Costs Fees Funding in United Kingdom

Professional Fees in Construction Contracts

Can the architect hold onto the signed contract documents if the employer has failed to pay fees owing?

Lien is the right to hold property until some obligation has been discharged. It is usually encountered in connection with debt. If I take my car into the garage for a repair, the garage owner has the right to keep hold of my car until I pay the cost of the repair. An architect has the right to keep drawings prepared for a client until the client has paid the architect’s fees owing.

Lien falls under various types. The examples above fall under the category of special or particular lien, and they are the most commonly encountered. There is also general lien, possessory lien, equitable lien and contractual lien. In general terms, if an employer owes fees to an architect, the architect is entitled to retain possession of goods and documents which belong to the employer until the fees are paid. The signed contract documents undoubtedly (as between the employer and the architect) belong to the employer, but an architect owed fees by the employer could retain the contract documents until paid. If the employer urgently needs the documents but is not prepared to pay the architect fees for some reason, the Civil Procedure Rules allow the claimant to retrieve the documents on payment into court of the amount claimed by the architect, that sum to await the determination of the architect’s claim.

Is the architect entitled to charge a new client full fees for a design which the architect has already prepared for a different client and for which fees have been paid?

The copyright position where an architect has prepared drawings for a site and the client sells the site is dealt with in question 86. This is a somewhat different question. It envisages an architect completing drawings for a client on a particular site and being asked to sell the drawing to a different client with a different site. There is no doubt that the architect retains copyright and no doubt that the new client has no right to a licence to use the drawings.

If the architect does sell on the drawings and the new client constructs a building from them, it is likely that the original client will not be pleased at having another house of exactly the same design in the area. Unless the original client contracted on the basis that an exclusive licence to build the house would be provided, there is nothing to be done. However, an architect who grants an exclusive licence cannot (as the name implies) grant another licence to another person for the same design.

Therefore, provided that the architect has not previously granted an exclusive licence to construct a house from the drawings, the architect can certainly sell the drawings again to another client. In practice, the architect will have to carry out some changes to the drawings. The title blocks must be changed to refer to the new client and site. It is likely that various minor changes will be necessary to ensure that the building sits properly on the new site. Moreover, a new site plan and probably foundation plans must be prepared. The architect is entitled to charge full fees for these drawings. The fact is that the architect is entitled to charge whatever the client is prepared to pay. Like any other transaction, the fee will be determined not by reference to whether the drawings are copies of earlier drawings, but by whether the client will pay the fee.

Can the architect claim extra fees for looking at claims?

This question usually arises when the architect has been engaged on the basis of the RIBA Standard or Concise Conditions of Appointments for an Architect 2010 (2012 revision) which are somewhat similar in terms. In order to arrive at the answer to this question, it is necessary to look at the terms of the engagement. A client will usually argue that dealing with contractors’ claims is part of the architect’s normal contract administration duties. However, if the architect is being remunerated on a percentage basis (as is usual), the client will also argue that there is no incentive for the architect to reduce a claim made by the contractor, because the architect’s percentage payment will increase as the claim increases. Such an argument says little for the client’s opinion of the architect’s professional integrity, and it is a source of wonder that a client will employ an architect while having such reservations. The RIBA Standard Conditions lay that particular concern to rest; under ‘Definitions’ it clearly states that the Construction Cost does not include ‘any loss and/or expense payments paid to a contractor’. A similar term would be implied in the RIBA Concise Conditions.

For a fully designed project where the architect’s services include administering the building contract, the RIBA Standard Conditions include ‘ascertaining or instructing ascertainment of loss and expense due to the contractor’. The Special Services section includes the option of ‘Assistance to the Contract Administrator dealing with extensions of time and contractor’s claims’. Where the architect is already acting as contract administrator, this service is not additional. Therefore, it seems clear that the architect must include for ascertainment of claims, even though, if a percentage fee is being charged, the amount of loss and/or expense is not part of the construction cost on which it is based. The architect’s only remedy appears to be to instruct the quantity surveyor to ascertain what both the RIBA terms and the building contract permit, which is probably the norm. Hopefully, the quantity surveyor can charge extra fees for ascertainment.

The contract administrator role says nothing about the extremely time-consuming task of forming an opinion prior to carrying out the ascertainment of money due. It might be argued that it is implied that the architect must carry out this task as part of the contract administrator’s role because it is something which has to be done. Of course it only has to be done if the contractor submits a claim. One can only imply a term like this into a contract if it is obvious and if it does not fly in the face of a term already included. Clause 5.9 already allows the architect to claim additional fees ‘for reasons beyond the Architect’s reasonable control’ and for which the Architect ‘would not otherwise be remunerated’. It is clear that the contractor’s claims for loss and/or expense and the notification of delays requiring extension of time are matters beyond the architect’s control. It is also clear that the architect would not be reimbursed in any other way. Therefore, there is no room to imply a term which would conflict with clause 5.9. In summary, it appears that under the RIBA Standard Conditions, an architect is entitled to claim additional fees for services in connection with extensions of time and forming an opinion about whether regular progress is likely to be affected by one of the relevant matters causing loss and/or expense, but not for the actual ascertainment of the resultant payment to the contractor. This is an awkward conclusion dependent on the reading of various parts of the appointment documents. It would be useful for the RIBA to look into amending this to make what is intended much clearer. Ideally, the architect should be able to claim additional fees for additional work the extent of which cannot be foreseen.

The Concise Conditions are simpler, as the name suggests. Although a number of activities are stated as being included in the contract administrator’s duties, dealing with the contractor’s claims is not one of them. Dealing with contractor’s claims is one of the additional services that must be specifically added to the small project services, which comes with the Concise Conditions. Clause 5.5 permits the architect to charge additional fees if the architect ‘is involved in extra work or incurs extra expense for reasons beyond the Architect’s reasonable control’ because performance of the Services is delayed, disrupted or prolonged; ‘extra work’ must include dealing with contractor’s claims. It is to be noted that the phrase ‘contractor’s claims’ is broad enough to cover extensions of time and additional preliminaries in relation to variations as well as loss and/or expense. Under the Concise Conditions, the architect can claim for carrying out ascertainment.

Architects claiming additional fees are well advised to notify the client as soon as it becomes clear that extra fees will be involved, and detailed timesheets should be kept setting out exactly what the architect does in relation to the claim. The timesheets of many architects are totally inadequate as a record of what was actually done.

Source: David Chappell, Construction Contracts: Questions and Answers, July 2010

Costs Fees Funding in the United Kingdom


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