Architects fighting clients to pay for work estimated at £200,000 have walked away with half their fee in a landmark case for the 'fast-track, rough-justice' solving of disputes.
The settlement was reached under adjudication last week and is believed to be the first case of its kind. The London architects - who could not be named - went to the High Court after their client, a married couple, sacked them and refused to pay £12,000 design fees for work to their home.
But both parties agreed to go for a speedy deal under adjudication to stop the case and costs from dragging on. The architects, called the 'claimers', prepared drawings for the three-storey Georgian house in North-west London. Work included conservatory and central heating alterations, a new kitchen and changes to floor levels.
The client 'responders' sacked them because 'the costed design of between £150,000 and £200,000 was vastly excessive', they said. They added that much of the work was needless and the architects failed to advise them on planning permission.
They agreed, however, to pay the architects £5700 on the eve of last Thursday's hearing, said the adjudicator, Ian Salisbury, the architect who chairs the riba committee on dispute resolution.
Adjudication is now a mandatory way of solving building contract disputes, including architect's appointments, under the Housing Grants Construction and Regeneration Act 1996. It came into force this May and moves at a cracking pace.
The adjudicator must be appointed within seven days of a party seeking adjudication, and has 28 days, with a further 14 at his discretion, to reach a final decision. Postal delays can throw the timing. But Salisbury insisted the parties stick to time limits as closely as possible.
Unlike arbitration or litigation, adjudication is not a final resolution. It aims to find a rapid decision that is enforceable until challenged. Salisbury said the best result is an agreement.
The timetable leading up to last week's settlement was:
23 February 1998: the High Court refers the case to adjudication governed by rules set by orsa, the Official Referees Solicitors Association. Parties must agree to an adjudicator or one will be appointed by the president of the Chartered Institute of Arbitrators. The parties cannot agree.
30 April: the CIArb recommends Ian Salisbury as adjudicator. Client responders initially 'object vigorously to the appointment of an architect', fearing he will favour a fellow architect. Salisbury is anxious over his appointment delay and wants to move fast.
6 May: parties are ordered to appoint an independent expert to give opinions on technical matters but cannot agree on one. Salisbury chooses architect John Winter who can be cross-examined at the final hearing.
21 May: statements of claim, defence and counter-claim with witness statements have all been served. The two job architects say they worked 50 hours at £60 per hour, with a trainee putting in 230 hours at £30 per hour. The couple counter-claim for £3000 for inconvenience.
28 May: a 45-minute visit to the responders' house enables Winter to write a 30-page report with photos, summary and breakdown of hours worked and opinion of whether time spent was reasonable. Winter thinks the hours claimed for the trainee to be excessive and should have been 140. The £30 pay rate is reasonable. However, he says, 'it would be unusual for someone of the trainee's experience to be employed on a project such as this without regular supervision'.
4 June: claimers and responders are to meet in a hearing restricted to five hours with opening and closing statements, cross-examinations and decision. They settle the day before this hearing. Responder client agrees to pay the architect claimer £5700 within 14 days. They are represented throughout by solicitor Black Graf & Co, with Chappell-Marshall, engineering contract consultant, representing the architects.
Salisbury said the success of the process was down to the parties' determination to see it through. 'I used all the powers I had to keep it moving,' he said. 'I can talk to parties independently or order them to do anything. My decision is binding on the parties and there is no going back. It is fast-track; it is rough justice, but hopefully we reach the right decision.'
The system was not without its problems, he said. 'What if a structure is condemned as unsafe by an architect but this is challenged? The adjudicator finds for the contractor. He completes the building only to see it fail. Can the employer sue the contractor for breach of contract, or can the contractor blame the adjudicator, or does the employer sue the adjudicator for taking the wrong decision? There are all sorts of problems.'
But one way of avoiding disputes was to keep talking, he said. 'It is almost unheard of having a dispute that does not entail a failure in communication.'
'Flower Farm - Honey Pool Landscape' by Alan Lai of Unit 17 is one of the designs from the Bartlett school of architecture summer show, running from 15 June to 10 July. The farm is in Northamptonshire and much of the exhibition work was inspired by oil fields, radio telescopes and bio-engineering plants from Texas. Contact the school, tel 0171 380 7504