Michael Phillips Architects Ltd v Riklin & Anor

The Claimant sues for fees claimed to be due for architectural services rendered to the Defendants in and after July of 2007. The original pleaded claim based upon an hourly rate was for £128,162 plus VAT at 15% and interest. By the time of trial the claim was limited to £94,430.21 exclusive of VAT and interest. This sum is expressed to be based upon a percentage charge for architectural services and some landscaping, and a further time charge for interior design services, together with disbursements of £1,561.39.

The Defendants deny the claim. Originally on the ground that the Claimant had assigned its title to the debt to a third party, as it asserted in its letter to the Defendants’ solicitors dated the 3^rd June of 2009; and alternatively on the ground that the percentage charge basis proposed by the Claimant is excessive and is based upon a construction cost figure that is too high. In respect of the claims for interior design services the Defendants’ case is that such services as were rendered were substantially encompassed within the architectural services obligation undertaken.

The Defendants also counterclaim for breach of contract with a set off against the claim. There is a further claim in tort against the Claimant for damage caused to the First Defendant’s Maserati motor car by the debt collection agents instructed by the Claimant to enforce payment of the hourly rate claim before any invoice or account was rendered. This claim amounts to £15,465.98.

The Defendants’ family trust Broadreach Ltd purchased St Mary’s Lodge, Captains Row, Lymington in the county of Hampshire in March 2007 as an investment and second home. The house is part Georgian with later additions.

The Defendants wished to renovate and update the property which was purchased for £1.4m. The cost of renovation was an element in the project to be subject to sensible limit. From the outset the Defendants were cost conscious, whilst anxious to complete their project and to occupy the house by the spring of 2008 they were mindful at all times as to the proportionality of their expenditure to the purchase price and ultimate value of the house when complete. They made that clear to the Claimant from the outset. They had an initial budget of £300,000 for the renovation works which was later increased to £350,000.

The Claimant company was controlled by Michael Phillips as a vehicle for his architectural practice. He also had interests in a property development company originally registered on the 26^th September 2006 as MacManus Phillips Ltd. It changed its name on the 8^th August 2008 to Lowe E Life Ltd. Mr Phillips’ architectural practice occupied premises in Lymington which were shared on a sub-tenancy basis by Rimus Ltd, the building contractors ultimately engaged by the Defendants on Mr Phillips recommendation. Mr MacManus, the director of Rimus Ltd, was the joint director with Mr Phillips of Lowe E Life Ltd, their joint property development company.

Mr Phillips, as the landlord of Rimus Ltd during 2007 and 2008, and, in effect the business partner of Mr MacManus in the property development company, was in an excellent position to be aware of the financial stability of Rimus Ltd. They shared the same bookkeeper.

Michael Phillips Architects Ltd prior to June 2007 had been involved with Mr MacManus and Rimus Ltd in projects for Hotel DuVin. The involvement of Rimus Ltd was brought to a premature end. They contended that they were owed £405,000 by their mutual Employer. They had not paid any rent to their landlord Mr Michael Phillips from the commencement of their tenancy in 2007.

Rimus Ltd went into liquidation in July 2008 four months after they were appointed contractors for the St Mary’s Lodge project.

There was no formal written contract entered into by the Defendants and their contractor Rimus. A written contract was proposed and pressed for by the Defendants. Miss Claire Lapsley an assistant architect in the practice confirmed that the draft sent to the contractor was never signed and returned by them.

The terms of the engagement of the Claimant to perform architectural services are subject of dispute. The Second Defendant wrote on the 15^th June 2007 asking for “.. your scale of fees/terms of business…”

The Claimant contends that Mr Phillips handed to Mrs Riklin a letter dated the 29^th June 2007 containing the following terms:-

“With regard to our fees, bearing in mind that this is an existing building and Grade II listed as well, it is quite difficult to anticipate the exact scope of works that we will be required to undertake. No one knows what we will uncover at the strip out phase or, to what extent the local conservation lobby will intervene and cause additional works and/or delay.

Mrs Riklin a careful and truthful witness was adamant that she was not given this letter at the meeting she had with Mr Phillips on the 29^th June 2007 at which she was handed some preliminary sketches.

In later dealings between the parties there was no mention of such letter until dispute arose as to fees in the context of a dubious debt collection exercise and Mr Phillips was asked for a copy of his retainer by the Defendants’ solicitors on the 28^th May 2009.

On the 4^th June 2009 he replied:-

“For your information I advise that I have a full and intensively comprehensive file of documentation, including the confirmation letter to your client’s wife (who engaged my company on their joint behalf). I have no doubt that your immediate client has never seen this letter (as evidenced by your client and his wife’s perpetual and continued joint miscommunication throughout the entire history of their project which is completely recorded and commented on by me in my project dossier). I am not in any position nor, is my company required, to deliver this or any other document to you. You are able to get this and any other document directly from your client. They were delivered to him and his wife (our joint “co clients”) and recorded electronically or otherwise by my company with both dates and times of delivery.” (Emphasis Given)

On the 7^th July 2009 in injunction proceedings in the Southampton County Court Mr Phillips asserted in a sworn statement that:-

“I sent an email recording my instructions and there is an email in response from Mrs Riklin confirming that I should proceed with the work”.

No such emails have ever been produced.

Mr Phillips sworn accounts cannot be reconciled. Where his evidence is at variance with that of Mrs Riklin I prefer her evidence as being both truthful and reliable.

I am satisfied that the first time the letter of the 29^th June 2009 was produced was during complaint proceedings before the Architects Registration Board when Mr Phillips was defending himself against the allegation that he had failed to comply with item 11.1 of the Architects Code of Conduct which provides that:-

“11.1 Architects should not undertake professional work unless the terms of the contract have been recorded in writing as to:

It is possible the document was created at an earlier stage. I am satisfied however that no such document was handed to or transmitted to either of the Defendants.

By the time that Mr Phillips accepted instructions from the Defendants in relation to the renovation of St Mary’s Lodge his architectural business had undergone rapid expansion to deal with a number of hotel projects necessitating the engagement and deployment of large numbers of staff of varying abilities with inadequate supervision. In his evidence he described the degree of his daily supervision. I am satisfied that Mr Phillips’ supervision and involvement was superficial and minimal doubtless because of pressure of work.

Later in the project there was a sudden contraction of work caused by the Hotel DuVin organisation suspending work on proposed future projects. The Claimant’s staff left or were laid off and the Claimant’s ability to perform architectural services in a conscientious way was substantially compromised.

The architectural assistant principally concerned with the project was Miss Claire Lapsley who started in August 2007. An internal Philips’ document makes reference to serious delays in the project at that time. Miss Lapsley left her employment with the Claimant in early August 2008 because of stress caused by overwork. In addition to her involvement in the St Mary’s Lodge project she was overseeing work in Cumberland and in Brighton.

Rimus Ltd the contractor, having come on site in March 2008 went into administration in July 2008. The Defendants by this time had overpaid the contractor in excess of £80,000. The Claimant had not performed any cost control or certification duties. The Defendants attempted to complete the project and used alternative contractors and sub-contractors at a cost considerably over the budget anticipated at the outset namely £350,000 and well over the contract sum agreed with the contractor on the Claimants advice namely £383,091. The ultimate cost to the Defendants was £583,000. For such architectural services as were rendered by the Claimant to the Defendant, no invoice was presented to the Defendants until the 26^th May 2008 when an invoice for £147,387.04 was presented by email and on the 4^th June 2009 an invoice for interior design at £32,730.

The Claimant sought payment of £147,387 based on an hourly basis. This equates to approximately one third of the original agreed construction costs. No attempt was ever made by the Claimant to agree a percentage lump sum fee. On the 15^th May 2009 the Claimants instructed debt collectors ESPI Ltd to enforce payment of the late invoiced sum.

The company instructed used threatening and bullying conduct to bolster their demands for payment. Their conduct included making telephone calls to Mrs Riklin, the besetting of her homes, and family and menacing visits to the mooring where Mr Riklin kept his boat in Lymington which were recorded on CCTV cameras.

The Claimant knew of this behaviour because Mr. Phillips was informed by letter from the Defendants’ solicitors dated the 28^th May 2009 and knew of the involvement of the police;-

“those threats are of such a nature that we have advised our client to report the matter to the police”.

On the 3^rd June 2009 the Claimant was informed that the harassment was continuing.

On the 12^th June 2009 a corrosive liquid was poured over the First Defendant’s Maserati motor car causing damage to the extent of £15,400.65.

An Injunction was subsequently obtained in the Southampton County Court against Michael Phillips personally and the Claimant company from harassing the Defendants and their family and from coming within 50 metres of their properties both in London and Lymington.

The Claimant’s fee claim is no longer based on the timesheets. The claim is now for a reasonable fee limited to £94,430.21 plus VAT and interest. The architectural fee claim has a maximum value of £66,748 based on the Claimant’s expert evidence compared with the timesheet claim of £106,606. For the interior design element, £26,390 is claimed compared with the original timesheet based claim of £39,585.75.

The court must assess what is the reasonable value of the professional services provided by the Claimant. The necessity for the court to assess what is a reasonable fee for the services rendered by the Claimant in the light of the obligations he undertook arises out of the clear failure of the Claimant to comply with his professional obligation contained in item 11.1 of the Architects Code of Conduct of the Architects Registration Board.

It is now common ground that the services that the Claimant undertook to perform were those comprised in the full suite of services of the Royal Institute of British Architects. Both architect experts agree this to be the case.

Mr Riklin, from the outset, I am satisfied looked for a greater involvement of the Claimant company, wanting project management, in the sense of on site supervision of the contractor. Mr Phillips assured him of his intention to have a close personal involvement in the project and emphasised that the management capability of his professional staff was such that there was no need to engage an independent project manager.

The second issue is what is the proper approach to the assessment of a reasonable fee? Is it the mechanistic approach of Mr Fleming, the expert who gave evidence for the Claimant, whereby he looked at each stage and decided what point had been reached and the proportion of the duties performed and apportioned it, applying the “reasonable percentage rate” he said applied, irrespective as to how competently it was performed? Or is it the pragmatic approach of Mr Nathan Silver for the Defendants who looked at the value of the service in fact performed at each stage and valued it against “the reasonable percentage rate”?

Thirdly what was the “reasonable percentage rate?” Was it as contended for by Mr Fleming 12% plus a further 2% by reason of the project involving a listed building or a discounted amount reflecting the then market of 10% plus a 2% net mark up on account of the listed building element and then a further discount reflecting the diminished value of the services rendered as contended for by Mr. Silver?

Fourthly since both parties’ experts accept that the proper approach in assessing a reasonable fee would be to charge a percentage fee of the contract price, what is the proper contract price figure to be used? Is it as contended by the Claimant’s expert the sum representing the ultimate cost of the works despite the Claimant’s withdrawal from the project and the contractor’s withdrawal on account of going into liquidation or the original revised contract sum agreed between the Defendants and the contractors on the advice of the Claimants?

There are subsidiary matters arising out of such of the Claimant’s breaches of duty and neglect as may be proved and which can be set off against any such part of the fee claim that is allowable. These include overpayments to the original contractor, duplicated payments to get the job complete and the Claimant’s responsibility for damage to the First Defendant’s car done by his debt collecting agents.

The Fleming approach or the Silver approach?

There was not a 2002 edition but there is a 2000 and a 2004 edition. For some reason Mr Fleming uses the 2000 edition rather than that which was current in 2007, which would have been the later 2004 edition, where the front loading is somewhat less than that in the 2000 approach to the valuations of each stage of work.

It is clearly appropriate the scale that should be used in part, in the assessment of a lump sum fee, in this case, and any apportionment in relation to stages properly performed should be based upon the 2004 version.

One of the difficulties in applying Mr Fleming’s approach to the assessment of fees in this case is that any neglect to give sound and prudent advice or neglect to perform contract administration duties competently, can affect the value of each aspect of the services already rendered.

By way of example such as proceeding without a written contract; or by failing to make prudent enquiry to a contractors financial status; or by failing to monitor the works or certify payments to the contractor; or by failing to consider budgetary constraints; or by failing to properly instruct or supervise the contractor to ensure that listed buildings regulations were adhered to.

Any such failures may substantially affect the value of all the stages as well as causing further consequential loss of damage.

Mr Fleming seemed to tick the RIBA stage boxes reached wholly in part and attributed a scale value to them and only then went on to consider any consequential loss flowing from ineptly rendered services when considering items of claims set off.

Some breaches of course are not reflected in the counterclaim sought to be set off. Nonetheless they clearly would affect the value of the services and stages in fact charged for and would graphically demonstrate how the architect performed his duties.

Of course care must be taken in relation to any proven breaches to ensure that there is no element of double recovery; but there is a proper distinction to be drawn between the valuation of the services partly and negligently performed and the consequential loss or damage that they may cause.

Mr Silver on the other hand was prepared to look at the total value of the services rendered by reference to the RIBA stages and guidance and then considered each stage individually, as well as part of the whole, since a breach in relation to an architect’s duty in respect of one stage or part may affect the value of the other stages and thus the total value of the services rendered.

Mr Fleming accepted that Mr Silver’s approach to ‘reasonable valuation’ was a legitimate one. In my judgment it is appropriate and just in this case, in which the Claimant from the outset sadly ignored their obligations to their clients.

The Defendants wanted a full professional service and would not have accepted the appointment of an architect on any other basis.

This is the traditional architectural service described by Mr Silver:-

“…In shouldering full service functions an architect’s work has to include, in any way that is reasonable and efficient; preparing the drawings, specification and other terms of the building contract and arranging signatures; administering the building contract during work on site; visiting the site at intervals to inspect the progress and quality of work; certifying payment to the contractor and sub-contractors when he is satisfied; making periodic financial reports to the client including any cost variation. (This is not an exhaustive list). It is incumbent on an architect to make clear, particularly with an inexperienced client, that in order for the architect to remain responsible control all work instructions have to be channelled through him, and no payments to contractors are to be made without his written certifications which will designate precise payment amounts”.

In this case the Claimant:-

“… didn’t perform one of the most essential parts of an architects services; the valuation of the works and the certification of payments. The payment certification process is the main means by which architects monitor builder’s progress. Through it the architect keeps abreast of work, controls construction expenditure and is able to designate and protect tranches of payment that are to be handed down to subcontractors. In use, the standard form of architect certificates makes those things clear and easy, and provides effective feedback to the client about the budget of progress. As the Riklins were inexperienced clients (the Claimant) owed them an extra duty of care on job progress and payments, they were never advised by MPA not to pay any builders unless an architect’s certificate had been issued”.

The contractor sought payment from the Defendants directly. The Claimant was in the same office as the contractors and was copied in to each application for payment. I am satisfied the Claimant was aware of and party to this practice. The evidence shows that on the contract price agreed with the contractor there was in fact an overpayment in excess of £80,000. Mr Silver expressed the view which I accept:-

“the result of MPA's failure to provide certification of payments was to put themselves outside a position of effective cost control. I consider this avoidance of responsibility and control by MPA to be troubling, and in this instance my professional opinion can fairly be brought into play. In my view no reasonably competent architect providing the traditional architect service ought to leave his client to fend for themselves in valuation and the certification of payments. It is a prime consideration in my downgrading the value of their services when I have considered a reasonable fee in section 10 of this report.

The Defendants were not people who were indecisive or prone to change their mind. They strike me as people who knew what they wanted in design terms from the beginning and in a focused way sought to achieve that by the Spring of 2008. There is no evidence that the Defendants were over demanding clients who could not agree matters between themselves and then caused disproportionate amounts of time to achieving instructions and in administering the contract. Their email correspondence geared to a weekly conference call demonstrates that the Claimant’s allegations that they… “engaged in perpetual and continual joint miscommunication” are wholly without foundation.

The Defendants’ requirements that the building work be completed by late spring of 2008 was frustrated by the insolvency of the principal contractor Rimus Ltd.

I do not accept that Michael Phillips was unaware of the financial position of Rimus Ltd when he endorsed the choice of Rimus Ltd as the appropriate contractor. I am satisfied that Mr Phillips knew full well the precarious financial status of Rimus Ltd and was reckless in endorsing the choice of Rimus and failed to warn the Defendants thereby exposing them to the risk of what transpired.

Mr Silver says:-

“… However I can say that the first principle of an architect’s duty of care is to protect his client from risk. No reasonably competent architect should recommend a contractor that he knows has financial difficulties without warning his client about it, making sure that works are not paid for in advance, and advising about forms of protection such as performance.”

Mr Fleming on behalf of the Claimant accepted paragraph 17.43 of his report:-

“In the absence of a formal contract, MPAL did not have the sort of normal tools and mechanisms to hand, to properly administer the job. This appears to me to be a failing on the part of MPAL in that they should either insisted on having a contract, or advised the client and builder on alternative forms of contract for procuring the works if the JCT was not forthcoming despite being the basis of tenders.”

There is an unsavoury aspect to the Claimants pleaded case asserting that the Defendants declined to sign any formal contracts upon which the RIBA scale of fees could be calculated. That clearly is false and was clearly known to be so by Mr Phillips when the statement of truth was sworn. The key matters were agreed by late April of 2008 in so far as the Employers were named LADs had been agreed, the contract price had been agreed in the sum of £383,911 based upon Rimus Ltd’s revised tender.

By his letter of the 18^th March 2008, Mr Phillips acknowledged that there was no contract in place, pending a formal contract document he promised to provide a letter of intent:-

“The letter of intent which I will draft will be based on the agreement reached two weeks ago and thus serve as the precursor to a formal contract. Much better then, if a formal contract takes all the current site discoveries into account, we then don’t have to worry about revisiting this at a later date with all the time, expense and issues and extras this could throw up”.

No letter of intent was ever produced. Miss Lapsley in her evidence confirmed the draft JCT contract was never signed and returned by the contractor.

Had the Riklins known of the precarious financial status of Rimus Ltd and Mr Phillips’ financial involvement with the directors of Rimus another contractor may well have been sought and appointed, which could have caused delay in the commencement and completion of the project. Mr Phillips’ endorsement of Rimus Ltd and failure to ensure a proper administrative structure for the project including certification, had the direct consequence of the Claimant knowingly or recklessly permitting overpayment in excess of £80,000 before the principal contractor became insolvent.

As to the first issue of the proper approach to assessing a reasonable fee I prefer the evidence of Mr Silver.

The bulk of the work was in relation to the more modern part of the house. While the interface of the Georgian part and the terrace are important, nonetheless in my judgment the starting point should be a competitive 10% of construction costs plus a mark up of another 2% for the historic building element.

As for the second issue, I am satisfied that the failure to properly administer the project by providing the contractual tools to manage risk and to monitor and control costs and the failures to ensure compliance with building regulations and listed building consent, reduced not only the value of the administration elements but also serve to reduce the value of the earlier design elements to the client by reason of the delay, the excessive costs and subsequent adjustment to design to achieve planning consent and listed building compliance and pursuit of appeals.

Mr Silver’s approach is what he terms the “Gestalt” approach and in so doing he tests the individual elements represented by the RIBA stages against the value of the whole. Normally of course the individual elements of an architect’s full service of accepted design, control of instruction and certification of payment work together as a Gestalt to achieve a full professional result far greater than the sum of parts, that result is reflected in the value of the whole. In this case I am satisfied the Claimant did not provide a normal full service and failed to clarify the limits of responsibility being taken by failing to certify payments and failing to inspect the work in conjunction with assessment to workmanship and progress. Such lack of integration led to the destruction of the value built up in the projects early stages namely the design, by the defaults in the later stages and the lack of control and cost certification.

Mr Silver considered that a fee reduction of 25% overall was justified, indicating that a fee of no more than 9% was earned according to the RIBA’s notional fee graph and its criteria. He then went on to posit that a further reduction to be made for the failure to complete work stages K and L. He assessed that the failures to complete work stages K and L represented 18% tranche of the normal full service thus the 9% should be reduced to 7.38%.

Mr Fleming’s approach was that the appropriate fee should have been 12.88% for works to a listed building for a partial service where omitted was the whole of stage L and 35% of stage K.

I have had the benefit of seeing the detailed plans and photographs of the work at St Mary’s Lodge. I am mindful of what Mr Silver says in his report:-

“The architectural renovation carried out at St Marys Lodge by MPA has some design merit and historical sensitivity.”

I agree with that. Sadly the process by which it was achieved was long and painful for the Defendants because of the abdication by the Claimant of its professional duties to its client, save in relation to the original design.

I accept Mr Silver’s evidence as to the degree of completion of stages K and L and the quality of that work. I accept that in the market there would have been a reduction of the lump sum to 10% of the construction costs executed under the supervision and design of the architect and a 2% uplift for the historical works.

In my judgment the overall reduction of 25% from 12% is appropriate applying the Gestalt approach and taking into account the non performance and part completion of the later stages. The proper figure in my judgment is that an overall percentage of 9% is the reasonable fee percentage for the Claimant’s architectural services.

RIBA guidance says that a fee percentage is to be applied to the final construction cost “executed under the architect’s direction”.

The experts’ views differ markedly as to the basis of calculation.

Mr. Silver says it should be based on the £383,911 revised Rimus Ltd contract price advised by Mr. Phillips or arguably the £405,942 figure paid to Rimus when they left the site. Otherwise the Claimant would be rewarded for overspend.

There can be no justification for charging a fee percentage on money spent after the Claimant abandoned the project and the builder went bankrupt save where the Claimant can demonstrate that the increase in cost of works was a cost of construction that was part of the original project or caused by a bona fide increase in scope executed under Claimant’s direction.

Mr Fleming asserts that the base cost is within the range of £405,942, the sum actually paid to Rimus and £425,942 a draft final account figure. Mr Fleming’s reference to the later figure is based on the misconception that a “drop hands deal” was done between Rimus and the Defendants. He wished to add in further sums, namely the kitchen costs, and a sum of £43,000.

The cost of the kitchen should not be included in the final cost since it was designed by an independent kitchen designer arranged by Mrs. Riklin. An e-mail from Mr. Phillips to a member of his staff properly acknowledges this:-

“Forget the kitchen Susie (Mrs Riklin) has a specialist working on this…”

In no way was it part of the final construction executed under the architect’s direction. Whilst the kitchen shell was the subject of some alteration to accommodate a newly designed staircase the cost of that is encompassed within the design fee element. I reject Mr. Fleming’s view that conventionally such an expenditure would be part of the construction cost on which the percentage fee is based.

I prefer the evidence of Mr. Silver that where there is no architect’s input there should be no architect’s benefit.

The Claimant now accepts that there should be no extra fee for landscaping originally part of the time based claim, and accepts that such service is included in the overall architectural full service. Landscaping costs increased from the original p.c. sums of £3,800, and £7,700 to an overall overspend of £37,400.

After Rimus left the site the overspend includes £17,500 of landscaping costs which Mr. Fleming wishes to add back into the base construction cost in the amount of £12,500. It is argued that this is not justified because it compensates the Claimant for its inefficiency by failing to provide a complete and costed design at the outset resulting in an uncontrolled overspend.

Some additional work was done, as Mr. Silver recognised. It would be appropriate, doing the best one can to hold that an additional £1500 fee is due.

I base that figure on Mr Fleming’s assessment.

Mr. Fleming also wished to increase the base construction cost by £43,000 for items “which were subject to further evidence but which on the face of it were probably for construction items”.

This conjecture was not substantiated. These matters are not proved. There should be no uplift. Mr. Fleming optimistically was seeking to give benefit to the Claimant without any evidential basis.

In my judgment the construction cost base for assessing the fee in this case should be £405,451.

There is a risk that Rimus, who were in a parlous financial state and who had presented applications to the Defendants resulting in over payments and duplicated costs of £81,405 had exaggerated the final draft figure, on the other hand the Defendants agreed to pay £405,451, not insisting on the revised figure of £383,911.

The pleaded claim was for £39,586 based upon the time sheets for Emma Edwards between January and July 2008. She was the interior designer employed by the Claimant. She had been qualified for 18 months and was engaged as a CAD architectural assistant.

It is accepted by the Claimant that much of the service provided by Emma Edwards at the relevant period would be comprised within a normal architectural service.

It is accepted that Emma Edwards’ design services falling within the scope of the fee for normal architectural work would include at least the specifying of straight forward decorative finishing, ironmongery, standard fittings, electrical layouts, standard joinery details, colour schemes and sanitary wares.

Mr Fleming on behalf of the Claimant identified two aspects of Emma Edwards’ work that he said took it outside that included in a normal full architectural service. These were he said detailed drawings, bespoke fittings and a degree of development of the client proposal. The drawings were more detailed than he would expect an architect to produce and there was he said, a lot of client communication.

The difficulty is that he has not identified any such drawings or analysed any drawings to show development attracting extra charge. It is right that certain drawings are of a larger scale than an architect might be expected to produce. However this is equally consistent with an inexperienced interior designer carrying out architectural duties for which she had never been trained.

There is no evidence that the Defendants were advised that the provision of interior design would be charged in addition to architectural services. Putting the Claimant’s case at its highest, had the letter of the 29^th June 2007 been delivered, it does not say that there would be charges for interior design matters and there are no hourly rates listed for an interior designer.

I am satisfied that in November 2007 Mrs Riklin asked the Claimant whether there was somebody who could help with the design side of things. She specifically asked whether those items fell within the architectural services already to be performed by the Claimant. In response Claire Lapsley said that the Claimant could draw up the built in storage etc, but that Mrs Riklin would be the best person to design soft furnishings as these would be done to personal preference.

This advice is consistent with the Claimant agreeing to perform those parts of Mrs Riklin’s request that an architect would normally perform as part of its full service and the drawings of Emma Edwards show that she provided drawings of matters normally covered by an architect’s full service. In the email discussion that Mrs Riklin had with Miss Lapsley she was never advised that she would be charged any extra interior design fee or told if that were the case what it would be.

The evidence of Mr Silver the Defendant’s expert:-

Emma Edwards was dismissed from the client’s employment as being unreliable. She was certainly inexperienced. Mr Phillips characterised the state of finish of matters for which she was responsible to inspect and instruct the contractors as being “truly diabolical”.

After Emma Edwards finished employment with the client she did in fact do some interior design work for Mrs Riklin and was paid for this separately.

I am satisfied that Emma Edwards did some interior design work whilst in the employment of the Claimant going beyond that normally comprehended in the full architectural services. I estimate the value of these to be £2,500. This is a house that had no unusual curtains, wall coverings or blinds.

I reject the £20,000 guesstimate of Mr Fleming. It has no evidential basis. The proof is on the Claimant to show what work was done and what should be chargeable. The Claimant has singularly failed to prove its case by producing examples of drawings which clearly refer to interior design or by giving any sensible analysis of drawings showing such interior design elements, which are not comprehended in the full architectural service.

I accept the evidence from Mr Silver based upon his careful analysis and his site examination. The claim for interior design services was grossly exaggerated and had no sound evidential basis.

The Claimant designed the works for the project to include a wood burning fire but failed to include a chimney in the design. In consequence no planning permission was applied for in respect of the necessary chimney. The construction work involved in the installation of the fire and a steel flue was worthless in the absence of a chimney into which it could discharge. I am satisfied that the wasted cost of this works caused by clear breach of duty by the Claimant is £4,000.

The listed buildings officer made it clear to Miss Claire Lapsley that the Georgian architraves should be left. The builders ripped them out in breach of both planning and listed building approval. They had to be refabricated and reinstated at a cost I am satisfied of £9,177. Miss Lapsley in evidence accepted that she neglected to make a proper note of these requirements and pass it on to the builders. In a project where a historic building uplift is sought it is blindingly obvious that the duty of care would include the architect clearly ensuring by instruction what could and should not be touched by the contractor.

This clear want of care was a breach of the architect’s duty to ensure that planning and listed building consents were rigorously adhered to. The cost consequences would have been obvious to a prudent architect. It is to be noted that Mr Phillips in his evidence when cross examined characterised such interference as “a desecration”. The refabrication and reinstatement of such items is sadly an expensive matter. It is some measure of the lack of supervision given to Emma Edwards that skirtings were permitted to be removed on her instruction in the historically sensitive part of the building.

The builders removed the nosing of the Georgian stair boards without obtaining any listed building consent for the work. The nosings had to be refabricated and refixed at a cost of £3,000. Mr Fleming in his cross examination made reference to the fact that the Claimant on site did not think that the removal of the stair nosings was justified even though they went on to justify it to the planners for the purposes of defending the builder. Mr Fleming was constrained to accept that the cutting off of the nosings was unjustified and that there was a failure of due skill and care. It connotes an absence of supervision. It is a clear breach. I am satisfied that the proper costs allowable for this item are £3,000.

The Claimant failed as they were instructed to source and supply pre-stained oak floorboards. Instead the Claimant purchased unstained floorboards at twice the originally estimated cost and which had to be stained on site and were unevenly finished. The total additional cost in my judgment is made out in the sum of £6,575. I have considered carefully the long and complicated chain of documentary evidence relied upon by the Claimant. It does not serve to exculpate the Claimant. It serves to underline how they failed to get a grip on the project and to control procurement and expenditure. Miss Emma Edwards was largely responsible for the earlier procurement exercise and it is some measure of her incompetence.

It is alleged that the Claimant failed to take into account the size of the central heating system and in consequence the room had to be redesigned and partially rebuilt at an estimated additional cost of £3,000.

It was clear that the change of the boiler from a party wall to an outside wall was not only sensible but the obvious solution since it avoided a long run of flue and venting to an outside wall. Had it been provisionally shown in the redesign of the room, an alteration would have not been necessary. I am satisfied that this was caused by the neglect of the architect to take proper care and the additional cost of £3,000 is made out and is recoverable

It is evident that in the rush to get work done the poor workmanship on the roofs went unheeded and the Defendants were not advised in a firm and timely way so that the defects could be remedied by those who originally carried out the work.

Mr Fleming questioned whether there was sufficient build up to warrant quantifying the claim to the sum of £3,000. There are invoices totalling £5,534 broken down for scaffolding, labour and materials. I am satisfied upon hearing the evidence that this claim is made out.

It is alleged that the Claimant’s interior designer Emma Edwards ordered the wrong colour tiles for tiling the bathrooms and when they were delivered they could not be returned because the tiling company had subsequently gone out of business. New tiles had to be sourced by the Defendants and delay was caused to the project and further costs. The new tiles were installed not by professional tilers but by the project builder’s assistants. A third set of tiles had to be ordered again at the Defendants’ cost. I have considered the evidence of both Mr Fleming and Mr Silver and I am not satisfied that the quantum of this claim is made out. I award a nominal £250 under this head.

Miss Claire Lapsley advised and prepared plans which showed that the fixtures for securing the glass balustrade for the terrace and top floor balcony were to be attached on the outside of the balustrades walling. Building regulations required that the glass had to be chased into the brick. The method of attachment that she instructed and which were followed by the contractor, necessitated replacement of glass, and adjustment of the wall to which they were attached and new fixings which complied with regulations for fixing toughened glass. Toughened glass, of course cannot be drilled or cut on site. I am satisfied that in relation to the glass balustrade cost the claim of £1,932 is made out and in relation to the adjustment of the parapet wall the sum of £3,777.

A substantial window bay and balcony was extended by the builder to create space for handrails to an interior staircase. No planning permission or listed building consent for this work was obtained. It became necessary therefore to apply for retrospective planning permission in July 2008. That was refused by the planning authority in December 2008.

A spiral wine cellar was also installed without the necessary planning permission or listed building consent, it became necessary to apply for retrospective planning permission in July 2008 which was refused by them in December 2008.

Mr Michael Phillips promised that he would represent the Defendant at the hearing for retrospective planning permission. He failed to attend the hearing and failed to give the Defendants any prior notice of his non-attendance. In consequence the Defendant’s applications for retrospective planning permission were dismissed and the Defendants had to appeal at a cost of £5,192.26. I heard Mr Phillips explain why he did not appear. He says that he went to the hearings afterwards in order to learn of the result, and accepts he refused to assist the Defendants with the preparation of the appeal for the retrospective planning appeal decision. He wrongfully blamed Mrs Riklin for his neglect because she cautioned him not to be confrontational. I reject his explanation for non attendance. His lack of professionalism and lack of application may reflect the fact that his business was “imploding” as he described it and that his resolve was weakened by his admitted dependence upon alcohol.

I am satisfied that they needed to be modified in order to get the planning approval. The cause was the breach by the Claimant in the first instance, I am satisfied the modification costs of £3,514 are properly recoverable.

The Claimant was clearly desperate for money. His business had imploded according to him. He said that Hotel DuVin owed him substantial sums of money. He used ESPI Ltd to collect that debt. He accepted in evidence that some intimidation was used. In relation to the Defendants, some measure of his desperation is evident, in that he had not rendered any account or invoice when he deployed ESPI Ltd again to collect monies from the Defendants. He knew that they had engaged a heavy weight employee built and looking like a boxer according to his description, to assist in the enforcement procedure of this and one other “debt”. He met Mr Mann of ESPI Ltd and his newly engaged employee Paul and learnt that Paul was to assist in the enforcement procedure and would be responsible for personal approaches to the Defendants “because ESPI Ltd could not cope with the collection of two debts at once”.

The Claimant’s agents in this so called debt collecting exercise from start to finish did not engage in any correspondence with the Defendants or their legal advisors.

The Claimant’s agents thereafter engaged in a campaign of harassment involving threatening telephone calls to Mrs Riklin on the 18^th May demanding payment of £128,000:- “he owes and he better pay”. When told it was a matter to be dealt with by the lawyers the caller emphasised that “it would not be a good idea and they’d better pay”.

A number of visits were made by four individuals who banged on the door of the Defendants’ home in London accompanied by shouting that ‘the Defendant would pay the debt’. The same individuals followed the Defendants’ children and were filmed at the Lymington Marina trying to gain access to the Defendants’ boat.

Michael Phillips for the first time by email rendered an invoice saying that ESPI Ltd would now have the sole responsibility to collect the debt.

In so far as that implied that the debt had been sold on, Mr Phillips now confirms that was not true. In so far as it implies that ESPI Ltd could collect the money claimed in such manner as they sought fit that appears to be the extent of the authority Mr Phillips invested them with.

On the 28^th May 2009 Mr Phillips was notified that his agents were in fact harassing the Defendants by intimidating threats. The Defendants’ solicitors wrote:-

“We understand that either you may have instructed debt collectors to attempt to recover monies from our clients, or otherwise you have assigned or factored any alleged right to recover monies from our client to a third party. Please provide their details. Our client has been contacted both in Lymington and in London by that third party and various threats have been made against our client and his family in an attempt to recover monies from our client. Those threats are of such a nature that we have advised our client to report the matter to the police for investigation.”

Mr Phillips reaction was to contact ESPI Ltd merely asking for comments on the letter he enclosed. He said in evidence that he was reassured by Mr Mann that they had done nothing illegal at that stage. There is no evidence of any words of stricture or caution as to conduct, although in evidence Mr Phillips accepted that by then he knew that police involvement was proposed and that that denoted suspected criminal activity.

“I must confess at the time I was very concerned to think anyone should be acting illegally on my behalf, and I didn’t want to commit anything to paper that would incriminate me (day 1 page 20 line 12).”

Mr Phillips when cross examined accepted that the obvious thing to do would have been to terminate the agency of ESPI immediately.

He chose not to. The message he gave to ESPI was clear. He was not imposing any limit upon their discretion as to how they collected his debt.

Question

“And you felt reassured by the fact the matter had been referred to the police? Why did you not at that stage when he phoned you say “cut this agency agreement; this matter has gone too far?”

Answer

“Because I did want to collect the debt, but I also was, I am going to use the word, reassured that they had not done anything to break the law”.

Question

“Police do not get involved unless there’s a suspected criminal activity Mr Phillips, they are not a social working outfit that come round and help people with their problems they get involved when there is criminal activity”.

Answer

“I am aware of that, Miss Rawley and I felt that when they had investigated the matter that the cessation of collection services if they were breaking the law would be taken out of my hands”.

Clearly had he chosen to do so Mr Phillips could have brought the intimidation to a swift end, he chose to let the enforcement process continue.

Mr Phillips was given a second opportunity to intervene and call a halt to the activities at ESPI Ltd. On 3^rd June 2009 the Defendants’ solicitors again wrote stating that the debt collectors’ harassment was continuing and was in the hands of the police. The Claimant was warned that the Defendants would apply for an injunction to restrain the Claimant from harassing the Defendants.

Mr Phillips’ response was uncompromising. He wrote:-

“Your letters of 28^th May and today received in this office by facsimile, prevail. This company has nothing whatsoever to reply to you about. We have both advised and warned your client of our likely actions if he maintains his stance as verbally presented to me in front of a witness when we met in his second home in Lymington, which we designed and then coordinate the construction, in good faith.

My emails to your clients are test to this and the collection process now initiated has absolutely no chance of recall. I have sold the debt from your client to my company to another and I have no further comment to make to you in this regard. You may take any other action that you or your client desires… This matter now rests with a registered debt collection agency, as warned by me in my email to your client on 10^th March and any further communications should be with them. You are at liberty to ascertain just who they are by any and or means at your disposal, my company will not be delivering this or any information to you from this point forward.”

He reiterated the untruth that he had sold the debt. He makes it clear that he chose not to intervene or to assist others to intervene to protect the Defendants from his agent’s conduct whom he refused to name.

Mr Phillips given the second opportunity chose not to “call off the dogs”.

On 12^th June 2009 acid or a corrosive material was poured over Mr Riklin’s Maserati motor car causing damage to the tune of £15,465.98. Mr Riklin received a telephone call subsequently at 9.30am on the 13^th June 2009 from a man saying:-

“Are you going to pay Michael Phillips now? You will pay.”

In cross examination Mr Phillips accepted that he could and should have stopped this from happening and that it was evident that he had put in train events controlled by people who he suspected did not care what conduct they engaged in and that he suspected that this was the sort of activity they might engage in.

The offence against property was clearly a species of harassment and intimidation. That ESPI were using harassment and intimidation to enforce collection of Phillips’ money was known by the Claimant from the outset in all likelihood and certainly by the 28^th May 2009.

Michael Phillips wilfully closed his eyes to the conduct of his agents once having set the process in motion and without any fetter on their discretion being imposed at any stage.

An injunction was obtained by the Defendants in Southampton County Court against Michael Phillips and the Claimant company restraining them from harassing the Defendants and their family and from coming within 50 metres of their properties in London and in Lymington.

It is clear that vicarious liability can attach to the tort of harassment even if the principal was not aware of the harassment see Majrverskiv Guys v St Thomas NHS Trust (2006) UKHL34.

In this case the Claimants Michael Phillips knew that harassment was taking place although there was no evidence that he had prior knowledge of the particular species of harassment to be employed.

ESPI Ltd was the agent of the Claimant for the purpose of taking steps to recover money from the Defendants howsoever. Plainly it was left to their judgment as to how this should be done. Their harassment of the Defendants was part and parcel of their attempts to do just that. Accordingly I find that this harassment, including the damage to the motor car was within the scope of his authority. The Claimant is vicariously liable for their tort.

There is no dispute that the extent of the damage and remedial works amount to £15,465.98 and that the damage was caused by Michael Phillips’ agents. There is clearly an equitable set off arising inseparably connected with the dealings or transactions which give rise to the subject of the claim.

The Claimant is entitled to recover the following fees

The Defendants are entitled to recover from the Claimant the following sums in respect of their counterclaim