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Disciplinary Panel Hearings

27 2月 2014

Mr Nicholas Procter 26 February 2014

Mr Nicholas Procter,
Disciplinary Panel hearing - 26 February 2014

CHARGES HEARD:

The formal charge is:

1. You did not at all times avoid any actions or situations that were inconsistent with your professional obligations in that following an investigation by the Insolvency Service into your position as a director of Procters Surveys and Valuations Ltd. you gave a Disqualification Undertaking under the Company Directors Disqualification Act 1986 disqualifying you from being a director of a company or an insolvency practitioner for a period of 5 years from 23 July 2013 Contrary to Rule 3 of the Rules of Conduct for Members 2007

BACKGROUND:

The Panel is convened to hear this charge, as brought by the RICS, against Mr Procter.  Mr Procter has been a member of RICS since 31 March 1992.  He was the sole principal and contact officer for the firm, Procters Surveys and Valuations Limited, trading under the names Procters Energy Assessment and Procters Commercial. 

With effect from 23 July 2013, Mr Procter was disqualified from acting as a company director for a period of 5 years, pursuant to a Disqualification Undertaking (the Undertaking) to which he agreed, pursuant to the Company Directors Disqualification Act 1986.  The Undertaking, dated 1 July 2013, narrates the following as undisputed facts; -

i. Mr Procter was director of Procters Surveys and Valuations Limited
ii. Procters Surveys and Valuations Limited went into Creditors Voluntary Liquidation on 22 July 2011;
iii. As at that date that company had assets of £3,500;
iv. As at that date it had liabilities of £110,440;
v. As at that date it therefore had a deficiency as regards creditors of £106,940;
vi. It had share capital as of that date of £100;
vii. The company had a total deficiency therefore of £107,040, as at the date at which Procters Surveys and Valuations Limited entered liquidation.

The schedule to the Undertaking further narrates that Mr Procter;-

 "Failed to ensure that Procters Surveys and Valuations Limited submitted timely returns and timely payments in respect of VAT and Corporation Tax and caused [Procters Surveys and Valuations Limited] to trade to the detriment of Her Majesty’s Revenue and Customs (“HMRC”) in respect of VAT from 01 May 2009 to 31 March 2011 and Corporation Tax from 01 July 2010 to 31 March 2011". 

The Undertaking further records that Mr Procter;-

 “Failed to act with due regard to the interests of Procters Surveys and Valuations Limited and its creditors at a time when [he] was aware that the company was insolvent, by retrospectively increasing [his] own remuneration and that of [his] wife which had the effect of expunging [his] overdrawn director’s loan account and creating a further liability to HMRC of £33,071, which remained unpaid at the date of the Liquidation."

In respect of these matters, which are more particularly detailed in the schedule to the Undertaking, Mr Procter has undertaken to the Secretary of State for Business, Innovation and Skills that, in accordance with Section 1A of the Company Directors Disqualification Act 1986, he will not, for a period of 5 years; -

“(a) be a director of a company, act as receiver of a company’s property or in any way, whether directly or indirectly, be concerned or take part in the formation or management of a company unless (in each case) [I] have the leave of the court, nor

(b) act as an insolvency practitioner."
 
The fact of Mr Procter’s disqualification, and the matters from which it arose, were reported in the local and business press; in addition to being reported formally by the Insolvency Service. 

DETERMINATION

Findings of Fact

The Panel has received and accepted legal advice from the legal assessor. It has reminded itself that the burden rests with the RICS to prove its case and to establish the material facts to the standard of the balance of probabilities. The facts, as set out in the charge and narrated above, are admitted by Mr Procter, and are found by the Panel to be proved, both upon the basis of that admission, and in any event upon the basis of the evidence, oral and documentary, produced to the Panel. In arriving at this conclusion, the Panel has had regard to all of the evidence, including documentary evidence of the Disqualification Undertaking, and its terms. It has also had careful regard to the oral submissions presented at the hearing by both parties.

The Panel accordingly finds that, following an investigation by the Insolvency Service into his position as a director of Procters Surveys and Valuations Ltd, Mr Procter gave a Disqualification Undertaking under the Company Directors Disqualification Act 1986, disqualifying him from being a director of a company or an insolvency practitioner for a period of 5 years from 23 July 2013.

Panel’s Decision

The Panel regards very seriously the disqualification as a director of one of RICS’ members. It has considered carefully whether such disqualification, and the circumstances in which it arose, means that Mr Procter has, as charged, breached Rule 3 of the RICS Rules of Conduct for Members 2007.

It is clear that Mr Procter did not run his business appropriately, from the perspective of the relevant regulatory authority. Moreover, the Panel has no difficulty in concluding that he did not conduct his affairs in a way which was consistent with his obligations as a professional, and specifically as a member of the RICS. The facts as established raise serious concerns as to Mr Procter’s integrity and insight.  The Panel is particularly concerned by the fact that Mr Procter has demonstrated an approach to the payment of creditors which was certainly cavalier and unprofessional, and was quite probably reckless. It does not consider that this was an approach which would promote trust in the profession. It is concerned as to his lack of insight in relation to the seriousness of his decision- one he accepted he had made- once his company had entered into voluntary liquidation, to remunerate himself in preference to paying his creditors. It appears to the Panel that Mr Procter approached his predicament with the sole objective of financial survival, but in doing so demonstrated an appetite for personal and commercial risk which was not consistent with either his legal or professional responsibilities.

Mr Procter stated that he had, at different points, obtained professional advice, including from accountants and lawyers, although he was unable to produce any documentary evidence of the advice he had received. Disqualification as a Director is always a serious matter and one which necessarily raises significant concerns from the perspective of the public interest. It is a matter for which Mr Procter must take responsibility, as a professional and as a member of the RICS. 

The Panel finds that Mr Procter has failed at all times to avoid any actions or situations that are inconsistent with his professional obligations, and as such that he has breached Rule 3 of the RICS Code of Conduct for Members. For all of these reasons the Panel finds Mr Procter liable to disciplinary action, in accordance with RICS Bye-law 5.2.2(c).

Penalty

The Panel received and accepted advice from the legal assessor. It considered carefully submissions from both parties, and had regard to the RICS policy on Sanctions.

The Panel notes in particular that Mr Procter had suffered a period of hardship, both personal and financial. There had been a family bereavement which, he stated, had distracted his attention for at least part of the period in question from his business affairs. Mr Procter further stated that he had sought and relied upon professional advice, although was unable to produce any written evidence of the actual advice obtained.

The Panel determines that it is appropriate, necessary and proportionate in this case to impose a penalty. Mr Procter’s conduct was of such a serious nature that it would be inappropriate not to impose a sanction. The Panel proceeded to consider each of the available penalties in turn, beginning with the least serious, stopping once it arrived at a penalty which it considered sufficient and appropriate in all of the circumstances.

The Panel does not consider that the imposition of a caution or reprimand would be sufficient in the circumstances of this case, recognising the seriousness of Mr Procter’s conduct, and the concerns which the Panel has expressed as to his integrity and insight. Mr Procter’s conduct in this case is such as to give rise to a serious risk of bringing the profession into disrepute. The Panel is further concerned that Mr Procter had failed to alert his professional body to the fact of his disqualification.

The Panel does not consider that any purpose will be served, from the perspective of the professional concerns raised in this case, in the imposition of further undertaking(s), over and above the statutory undertaking provided to the Secretary of State.

The Panel does not consider that the imposition of a fine would be sufficient or appropriate, given its significant concern as to Mr Procter’s lack of insight, and the real concern that this raises from the perspective of the public interest.

The Panel considered very carefully whether it might be possible to address the concerns raised in this case through the imposition of conditions. It does not consider that this would be possible, in the circumstances of this case. This was not a case, for example, in which the concern related to a specific aspect of the Relevant Person’s competency, but to matters of his broader professionalism and integrity.

The Panel took account of the fact that there had been direct detriment to the public as a result of Mr Procter’s decision improperly to pay himself a salary in preference to the claims of Her Majesty’s Revenue and Customs. Mr Procter had received direct benefit for himself and his family as a result of his actions. Mr Procter had demonstrated a serious lack of professionalism in both failing to manage his company’s tax affairs appropriately, over a significant period of years, and in deciding to pay his own remuneration in preference to the claims of his creditors, as set out in the Disqualification Undertaking. The latter in particular gives rise to a serious concern in relation to Mr Procter’s integrity. Mr Procter failed to notify the RICS of his disqualification, a matter which the Panel regards as being of some seriousness in its own right. Mr Procter has throughout demonstrated a marked lack of insight as to the seriousness of his actions, which are such as to give rise to concern from the perspective of the public, and of the profession, in terms of its good standing in the public eye.

Having regard to all of the circumstances, and for all of these reasons, the Panel determines that it is necessary in this case to expel Mr Procter from membership of the RICS. It so orders, with immediate effect. 
 
Determination on Publication and Costs

The Panel received and accepted advice from the legal assessor, and had regard to the RICS policy guidance on publication and costs. It had regard to submissions received from both parties in relation to publication and costs. It heard submissions in particular from Mr Procter in relation to his current financial means.

Publication

The Panel directs publication in accordance with Supplement 3 to the Sanctions policy, in Modus, on the RICS website, and in a newspaper local to Mr Procter.

Costs

The Panel orders that Mr Procter pay the costs of the RICS in this case of £4,723.50, as sought.

Appeal Period

Mr Procter has 28 days to appeal this decision in accordance with Rule 59 of the Disciplinary, Registration and Appeal Panel Rules.