When does CIPAA apply?

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CIPAA applies to every construction contract made in writing relating to construction work carried out wholly or partly within the territory of Malaysia including a construction contract entered into by the Government. It is noteworthy that due to the Federal Court decision in Jack-in Pile(M) Sdn Bhd v Bauer (Malaysia) Sdn Bhd, construction contract entered into on or before 15.4.2014 is not applicable in CIPAA and cannot be referred to CIPAA.

CIPAA does not apply to a construction contract entered into by a natural person for any construction work in respect of any building which is less than four storeys high and which is wholly intended for his occupation. The meaning of “occupation” can mean residential or commercial occupation as per the High Court case of Liew Piang Voon v WLT Project Management Sdn Bhd.

In order to exclude the application of CIPAA pursuant to Section 3 of CIPAA, all the following limbs must be fulfilled concurrently and there cannot be partial fulfilment:-

     a.  There must be a construction contract;and

     b. The construction contract must be entered into by a natural person; and

     c. It must relate to construction work in respect of a building which is less than four       

     storeys high; and

     d. The building must be wholly intended for occupation by the person who entered 

     into the contract; and

     e. Occupation in this context can be residential or commercial occupation.

Lastly, CIPAA also does not assist contractors for emergency government contracts. If the Government construction contract is for any construction works that is carried out urgently and without delay due to natural disaster, flood, landslide, ground subsidence, fire and other emergency and unforeseen circumstances, the construction work would fall under the exemption of CIPAA and the parties to the contract can’t rely on CIPAA.