Fees - Construction Contracts - page 133

78 Can the architect who is owed fees also recover
the cost of management time chasing payment?
Getting paid is a problem in the construction industry. It is quite common for architects and
others to send reminder after reminder and even have to convene meetings in order to get
paid. Even before such a dispute gets to court, the architect often incurs substantial costs
chasing payment. The Late Payment of Commercial Debts (Interest) Act 1998 provides for
one-offlumpsumpaymentsinadditiontointeresttoassisttowardsthecostsinvolved,butin
most cases the payment (a maximum of £100 for invoices in excess of £10,000) is nowhere
near the actual cost. Many architects simply write off small debts because it is not worth the
cost of chasing them.
Whether the cost of chasing invoices can be claimed has been addressed by the courts.
In Clancy Consulting Ltd v Derwent Holdings Ltd; Anglo International Holdings Ltd; Mar-
down Ltd; Cashtal Properties Ltd; Mount Murray Country Club Ltd; Cashtal Developments
Ltd , 5 the defendants were separate companies which were controlled by a common trust. I
will refer to them collectively as 'Derwent'. Instructions were given by Derwent's agent,
Kingsley Fereday Management Ltd (KFM). Clancy provided mechanical and engineering
services and was to be remunerated in accordance with various contracts. A monthly cer-
tification process was involved in which KFM did the certifying. It was said that the pay-
ment terms of the contracts were that Clancy would be remunerated from time to time on an
hourly rate basis, being the rates in force at Clancy, unless and until a further lump sum fee
was agreed with KFM, and that Clancy should invoice for their own costs on a time charge
basisuntilaformalfeeagreementhadbeenenteredintoinrelationtotheschemeasawhole.
Clancy claimed three amounts:

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•
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£329,525 plus VAT in respect of sums certified by KFM but not paid by Derwent;
£68,565 plus VAT in respect of sums not certified by KFM and not paid by Derwent;
£37,242 in respect of management fees as damages incurred in chasing payment.

The defence served by Derwent was categorised by the court as being unsatisfactory, con-
sisting of bare denials. The court held that Clancy was entitled to be paid the amount certi-
fied. There was no basis for any defence. So far as the uncertified amount was concerned,
Derwent had not objected at any time or in any document to the hours claimed. They had
never said that they were excessive, and they could not subsequently argue to the contrary.
Likewise, they had never complained about the rates, nor had they put forward an altern-
ative rate or said why Clancy's rates were unreasonable. Therefore, Clancy was entitled to
payment of the uncertified sum also. Derwent tried to argue that Clancy could not be paid