In William Clark Partnership Limited v Dock St PCT Limited, Clark was appointed by Dock Street to provide quantity surveying and project management services relating to the construction of a new build primary healthcare centre in Lancashire. In March 2012, the main contractor (F Parkinson Limited) made an application for payment with a projected final account for £7.9m, an amount Dock Street thought to be too high. In January 2013 Parkinson started adjudication proceedings, which were settled with a final account of £7.7 million.
Dock Street refused to pay the balance of Clark's fees on the basis that there had been an overspend on the project. Clark commenced Court proceedings for its unpaid fees totalling £174,500. Dock Street counterclaimed for the repayment of £195,000 already paid to Clark, and an abatement to reflect the services not provided.
Among other issues, the Court had to decide whether Dock Street was entitled to a deduction (by abatement or otherwise) in relation to any services allegedly not performed or defectively performed by Clark.
Clark relied on the decision in Pickard Finlason Partnership Limited v Lock which held that "...in relation to contracts for professional services where the obligation in question has been substantially performed the professional is entitled to his fee and there is no scope for applying the doctrine of abatement..."
The Court indicated that it was open to Dock Street to defend itself by arguing that all, or some specific part, of those services were either not performed at all or were performed so poorly that they were worthless. However, the Court emphasised that Dock Street could not defend itself by arguing that some or all of the services were performed, but not fully or properly in every material respect, so as to seek a reduction of the fee payable.
The Court found that some of the services had been at least partially performed by Clark, in which case the defence of abatement or deduction failed.
But in relation to Clark's obligation to provide cost reports on a monthly basis during the construction phase (stating the actual and projected final cost of the development) the Court found that there had been a wholesale and serious failure of a basic obligation which a professional quantity surveyor should have provided.
Dock Street was therefore entitled to a deduction from Clark's fees claim to reflect that specific failure.
COMMENT: This case clearly demonstrated that a defence of abatement or deduction might not be effective against a consultant's claim for fees. Employers should take timely legal advice on what steps to take where substantial project overspend is predicted.