RECOUPMENT OF UNPAID ARCHITECTURE FEE ARISING FROM TERMINATION
There are a number of concerns in providing architectural services. Among them, termination of project, leading to termination of services and ultimately, non-payment of fee. Here, we look at these issues.
One has to bear in mind that the Board of Architects Malaysia (LAM) was only empowered to hear and determine disputes relating to professional misconduct and not any disputes between the architect and its client. Thus, the court will find that there is no implication in law that a service of an architect will be automatically terminated upon the discontinuation or termination of a project where the architect has been legally appointed. In the same vein, the said developer must unambiguously state if it intends to terminate the service of the architect and pay the outstanding fee owed to him prior to any issuance of letter of release.
On the issue of non-payment of fee, CIPAA has provided a quick avenue for architects to reclaim its fee, on the basis of temporary finality under the service contract. The very tactical maneuvering by defending counsel is to challenge the jurisdiction of the Adjudicator that he has no jurisdiction to hear the case in view that there is no contract between the client and the architect. It is common practice that architects may had proceeded with works without a ‘proper appointment’, i.e. a verbal-contract. Therefore, it is also common for LAM to request a copy of the ‘memorandum of agreement’ from the architect to establish locus-standi of hearing the case. In absence, the court has provided guidance that a contract exist when there is an acceptance by conduct, i.e. by signing on the ‘submission-drawings’ or even sketch-plan, even to an extend of responding to an email. These, considered written-contract, enforceable unless otherwise there is a contention of misrepresentation.
As to the quantum of fee, in contrast to the claim by PAM that the scale of minimum fee SOMF is in placed to protect the client and the public, failing non-compliance may risked project delivery to be sub-standard. Unfortunately, that is not the way the court perceived and the court has also gone an ‘extra-mile’ to say that “unexpected in a case where in a competitive market one has to try to anchor in the work and secure the project [by not complying with the SOMF]”, whereupon a term in the contract cannot be changed merely by reason of a termination of services; an agreement that does not conform to SOMF, i.e. on lump-sum, shall not be based upon SOMF as its basis of claim; as SOMF is only binding to the architect but not the contracting party.
Concluding, while the Malaysia Productivity Corporation (MPC) may justify there is no reason to maintain price-fixing by professional bodies quoting cases from the US instead of the common law, recouping of unpaid fee arising from termination can be a delicate act of balancing between risks, time, goodwill and sheer persistency. The question is, unlike CIPAA, architect cannot exercise a lien so easily over its deliverables and the only sole mechanism to hold ‘ransom’ of ‘unkind-client’ is via its certificates and letter of release. So, don’t force the architect to take the ‘extreme-measure’ as he has still bills and salary to pay, just like you and me.
 Arkitek Tenggara Sdn Bhd v Mid Valley City Sdn Bhd  5 MLJ 697
 Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd Civil Appeal No 02(f)-3-01/2018(W)
 GC Architect v DeChoice Sdn Bhd and Lim Kim Heng Civil Appeal No BKI-12B-3/3-2016
 Berita Arkitek December 2020
 Ar. Lim Yoke Tiang v Matrix Concepts (Central) Sdn Bhd  1 LNS 35 (CA): p.15.L.
 <http://www.mpc.gov.my/wp-content/uploads/2016/11/Regulatory-Review-Price-Fixing-for-Professionals-in-Building-Constructions-November-2014.pdf>, access 3 May 2021
Many years ago, the Board had in placed the Noblest Scale of Fee called the Scale of Minimum Fee Rule (SMFR) and one Towering Figure of that Time, almost sharing the same stature of “Lord of the Rings - Gandalf”, our grandfather Architect nick-named “The King of the Loo” has risen to awake newbies architect that “Thou Shall Not Undercut Your Professional Fee” or “You shall Face the Full Force of the Board!”. Such “commandments” shiver through the spines of every newbies architects to the extent that one committed suicides because of such!
In reality, with the exception of Government Jobs, no private practice actually go by it or rather openly admitted to have not complying to SMFR, a staggering FACT shown by the polls conducted by both the Board and the Institute. Yet, the noble of noblest Board happily admitted that fact and the irony is these practices agree that such Rule shall be continued for perpetuity as it safeguard the interest of the practitioners. Now you know why Newbies are forced to take jobs at ridiculously low price as nobody has faith in this archaic rule.
For the benefits of Newbies so that they are not caught red-handed of committing such heinous “crime”, this is how the BIG BOYS did it. Assuming Construction Cost = RM100,000,000.00, “market Fee” (1.2%) = RM 1,200,000.00. What is in their appointment letter reflects, Construction Cost = RM30,000,000.00 and the Scale of Fee Rule (4%) = RM 1,200,000.00. Even with the compliance of the SMFR, one is able to manipulate the figures and that is how BIG FIRMS are doing to protect the interest of their shareholders. You are technically in compliance to the Rule.
SMFR is again going to be the same stale subject in the Professional Qualifying Examination but as a matter of surviving the Red Ocean to the Newbies, pledging your alliance to such will only make you death by hunger unless one is born with a silver spoon.
I am sharing these information with a caveat that these information is for educational purpose only and shall not be taken as an advice be it legal or otherwise. You should seek proper advice to your case with the relevant professionals. The author cannot guarantee the accuracy of the information so provided here.