. For

example, PWD 203A provides that upon obtaining possession of the site and subject

to the provision of the performance bond and insurance policies, the contractor is

then obliged to forthwith commence the execution of the works regularly and

diligently and complete the works on or before the date for completion.10

On the other hand, PAM 98 provides that the contractor’s primary obligation

is to complete the works by the contractual date for completion. As his secondary

obligation, the contractor is then to begin the work and proceed regularly and

diligently so as to complete the work ‘on or before’ the completion date set out in the

Appendix of the PAM 1998 Form.11

Consequently, failure by the contractor to even if diligently, or alternatively

if he fails to proceed diligently although regularly, he will be in breach of this

provision.12 The employer under most standard forms of contract is entitled to

determine the contractor’s employment if he fails to proceed regularly and diligently

with the works.13

9 Supra note 5. 10 Lim Chong Fong, “The Malaysian PWD Form of Construction Contract.” (Selangor: Sweet & Maxwell Asia, 2004), p. 81. 11 Supra note 1, p. 183. 12 Neil F. Jones, “The JCT Major Projects Form.” (Oxford: Blackwell Publishing, 2004), p. 79. 13 PWD 203A clause 51(a)(ii); PAM 98 clause 25.1(ii); Roger Knowles, “One Hundred Contractual Problems and Their Solutions.” (London: Blackwell Publishing, 2000), p. 184.

4

1.2 Problem Statement

Construction contracts usually impose an express duty on the contractor to

complete the works by a specified date or within a specific period.14 Many standard

forms of contract include an express obligation for the contractor to proceed

regularly and diligently with the works. If the contractor does complete in time, but

it can be shown that there was a breach of contract if the work did not proceed

regularly and diligently.15 This requirement to regularly and diligently proceed with

the work should be of much more practical use to the employer than the obligation

on the contractor to complete by a certain date.16

For example, clause 21.1 of the PAM Private Edition 1998 with Quantities

provides that:

“On the Date of Commencement stated in the Appendix, possession of

the site shall be given to the Contractor who shall thereupon begin the

Works, and regularly and diligently proceed with the same and

complete the same on or before the Date for Completion stated in the

Appendix subject to any extension of time in accordance with clause

23.0 and/or sub-clause 32.1 (iii).”

It is difficult to see what remedy an employer would have if he could

establish that the contractor was in breach of this clause alone. However the PAM

98 forms give the obligation considerable force by providing that a failure by the

contractor to comply entitles the employer to determine the contractor’s

employment.17

14 Andrew Tobin, “Regularly and Diligently: You’ll Know it when You See it.” (Royal Institution of Chartered Surveyors, 22 July 2004), pp. 1-2. 15 Vivian Ramsey, “Construction Law Handbook.” (London: Thomas Telford, 2000), p. 4.1/15. 16 Neil F. Jones and Simon E. Baylis, “Jones & Bergman’s JCT Intermediate Form of Contract.” Third Edition. (London: Blackwell Publishing, 1999), p. 78. 17 See, for example, clause 25.1 (ii) of the same PAM 98 Form.

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In the light of the widespread use of PAM forms of contract, the phrase

regularly and diligently has become commonly used in the construction industry.

However, when the phrase has come before the Courts, it has become evident that

trying to define what it actually means in practice is by no means any easy task.18

Furthermore, lengthy and complex of document is drafted in difficult, obscure

language which invites different interpretation.19

The employer’s right to determine is therefore dependent on the correct use

of the notification requirements, together with an assessment of the contractor’s

failure to proceed regularly and diligently with the works. However, there is a great

deal of uncertainty as to the exact circumstances in which a contractor could be said

to be failing to proceed regularly and diligently with the works.20

It was contended on behalf of the architect that in order to meet the

requirements of this clause, it had to be shown that the contractor was proceeding

neither regularly nor diligently and that, although there could be no doubt that he

was not proceeding regularly, nonetheless he was doing his best to proceed

diligently. The contention was rejected emphatically.21

A slow rate of progress judged against the performance of other contractors

is an indicator that the contractors is not proceeding regularly and diligently although

low productivity on site may well be explained by other factors are outside the

contractor’s control.22 However, merely failing to comply with your programme is

not failure to proceed regularly and diligently, although some architects seems to

think that it is. This is very difficult ground for the employer to establish and,

18 Supra note 14. 19 Tan Gim Ean, “New Building Contract Clarified.” (New Strait Times, 30 June 1999), p. 1. 20 Billie Bingham, “Terminating for the Failure to Proceed ‘Regularly and Diligently’.” (Royal Institution of Chartered Surveyors, 10 August 2006), pp. 1-2. 21 Nicholas J. Carnell, “Causation and Delay in Construction Disputes.” Second Edition. (Victoria: Blackwell Publishing, 2005), p. 74. 22 Vincent Powell-Smith and David Chappell, “A Building Contract Dictionary.” Third Edition. (London: Blackwell Publishing, 2001), p. 348.

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depending on circumstances.23 In the arbitration proceeding, the arbitrator held that

the obligation on the contractor to execute works regularly and diligently were not

limited to progress but also referred to the manner of working.24

The words regularly and diligently will be interpreted in the light of the facts,

but it seems clear that simply going slow will not necessarily be taken to mean that

the contractor is not proceeding diligently. Failure on the part of the contractor to

keep his programme would hardly qualify under this head unless such failure was

gross.25 In practice, there may be instances where it may be difficult to show that the

contractor has failed to work regularly and diligently.26

Whether a term that the contactor must proceed regularly and diligently

would be implied in this instance is open to question. The employer’s liability to

terminate on failure to proceed regularly and diligently emphasizes the importance of

understanding its meaning.27 It is the most difficult ground to establish in practice,

and essentially it is a question of fact.28 However, it is submitted that circumstances

would need to be quite extreme before a sub-contractor could be sure that a

contractor was not proceeding regularly and diligently with the main contract

works.29

Hence, the issues derived from the statement above are what are the judicial

interpretations on the phrase ‘regularly and diligently’ in construction industry?

23 Vincent Powell-Smith, John Sims and Christopher Dancaster, “Contract Documentation for Contractors.” Third Edition. (London: Blackwell Publishing, 2000), p. 183; David Chappell, “The JCT Minor Works Building Contract 2005.” Fourth Edition. (Oxford: Blackwell Publishing, 2005), p. 79. 24 Anthony P. Lavers, “Case Studies in Post-Construction Liability and Insurance.” (New York: Spon Press, 1999), p. 162. 25 David Chappell, “Understanding JCT Standard Building Contracts.” Seventh Edition. (New York: Spon Press, 2003), p. 10. 26 Ibid., p. 115. 27 David Chappell, “The JCT Minor Works Building Contract 2005.” Fourth Edition. (Oxford: Blackwell Publishing, 2005), p. 79. 28 Supra note 1, p. 248. 29 Peter Barnes, “The JCT 05 Standard Building Sub-Contract.” (Oxford: Blackwell Publishing, 2007). p. 295.

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What are the exact circumstances in which a contractor could be said to be failing to

proceed regularly and diligently with the works? Thus, the above-mentioned

question forms the basis for this research which intends to identify the closest

answers of it.

1.3 Objective of Research

Following the issues stated above, this research attempts to:-

1. To identify judicial interpretations on the phrase ‘regularly and diligently’

in construction industry.

1.4 Scope of Research

The following are the scopes for this study: -

1. Only construction cases will be discussed in the study.

2. The study only examines the contracts between employers and

contractors, contractors and sub-contractors, and contractors and

suppliers.

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1.5 Importance of Research

The importance of this study is to give an insight of judicial interpretations

on the phrase ‘regularly and diligently’ to the parties in construction industry. The

study may help the parties to the contracts to have a more complete understanding on

the exact circumstances in which a contractor could be said to be failing to proceed

regularly and diligently with the works.

1.6 Research Process and Methods of Approach

Research process and method of approach will be used as guidelines so that

the research could be done in a systematic way to achieve the research objective.

Basically, the research process consists of 4 major stages, which involve initial

study, data collection, data analysis, and completion. The following will be the

research process and the methods of approach used for this research (refer to figure

1.1).

1.6.1 Initial Study

First stage of research involves initial study. Firstly, initial literature review

was done in order to obtain the overview of the concept of this topic. At the same

time, discussions with supervisors, lecturers, as well as friends, were held so that

more ideas and knowledge relating to the topic could be collected. After the initial

study, the rough idea of the research topic is obtained. The objective and scope of

the research are identified then. Afterward, a research outline will be prepared in

9

order to identify what kind of data will be needed in this research. Sources of data

will be identified as well.

1.6.2 Data Collection

Collection of relevant data and information can be started in this stage. Data

will be collected mainly through documentary analysis. All collected data and

information were recorded systematically. Data collected to analyse mainly from

Malayan Law Journal, Singapore Law Report, Building Law Report, Construction

Law Report and other law journals. It is collected through the Lexis-Nexis legal

database. All the cases relating to the research topic will be sort out from the

database. Important cases will be collected and used for the analysis at the later

stage.

In addition, secondary data also collected from books, articles reports,

seminar papers, newspaper as well as from the internet. Books relating to

obligations of the contractor, time for performance, determination and interpretation

of the contract will be read to know in depth the theories relating to the research

field. All the relevant books will be obtained from the library of Universiti

Teknologi Malaysia. In the other hand, seminar papers, articles, reports and

newspapers will be the sources to strengthen the theories found in books. All

sources are important to complete the literature review chapter.

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1.6.3 Data Analysis and Interpretation

In this stage, all the collected data, information, ideas, opinions and

comments were arranged, analysed and also interpreted. This process is to process

and convert the data collected to information that is useful for the research.

Arrangement of data tends to streamline the process of writing of the paper.

1.6.4 Completion

The last stage of the research process mainly involved the writing up and

checking of the writing. Conclusion and recommendations were made based on the

findings during the stage of analysis.

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1st stage

2nd stage

3rd stage

4th stage

Figure 1.1 : Research Process and Methods of Approach

Identify the research topic

Identify the research objective, scope and prepare the research outline

Data Collection

Data Analysis and Interpretation

Data Arrangement

Completion

Writing and Checking

Identify type of data needed and sources of data

Approach: Documentary Analysis • Law Journals, e.g. Malayan Law Journal,

Singapore Law Report, Building Law Report, etc. • Books • Other Journals

Data and Information Recording

Literature Review and Discussion

Initial Study