Case Note: Khan v Filardo Ercan Architects Pty Ltd (Civil Dispute) [2023] ACAT 35 (19 June 2023)

The recent ACT Civil and Administrative Tribunal (ACAT) case of Khan v Filardo Ercan Architects Pty Ltd has highlighted the importance of maintaining good relations between the architect and client on domestic projects, including maintaining clear communication between each party on how the architect prepares the design and what exactly the client wants and when.

Facts

The case involved a dispute between the client, Mr Khan and the architectural firm Filardo Ercan Architects (FEA).

In September 2021 Mr Khan entered into a written contract with FEA to design a “good quality” and sustainable house that took into account and benefitted from the block’s location, its qualities and characteristics, and the surrounding environment.

Under the contract, FEA were required to exercise the skill of a “reasonable, qualified architect” and to provide their services within a reasonable time, except where delay was wholly or partially attributable to the client or a third party.

The brief included a list of 26 requirements which were incorporated from the “best practice principles for environmentally sustainable homes” from the Australian Government website.

Throughout the design process, Mr Khan played an active role providing numerous amendments, requests and changes to the plans provided by FEA, including drawing up amended plans himself to show exactly what he wanted.

Relations between Mr Khan and FEA ultimately broke down and Mr Khan brought a claim against FEA as he felt FEA had generally been unresponsive and slow, that their work had not been to a professional standard, that they had not taken into account regulatory requirements and that he had had to undertake much of the problem solving himself that he would have expected from a professional architecture practice.

FEA submitted that the plans were on the point of being ready for the approval process in April 2022, but on 29 April 2022 Mr Khan withdrew from the contract with FEA and commenced his claim for compensation in August 2022.

Claim by Mr Khan

In his claim, Mr Khan sought relief under the following guarantees in the Competition and Consumer Act 2010 (Cth) (the Act):

(a) Section 60 – Guarantee as to due care and skill, which requires that services supplied to a consumer are delivered with due care and skill; and

(b) Section 62 – Guarantee as to reasonable time for supply, which requires that the delivery of services is achieved within a reasonable time, where the contract does not specify timing (Guarantees).

Although section 61 of the Act provides that, where the consumer makes known the purpose for which the services are being obtained, or the result that is intended, then there is a guarantee that the services will be reasonably fit for that purpose, subsection 61(4) specifically excludes this guarantee from applying to services of a professional nature by qualified engineers and architects.

Duty to deliver services with due care and skill (section 60)

Mr Khan claimed that FEA had failed to deliver their services with due care and skill (section 60) for the following reasons:

(a) When the plans were at a fairly advanced stage, an issue arose that required the garage wall to be shifted 1.5m, and in moving the wall FEA allegedly failed to make the adjustment to the door of the garage, leaving a door that was only 4m wide and insufficient to allow two cars to use the garage, and which is narrower than the recommended Australian Standard. Mr Khan noted that the garage door was not changed until he identified the issue with FEA;

(b) That a solar encroachment issue should have been highlighted at an earlier stage.

FEA insisted that the narrow door was intentional because the brief provided by Mr Khan noted the importance of storage space in the garage, and that with a car port as well it was unlikely that the garage would need to be used for two cars. FEA also stated that the relevant Australian Standards for garage doors included with Mr Khan’s claim were voluntary rather than mandatory.

The Tribunal found that it was highly unlikely that the narrower garage door was designed intentionally, and that was far more likely that FEA forgot to adjust the plan and held that FEA had failed to exercise due care in relation to the design of the garage door. The Tribunal also noted, however, that this error was an error of a kind that could easily be made, and should have been picked up, but was also similarly easily remedied. The plans were corrected before being issued as final and therefore the consequences were minimal and could not be regarded as a “major failure”. On that basis, the architect was not held liable for the alleged loss.

Conversely, the Tribunal determined that FEA had not failed to exercise due care in relation to the solar encroachment issue and the Member believed that the conflict regarding this issue may have reflected unsatisfactory communication between the parties, but it did not establish a failure to exercise due care.

Duty to deliver services within reasonable time (section 62)

In determining whether FEA breached this duty under the Act, the Tribunal noted that the contract did not make time of the essence, and instead stated that the services were to be provided “within a reasonable time” except where the client or another third party caused delay.

The Tribunal noted that there was a great deal of “back and forth” between FEA and Mr Khan before the design was finalised to Mr Khan’s satisfaction, which added to the timeframe for the design. The Tribunal found that, ultimately, the problem arose due to Mr Khan’s wish to have his brief met precisely which was inconsistent with FEA’s role as an architect to contribute in a genuinely creative manner to the project. In each instance that FEA put forward new ideas or variations to the design, in the way that might be expected of architects, Mr Khan rejected these ideas.

The Tribunal held that the period of two weeks spent finalising the preliminary plans was not outrageous as those plans would determine the essential parameters for how the project would proceed and that FEA had not failed to deliver the services within a reasonable time.

Conclusion

Throughout his decision, the Member noted that the conflict between the parties arose due to a misunderstanding between Mr Khan’s and FEA’s concept of what an architect should do in the performance of its services, which appeared to the Tribunal to be “radically different” work.

This case is just one example of the importance of managing your client’s expectations and making sure that, right from the beginning, you get a clear brief from the client, which you will use reasonable endeavours to comply with, and a corresponding scope of services setting out exactly what you will and will not be doing on the project.

Professional Indemnity Considerations

If any stage you feel that relations between you and your client are breaking down, some good ideas to try and restore the relationship, as well as protect yourself in the event of a claim include:

a. Maintain clear and consistent communication with your client throughout the project, especially in relation to deadlines and expected timeframes;

b. Ask another colleague to step into the line of communication – sometimes different personalities can clash and introducing a fresh perspective often helps;

c. Ensuring that all important conversations, instructions, directions with your client are recorded in writing, whether by sending an email or keeping detailed file notes. Such records can be invaluable in the event of a legal dispute.

Make sure that you are managing your client’s expectations and not agreeing to contractual terms that may increase your liability over and above that at law (and which might impact on your professional indemnity insurance policy). Your legal duty and standard of care applies in the performance of your services and it is not a defence to a negligence claim that you agreed to rush/accelerate those services. If you have any insurance concerns over terms contained in any of your Consultancy Agreements, contact your Account Manager or our team of Risk Managers at informed by Planned Cover to arrange an insurance review.

Even though this case was ultimately found in the Architect’s favour, in the event of any claim (even those that seem frivolous) you will have to notify your insurer and assist the insurer with defending the claim through the court processes, which can take considerable time and resources. Clients in domestic projects may not be experienced in the services provided by architects, and establishing positive relations and clear communication as to the client’s requirements for the services, particularly in relation to timeframes and any other specific elements they wish to be included in the design from the outset and through the duration of the project, may avoid relations breaking down to the point that a claim may be made.

Nina Stone
Risk Manager QLD

This article is only general advice in respect of risk management. It is not tailored to your individual needs or those of your business, nor is it intended to be relied upon as legal or insurance advice. For such assistance you should approach your legal and/or insurance advisors.