RECOUPMENT OF UNPAID ARCHITECTURE FEE ARISING FROM TERMINATION

​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.[1] 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.[2] 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.[3]
 
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.[4] 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.[5] 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.[6] 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]”[7], 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.[8]
 
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[9], 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.

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[1] Arkitek Tenggara Sdn Bhd v Mid Valley City Sdn Bhd [2007] 5 MLJ 697
[2] Ibid
[3] Opcit
[4] Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd Civil Appeal No 02(f)-3-01/2018(W)
[5] GC Architect v DeChoice Sdn Bhd and Lim Kim Heng  Civil Appeal No BKI-12B-3/3-2016
[6] Berita Arkitek December 2020
[7] Ar. Lim Yoke Tiang v Matrix Concepts (Central) Sdn Bhd [2020]  1 LNS 35 (CA): p.15.L.[27]
[8] <http://www.davidyek.com/critics/can-the-architect-claim-scale-of-maximum-fee-in-the-face-of-termination>
[9] <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