Draft Directive Consultation: Transfer of Commissions

The transfer of commissions, projects and tasks from one perit to another is generally a delicate and potentially complex transition which can give rise to a number of issues related to ethics, commercial interests, and intellectual property rights.

In 2009, the Council of the Kamra had, at the behest of the General Meeting, issued a Directive that sought to govern the transition from an ethical perspective. The focus at the time was not to stifle the possibility for the incoming periti from delivering their professional services and not to unduly harm clients who may be victims of vexatious requests for payments from outgoing periti. As a result, Directive 04/09 had stipulated that outgoing periti must hand over projects to the incoming perit even if there are outstanding payments due.

Over time, however, the original intentions of the directive were thwarted to the point where periti frequently end up not getting paid for their services by their clients, who exploit the directive to move projects from one perit to another, sometimes more than once, to avoid paying for professional services.

 

The current Council has thus decided to redraft a new Directive to govern the transfer of commissions between periti that shall replace the 2009 Directive. The draft directive seeks to strike a fairer balance between the rights of periti to get paid, and the protection of clients from vexatious claims for payment.

The draft Directive changes many of the dynamics that we have been hitherto accustomed to, including:

  1. The right for the outgoing perit to refuse to release the commission subject to certain conditions being satisfied;
  2. The requirement to provide a handover;
  3. The processes to be undertaken depending on the stage of the project.

 

The Council has approved the text of the Directive and is hereby publishing it for consultation with members of the profession. There was, however, a minority position within Council on certain parts of the text which members of the profession are being specifically requested to express their opinion about through an online poll.

 

The two lines of thought are as follows:

 

Version 1

The outgoing perit may refuse to release the commission if any professional fees clearly established in a written agreement are still due, and the incoming perit shall desist from taking over a project in such situations. If a dispute on the settlement of the fees arises between the outgoing perit and his/her client, the transfer of the commission shall remain pending until the dispute is resolved by the Courts or any other adjudicating body.

 

Version 2

The incoming perit may take over the commission from the outgoing perit, if the latter institutes formal legal action against the client to recover any outstanding fees within an established period of time, and the incoming perit is duly informed of such action. In such case, the incoming perit may freely take over the commission in the knowledge that the dispute will be settled by the Courts or any other adjudicating body.

 

Members of the profession are invited to participate in the online poll by selecting their preferred direction for the final text of the Directive.

 

The poll closes on 25th April 2022.

 

Full draft Directive text

You can review the two versions of the full text by clicking on the links below. The differences are highlighted in yellow.

Version 1

Version 2

 

Online Poll

Participate in the online poll by selected your preferred version, and drop any additional feedback you may have in the comment box.

 

 

Poll is now closed.

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Case Study 4 | Change of Use and Related Works on a Property on which another Perit was previously engaged

One of the functions of the Kamra tal-Periti is to investigate complaints of misconduct made against members of the profession. In some cases, it is evident that periti act in bona fide, however in a manner which may give rise to issues of misconduct.

One such case involved a complaint which was received from Perit A in May 2018. Perit A had been engaged to submit an application for sanctioning and alterations to a property including the change of use of a space into a clubhouse. This application was approved and a commencement notice submitted in April 2018.

Perit A subsequently became aware that Perit B had been engaged to submit an application for the change of use of the property to a restaurant, including related alterations, which application had been submitted in February 2018.

Perit A reported that at no time had Perit B notified of such engagement, and also claimed that Perit B had copied certain details (site information and signage) from the first set of permit drawings and reproduced them in the new application drawings.

The Council of the Kamra tal-Periti wrote to Perit B asking for comments on the complaint. Perit B responded stating that the works which were subject of the new application were completely different from those which Perit A was engaged to undertake, that the briefs were different and that the Client had confirmed that the works covered by the first permit would not be undertaken. Furthermore, the fact that the Planning Authority did not require a Change of Perit form was also interpreted by Perit B as an indication that there was no need to inform Perit A. Nevertheless, immediately upon becoming aware of the complaint, Perit B wrote to Perit A apologising for their actions.

Perit B also stated that the elements which Perit A alleged to have been copied from the original permit drawings consisted of site information and signage, and that the new application was not proposing any changes to such aspects. Thus these were indicated on the new application drawings in order to represent the “as existing” situation.

After taking into account all of the submissions by the parties, the Council of the Kamra tal-Periti concluded as follows:

 

  1. VERACITY OF ALLEGATION

It is evident that Perit B did submit an application for a change of use and related minor works on a building on which Perit A had been previously engaged to carry out other works. It is also evident that Perit B used the drawings prepared by Perit A as a basis for the new application.

 

  1. NATURE OF MISCONDUCT

The Code of Professional Conduct (Chapter 390.01 of the Laws of Malta) states that “A member, on being approached or instructed to proceed with professional work upon which another member was previously employed, shall notify the fact to such architect.”

In this case, the works which Perit B was approached to undertake were different to those entrusted to Perit A, although they concerned the same building. The Council is of the opinion that this presents a borderline case, in view of the following:

  1. The brief given to Perit B was different to that given to Perit A and therefore it could be considered that Perit B was not “proceeding with work upon which another member was previously employed”;
  2. The Applicants for the two planning applications appear to be different, although possibly representing the same Client Organisation,and therefore it seems that there was also lack of communication at this level;
  3. Notwithstanding the above, the fact that the proposed works in the application submitted by Perit B concerned the same site on which a planning permit had been obtained by Perit A and which was still valid, and for which a commencement notice was subsequently submitted, created uncertainty both in terms of responsibility, as well as with regard to Perit A’s relationship with the Client.

The Council was therefore of the opinion that it would have been far more prudent for Perit B to advise Perit A immediately upon being engaged to proceed with the new application, particularly in view of the fact that the structural works covered by the first permit were potentially overlapping in terms of execution timeframe with the new works to be undertaken Perit B’s direction. The Council is nevertheless assured that the actions of Perit B were not intended to supplant Perit A, who would have proceeded to oversee the implementation of the scope of works entrusted to said Perit A.

The Council also took note of Perit B’s explanation that the site information and signage were replicated from Perit A’s drawings since no changes were being effected to these parts in the new application, and therefore these were taken as the “as built” situation. Nevertheless, this further confirms the Council’s opinion that it would have been prudent for Perit B to communicate directly and immediately with Perit A on this matter.

 

 

DECISION

The Council concluded that the case presents a borderline situation, further exacerbated by Perit B’s failure to communicate with Perit A.  The Council also considered that Perit B had apologised immediately upon being made aware of Perit A’s complaint.

Perit B was formally advised that it would have been prudent to notify Perit A, if anything in order to ensure that Perit A was aware of the Client’s intentions not to proceed with the originally approved works, and was exhorted to exercise more prudence in future similar situations.

 

The Council has issued this Case Study to remind members of the profession that, at all times, it is important to safeguard the interests of fellow professionals. For the avoidance of doubt, it is recommended that, upon being engaged to carry out new works on a site where another perit was previously engaged, periti should communicate with the pevious perit and advise them of their new engagement, even if the works to be undertaken are different from those originally entrusted to the first perit. It is also to be noted that the administrative requirements of the Planning Authority, such as the requirement or otherwise to submit a Change of Perit form, are not to be confused with the overriding principles outlined in the Code of Professional Conduct.

 

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Case Study 2 | Conflicting role of Perit and Developer

As you are aware, one of the functions of the Kamra tal-Periti is to investigate complaints of misconduct made against members of the profession. Many of these cases are often cleared following mediation between the parties, however there are several instances where the Council finds the actions of the perit in question to be unacceptable and unbecoming to the profession.

This case study considers a complaint which was received from Complainants A in March 2017, wherein they stated that they had purchased an apartment from Perit X around 20 years ago. When they came to sell the property in 2014, the estate agent brought to their attention the fact that the property was not compliant with the approved permit, including the number of garages beneath the block, some internal alterations, changes to the façade, and a room at the back of the property which had been indicated to them to be a bedroom (and was in fact used by them as such) but which had been approved as a kitchen in view of the depth of back yard which was less than the required minimum of 3m.

Complainants A alleged that they had been deceived when purchasing the property from Perit X, since the latter knew that the property was not in accordance with the approved permit. They stated that since the seller was a Perit, they had assumed that Perit X was acting in a professional manner, and they trusted in the advice given to them at the time of purchase. They also alleged that Perit X had shouted at them in their own residence, and also requested payment to submit the relevant applications to the Malta Environment and Planning Authority (MEPA), and, later, the Planning Authority (PA), to rectify the deviations from the approved permit. They also complained that although these matters had been brought to the attention of Perit X in 2014, the situation had not yet been addressed at the time of their complaint, and thus they had suffered damages as they could not sell their property.

Throughout the course of its investigation into this case, the Council of the Kamra tal-Periti requested various statements in writing from both Perit X and the Complainants. The Council also summoned both parties to testify, in order to be in a better position to determine the facts of the case.

It transpired that the land on which the block of apartments was built was owned by Company Y, of which Perit X was one of two shareholders (the other shareholder was also a Perit). Perit X had submitted the application for development permission to the Planning Area Permits Board (PAPB), in the capacity of both the owner and the responsible Perit. Perit X was then responsible for the design and erection of the block, and had acted on behalf of Company Y when the apartment was sold to the Complainants.

Upon being contacted in 2014 by the Complainants, Perit X proceeded to submit a number of applications to the MEPA / PA in order to rectify the situation with the Complainants’ apartment and the rest of the block. These included a Full Development Application to sanction the garages, and the internal and external alterations, a Minor Amendment application to this permit, two Category B (CTB) Concession applications and two applications for Regularisation. All these applications were eventually approved.

After taking into account all of the submissions and the testimony of the parties the Council of the Kamra tal-Periti concluded as follows:

 

  • CONFLICT OF INTEREST BETWEEN ROLE OF OWNER / DEVELOPER AND PERIT

There is no doubt that conflict of interest existed between the role of Perit X as co-owner of Company Y (the developer), and the role of same as Perit responsible for the design and erection of the block. Perit X admitted to have been fully aware that the permit conditions were not adhered to at the time that the Complainants purchased the property, and yet he had never informed the Complainants of these deviations, thereby abusing their trust. In particular, this situation was further aggravated by the fact that, when purchasing the property, the Complainants felt reassured that they were acquiring a property which was built in line with the original planning permit, in view of the fact that the seller was a Perit by profession.

 

In its decision, the Council wrote to Perit X stating that “By putting yourself in this position, the Council is of the opinion that you have created a situation which goes against the intent of the Code of Professional Conduct which states that “A member must not hold, assume or consciously accept a position in which his interest is in conflict with his professional duty.” It is clear that in this situation you placed your interests as owner / developer of the property before your duty of care as a professional towards society. In view of this, the Council is hereby issuing a formal severe reprimand, which reprimand shall be registered in the Kamra’s records. Furthermore, you are advised that the Council will not tolerate any other similar reports of misconduct against you in the future.”

 

  • DELAY IN ADDRESSING THE SITUATION

While it is true that there was a delay in addressing the situation, which was originally brought to the attention of Perit X in 2014, the planning processes available at the time could not address the situation present on site, and the Council was satisfied that the submissions to the MEPA and PA by Perit X were carried out with due diligence. The Council agreed that the delay in achieving full regularisation of the property as built was beyond the direct control of Perit X, although, as outlined above, the deviations from permit conditions should have been disclosed to the Complainants at the time of purchase of the property.

 

  • RAISING OF VOICE

The Council noted that Perit X had admitted under oath to shouting at the Complainants in their residence. Although it is a matter which is not becoming of a professional, the Council was satisfied that this appears to have been a momentary outburst. Nevertheless, the Council requested Perit X to apologise formally to the Complainants.

 

  • REQUESTS FOR PAYMENT

The Complainants claimed that Perit X requested payment in order to rectify the planning situation of the property. The Council is satisfied that although this was the case, Perit X did not insist on this matter, and eventually carried the costs associated with the relevant planning processes. Ultimately, this was a commercial matter between the two parties. The Council agreed that Perit X had not been engaged by the Complainants with respect to the applications submitted to the MEPA / PA to rectify the situation, but rather they approached Perit X as co-owner of Company Y, and therefore if anything any claim of fees due should have been addressed through Company Y.

The decision was copied to the Complainants. The Council also agreed to issue a Memo to its members advising them of the serious conflicts that may arise when they assume dual roles such as in this case.

 

The Council has issued this Case Study to remind members of the profession that, at all times, it is important to act in a manner which upholds ethical standards and professional decency. Periti are reminded that, in accordance with Chapter 390 of the Laws of Malta, conduct which is deemed to be discreditable to the profession may be punishable through the suspension, revocation or cancellation of a warrant.

 

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Case Study 1 | Taking Deposits and Not Delivering Services

One of the functions of the Kamra tal-Periti is to investigate complaints of misconduct made against members of the profession. Many of these cases are often cleared following mediation between the parties, however there are several instances where the Council finds the actions of the perit in question to be unacceptable and unbecoming to the profession.

This case study involves a complaint received from Complainant A in November 2016, wherein it was alleged that Complainant A had engaged the services of Perit X to survey their property and provide an estimate of the insurable value. Perit X inspected the property and requested a deposit of €80.00, and assured Complainant A that the report would be completed within three weeks.

Despite several attempts to contact Perit X, and several reminders by email, SMS and phone calls, the Complainant never received any form of report from Perit X. The Complainant therefore wrote to the Council of the Kamra tal-Periti stating that “months have now passed from the agreed delivery date and we are left with no other means of recourse (excluding legal) but to appeal to you on the grounds of professional ethics and basic decency. I strongly believe that the profession as a whole does not merit such an image and that such behaviour should be flagged and looked into”.

The Council of the Kamra tal-Periti finds your behaviour to be completely unacceptable

In January 2017, the Council wrote to Perit X for comments, and the latter replied within a few days, stating that the deposit would be returned to the Complainant. However, more time passed, and the Complainant informed the Council that such deposit had not been returned. Therefore in March 2017, the Council wrote to Perit X again. In its letter the Council stated that “it finds this to be unacceptable behaviour on the part of a member of the profession, and in view of this you are requested (i) to apologise in writing to the complainant for your failure to provide the contracted services and for the delay in settling the repayment of the deposit, and (ii) to return the deposit, both within 2 weeks of this letter. You are also requested to copy the Council of the Kamra tal-Periti with your correspondence with the complainant as well as proof of repayment of said deposit“.

The two weeks passed, and once again no reply was forthcoming from Perit X. The Council sent a reminder at the end of March 2017, asking for Perit X to comply with its request by the 7th April 2017.

Perit X did not reply to the Council’s request, nor was any communication made with the Complainant. The Council therefore wrote to Perit X as follows:

“The Council of the Kamra tal-Periti finds your behaviour to be completely unacceptable, and unbecoming of a member of the profession. Furthermore, your behaviour is being considered as an act of disrespect towards the Council and the Kamra. The Council is therefore issuing a formal reprimand in your regard, which reprimand shall be registered in the Kamra’s records.“

This communication was copied to the Complainant.

The Council reminds members of the profession that, at all times, it is important to act in a manner which upholds ethical standards and common decency. Periti are reminded that, in accordance with Chapter 390 of the Laws of Malta, conduct which is deemed to be discreditable to the profession may be punishable through the suspension, revocation or cancellation of a warrant.

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