THE CURSE OF ERRANT CONTRACTORS
BY Prisca Teh
Leonard Lin (not his real name) was exultant when he secured a double-storey terrace in Sri Petaling. It was ideal because it gave him easy access to his workplace and was located near his parents and his wife’s business. Though it was a second-hand house, he was prepared with enough savings to turn it into one as good as new.
Upon engaging a contractor, Lin studied the quotation and having agreed to its details, made out a cheque for RM65,000 as the initial payment.
After some progress, he noticed something amiss when the work seemed to stall and the building materials stopped arriving. To his dismay, he soon discovered the contractor had no intention of continuing the work.
With much difficulty, Lin managed to speak to the runaway contractor. In a step towards compromise, Lin tried to get him to sign a self-drafted debtor document for the sum of the outstanding work, calculated to be RM44,000, to be repaid by instalment. Sadly, not a sen was recovered. The contractor admitted to landing in hot water after having gone off the deep end with a China lady.
Asked if he lodged a police report or took any legal action, Lin said, “No legal action was taken as the contractor absconded and subsequently could not be traced.”
He simply resolved the problem by getting another contractor and ended up digging deeper into his savings.
To avoid such dire straits, Lin advised, “Get a reputable contractor with a good track record. Monitor work done on a daily basis and [check that] building material [is] brought to the site according to the amount of cash given to the contractor. All cash given to contractor must be documented with receipt acknowledgement and stated purpose.”
Although this happened six years ago, a check revealed that such misfortune is not uncommon even today.
Real Spaces spoke to Mohd Daud Leong, who heads a legal firm under his name, to find out if there was more one could do against unscrupulous contractors.
Being a lawyer, Leong’s first recommendation was to draw up a legal construction agreement with the contractor with a stipulated schedule of payment.
However, Leong concurred that typically, the contractor probably has a standard agreement. In such a case, he said, “Make sure they explain their clauses.”
Probed further, Leong said, “Of course it is best to have a legally drawn document, but if you want to save on lawyer fees, it is also possible to draw up your own document delineating the prices and scope of work in order to safeguard both parties. The important thing is to have it in black and white.”
He further explained that if anything deviates from the original agreement, a variation order must be drawn up. From his experience, Leong pointed out that a lot of disputes arise from variations which have not been documented in black and white.
“For instance, you get an 8ft door instead of the 10ft door you expected. So, the document must be specific right down to the measurements.”
Asked on whether the typical quotation provided by the contractor stands up in case of legal dispute, Leong said yes, but it is most probably biased towards the contractor.
As a safeguard, Leong advised clients to include the term “subject to verification” in the quotation. So, when the work is incomplete or unsatisfactory, this term can be invoked in a court case.
On the other hand, he said there were cases when difficult clients can abuse this term and cites even normally acceptable irregularities to be unacceptable, using it as an excuse not to pay the full sum. Hence, Leong reiterated the advantage of a legal contract drawn up by professionals, which is “normally quite fair to both parties”.
“If a contractor runs away, you can sue for breach of contract. If the work done is only 20 per cent and you have paid 50 per cent, it will be a sure-win case. With the name card, you can serve notice to the known address. If that fails and you hire a lawyer, they will search under the registrar of companies or locate the company secretary that represents them,” explained Leong.
No lawyers are needed though, “for claims not exceeding RM5,000, where consumers can file through the small claim court. And for claims up to RM25,000, consumers can bring it to the Tribunal for Consumer Claims.”
(Claims exceeding such amounts should be filed in the magistrate’s court, sessions court or high court accordingly.)
“The documents can be drawn up without a lawyer, but you have to make sure the clauses, terms and conditions make sense and can be enforced. However, if the document is signed under a private limited company, you can only wind up the company. Nothing will happen to the directors. You can go for seizure and sale, take whatever the company has left behind… tables and chairs… and try to recover your losses by selling them. Most likely you won’t get back cash. Let’s hope the more expensive equipment, such as the photostat machine, is not on lease, otherwise you can’t touch it.
“But to wind up a company, you need to spend easily up to RM30,000 in legal cost. To make someone bankrupt, it costs RM20,000 to RM25,000. So, to make it worthwhile, your claims should be RM30,000 and above,” Leong elucidated.
As a tip, Leong reminded clients to impose interest for outstanding sum as legal procedures take time, “Otherwise, your claim of RM9,000 will remain forever RM9,000 regardless how long it takes to settle.”
Although most consumers choose not to pursue the culprit because they are either unaware of the countersteps or are put off by the hassle, Leong advised them to at least blacklist the contractor.
Though it is more to protect others from falling prey rather than to recover your own losses, Leong stressed, “You must do something. Otherwise, he can keep cheating RM15,000 off every client and grow rich by it if no one files any claims.”
On another counteraction, Leong replied, “You can lodge a police report, but it’s up to the police whether this leads to case. If it’s just a single case, maybe they won’t take action. But if five persons report the same person, then the police will probably nab the person for cheating.”
Probed, Leong concurred it is usually highly unlikely to recover your money.
Asked if there are any real cases where clients are able to recover losses, Leong said, “Yes, if the contractor turns up. In one case I know of, the Tribunal wrote to the contractor and he turned up. Eventually, the contractor paid the client RM5,000 in an amicable settlement.”
Asked on how troublesome the procedure is, Leong said, “The Tribunal is very helpful. You just have to fill in some forms and they are most likely to immediately call the other party. They are quite effective, they actually do their work. So far I have not heard of complaints against the Tribunal. [Cases are solved] definitely within less than a year.”