Professional Conduct Committee Decisions

ARCHITECTS REGISTRATION BOARD

PROFESSIONAL CONDUCT COMMITTEE

IN THE MATTER OF

MR ERIC ERIKSON (064730F)

held on

21- 23 November 2011

at
Clifford’s Inn Conference Centre
Fetter Lane London
EC4A 1LD

Present:

Mr Paul Housego (Chair)
Mr Stephen Neale (PCC Lay Member)
Ms Judy Carr (PCC Architect Member)

Mr Stephen Battersby (Clerk to the PCC)

Mr Iain Miller of Bevan Brittan represented the Board.

Mr Erikson attended the hearing and was unrepresented.

The allegation against Mr Erikson is that he is guilty of unacceptable professional conduct in connection with the project at 44 Fitzjohns Avenue London NW3 on behalf of his client Dr Kevin Leddy.
There are 4 matters alleged:

First, that he failed to act in his client’s best interest and accordingly consistent with his professional obligation, and /or that he failed to act with integrity. Five specific matters are alleged under this heading.
1. That he failed to inform (or misrepresented to) Dr Leddy remedies available to him following the contractors delay in completing works.
2. That he delayed in informing Dr Leddy of the contractor’s financial circumstances.
3. That he recommended that Dr Leddy make payments to an individual who was not a party to the contract.
4. That he advised Dr Leddy to pay monies to Danvic (UK) Ltd and / or a 3rd party prior to ensuring that issues regarding building regulation approval and contractors receipts were effectively dealt with.
5. That he failed to provide Dr Leddy and/or Kemi Leddy and/or Donal Leddy with a copy of the signed contract.
Secondly that he failed to carry out his professional work faithfully and conscientiously with due regard to the relevant technical and professional standards, contrary to standard 4 of the code. This was clarified so that it was put as an allegation of lack of impartiality, which was denied, and that there was a failure to obtain building regulation approval, which Mr Erikson agreed was factually correct, but denied there was unacceptable professional conduct involved.
Thirdly that he failed to carry out professional work without undue delay, and, so far as was reasonably practicable, in accordance with any timescale and cost limits agreed with the client.
Fourthly that he failed to deal with a complaint made on 12 August 2009 about his professional work promptly or appropriately.
Save as above Mr Erikson denied the allegation and the matters set out above.
The 2002 code applies to all matters. We bear in mind that the burden of proof is on the Board’s solicitor on the civil standard: that is on the balance of probabilities.
Dr Leddy had consulting rooms at the address of the contract. He retired from practice, and wished to refurbish the consulting rooms so as to let them as a residential flat. Mr Erikson was recommended to him, and was engaged by Dr Leddy. The proposal letter from Mr Erikson is dated 22 July 2006, but was misdated, as it was 2007. The contract between them was signed on 23 July 2007. Mr Erikson had worked with Danvic (UK) Ltd for some 10 years. He obtained quotations from several contractors, recommended Danvic (UK) Ltd, and a contract was signed between Dr Leddy and Danvic (UK) Ltd on 21 February 2008 with a start date of 3 March 2008 and a completion date of 9 May 2008.
Work started in time. There were some additional works, and there were some delays. There was concern at delay in August 2008 expressed by Dr Leddy’s daughter in law.
On 12 of October 2008 Mr Walker, who controlled Danvic (UK) Ltd, put in a routine request for payment and stated “a quick payment would be very handy.” Mr Walker had been accustomed to Dr Leddy paying his accounts within 3 or 4 days. On this occasion Dr Leddy did not pay so promptly. The contract provided for payment within 14 days of receipt by the client of payment request after being approved by the architect. On 28 October 2008 Mr Walker left site. He sent an e-mail on that date (document 50) saying that he was leaving site until he received payment. He said this was because of the current climate and cash flow for his business, and that it was purely for economic reasons only. He apologised to Dr Leddy for this.
Mr Erikson now says that the lack of payment by this date was a breach of contract by Dr Leddy. This is wrong. Plainly it was not the contractor’s view at the time. We accept the statement set out at the time by Mr Erikson that the contractor should not have left site. This is contained in document 52, an e-mail of 29 October 2008 “Dr Leddy has assured me today that he will be sending you a cheque today for your valuation request of 14 October. This is within contract terms so your withdrawal from site is really not justified. Please rectify this by returning to site as soon as possible.”
Dr Leddy did indeed supply a cheque. It failed to clear the bank because the bank insisted on its contractual period of notice to withdraw money from another account, this being at precisely the time of the Lehman Brothers financial crisis. Dr Leddy provided a replacement cheque on 3 November which cleared the bank on 5 November. We accept Dr Leddy’s evidence given orally that he was mortified at the cheque failing to clear and that he explained the reason to the contractor. On the balance of probabilities we do not accept Mr Erikson’s evidence that the contractor knew, only, that the client had bounced a cheque on him.
By 5 November 2008 Mr Walker and his company were engaged on work in Nottingham or elsewhere. Mr Erikson had discussions with the contractor, though there are no letters or e-mails. No advice was given to Dr Leddy about his alternatives or options. No doubt partly as a result of Mr Erikson’s discussions with the contractor (for Dr Leddy had none) the contractor returned to site commencing work effectively from 10 January 2009. There was a substantial retention of monies at that time, and throughout this contract.
By early February 2009 the initial work was 94% complete. Further works were instructed. This occurred over a period of time. Some £23,000 worth of additional work was ordered. That work was largely complete by the end of May 2009. There is no complaint about the progress of works during that period.
At no time was the original contract revisited to agree a new completion date for the work. Mr Erikson points out that the goalposts continually moved with additional works being commissioned and that they would have had to have been frequent changes of completion date. After February 2009 we think is correct. Prior to October there was an agreement that 18 November would be a completion date. It was not a formal variation. We do not think this matter can justify a finding of unacceptable professional conduct.
Mr Erikson’s evidence concerning worries about the financial viability of Danvic (UK) Ltd was that he had no concerns until late May. However in his submissions to us he retracted that evidence and said that he did have concerns as early as March 2009. On the written evidence it is difficult to see how one can find otherwise because on 7th June 2009 (66 / 67) Mr Erikson wrote to his client to say “I am advised by Danvic (UK) Ltd that they became unable to pay their debts in February 2009… Since that time I am further advised that Danny Walker has taken on the work personally and has completed the work to its present stage of practical completion.… I am reliant on Danny Walker for the above information which he first broached to me in March 2009.”
Mr Erikson now says, in his submissions, that he had concerns about the viability of the contractor but (as he said in evidence) considered it relevant that the work was being carried out to a high standard, there was no interruption in the performance of the work, that there was a substantial retention (some £30,000 on a total contract value of some £90,000) for most if not all of this period. Additionally, the contractor was not continually pressing for payment. No request for payment was made, and the architect certified work as normal. Accordingly he considered it in his client’s best interests not to worry him about the possible insolvency of the contractor. The revision of his evidence (set out in this paragraph) seems to us more likely to be the case, and we so find.
That letter (66/7) went on to suggest that Danny Walker was entitled to be paid personally for all work carried out from February 2009 (£30,000). He suggested also that £10,000 be paid immediately to Danny Walker personally against an undertaking from Danny Walker to repay the money if a claim was made, successfully, by administrators or liquidators of the contractor. He suggested that a further £15,000 was retained, but was due to Danny Walker and that the remaining £5000 (making a total of £30,000 owed) was held on retention, but that a discount might be possible. He suggested in addition that the initial payment of £10,000 was made within 7 days.
On 10 June 2009 a certificate of practical completion was issued, giving a practical completion date of 5th of June 2009.
On 10 June 2009 Dr Leddy changed the locks at the premises. There were 3 minor items remaining to be done, but nothing else. Mr Erikson wrote to Dr Leddy on 10 June 2009 (document 70) stating “I have to advise you that this is a clear breach of contract on your part and opens up the possibility of a claim against you under the terms of the contract.” In the same letter he enclosed a certificate of practical completion. The whole letter is very hostile towards the client. There is no possible explanation, and Mr Erikson was unable to offer one to us, about how, at one and the same time, a certificate of practical completion can be is issued, certifying that the job is done, and the changing of the locks amounts to a breach of contract with the contractor. This is the more so here where the certificate gives a completion date of 5th June, 5 days before the locks were changed.
Plainly Mr Erikson was concerned as to whether Danvic (UK) Ltd was still in existence, so on 10 June he made enquiry of the company’s bookkeepers. On that same day Mr Erikson received an e-mail from the bookkeepers for the contractor (document 71) stating that the company was not in liquidation and that the bookkeeper had not yet (that word should have rung alarm bells) been informed that the company had ceased trading. It also stated that the company had received 3 court judgments for late payment of outstanding debts and that those 3 judgment creditors had threatened winding up orders if the debts were not settled. It did not say how much the judgment debts were, or that they had been settled. In fact the company was put into liquidation the following day, 11 June 2009. This was not known by Mr Erikson or by his client until 29 July 2009. Mr Walker will, of course, have known. He did not share that information with Mr Erikson or with the client, Dr Leddy.
At an earlier stage, 28 of August 2008 Dr Leddy’s daughter-in-law, Kemi Leddy had written to Mr Erikson expressing concern about absence of workers on site, and pointing out that delay results in loss of income from rent. We do not accept Mr Erikson’s evidence that he had no idea whether the property was to be sold or rented. Whatever was to be done with it it was obvious that delay would mean loss to the client, and it is not credible that Mr Erikson should disbelieve the statement in the letter of 28 August 2008 that the property was to be rented. That letter also says that there is no written contract, which (by necessary implication) was information obtained from Dr Leddy. Mr Erikson did not supply one in response.
On receipt of that letter Mr Erikson spoke with Dr Leddy. He said that if Kemi Leddy was involved the contract documentation would have to be rewritten and that would involve expense and delay. It was not so, but Dr Leddy was concerned about this and said that he would continue to deal with matters alone. Mr Erikson wrote to Mrs Leddy “I have spoken with my client Dr Leddy and we are agreed that matters should remain on the agreed contractual basis between us. Accordingly I will deal with contractual matters with Dr Leddy only.” There was no valediction to this letter. This is typical of the correspondence addressed to Mrs Leddy by Mr Erikson. He again attempted to remove Mrs Leddy from the equation by letters of 6 February 2009 (document 55) and 30t July 2009 (document 142) where he refused to accept a written instruction from Dr Leddy to deal with Dr Leddy’s son Donal.
Mrs Leddy is a barrister engaged in the government legal service. It was fortunate that Dr Leddy asked her about the e-mail containing the suggestion that £30,000 be paid to Danny Walker. There was a meeting on 11 June 2009 referred to in a letter sent by e-mail on the 12th (document 92 to 94). In this she raised the question of a structural engineer’s report. She wondered whether building regulation approval was necessary, as indeed was the case, for a structural beam supporting a chimney for the flat above. It is plain that at the meeting the suggestion to pay Danny Walker personally was refused by the client, but that there was an offer made by Danny Walker to accept payment to Danvic (UK) Ltd of £25,000 plus VAT to be paid immediately to Danvic (UK) Ltd. At this time Mr Walker had formed a new company, Danvic Ltd, the sole shareholder being his wife. Given subsequent events it seems to us likely on the balance of probabilities that Mr Walker’s aim was to have £25,000 paid to his wife’s company. It is clear that there was now no question of payment direct to Mr Walker personally, but that was not because of Mr Erikson’s involvement, but because of a refusal by the client. To pay Mr Walker direct was a naive suggestion according to Mr Erikson, viewed with hindsight. He understates the matter.
Ultimately £10,000 was paid to Danvic (UK) Ltd. The cheque was so addressed although the payment request asks for a cheque payable to “Danvic Limited” (page 78). That cheque was paid into Mr Walker’s wife’s company but the money subsequently recovered (presumably) by the liquidator of Danvic (UK) Ltd. While Mr Walker is not a party to these proceedings and we have heard no evidence from him, there are question marks over Mr Walker’s actions at this point.
On 3 July 2009 Mr Erikson then declined to deal with Dr Leddy by e-mail, (page 125), on the basis that the e-mails were in fact being written by Mrs Leddy, Dr Leddy’s daughter in law. This was less than helpful.
On 29 July Mrs Leddy found out that the company had been the subject of the liquidation order (on 11th June 2009) and she wrote to Mr Walker to say that she would make no further payments to Danvic (UK) Ltd. This was copied to Mr Erikson who described this “as a drastic step which plunges the whole situation into deep crisis”. This is not a justified comment.
Also on 29 July, or possibly 30 July 2009 Mr Erikson received a letter of authority signed by Dr Leddy asking Mr Erikson to deal with his son Donal. Mr Erikson replied on 30th (document 142) to say that it was unwitnessed and it was a “purported letter of authority” This was unacceptable. He also requested payment of his outstanding invoice of £4870.10 dated 5 June 2009–issued at the same time as the certificate of practical completion.
However he did write on 1 August 2009 (document 143) to say that “there is no provision within the contract for liquidated and ascertain damages to be applied, so your ambitious claim of one year’s rent does not appear tenable.” He refers to this as the routine matter of dispute being raised by the client once the job is finished to avoid payment.
He does not refer to the possibility of a claim for breach of contract by the contractor. This repeats what he said in the letter of 7 June 2009 (docs 66/7) where he said “I would also confirm that, as we have discussed, there is no provision within the contract with Danvic for liquidated and ascertained damages which might otherwise be claimed for loss and expense due consequent on the slow progress of the work over the last 5 months. You are not therefore entitled to make any deductions in this respect”. Mr Erikson seeks to explain this as saying only that there was no liquidated damages clause–which is correct. What is conspicuous by its absence from both these communications is the advice one would have expected that the client is not deprived of remedy simply because there is no liquidated damages clause. Dr Leddy was left with the impression that he simply had no remedy at all. That was the advice he was given by Mr Erikson. It was incorrect and advantaged the contractor, who was (at the time) not subject to any claim, and correspondingly disadvantaged the client, who did not know what his position was.
The history of the matter comes to a swift conclusion. A detailed letter of complaint was compiled by Mrs Leddy and sent to Mr Erikson on 12 August 2009, document 144 onwards. Mr Erikson did not reply to this letter at any point. He had decided to commence County Court action for recovery of his fee note. At about this time, and probably (given the issue date of the summons) after the receipt of the complaint letter he sent the summons to the County Court, which issued it on 17 August 2009, document 155. He did not acknowledge the letter from Donal Leddy, nor a subsequent e-mail of 1 September 2009. (Document 156) where Donal Leddy says “I have not received a response to my correspondence below–please could you let me know when I can expect to receive one?” He also says “I note that you issued a County Court claim against my father on 17 August and assume that this is your preferred method of dealing with the dispute between us. Therefore I will respond your claim in due course on my father’s behalf.” Mr Erikson says that he ignored the first part of the letter requesting a reply because of the second part of the e-mail.
We now return to the allegations.
1 (i) Failed to inform or misrepresented the remedies available following contractors delay. We refer to these above. On two occasions when advice was needed it was wanting. It is the architect’s responsibility to tell the client what remedies he may have. He was told that he had no liquidated damages claim and therefore had no remedy. This allegation is proved.
1. (ii) Delay in informing Dr Leddy of the contractor’s financial circumstances. Mr Erikson accepts that he knew some months before he told his client that the company had financial difficulties. He says that he was aware of that work was being carried out on site, that it was being done to a high-quality, that there were no persistent requests of payment, and that there was a substantial retention. This is all true. Therefore he did not consider the client to be at risk and thought it better to say nothing. That was not his decision to make. It is the client who should decide what to do, on advice from the architect, and possibly also his lawyer. This allegation is also proved.
1. (iii) We can find no description of the suggestion that payment should be made direct to Mr Walker other than that it was extraordinary. Attempts to build in safeguards to the client were patently useless; an undertaking by an individual to repay £10,000 was likely to be of limited value when that individual’s company had unquantified unsatisfied County Court judgments against it. Attempting to backdate £30,000 of the work to Mr Walker personally when there was no contractual relationship between Mr Walker and client is incomprehensible. Mr Erikson knew, because Mr Walker had told him, that Mr Walker had borrowed £10,000 personally from his uncle. There is no suggestion of any dishonesty here, but it does seem to us that Mr Erikson was intent on trying to assist Mr Walker in his difficult personal financial circumstances. In doing so he was placing his client in entirely unnecessary jeopardy. The work was substantially complete by this point. The only question was who would receive payment for it. If Mr Walker’s company went into liquidation, then it would be the liquidator and hence the creditors. This was not impartial advice between contractor and client, and it was not motivated by any concern about the client’s position. This allegation is proved.
1(iv) Advising payment prior to issues being dealt with regarding building regulation approval and contractors receipts were effectively dealt with. We do not find this proved. Practical completion is a somewhat difficult area. There was a very large amount of money outstanding on this contract–some £30,000–and it was not unreasonable to expect some of that money to be released to the contractor, or to the liquidator.
1. (v) There is no evidence of a signed contract being given to the client, or in his direction. On the balance of probabilities we find the allegation proved.
2. Failure to carry out professional work faithfully and conscientiously–this relates to two matters. First the building control matter. Mr Erikson admits he was at fault here, but this is not an allegation of serious professional incompetence. He denied there was any responsibility to obtain such consent, and then attempted to blame the client for it. He said that the client had advised the work was non-structural, even though he, the architect, had commissioned a structural engineer’s report. He said initially, on 16th June 2009 (document 97) that this was simply a device by the Council to obtain more in the way of fees. Later, on 07 July 2009 (document 130) he attempted to blame the client by saying “You specifically advised me that this was non structural”. He is the architect. It is his responsibility. He also blamed the contractor for failing to notify the Council building control department of the commencement of work. This was Mr Erikson’s responsibility. He tried to evade his responsibility here, and this is proved.
The second way this is put is lack of impartiality.
There was a lack of impartiality throughout the conduct of this contract. One has only to contrast the mild letter sent to the contractor who left site before payment was due with the letters to the client to which we have referred above. The suggestion that Mr Walker should be paid personally is also a failure of impartiality. Mr Erikson had a long and harmonious working relationship with Mr Walker going back some 10 years. Whenever there was a difficulty in the contract administration he did not act in an evenhanded way, but put the interests of the contractor before those of the client. We bear fully in mind that he is correct in saying that there was always a substantial financial buffer for the client, and that the work was carried out to a high standard, but even allowing for this, the allegation is proved.
3. He failed to carry out professional work without undue delay. This refers to the gap between in the end of October and the beginning of January 2009. There is no suggestion of a delay in Mr Erikson’s own professional work nor time limits or costs limits being disregarded. Mr Erikson did not formally extend limits. He did not issue formal notices when the contractor went off-site. There are matters of degree here and while it may be that Mr Erikson can be criticised, this was not unacceptable professional conduct. The contract changed continually over time, and we accept Mr Erikson’s point that he would have had to issue revised completion dates frequently. He did provide detailed cost analysis reports as the contract continued. When the contractor was off-site, Mr Erikson did work with the contractor successfully to ensure the contractor returned to site after a period of approaching 2 months, which period included a substantial Christmas break. We do not agree that there is unacceptable professional conduct on this point.
4. Mr Erikson received a detailed letter of complaint. His only response or action was to issue a court summons. Even if the court summons was in process prior to the receipt of the complaint (which we doubt) the complaint was simply ignored. We do not accept Mr Erikson’s explanation that Donal Leddy acquiesced or requested that the matter be dealt with through the court. Mr Erikson simply ignored his professional obligations here, and indeed said he was unaware of them.
When one considers the various matters which we have found substantiated, we find Mr Erikson is guilty of unacceptable professional conduct, and acted with a lack of integrity.
In coming to this conclusion we have noted Mr Erikson’s objection to the witness statements of Dr Leddy and Mrs Leddy. These are drawn in substantially the same terms. They were drafted by a solicitor after a discussion with the two of them jointly. We have come to our conclusions largely on the basis of Mr Erikson’s own evidence to us, and on a detailed consideration of the documents. The two witness statements are in large measure commentary upon those documents. In fact, we do not need the assistance of those two witness statements to arrive at our conclusions.

Mr Erikson spoke in mitigation

In the circumstances the PCC considered the appropriate sanction to be a penalty order of £1500, payable within 28 days

Back