Suspension of works as remedy for non-payment

• Main Author: Lee, Chia Kuang (Author)
• Format: Thesis
• Published: 2009-07.
• Subjects: HD28 Management. Industrial Management; Thesis
• Online Access: Get fulltext

 Construction industry is vital for the nation's growth and will only continue to function with the basis of payment by the employer. However this industry has been plagued by the non-payment scenario, and directly affecting contractor's cashflow. In properly securing payment and remedying non-payment by the employer, contractor nevertheless can choose to suspend works. This right is a selfhelp remedy that can be an effective means of securing payment without the need to instigate other formal procedures and remedies which are time and money consuming. In Malaysia, this right has been introduced in CIDB 2000, and later in PAM 2006 for building works; while the other countries such as UK, New Zealand, Australia, Isle of Man, and Singapore has incorporated this right in their building acts since a very long time. Despite of this convenience, studies have shown many contractors in Malaysia do not favour this right in remedying non-payment, and similiarly there is almost no case law (except one case in New Zealand) that illustrate contractor exercising this right. This research therefore has been done to explore what are the possible problems that the contractor may encounter and to what extent it may arise when exercise this right in relation to PAM 2006 and CIDB 2000. The result shows that the contractor's right in suspension of work can be challenged by the employer for several grounds such as the validity of notice to suspend works, validity of interim certificates and the right to set-off as grounds for non-payment. Secondly, without proper fulfillment such as mitigation of loss, prevention of delay, and submitting notices, contractor can be held to have lost his rights in these claims. Thirdly, contractor may face problems in suspending works downstream as there is lack of back-to back provisions in sub-contracts. This research will shed a light of what are the possible problems that the contractors may encounter under PAM 2006 and CIDB and forms a guideline for the contractors to suspend work optimistically.