Chapman v NSW Architects Registration Board
[2013] NSWADT 120
•30 May 2013
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Chapman v NSW Architects Registration Board [2013] NSWADT 120 Hearing dates: 6 March 2013 Decision date: 30 May 2013 Jurisdiction: General Division Before: M Chesterman, Deputy President
J Jose, Non-judicial Member
P O'Carrigan, Non-judicial MemberDecision: 1. The Respondent's decision that the Applicant was guilty of unsatisfactory professional conduct is affirmed.
2. The Respondent's order that the Applicant be reprimanded and that she report to the Respondent on certain specified matters is set aside and the following order substituted: 'The Applicant is cautioned.'
Catchwords: Architect - unsatisfactory professional conduct - failure to advise clients of increase in cost of building project Legislation Cited: Administrative Decisions Tribunal Act 1997
Architects Act 2003
Architects Regulation 2004
Environmental Planning and Assessment Act 1979Cases Cited: Building Professionals Board v Boulle [2008] NSWADT 80 Category: Principal judgment Parties: Annabelle Chapman (Applicant)
NSW Architects Registration Board (Respondent)Representation: P A Horvath (Applicant)
P Griffin (Respondent)
Colin Biggers & Paisley (Applicant)
File Number(s): 123236 Publication restriction: Publication of all of the bundle of documents comprising Exhibit 2 in these proceedings is prohibited, except for the emails sent by Emile Jansen dated 20 and 22 October 2012.
reasons for decision
Introduction
By an Application filed on 21 August 2012, the Applicant, Annabelle Chapman, sought review by the Tribunal of a decision of the Respondent, the NSW Architects Registration Board ('the Board') made on 19 July 2012.
In that decision, the Board found that Ms Chapman, who is a registered architect, had been guilty of unsatisfactory professional conduct. In the exercise of powers conferred on it by section 43(4) of the Architects Act 2003 ('the Act'), it ordered that she be reprimanded and that within thirty days of its decision she should report to it on certain specified matters relating to her practice as an architect.
The Application filed by Ms Chapman (hereafter 'the Architect') is made under section 44 of the Act. It was heard before us on 6 March 2013. Ms Horvath of counsel appeared for the Architect and Mr Griffin of counsel for the Board.
The evidence tendered by the Architect comprised a statement by her dated 30 October 2012; an undated statement by Ian Thomas, a licensed builder; and an expert report by Emile Jansen, a registered architect and licensed builder. These three witnesses gave oral evidence and were cross-examined. The only evidence tendered by the Board was its folder of relevant documents, which it had filed pursuant to section 58 of the ADT Act, and two emails sent by Mr Jansen on 20 and 22 October 2012 respectively.
Written submissions on behalf of both parties were filed in advance of the hearing.
Outline of facts
These proceedings derive from a complaint ('the Complaint') made against the Architect by Rainer and Greta Hug ('the Clients') and received by the Board on 24 August 2010.
At about 8 a.m. on 22 September 2009, the Architect met the Clients for the first time. They gave her a detailed description of the project on which they wished to retain her ('the Project'), involving alterations and additions to their residence in Roseville. Her summaries of the requested alterations and additions, contained in her notes of that meeting and an account of it given in a letter to the Board dated 21 October 2010, included the following items:-
(a) Create a 'new kitchen/dining/living area'.
(b) Construct a new rear deck, with both covered and uncovered areas, with the latter including a swimming pool.
(c) Construct steps from the new deck to the yard
(d) Turn existing garage into rumpus room.
She also indicated in her notes that a diagram of a sewer line, situated close to the house, should be obtained from Sydney Water.
The Architect recorded in her notes of this meeting that the Clients' budget was '$250k-$300k'. According to the Complaint, however, the Clients stipulated a budget of $250,000.
At a second meeting with the Clients on 30 September 2009, the Architect gave them plans that she described as her 'first set of schematic drawings'. These drawings ('the first plans') formed part of the evidence put before us. They did not indicate the alignment of the sewer.
At the hearing, the Architect testified that the first plans were based on a budget within the range $250,000 - $300,000 (exclusive of fees and charges). She said that the basis for both this estimate and a later estimate that she made of the cost of the Project was a rate of $2,750 per square metre. She believed that a rate of between $2,500 and $3,000, being in line with rates suggested in a 'Valuation of Works - Estimate Sheet' issued by the Council, produced a reasonably reliable result for operations like the Project.
Mr Jansen also expressed the opinion that the alterations and extensions depicted in the first plans could be implemented within the same budget. Adopting his own template and values, he provided his own opinion as to the probable costs of the different items involved. The total of these estimated costs stated in his report was $272,650.
During their meeting on 30 September 2009, the Architect and the Clients signed a Client and Architect Agreement ('the Agreement'), which the Architect had prepared on the letterhead of her firm. The Agreement stated that the budget for the Project was $250,000. It also included the following provisions:-
1.0 Responsibilities and entitlements of the architect
The Architect:
1.1 Shall provide, where appropriate, indications of the cost of the project which are not a guarantee of the actual cost, a quotation or a tender...
1.7 Shall inform the client promptly when an instruction from the client changes the original brief and requires additional services.
1.8 Shall provide the client with an estimate of the fees for the additional services which may be required.
3.0 The Services...
The architect will provide the following services at each stage of the project...
3.3 Detailed design...
Review the final design against the budget and obtain preliminary opinion of probable cost from a builder or quantity surveyor'.
During cross-examination, the Architect said that during discussions at that time with the Clients the budget was understood to be within the range $250,000 - $300,000. When asked why the Agreement stipulated $250,000 only, she gave the following reasons: (a) this accorded with a request put to her at the time by the Clients; (b) they realised, however, that the cost might turn out to be higher; and (c) they did not say that $250,000 was an absolute upper limit.
In answering a further question, the Architect acknowledged that her failure to alter the budget stated in the Agreement to $250,000 - $300,000 had the potential to mislead the Clients and that they were entitled to assume that the agreed budget was $250,000 only. She said also that at the time she believed that the work could be done for this amount.
At this meeting between the Architect and the Clients on 30 September 2009, the Clients requested her to prepare further plans incorporating a number of changes to the first plans. According to summaries contained in her affidavit and in an annexed Chronology, the most significant of these changes were as follows:-
(a) Increase the size of the living room, adding a fireplace.
(b) Increase the size of the kitchen, adding a 'highlight window'.
(c) Increase the area of the rear deck, the area of the covered part of the deck and the width of the steps leading from the deck to the garden.
(d) Divide the rumpus room, creating a gym and a playroom in which toys could be stored.
(e) Create a separate laundry.
On 1 October 2009, the Architect sent to the Clients a set of revised schematic drawings, together with a covering letter. The five changes that we have just outlined were incorporated into them. The drawings, but not the letter, formed part of the evidence put before us.
The Chronology prepared by the Architect also listed a number of communications between her and the Clients during October and November 2009 (for example, an email from the Clients to her on 19 October 'in relation to deck width'). The evidence before us did not include copies of any of these emails or any further indication as to their content.
On 27 October 2009, the Architect sent a tax invoice to the Clients for services including 'preparation of sketch plans as per your brief dated 30 September 2009'. The invoice contained a statement that the budget for the Project was $250,000.
In further versions of the schematic drawings dated 4 November and 13 November 2009, there were further extensions to the width of the rear deck, in response to requests by the Clients.
Following discussions during November 2009 with a hydraulic engineer employed by Ku-ring-gai Council ('the Council'), the Architect advised the Clients that if they proceeded with the Project the Council would require them to install four water tanks and a small detention tank on their property, or to acquire a drainage easement over a neighbouring property. The Clients indicated that they would try to acquire an easement.
During the same month, the Architect also advised the Clients that the Council did not at this stage require them to submit a landscape plan.
On 25 November 2009, the Architect prepared further plans ('the draft DA plans') in a form that was appropriate for the Development Application to be submitted to the Council ('the DA'). Using once more a rate between $2,500 and $3,000 per square metre as the basis of her calculations, she estimated that the overall cost of the Project had risen from her previous figure of $250,000 to about $390,000.
In her evidence at the hearing, she stated that this significant increase was attributable to two factors: the substantial changes that the Clients had requested since her initial instructions and the Council's requirement that if no easement was acquired (as proved subsequently to be the case), water tanks and a detention trench would have to be installed.
When asked in cross-examination why she did not alert the Clients to the fact that the changes requested by them would inflate the cost of the Project beyond the budget figure of $250,000, the Architect answered that these changes were so numerous that it was impracticable for her to supply budget estimates reflecting each change. She said also that at the time she believed that the Clients, being professional people who had received education at tertiary level, would have realised that the estimated cost would exceed $250,000.
Before submitting the DA, the Architect showed the draft DA plans to Mr Thomas and asked him whether he agreed with her revised estimate. In his statement and his oral evidence, Mr Thomas stated that after giving overnight consideration to this request, he formed the opinion that her estimate was broadly correct and that her approach in calculating it (by reference to a rate per square metre) was appropriate.
Mr Thomas testified also, as did the Architect, that she did not ask him if he would like to work on the Project if it went ahead, because the Clients' residence was outside the region where he carried on his business as a builder.
The Architect then prepared plans, dated 2 December 2009 ('the final DA plans'), to accompany the DA.
In his report, Mr Jansen stated that in his opinion the costs of the Project, as depicted in the final DA plans, would have amounted to $370,387. According to a schedule of these costs in his report ('the Jansen schedule'), his calculations used as their starting-point the amount that he had estimated for the cost of the first plans. Without any explanation, however, the schedule gave this amount, stated earlier to be $272,650, as $298,450. He did not explain this discrepancy.
This schedule provided a breakdown of the various items of costs that were likely, in Mr Jansen's opinion, to be incurred. His report also contained a summary of the differences between the first plans and the final DA plans. The differences that he discerned, however, did not correspond with the changes that, according to the Architect, the Clients had requested. It is noteworthy, for instance, that according to the Jansen schedule a swimming pool initially requested by the Clients, which he costed at $36,000, was no longer required.
In the Jansen schedule, two specific items for which individual estimates of costs were given were the four rainwater tanks and 'the soakage trench etc'. The estimates for these items, which constituted the extra installations required by the Council, were respectively $4,600 and $10,000.
On 2 December 2009, the Architect sent an email to the Clients enclosing the form of application for the DA and asking them to sign it. She stated that she intended to lodge the DA on 9 December. She asked for 'a cheque made out to Ku-ring-gai Council in the amount of $1,659 (calculated on the project cost estimate of $390,000)' and asked also whether they liked a sketch of the front fence that she had attached and whether the Clients wished it to be added to the DA.
According to the Complaint, it was 'at this time' that the Architect first notified the Clients that the estimated cost for the Project had risen above $250,000. The tenor of the Architect's evidence was, as already indicated, that the original agreed estimate was $250,000 - $300,000 and that the Clients recognised at the outset that costs exceeding $250,000 might in fact be incurred. But she did not claim to have notified them of any actual or possible increase in the estimated cost between her meeting with them on 20 September 2009 and her email to them on 2 December 2009.
An email reply sent by Ms Hug on 2 December 2009, commenced as follows: 'We are happy with the drawings of the front fence if you could add that to the DA please. I will post a cheque to you tomorrow.' Ms Hug made no comment on the increase in the estimated cost of the Project.
In the Complaint, however, the Clients stated that their acquiescence in the increase of the cost of the Project from $250,000 to $390,000 was 'reluctant'.
On 6 December 2009, the Clients notified the Architect that they would not be able to acquire an easement for drainage over the neighbouring property.
On 9 December 2009, the Architect lodged the DA with the Council. She also sent an invoice to the Clients in which the estimated cost of $390,000 was mentioned. The Clients raised no question about this amount.
On 15 December 2009, the Council notified the Architect that, contrary to earlier indications, a landscape plan was required before consideration would be given to the DA.
During January and February 2010, both a landscape plan, developed by the Clients without the Architect's involvement, and revised plans for a stormwater drain were submitted to the Council.
By a letter dated 24 February 2010, the Council advised the Architect that Development Approval had been granted.
In the course of a meeting on 11 March 2010, the Clients advised the Architect that on account of the substantial increase in the estimated cost of the Project, they had decided to have the proposed renovations and extensions completed in two stages, and that because they had a budget of about $400,000 they would defer proceeding with the second stage. The Architect suggested to them that she should nonetheless prepare the plans and take the other necessary steps to enable them to obtain a Construction Certificate for the whole Project, not just the first stage. She pointed out that this would save them the time and expense associated with lodging a second application. They accepted this advice. Both the Architect's advice and the Clients' acceptance of it were confirmed in an exchange of emails on the same day as the meeting.
During the next three months, the Architect and the Clients continued to correspond, principally with reference to the types of finishes and fittings to be used and to some additional items that the Clients requested. This correspondence included an email sent by Ms Hugh to the Architect on 22 March 2010. A 'List of inclusions/specifications' attached to it concluded as follows:-
Can you please advise us if any of the work above (or future work undertaken) will be charged as additional fees prior to commencing part of the work (ie. It is not included in the fee schedule as a percentage cost of the project of $390,000).
Thanks.
Cheers,
Greta and Rainer
In an email sent on 18 May 2010, the Clients advised the Architect that they were happy for her to complete the construction certificate and contract documentation 'as per our agreement', but that they did not require her services in the tendering process because they had a friend who would assist them with this exercise. An offer by her to assist them was not accepted.
On 25 May 2010, the Architect sent to the Clients a schedule of Prime Cost items based on indicative prices from previous projects of a similar nature. She said at the hearing that she did this to assist them in obtaining tenders. The schedule showed a total of $106,779, but a copy sent to the Board by the Clients had an annotation to the effect that was 'incorrectly added' and that the correct total was $156,659.
On or about 16 June 2010, the Architect sent to the Clients the final version of the plans required for applying for a Construction Certificate ('the CC plans').
Using the CC plans, the Clients then obtained three tenders, in which the prices quoted were respectively $593,089, $614,750 and $685,929. As summarised in Mr Jansen's report, the first of these tenders, by Good Foundations Ltd, included 12 Prime Cost items totalling 26.4% of the price and excluded (amongst other things) the carport and the gymnasium. The second, by County Construction Pty Ltd, included 4 Prime Cost items (8.1%) and excluded landscaping, carpet and air-conditioning. The third, by Douglas McGregor, included 13 Prime Cost items (30%). It did not specify any exclusions, but according to a letter dated 22 July 2010 (outlined below) from the Clients to the Architect, the front fence, front landscaping, driveway, carport and gym/playroom were excluded.
On or about 16 July 2010, the Clients rang the Architect to advise her that the amounts quoted in these three tenders substantially exceeded her estimate of $390,000 based on the DA plans and to ask her for an explanation of this.
In a letter dated 19 July 2010 to the Clients, the Architect provided details of a calculation of the costs of the Project (excluding the carport, driveway, pathway and landscaping) based on the 'Valuation of Works - Estimate Sheet' issued by the Council. This produced a figure of $402,647, representing $2,051 per square metre. There was no explanation by the Architect as to why a distinctly lower rate per square metre was now applicable. She stated also that she had spoken to a builder, Campbell Isherwood, who had said that 'at first look' the cost would be about $500,000. The Architect pointed out, however, that his estimate included the roof to the whole building, the joinery and fireplace in the sitting room and the 'rear BBQ', being items that were not included in her calculations.
On 21 July 2010, the Architect and Ms Hug had a telephone conversation. A copy of an email on the same day from Ms Hug to Mr Hug, describing this conversation, was amongst the documents tendered by the Board.
In a lengthy letter dated 22 July 2010 to the Architect, the Clients expressed their 'dissatisfaction' with the architectural services that she had provided. Amongst a number of grounds of complaint that they set out in this letter, the following three are relevant in the present context. First, she had signed the Agreement stipulating a budget of $250,000, but after preparing the DA plans had informed them that the budget estimate had risen to $390,000. Secondly, the three tenders that they had received were for sums ranging between approximately $600,000 and $685,000 and related only to 'a limited part of the work, that is, excluding the front fence, driveway, carport and conversion of existing garage into a gym and playroom'. Thirdly, in her letter of 19 July 2010 and in the telephone conversation on 21 July, she had revealed that her estimate of $390,000 had been based on the Council's Estimate Sheet (which she had not shown to them), that she now estimated a cost ($432,229) exceeding this figure by more than 10% and that in breach of the Agreement she had failed to obtain an opinion of cost from a builder or quantity surveyor at the Detailed Design stage.
During July and August 2010, the Architect obtained five tenders from builders. She stated in her affidavit that these were based on what she considered to be 'a reasonable scope of works based on the DA approval'. As summarised in Mr Jansen's report, the names of the tenderers (in short form), the prices estimated or quoted, the scope of works involved and the situation with regard to PC items were as follows:-
Winbrook: $338,140 quoted; stages 1 and 2; PC items included
Dancom: $280,000 estimated; stage 1; PC items not included
Kendale: $400,000 estimated; stage 1; PC items not included
Creative: $435,000 quoted; stage 1; includes $98,000 for PC items
Greygum: $450,000 estimated; stage 1 excluding landscape; includes $30,000 for PC items
By a letter dated 14 August 2010, the Clients lodged the Complaint. It was accompanied by a statutory declaration by each of them, verifying the truth of its contents.
The grounds of the Complaint included the following: (a) what we have called 'the first plans', which the Architect gave them on 30 September 2009, were not in accordance with the Agreement because the cost of implementing what she proposed in them would have substantially exceeded the estimate of $250,000 quoted in the Agreement; (b) she failed to obtain an opinion as to the probable cost of the Project, as required by the Agreement; (c) she failed to advise them that the changes incorporated into the first plans would increase the estimated price from $250,000 to as much as $390,000; and (d) because the prices quoted to them by their tenderers were so much larger than the estimates that she had supplied, and were also beyond their means, she had left them with a number of plans (for which they had paid fees totalling $34,154, of which the architectural component was $22,599) that were of no use to them.
The Complaint included a number of other allegations that need not be summarised here.
The Board's determinations
On 19 April 2012, having sought and obtained evidentiary material and submissions from the Clients and the Architect, the Board made a preliminary determination. It sent this determination to the Architect and invited her to make further submissions if she so wished. She made further submissions in a letter dated 17 May 2012
On 19 July 2012, having considered these submissions, the Board issued a final determination ('the Determination') in which it confirmed, subject to minor amendments, its preliminary determination.
In the Determination, after outlining the Complaint and the evidence and submissions that it had received, the Board explained in the following terms (at paragraphs 9.1 and 9.2) why it found the Architect to have engaged in unsatisfactory professional conduct:-
9.1 Whether The Architect Prepared A Design Which Was Not Within The Specified Budget
(a) The Complainant's allegation that the stipulated budget was $250,000 is supported by references made in the Architect -Client Agreement and the invoices issued by the Architect. It was clear at the time the Architect was retained that the clients had a budget of $250,000 for the works that they intended to carry out.
(b) The budget was then varied by an increase to $390,000 at about the time the DA was submitted to the Council. This increase arises primarily due to Council requirements.
(c) The Architect has also stated that there were changes to the design that had cost implications. However, whilst the changes were referred to in the submissions, no details of the cost implications of those changes were provided in any submissions. In addition, there does not appear to be any information in the submissions as to how the changes and their effect on price were discussed with the Complainants.
(d) Whilst there is evidence of discussion occurring in relation to an increase in the budget amount, those discussions appear to be more in keeping with the Architect informing the Client that there has been a change in the budget amount. The requirement of the Council to have detention pits constructed appear to be the significant cost increase in the budget.
(e) The significant issue that arises from an increase in the likely construction costs is that the increase in the budget had a consequential effect on the ability of the Complainants to complete the project. Whilst the Architect does not concede this issue the Complainants have confirmed that the increase in the budget at this time ultimately caused the Complainants to split the project so as to allow it to be undertaken in a staged development to accommodate the increase costs and their ability to meet these costs.
(f) The issue concerning budget and the Complainants' ability to meet the costs to build the design was magnified upon receipt of tenders from the builders. Tenders for completion of the construction as designed by the Architect were in amounts that ranged in value up to $800,000. This construction sum being significantly in excess of the budget the Complainants initially provided to the Architect.
(g) Whilst the Architect independently sought tenders for construction of her design and asserts that the design could have been constructed for the budgeted amount of $390,000, it is apparent that the Architect's tenderers did not include PC items. The addition of the PC items adds a significant sum to the costs to complete the works.
(h) It is the Board's view that the obligation of the Architect is to provide professional services so as to prepare a design to a specified budget as would be expected by a competent architect in the same circumstances.
(i) What is required of any architect and in this complaint of the Architect, is that when a budget has been stipulated in the Architect -Client Agreement, the architect must design to that budget or alternatively provide clear and precise notice to the client of the effect any changes in the design, including in the quality of materials and fittings on the budget estimate will have so that the client maintains an informed position and is able to make decisions on design issues from an informed basis including costs implications.
(j) In the circumstances of this Complaint, the evidence of both parties makes it clear that the Architect failed to prepare a design to achieve the budgetary requirements of the Complainants. This failure was compounded by the lack of information as disclosed in the documents provided by the Architect and the Complainants to the Board relating to the Architect informing the Complainants of any changes to the budget as a consequence of the changes in design prepared by the Architect or as a consequence of changes to the quality of materials and finishes.
(k) If the Architect was not able to provide specialist budgetary advice, then the Architect was entitled to advise the Complainants that a professional costs expert should be retained, such as a quantity surveyor to ensure that the budget was being met. However, in this complaint there was no advice provided by the Architect to the effect that she was either inexperienced in relation to designing to a budget or alternatively that a independent person should be retained to provide budgetary advice.
(I) The Architect has referred to price checks being provided at the relevant time. However, there is no information provided by the Architect to support this assertion.
(m) It is in these circumstances that the Board is satisfied that the Architect's conduct in relation to designing to a budget and providing advice in relation to changes in design so as to affect the budget, has not been completed as required by the standards of a professional architect, and as a consequence this conduct amounts to a breach of the Architect's Act.
9.2 Breaches to the terms of the contract
(a) The Complainants allege the Architect was obliged as per the terms of the Architect -Client Agreement to obtain a preliminary opinion of probable cost from a builder or quantity surveyor to base her budget prior to DA submission.
(b) There is common evidence that relates to this issue and the issue above in paragraph 9.1(a). The Complainant's allegation that the stipulated budget was $250,000 is supported by references made in the Architect -Client Agreement and the invoices issued by the Architect. It was clear at the time the Architect was retained that the clients had a budget of $250,000 for the works that they intended to carry out. Accordingly, by reference to the matters referred to in paragraph 9.1(a) above, the Board is satisfied that the Architect's conduct in this respect amounts to unsatisfactory professional conduct.
In paragraphs 9.3, 9.4 and 9.5, the Board outlined three further grounds on which the Clients had complained and set out reasons why none of them called for disciplinary action on its part. These grounds were not canvassed at the hearing before us.
At paragraph 11 of the Determination, the Board stated:-
11 Board Decision.
(a) Pursuant to section 43(4)(a) of the Act, the Board orders that Annabelle Chapman, Architect, be reprimanded in respect of the provision by the Architect of advice in relation to budget estimates and costs to be incurred in the construction of designs prepared by the Architect so as to ensure that the designs prepared by the Architect can be completed in accordance with the budget specified.
(b) If an architect is of the view that they do not have the skills to provide budget advice, then it is incumbent upon the architect to disclose this issue to the client and to suggest that a professional expert such as a quantity surveyor be retained to provide cost advice.
(c) The Architect did not provide accurate advice as to cost and cost increases, did not design to the budget and did not keep the client informed as to changes in the budget arising from changes in the design.
Orders
a. In respect to the Complaint against Annabelle Chapman, Architect, the Board finds that pursuant to section 43(4) she is guilty of unsatisfactory professional conduct.
b. It is the obligation of the Architect to provide the services for which they are retained to achieve a level that is consistent with the requirements of the architectural profession. If an architect is retained, as in this case, to design to a stipulated budget, then the architect has an obligation to design to that budget, to inform and keep informed the client of any changes which will affect the budget and to inform the client of cost increase or decrease to that budget.
c. It is the Order of the Board that the Architect must report to the Board within 30 days of the date of this determination as to:
i. the changes which she will invoke in her practice to specifically deal with the issue of preparing a design to a budget as specified by a client;
ii. the ability of the Architect to properly assess the budget and prepare a design to meet the budget;
iii. the level of information to be provided to the client as to whether or not the budget can be met or alternatively the information to be provided to the client where changes in the budget occur due to changes in the design; and
iv. the recommendation to clients of the retention by the Architect of independent cost experts if it is the Architect's view that this is required to assist her in budget issues.
Relevant legislation
The Act's definition of unsatisfactory professional conduct, contained in section 32, states so far as relevant:-
unsatisfactory professional conduct means any of the following:...
(b) a failure by the architect to comply with a provision of any code of professional conduct established by the regulations and in effect under section 7...
(h) any other conduct of the architect that demonstrates incompetence, or a lack of adequate knowledge, skill, judgment or care in the practice of architecture...
The following provisions within section 43 of the Act should also be quoted:-
43 Decision after investigation of complaint
(1) After the Board has completed an investigation into a complaint against an architect, the complaint is to be dealt with in accordance with this section.
(2) The Board may apply to the Tribunal for a disciplinary finding against an architect under Division 3 if it is satisfied that the architect is guilty of unsatisfactory professional conduct or it may instead exercise the functions conferred on it by subsection (4).
(4) If the Board is satisfied that the architect is guilty of unsatisfactory professional conduct (but not professional misconduct), the Board may take any one or more of the following actions:
(a) caution or reprimand the architect,
(b) order the withholding or refunding of part or all of the payment for the architectural services that are the subject of the complaint,
(c) direct that such conditions relating to the architect's practice of architecture as it considers appropriate be imposed on the architect's registration,
(d) order that the person complete any educational course or courses specified by the Board,
(e) order that the person report on his or her architectural practice at specified times, in a specified manner and to specified persons,
(f) order that the person seek and take advice, in relation to the management of his or her architectural practice, from a specified person or persons,
(g) order the architect to pay a fine of an amount not exceeding 15 penalty units.
During the period of relevance to these proceedings, the NSW Architects Code of Professional Conduct ('the Code') was set out in Schedule 1 of the Architects Regulation 2004. An introductory note stated that a failure to comply with the Code 'will constitute unsatisfactory professional conduct' for the purposes of the Act and 'may be grounds for disciplinary action under Part 4 of that Act'.
Clause 6 of the Code was headed 'Provision of information to clients and prospective clients'. Paragraph (4) of this clause was in the following terms:-
(4) An architect should advise a client on the likelihood of achieving the client's stated objectives having regard to the client's stated budget and time requirements for the architectural service concerned.
The Architect's submissions
In arguing on the Architect's behalf that the evidence did not support the conclusions stated in paragraph 9.1 of the Determination, Ms Horvath put forward the following propositions:-
(a) Mr Jansen, who provided the only expert evidence to be put before the Tribunal, estimated that the cost of the designs depicted in the first plans was $272,650. The Board did not adduce any evidence disputing this estimate. Accordingly, to the extent (if any) that the conclusions reached in paragraph 9.1 proceeded from the premise that in preparing the first plans the Architect failed in her obligation to design to the budget specified at that time by the Clients, those conclusions were ill founded.
(b) The increase in the budget from $250,000 (as at 20 September 2009) to $390,000 (as at 9 December 2009) was attributable to a significant extent to the cost of the Council's requirement that four water tanks and a small detention tank be installed. It was also attributable to the numerous significant changes requested by the Clients. Their requests triggered the operation of a common phenomenon that Mr Jansen described in his report, using the label 'scope creep'.
(c) During this period between the first plans and the draft DA plans, it would have been impracticable for the Architect to adjust the estimate of the costs of the Project on each occasion that the Clients requested an alteration to her design. This would particularly have been the case if the most expensive and important changes were requested towards the end of this period. The evidence did not throw any light on the timing of their requests for these.
(d) The Architect was entitled to assume that during this period the Clients would realise that the costs were increasing. Furthermore, although they alleged in the Complaint that their acceptance of the increased figure of $390,000 was 'reluctant', their correspondence with her, both at the time of lodgement of the DA and subsequently, contradicted this allegation. Relevant instances of this correspondence were Ms Hug's email of 2 December 2009 and the concluding passage in the attachment to the Clients' email of 22 March 2010 (see above at [34] and [42]).
(e) The Architect's estimate of $390,000 for the cost of the draft DA plans received support from Mr Jansen's estimate of $370,387. Mr Jansen also supported the basis of her calculations: namely, the adoption of a rate of $2,750 per square metre, as suggested in guidelines published by the Council.
(f) In determining this aspect of the case, it was important to bear in mind that, as Mr Jansen pointed out, 'scope creep' usually occurred 'by stealth', involving 'numerous small and innocuous design changes', and that it was 'difficult to prevent clients from expressing their desires and equally difficult to refuse to acquiesce when a client demands changes'.
(g) For the foregoing reasons, while it may have been 'prudent' for the Architect to alert the Clients to the increase of the cost of the Project occasioned by their requests within the period from 20 September to 2 December 2009 to change the design, her failure to do so did not amount to unsatisfactory professional conduct. It did not involve a failure to observe the standard laid down in the Act's definition of unsatisfactory professional conduct: namely, a 'reasonable' standard of 'competence'. As Mr Jansen pointed out in his report, her behaviour was in fact 'normal'.
(h) The fact that the tenders for the Project obtained by the Client significantly exceeded the revised budget figure of $390,000 did not provide a sufficient basis for the Board's apparent conclusion that the Architect failed to comply with this budgetary requirement. The reasons for this included the following:
(i) The Architect herself obtained five estimates or quotes, of which three were below, or within an acceptable range above, her estimate of $390,000.
(ii) Because the prices estimated or quoted all related to different versions of the Project (notably so far as Prime Cost items were concerned), they could not be reliably compared with each other.
(iii) Between the preparation of the draft DA plans, on which the estimate of $390,000 was based, and the Clients' seeking of tenders, the scope of the Project was significantly enlarged.
(iv) It was likely that the Clients did not have the expertise or experience required to secure favourable offers from builders.
(v) It was also likely that their tenderers included in their offered price an increment to take account of the risk that the absence of an architect would make completion of the project more expensive for them.
In relation to the last of these propositions, Ms Horvath relied on relevant passages in Mr Jansen's report. In his oral submissions, she added details of the ways in which the Project expanded after the Architect provided the estimate of $390,000 to the Clients.
In opposing the Board's conclusion in paragraph 9.2 of the Determination, Ms Horvath relied on the evidence given by Mr Thomas. This evidence, she said, confirmed the Architect's claim that she had complied with clause 3.3 of the Agreement. Ms Horvath pointed out that because this clause appeared under the heading 'Detailed design' and was followed by provisions relating to development approval, the phrase 'final design' within it clearly referred to plans that were being prepared for the purposes of a development application.
Finally, with reference to the circumstances in which failures by architects to maintain professional standards should be characterised as unsatisfactory professional conduct, Ms Horvath drew our attention to Building Professionals Board v Boulle [2008] NSWADT 80, a Tribunal decision in disciplinary proceedings against an accredited certifier. The definition of unsatisfactory professional conduct applicable to those proceedings, forming part of section 109R of the Environmental Planning and Assessment Act 1979, included the following phrases:-
... conduct (whether consisting of an act or omission):...
(a) occurring in connection with the exercise of an accredited certifier's functions as a certifying authority that falls short of the standard of competence, diligence and integrity that a member of the public is entitled to expect of a reasonably competent accredited certifier, or...
(d) by which an accredited certifier fails to comply with:
(i) any relevant code of conduct established by the accreditation body by which he or she is accredited, or
(ii) any other Act or law prescribed by the regulations, or
(e) by which an accredited certifier contravenes this Act, whether or not he or she is prosecuted or convicted for the contravention.
Paragraphs [38] and [39] of the Tribunal's decision included the following observations:-
38 We are satisfied that the omissions and failures by [the respondent] identified in this case fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent accredited certifier (part (a) of the definition). These were not mere mistakes of a kind that can sometimes occur in the life of a generally competent certifier...
39 Part (d) and part (e) of the definition are expressed in such a way that any failure, however minor, in complying with any Act or law prescribed by the regulations or any contravention of a penal provision might give rise to a finding of unsatisfactory professional conduct. In our view, a tempered view should always be taken, not an absolutist one, when making findings based on parts (d) and (e), cognisant that the finding is a disciplinary one going to the reputation and standing of a practitioner....
Ms Horvath submitted that, taking account of these observations, we should conclude that any deficiencies in the Architect's conduct did not 'obtain the level of objective gravity required to make a finding of unsatisfactory professional conduct'.
The Board's submissions
The principal argument put by Mr Griffin on behalf of the Board was that between 20 September 2009, when the budget figure of $250,000 was agreed upon, and 2 December 2009, when the increased estimate of $390,000 was communicated to the Clients, the Architect failed to comply with the requirement in clause 6(4) of the Code to 'advise a client on the likelihood of achieving the client's stated objectives having regard to the client's stated budget...' He argued also this failure demonstrated 'incompetence, or a lack of adequate...skill, judgment or care in the practice of architecture', within the meaning of section 32(h) of the Act.
Mr Griffin acknowledged that if the Clients' requests to enlarge the scope of the Project had been conveyed in the period just before 2 December 2009, there would have been no obligation on the Architect to advise on cost increases. But the evidence, he said, as to the timing of these requests suggested the contrary. Requests for changes were made throughout the relevant period of about two months.
According to Mr Griffin, the Architect's claim that it would have been impracticable for her to provide numerous revised estimates did not absolve her of responsibility, because it was not necessary for her to tell the Clients precisely by how much the costs would increase on account of their requests. It would have been sufficient for her to warn them in very general terms of the prospect of increased costs. She was certainly not entitled to rely on their level of education as an excuse for not warning them in this way.
With reference to the evidence regarding the Clients' reaction to the increased budget figure of $390,000, Mr Griffin agreed that it contradicted the allegation in the Complaint that they accepted this figure 'with reluctance'. But he maintained that this was irrelevant to the question whether the Architect contravened clause 6(4) of the Code. The obligation stated in that clause was operative irrespective of the reaction of the client to the prospect of increased costs.
For reasons which we do not need to describe here, arising from evidence as to the contents of two emails sent relatively recently by Mr Jansen (about which he was cross-examined), Mr Griffin submitted that we should conclude that he was not an impartial witness and should rely on our own expertise in determining these proceedings. He argued also that Mr Jansen had been 'unreasonable' in not conceding certain matters, even though the Architect had conceded them, and that Mr Jansen's claim that it was sufficient for her to have acted as a 'normal' architect would have done was at odds with the standards of 'reasonable' or 'adequate' skill and care required by the Act.
Mr Griffin's written and oral submissions did not specifically address those parts of the Determination in which the Clients' claim of a failure by the Architect to observe the revised budgetary limit of $390,000 was upheld.
In oral submissions, though not in his outline filed before the hearing, Mr Griffin conceded that the Board's finding in paragraph 9.2 of the Determination was in conflict the evidence given by Mr Thomas and could no longer be supported. The Board, he added, had not been supplied with this evidence.
Discussion and conclusions
The Tribunal's duty in hearing an application for review of a reviewable decision is to 'decide what the correct and preferable decision is having regard to the material... before it': see section 63(1) of the Administrative Decisions Tribunal Act 1997. In so doing, it 'may exercise all the functions that are conferred or imposed... on the administrator who made the decision': see section 63(2).
In view of the nature of this duty, it is not necessary for us to identify precisely each aspect of the Architect's conduct on which the Board relied in making its finding of unsatisfactory professional conduct and its consequential orders under section 43(4) of the Act. We are bound to observe, however, that the key passages in the Determination, which we have quoted above, do not make this entirely clear.
What follows is our own assessment of the evidence before us, which differed in some respects from the evidence before the Board. In making this assessment, we have of course taken careful note of relevant parts of the Determination.
In our judgment, the principal argument advanced by Mr Griffin should be upheld, for the following reasons.
The increase in the budget figure between 20 September and 2 December 2009, being from $250,000 to $390,000, involved a significant sum of money: $140,000. More importantly, it was a substantial increase in proportional terms. According to the only evidence that we have on the matter, provided by Mr Jansen, the Council's requirements of water tanks and a detention trench accounted for only $14,600 of this increase (a little more than 10%). The rest of this increase - $125,400, representing more than 50% of the original budget figure - must be taken to have flowed from the Clients' requests for changes to the Project. The evidence as to when these requests occurred, deriving principally from the Architect's affidavit and the attached Chronology (see [16 - 20] above), shows that a substantial proportion of them were communicated at the meeting on 20 September 2009 or within a month following that date. Yet the Architect, according to all the evidence (including her own), did not say to the Clients, even in general terms, that compliance with the requests made within this period was bound to increase the cost of the Project substantially. In fact, she sent to the Clients, or caused to be sent to them, a tax invoice dated 27 October 2009 displaying the initial budget estimate of $250,000.
We agree with Ms Horvath that despite the claim of the Clients to the contrary in their Complaint - being a claim that could not be tested in cross-examination because they were not called as witnesses - their acceptance of this increase in the budget appeared not to be 'reluctant'. But as Mr Griffin submitted, this is not enough to relieve the Architect of the specific duty that was imposed on her by clause 6(4) of the Code, or of her general duty to maintain appropriate standards of skill, judgment and care.
We agree with Mr Griffin that compliance with these standards is not to be assessed by reference to what is 'normal' among architects, and that terms such as 'reasonable' or (to quote from section 32(h)) 'adequate' should be employed instead.
We have taken careful account of Ms Horvath's argument based on the Tribunal's observations in Building Professionals Board v Boulle [2008] NSWADT 80. But this is not a case involving just a 'minor' contravention of a provision within a statute or regulation. Clause 6(4) of the Code, taken in conjunction with paragraph (b) of the definition of unsatisfactory professional conduct in section 32 of the Act, provides a basis for our conclusion. But it is not the only basis. The Architect's conduct in failing completely to convey a simple warning to the Clients about the cost implications of their requests for changes to the Project and, moreover, in sending them a document suggesting that there were no such implications constituted, in our opinion, a failure to observe adequate standards of skill and care in her professional dealings with them. Arguably, she also breached the obligations imposed on her by clauses 1.7 and 1.8 of the Agreement (though this question was not addressed in the parties' submissions). For these reasons, her conduct amounted to unsatisfactory professional conduct under paragraph (h), as well as paragraph (b), of the definition in section 32.
The other grounds on which the Board's finding of unsatisfactory professional conduct was based are not made out, according to the evidence before us. We agree with Ms Horvath that, in the absence of evidence contradicting Mr Jansen's opinion on the matter, there is no basis for a ruling that in preparing the first plans the Architect failed to observe the initial budgetary requirement of $250,000. We also agree with Ms Horvath, for the reasons advanced by her, that the fact that the tenders for the Project obtained during 2010 by the Clients significantly exceeded the revised budget figure of $390,000 did not provide a sufficient basis for a finding that the Architect failed to comply with this budgetary requirement also. Finally, as Mr Griffin conceded, the alleged breach of the Architect's obligation under clause 3.3 of the Agreement to obtain an opinion as to probable cost is not established, in view of the undisputed evidence given by Mr Thomas.
For the foregoing reasons, we find, as the Board did, that the Architect engaged in unsatisfactory professional conduct, but on distinctly narrower grounds than those stated in the Determination. We accordingly consider that the sanctions imposed by the Board under section 43(4), comprising a reprimand (under paragraph (a)) and an order (under paragraph (e)) to report to it on certain specified matters, went further than the circumstances required. We have decided that these sanctions should be set aside and the lesser sanction of a caution (also under paragraph (a) of section 43(4)) should be imposed instead.
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Decision last updated: 30 May 2013
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