Rev. No.

: 4
Date: 9.4.2019

BOARD OF ENGINEERS MALAYSIA

CIRCULAR NO. 008

PROCEDURE FOR A REGISTERED ENGINEER OR AN ENGINEERING CONSULTANCY

PRACTICE TAKING OVER THE WORK OF ANOTHER REGISTERED ENGINEER
OR AN ENGINEERING CONSULTANCY PRACTICE

In exercise of the powers conferred by paragraph 4(1)(f) of the Registration of Engineers Act
1967 [Act 138], the Board of Engineers Malaysia hereby set out the procedure for taking over
the work of a registered Engineer or Engineering consultancy practice by another registered
Engineer or Engineering consultancy practice in accordance to Regulation 31 of the
Registration of Engineers Regulations 1990 (Revised 2015).

This Circular supersedes Circular No. 1/2006, Guidelines for An Engineer Taking Over the
Work of Another (BEM/RD/PPC/02).

1. Regulation 31 of the Registration of Engineers Regulations 1990 (Revised 2015)

states:

A registered Engineer or an Engineering consultancy practice shall not directly or

indirectly –

(a) supplant or attempt to supplant another registered Engineer or an Engineering

consultancy practice;

(b) intervene or attempt to intervene in or in connection with engineering work of

any kind which to his knowledge has already been entrusted to another
registered Engineer or an Engineering consultancy practice; or

(c) take over any work of that other registered Engineer or an Engineering
consultancy practice acting for the same client unless he has -

(i) obtained the consent of that other registered Engineer or an

Engineering consultancy practice; or

(ii) been formally notified by the client that the services of that other
registered Engineer or an Engineering consultancy practice have been
terminated in accordance with the provisions of any contract for
professional engineering services entered into between that other
registered Engineer or an Engineering consultancy practice and the
client, provided always that, in the case of dispute over non-payment of
fees or quantum of any outstanding fees under the contract, the client
may request the Board to be the stakeholder.

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2. For the purposes of the Regulation 31 and this Circular:-

2.1 The reference to consent of that other registered Engineer or an Engineering

consultancy practice in Regulation 31(c)(i) means a letter from an existing
registered Engineer or an Engineering consultancy practice (“First Engineer”
or “First Engineering consultancy practice”) agreeing to another registered
Engineer or an Engineering consultancy practice (“Second Engineer” or
“Second Engineering consultancy practice) taking over his or its work (“Letter
of Release”).

2.2 The reference to contract in Regulation 31(c)(ii) means a contract or agreement

in writing between the First Engineer or the Engineering consultancy practice
in which he or it is practising and the party that engages them (“the Client”).
The Board considers that there is a contract or agreement in writing if the
contract or agreement is made in writing whether or not it is signed or if the
contract or agreement is made by an exchange of communication in writing.

3. For the purposes of Regulation 31(c):-

3.1 A Second Engineer or Second Engineering consultancy practice shall check

with his or its prospective client namely the Client and the relevant Local
Authority, if applicable, whether there is a First Engineer or First Engineering
consultancy practice whose appointment has not being properly terminated, or
where there is a dispute over non-payment of fees, before accepting any work.
If there is, the Second Engineer or Second Engineering consultancy practice
shall write to the First Engineer or First Engineering consultancy practice for a
Letter of Release for him or it to take over the work.

3.2 If the appointment of the First Engineer or First Engineering consultancy

practice has been terminated in accordance with the provisions of the contract
or agreement and:-

(a) the First Engineer or First Engineering consultancy practice is not

claiming any fees due from the Client (i.e. no “Dispute of Fees”),

(i) he or it shall issue a Letter of Release to the Second Engineer

or Second Engineering consultancy practice within fourteen (14)
days of being requested by the Second Engineer or Second
Engineering consultancy practice, regardless of any other
dispute between the First Engineer or First Engineering
consultancy practice and the Client.

(ii) if he or it did not do so, the Second Engineer or Second

Engineering consultancy practice may refer the matter to BEM
for BEM to issue a letter to the Client, copied to the First
Engineer or First Engineering consultancy practice, confirming
a Letter of Release by the First Engineer or First Engineering
consultancy practice is no longer necessary (“Confirmation
Letter”).

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 (b) the First Engineer or First Engineering consultancy practice is claiming
there are fees due from the Client (i.e. there is a “Dispute of Fees”),

(i) he or it shall reply accordingly within fourteen (14) days of the

request. The Second Engineer or Second Engineering
consultancy practice may then advise the Client to submit a
request in a SH Form appointing BEM to act as a stakeholder,
where the terms in the SH Form shall apply and bind both
parties.

(ii) if he or it did not do so, the Second Engineer or Second

Engineering consultancy practice may refer the matter to BEM
for its consideration on whether a Letter of Release by the First
Engineer or First Engineering consultancy practice is no longer
necessary (“Confirmation Letter”).

3.3 Where a Client has submitted a request in a SH Form appointing BEM to act
as a stakeholder:-

(i) BEM shall assess a sum of money to be deposited with BEM as

stakeholder (“the Stakeholder Sum”) and inform the Client accordingly;

(ii) On receipt of the Stakeholder Sum, BEM shall issue a Confirmation

Letter to the Client, copied to the First Engineer or First Engineering
consultancy practice.

3.4 The letters under paragraph 3.2(a) and (b) above shall not prejudice nor affect
any dispute which the First Engineer or First Engineering consultancy practice
may have with the Client other than the Dispute of Fees.

3.5 The BEM also does not consider Regulation 31 contravened and a Letter of
Release is not necessary if the First Engineer or First Engineering consultancy
practice:-

(a) has commenced an action to resolve the Dispute of Fees after his or
its termination (“the Action”);
(b) has either been suspended or had his or its name removed from the
Register maintained by BEM for any reason whatsoever;

(c) has informed the local authorities that he or it was withdrawing from the
work; or

(d) has terminated his or its employment on his or its own accord.

3.6 The Action in paragraph 3.5(a) means arbitration proceedings commenced

under the Arbitration Act 2005 (“AA”) if there is an arbitration agreement or an
originating process under Rules of Court 2012 (“ROC”) or adjudication
proceedings under the Construction Industry Payment and Adjudication Act
2012 (“CIPAA”).

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 FORM SH
REGISTRATION OF ENGINEERS ACT 1967 (REVISED 2015)
(Section 4(ea))
[to be read together with “Procedure for a registered Engineer or an Engineering consultancy practice
taking over the work of another registered Engineer
or an Engineering consultancy practice”]

APPLICATION FOR BOARD OF ENGINEERS MALAYSIA TO ACT AS STAKEHOLDER

Name of Applicant: ………………………………………………………………………………..……………………………..……

NRIC/Passport No.: …………………………………………... Nationality: ………..……………..……………

Address: ……………………………………………………………………………………………………………………………….……

……………………………………………………………………………………………………………………………………………………

Name of project: ….……………………………………………………….…………………………….................................

…………………………………..…………………………………………………………………………………………………..………….

……………………………………………………………………………………………………………………………………………………

Disputing Parties

A. Name of Client: ……………………………………………………………………………………………………….….……

Company Registration No.: ……………………………………………………………………………..………….……

Address: ……………………………………………………………………………………………………………………….….

………………………………………………………………………………………………………………………………………….

Tel. No.: …..……………………… Fax. No.: …………………………… E-mail: ………………………………

B. Name of First registered Engineer/

First Engineering consultancy practice: …………………………………………………………………………….

BEM’s Registration No.: ……………………………………………………………………………………………………

Address: ………………………………………………..…………………………………………………………………………

………………………………..………………………………………………………………………………………………………..

Tel. No.: ……………...………..… Fax. No.: .…………………..…..…. E-mail: ……………………………..

Contact Person: ………………………………………………………………………………………………………………..

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Brief description of dispute (Please use additional pages if necessary)

…………………………………………..…………………………………………………………………………………………………………..…..

………………………………………….…………………………………………………………………………………………………………………

……………………………………………………………………………………….……………………………………………………………………

…………………………………………………………………………………………………………………………………………………………….

Attachments: (Please tick where submitted)

Copy of contract document

Proof of contract

Letter of termination

Status of works

Amount of fees outstanding for works done to-date

Other relevant documents (please describe)

……………………………………..………………………………………..………………………………………………………..……

……………………………………………………………………………………………………………….……………………………

Non-refundable processing fee of RM 2,000.00

Cheque No.: ……………………………………………………

I/We hereby request the Board of Engineers Malaysia to act as stakeholder for the disputing parties as
detailed above and hereby confirm that I/We shall abide by the conditions as contained herein.

..…………………………….……………………. ……………………..……..…………………………
Applicant's Signature Position in the Company

…………………….………………………………
Company Stamp

Date: ………………………….………………..

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 CONDITIONS

1. Payment of the Stake

1.1 Further to Regulation 31(c)(ii) of the Registration of Engineers Regulations 2012, if the Client
(“the Applicant”) claims that it had terminated the appointment of the First Engineer or First
Engineering consultancy practice in accordance with the provisions of the contract and the First
Engineer or First Engineering consultancy practice is claiming there are fees due to him or it
(“Dispute of Fees”), the Applicant may submit an application in the SH Form appointing the
Board of Engineers (“BEM”) to act as a stakeholder, whereby the following stakeholder terms
shall apply.

1.2 BEM shall assess a sum of money to be deposited with it as stakeholder (“the Stakeholder
Sum”). On being informed, the Applicant shall deposit the Stakeholder Sum within thirty (30)
days, failing which this application is deemed to have been withdrawn by the Applicant.

1.3 On receipt of the Stakeholder Sum, BEM shall issue a letter to the Applicant, copied to the First
Engineer or First Engineering consultancy practice, confirming a Letter of Release by the First
Engineer or First Engineering consultancy practice is no longer necessary (“Confirmation
Letter”).

1.4 BEM shall place the Stakeholder Sum in any account of its choice (“Stakeholder Account”) and
shall hold it until its release as provided in paragraph 3 below.

2. Dispute of Fees Resolution

2.1 Within sixty (60) days from the Confirmation Letter, the Applicant shall initiate action as defined
in paragraph 5 below to resolve the Dispute of Fees (“the Action”).

2.2 The Action is deemed to have commenced: -

(a) For an action in court, when an originating process defined in Order 5 of Rules of Court
2012 (“ROC”) is filed;

(b) For arbitration, when a notice of arbitration defined in section 23 of Arbitration Act 2005
(“AA”) is served;

2.3 If the Action is not commenced within sixty (60) days, BEM shall release the Stakeholder Sum
to the First Engineer or First Engineering consultancy practice.

2.4 After the commencement of the Action but before the Decision, the First Engineer or First
Engineering consultancy practice and the Applicant may amicably settle the Dispute of Fees
by a mutual agreement in writing stating clearly the parties’ agreement on the release of the
Stakeholder Sum (“Settlement Agreement”).

3. Release of the Stakeholder Sum

Within thirty (30) days from the Settlement Agreement or the decision as defined in paragraph
5 below (“the Decision”) regardless of any challenges against the Decision (“Appeal”), BEM
shall deal with the Stakeholder Sum in the following manner:

(a) Release the Stakeholder Sum according to the Settlement Agreement; or

(b) If there is no Settlement Agreement;

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 (i) If the amount awarded to the First Engineer or First Engineering consultancy
practice in the Decision (“Amount Awarded”) is lesser than the Stakeholder
Sum, BEM shall release an amount equivalent to the Amount Awarded to the
First Engineer or First Engineering consultancy practice from the Stakeholder
Sum and refund the balance to the Applicant; or

(ii) If the Amount Awarded is higher than the Stakeholder Sum, BEM shall release
the Stakeholder Sum to the First Engineer or First Engineering consultancy
practice. The First Engineer or First Engineering consultancy practice is at
liberty to recover the remaining Amount Awarded from the Applicant; or

(iii) If there is no Amount Awarded to the First Engineer or First Engineering

consultancy practice in the Decision, BEM shall refund the Stakeholder Sum
to the Applicant.

4. Other Proceedings

4.1 If BEM commence any interpleader or similar proceedings to determine the release of the
Stakeholder Sum (“Interpleader Proceedings”) and/or any party commence legal actions
against BEM in relation to or arising from the Stakeholder Sum or BEM’s appointment as
stakeholder (“Other Proceedings”), all BEM’s costs in or arising from these proceedings shall
be paid out of and deducted from the Stakeholder Sum prior to releasing the same.

4.2 The balance of the Stakeholder Sum shall be released by BEM in accordance with the order
granted in the Interpleader Proceedings.

5. Interpretation

Action means arbitration proceedings commenced under AA if there is an

arbitration agreement or an originating process under ROC;

Amount Awarded means the fees ordered to be paid by the Applicant to the First
Engineer or First Engineering consultancy practice in the Decision;

Appeal means an application under section 37 and/or 42 of the AA or an

appeal within the meaning of Order 55 and 55A of ROC and Part II of
the Rules of Court of Appeal 1994 or any other application under the
AA made to challenge the Decision or any part thereof;

Decision means an order from the Court or an award by the Arbitrator in the
Action ordering an amount to be paid to the First Engineer or First
Engineering consultancy practice.