REUTERS | Fabrizio Bensch

Consultants’ fees, poor service and harassment: reflections on the Phillips case

For anyone who (like me) is going through the ordeal of domestic building work, the tale of Michael Phillips Architects Ltd v Riklin and another has a painful resonance.

Reading the cocktail of ingredients – a high handed architect giving “jobs to the boys”, a complete absence of contract administration or cost control, a cavalier disregard for planning and listed building requirements, the contractor becoming insolvent, all leading to delays, cost overruns, spurious fee claims and disputes – one is left thinking, “There but for the grace of God go I”. Only the tragi-comic dénouement, in which a thuggish debt collector pours acid over Mr Riklin’s Maserati, lifts the story out of the ordinary and into the realm of high farce.

Reducing the architect’s fee

Leaving aside the Riklins’ counterclaim for harassment and criminal damage, the key element of the decision for me lies in the judge’s finding that the architect’s fee claim should be reduced, on two grounds. First, that he had not performed all the services which he was contracted to provide, either properly or at all. Second, that this failure reduced the overall value of the architect’s services to the client.

It is tempting to see this ruling as a general licence for clients to challenge consultants’ fee claims on the grounds that the consultant has failed in his duties or not provided “value”. However, the facts of Phillips v Riklin are unusual and extreme. In my view it should not be treated as authority for such a wide-ranging proposition. Not only were the architect’s failings stark and glaring, but he made no attempt to record his terms of engagement at the outset, as required by the Architects Code of Conduct published by the Achitects Registration Board. Moreover (as the judge found) neither the architect nor his expert were credible witnesses. So, as a statement of general principle, it should be treated with caution.

Lessons for clients and consultants

That said, the case does throw up a couple of useful lessons, which both clients and consultants would do well to heed:

  • If a consultant’s fee is to be calculated as a percentage of the final construction cost, make sure you define clearly what “construction cost” means. In this case, not surprisingly, the judge held that it should exclude all works other than those in respect of which the architect actually provided services. In other situations (and this issue is surprisingly common) the dividing line will be much less clear cut.
  • When using the RIBA scale to determine what is a “reasonable percentage fee”, it is legitimate to take into account the value of the services performed, not just the fact of their performance. Taken as a whole, an architect’s services should deliver a result which is “greater than the sum of their parts”. Failing this, a reduced percentage should apply.

The problems in this case were compounded by the absence of a signed appointment, or for that matter an executed building contract.  Had the agreed terms been recorded in writing, at least some of the areas of dispute may have been avoided.

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