Letter of Release

Letter of release usually comes in the picture when an Architect's service is prematurely terminated and the client intends to proceed with another Architect.

PAM guidelines on Letter of Release via General Circular No. 2/2007 must be read in the background of the Conditions of Engagement of a Professional Architects, Rule 19:

“In the event that the Memorandum of Agreement between the Professional Architect and the client is TERMINATED for a reason not due to the fault of either party, the Professional Architect shall, subject to the rights of either party in respect of antecedent breaches of the Memorandum of Agreement between the two parties, charge the balance of fees for architectural consultancy services rendered up to the stage of termination together with all reimbursable charges, and after the full settlement of all fees and charges due from the client, the Professional Architect shall issue A LETTER OF RELEASE to the client and the client shall be entitled to appoint another Professional Architect to continue with the project”

The CF and CCC precondition came about to accommodate Purchasers who wish to carry out a renovation works by engaging his own architect while the Developer's Architect had not fully completed his duty.

I’m of the opinion that LOR is not relevant under the following conditions:

1.Obtaining CF was never part of the original agreement ( not a full service)
2.The Architect had fully discharged their duty (final cert issued)
3.All fees due to the architect are duly paid

I’ve come across some LOR case laws but mostly involved instances where Professional Architect withheld LOR when there were disputes relating to claim of professional fees and I think the subject may deviate from our original discussion.

In TRHamzah and Yeang Sdn Bhd v. Lazar Sdn. Bhd. (1985) 2 MLJ 45, the architect terminated its services as architects on the ground of failure of payment of fees. The court held, among others, that the Architect cannot withhold LOR if:

1.The architect’s services were not terminated by the client
2.The project was not abandoned
3.The architect refused to agree to have the fees referred for settlement.

The key point is on item 3; by refusing to refer to dispute resolution, a waiver on the LOR cannot be obtained. It was held that in the circumstances of this case, the court could not allow the architect to withhold the Letter of Release as to do so would mean “that the architect can hold the client to ransom’ (see Blair v. Osborne and Tomkins [1971]).

When in doubt, Architects may always refer to LAM for clarification. Under certain conditions, as I mentioned, LAM may waive the LOR.

However, it is also important to note that these waivers are not immune in court and may be challenged. In Akitek Tenggara Sdn. Bhd. v. Mid Valley City Sdn. Bhd. (1999) 2 MLJ 625, the court held against LAM’s waiver due the following reason:

a) The termination of the agreement was unlawful
b) The Architect’s services were terminated not because the project was aborted but because the client wanted to use its own architect.
c) Cancellation of the contract by the Client was purely on the basis that it wished to utilize its own architect

The above are just my observations and may subject to criticism. Case laws have to be construed in the whole context and circumstances of the case.