4 NOV 2010
Mr Gordon Cain , Suffolk, CB9
Corinna Kershaw (Lay)
Milton McIntosh MRICS
The formal charge is:
You have not at all times avoided any actions or situations that are inconsistent with your professional obligations in that as sole principal of and contact officer for the firm Gordon Cain & Co Ltd. you did not arrange for all previous work of the firm to be covered by adequate and appropriate professional indemnity run-off insurance for a period of time following the firm ceasing to trade at the end of 2007 Contrary to Rule 3 of the Rules of Conduct for Members 2007.
Findings of Fact
The Panel found the charge proved on the basis of the admission contained in the Listing Questionnaire signed by Mr Cain on 9 October 2010. The Panel determined that Mr Cain was liable for disciplinary action in view of the finding of fact.
This case arose following an application by Mr Cain to resign from membership of RICS made in January 2009. Mr Cain was informed that he would have to de-register his firm prior to resigning. Mr Cain eventually submitted a form for deregistration from 31 December 2008 by an application dated 18 August 2009. In this form he stated ‘no’ in answer to question 6 as to whether he had appropriate professional indemnity insurance/run off insurance.
As a result of this admission, Mr Cain was encouraged by RICS to obtain run off insurance. The documents before the Committee set out the correspondence between RICS, Mr Cain and prospective insurers regarding the pricing of possible cover and Mr Cain’s willingness to purchase any cover.
Mr Cain also produced a set of final accounts for his business dated 4 March 2008 for the 15 months ending November 2007. These accounts showed a dividend of £41,728 paid during the period ending 31 August 2006 and a further dividend paid of £64,711 paid during the period ending 30 November 2007. Documents in the bundle showed that the dividends were paid to Mrs Cain.
In his statement, Mr Cain states that the dividends were used towards paying off a large mortgage on his house. The Panel has taken into account that Mr Cain has fully cooperated with RICS and given all the information requested of him. However, at the time Mr Cain decided to close his business he made a decision to use what monies were left in the business for his private use rather than to provide for appropriate professional indemnity run off insurance as required by RICS regulations.
RICS expects businesses that it regulates to employ basic business planning procedures including the maintenance of adequate insurance. This was a planned closure of a business and Mr Cain, as part of the planning process, should have allowed for appropriate professional indemnity run off insurance to be put in place. The Panel regards Mr Cain’s failure to make such provision as extremely serious. The regulations are in place in order that the public is adequately protected in the unfortunate event of a claim arising following the cessation of a business. It is the least that the public should expect from a business providing professional services. Mr Cain’s actions have allowed the potential for claims to arise which will not be insured. He has exposed himself and the public to these risks.
The Panel has noted Mr Cain’s mitigation and in particular his constrained financial circumstances and it also noted that Mr Cain has no previous disciplinary record with RICS.
The Panel considered whether a caution or reprimand would be sufficient sanction to reflect the seriousness of the breach. It concluded that, in the circumstances of this case, neither sanction was sufficient. In reaching this view, the Panel particularly took account of Mr Cain’s deliberate decision not to pursue the provision of professional indemnity run off insurance.
The Panel then considered whether a fine would be proportionate. Again, the Panel determined that a fine would not reflect the gravity of this matter nor uphold the important principle of regulatory compliance.
The Panel considered whether there could be any undertakings or conditions on membership that would address the wrongdoing in this case. It concluded that there were none.
The Panel has therefore determined that Mr Cain should be expelled from membership of RICS. Mr Cain’s behaviour was a wilful failure to comply with an RICS rule of conduct. This rule is specifically directed to ensure that the public are able to have adequate recourse in the event that advice given to them by a member, who is no longer practising, gives rise to a claim.
The Panel is mindful that expelling Mr Cain from membership does not ameliorate the position of Mr Cain’s former clients. However, it prevents Mr Cain from continuing to practice as an RICS member. This action serves to demonstrate the importance RICS places on its members complying with all its rules and not just those which they choose to observe. It is unacceptable for RICS members to ignore their obligation to maintain adequate professional indemnity run off insurance. Further this penalty serves to protect the reputation of the profession and deter others from acting in a similar manner.
Mr Cain is to be expelled from membership forthwith.
Determination on Publication and Cost
The Panel determined that publication should be made in line with the publication policy as set out in Supplement 3 to the Sanctions Policy dated 1 January 2008 (v2).
The Panel determined to award costs against Mr Cain, in the sum of £3,707.75 as set out in the schedule prepared by RICS and sent to Mr Cain on 28 October 2010. The Panel requests that RICS staff consider the collection of this amount in instalments so as to take account of Mr Cain’s financial circumstances.
Mr Cain has a right to appeal against this decision within 28 days of the date the decision is deemed to have been served on him.