THE LAW SOCIETY S RESPONSE TO THE COMPETITION AUTHORITY S FINAL REPORT ON ARCHITECTS

Transcription

1 THE LAW SOCIETY S RESPONSE TO THE COMPETITION AUTHORITY S FINAL REPORT ON ARCHITECTS The Law Society has reviewed the Competition Authority s final report on architects dated March 2006, which sets out the key competition issues which the Authority has identified in the architects profession. The Law Society s response, as set out below, is confined to those areas of the Authority s report that are related to the recommendations contained in the report that call for action to be taken by the Society. The Authority has identified the area of Opinions on Compliance as a restriction on offering architectural services. However, it does not seem to have understood the position with regard to certificates of compliance properly. In the Glossary at page v, it refers to An Opinion on Compliance with building regulations as being a requirement of financial institutions. The Law Society has two comments in relation to this reference: (a) (b) The requirement that architects (or any one of a number of other professionals) give certificates of compliance in relation to any development under the planning legislation, long pre-dates the building regulations. Architects were being asked to give certificates of compliance with planning permissions (and with Building Bye-laws in relevant local authority areas) from a time shortly after the 1963 Planning Act came into force in October Such certificates were first required by prudent solicitors acting for purchasers in the late 1960s, and the practice became commonplace and a widely accepted feature of conveyancing practice by the mid-1970s. The need for certificates of compliance was highlighted by the introduction of Sections 26 and 27 of the 1976 Planning Act. Building regulations were first introduced in the early 1990s under the Building Control Act 1990, some 15 years or more after the practice of requiring certificates of compliance had become commonplace. Any purchaser, and not just financial institutions, required such certificates in respect of any building where development needing planning permission had been carried out since 1 st October 1964, in order to ensure that such development was not unauthorised development within the meaning of the Planning Acts, which would have cast a serious blot on the title. The erroneous assumption that an opinion on compliance is required only where a borrower is raising finance on a building being used as collateral for a loan, is repeated on page viii and at paragraph Every purchaser, regardless of whether

2 or not they are borrowing on the security of the relevant premises, needs evidence of some kind that the property being purchased has not been constructed, altered or extended in contravention of planning legislation. It is precisely because a prudent purchaser requires a certificate of compliance that a lending institution giving a loan also requires it. This is to ensure that, in the event of a forced sale by the lending institution, a potential purchaser will not reject the premises for lack of evidence of compliance with the planning laws. In this regard, and with a view to a future sale (which is also a legitimate concern of any purchaser, whether or not they are borrowing to assist a purchase), a lending institution is merely exercising the same level of care as any prudent purchaser in ensuring that the property complies with the planning laws. The Society would like to comment in relation to Paragraph 4.25 that the Conveyancing Committee of the Law Society has issued recommendations to members of the Society in relation to planning matters since the late 1960s. Its recommendations to Society members on the format of certificates of compliance and on who should certify compliance have been necessary because of a continuing failure to establish and observe national standards for compliance and enforcement of planning permissions and (in more recent years) building regulations. It is not a role that the legal profession has taken upon itself by choice. However, in order to protect clients from the often dire consequences of purchasing unauthorised developments, the Society has recommended certain basic requirements which have gained wide acceptance by the building industry, the architects profession, the engineers profession, the building surveyors profession, the auctioneering profession as well as by the legal profession itself, over the last forty years as being both necessary and reasonable. Paragraphs 4.26, 4.27, 4.28, 4.29 and 4.30 lead to the recommendation in Paragraph 4.33 that any individual who has sufficient professional indemnity insurance should be qualified to give opinions on compliance. Please see the Society s later comments in relation to Recommendation 7(b). Part of the practice recommendation published to solicitors by the Conveyancing Committee of the Law Society in October, 1994 on who should certify compliance is wrongly paraphrased in the Authority s report at the second bullet point of Paragraph That paragraph mis-states that The Law Society has identified specific characteristics that individuals should possess in order to give Opinions that would most likely be accepted by a court. The paragraph goes on to list these characteristics. Six of the seven qualifications listed in the Society s recommendation have been transposed verbatim as characteristics in paragraph 4.26 of the Report. However, recommendation (b) of the Society s practice note, being the only recommendation that relates to practically-trained architects without formal qualifications, is wrongly paraphrased as Persons who have been in practice as architects on their own account for 10 years, particularly those on the Minister s List ;. Recommendation (b) of the Society s practice note actually states that the 2

3 relevant category would include persons on the Minister s list. It does not exclude persons who are not on the Minister s list and, in fact, the first sentence of paragraph (b) of the Society s practice note clearly includes Persons who have been in practice as Architects on their own account for ten years. In addition, the Society s practice note does not state that these qualifications are characteristics that would most likely be accepted by a court. What it actually says is that [the Conveyancing] Committee feels that it is reasonable for solicitors to accept Certificates of Compliance or Certificates of Opinion from:- persons with the qualifications in the list that followed. Following on what is contained in paragraph 4.26, paragraph 4.27 of the Report incorrectly states that The Law Society s list excludes some practically-trained architects without formal qualifications who are not on the Minister s List, but who may, by virtue of skills and experience acquired since the creation of the List, have sufficient ability to provide Opinions on Compliance. The Society has two comments to make on this statement:- (a) (b) As outlined above, the Law Society s practice note does not in fact exclude people who are not on the Minister s list. The practice note was published in October, It appears from the Authority s Report that the Minister s list was compiled in However, its compilation was anticipated in the Society s 1994 practice note. The Law Society s guideline, in including persons with 10 years practice as architects on their own account, follows a normal practice in relation to unregistered professions, which is usually adopted when legislation providing for the registration of such professions is introduced, of accepting that a number of years actual practice in a profession should entitle a person to registration in the absence of any formal qualifications. It is evident from the practice note that the Society did not intend waiting for the Minister s list to be compiled before it included in its own list of suitable qualifications for giving certificates of compliance those persons with the appropriate experience but without formal qualifications. It has been the experience of the Law Society that many people who had already been practising as architects on their own account for 10 years or more without formal qualifications by the time the practice note was published in October, 1994, regularly availed of the Society s practice recommendation before the Minister s list was ever compiled, and they continue to do so in significant numbers. Indeed, it is entirely possible that many of these people did not need to apply subsequently to go on the Minister s list, because they would have been able to conduct their normal business as architects without being on his list. The Authority offers no evidence to support the erroneous claim in paragraph 4.27 that the Law Society s list excludes persons who may have acquired the necessary skills since the creation of the Minister s list. Since the Minister s list is now some 10 years old, the Society is aware that there are likely to be 3

4 persons who have acquired the 10 years experience in practice as architects on their own account, which the Law Society considers reasonable for those who have no appropriate professional qualification. The recommendation in (b) of the Society s practice note applies whether or not those persons are on the Minister s list, and whether they acquired the appropriate 10 years experience before or after the Minister s list was compiled. These persons are not excluded by the Society s recommendation from offering certificates of compliance, as alleged, and the Report is regrettably incorrect in this regard. In response to paragraph 4.28, the Society submits that the statement contained in this paragraph that The Law Society s list results in the exclusion of some competent architects and indeed other professionals is incorrect since it is based on a misstatement and a mis-interpretation of the true nature of the Society s recommendation, as outlined above. In relation to the statement, there are two points that the Society would make: (a) It is precisely because there has been no independent body that determines who is competent to certify compliance that it has been necessary for the Society to issue some form of guidelines to its own members on the kind of qualifications held by individuals from whom it considers it would be reasonable to accept certificates of compliance. The solicitor s recommendation to the client is based on the certifier s formal qualifications or on 10 years practical experience as an architect. These are not unreasonable or inappropriate matters to take into consideration, in the view of the Society. It is noted that the new regulatory body for architects will now regulate the use of the word architect and will register as architects those persons without formal qualifications where it believes they have the necessary experience. It should also be noted that qualifications, a certain number of years experience, or registrations do not in themselves either measure or guarantee competence in every case, but these criteria represent a reasonable starting point when assessing whether or not a certificate of compliance can be relied upon. (b) It is evident from a reading of the Law Society s practice note that other professionals are not excluded from issuing opinions on compliance and it can be seen that, as well as persons practising as architects on their own account for 10 years, engineers and building surveyors are included in the list, including (not particularly ) persons who have been in practice on their own account as engineers in the construction industry for 10 years, i.e. without formal qualification. Therefore, the Society submits that its recommendations include a very broad range of professionals as suitable to certify compliance and are not restrictive in any way. 4

5 The suggestion in paragraph 4.29 that the primary purpose of the Law Society s list is to minimise the potential for solicitors to face negligence claims is absurd. The list was prepared by the Society with a view to assisting solicitors to protect their clients against the many risks of purchasing a building which either constituted, or contained, unauthorised development. A proper system of planning control would have obliged planning authorities to monitor all developments in respect of which planning permission had been granted, with a view to certifying proper compliance with the permission after its completion. Very few planning authorities provided this service, and those that did have now ceased doing so. The Authority at paragraph 4.31 mentions that an independent body responsible for verifying that architectural work complies with the relevant standards would reduce the demand for opinions on compliance, but fails to follow through on this statement with a proposal or a recommendation that such an independent body should be set up. Conscious that not all development, particularly of one-off houses, was designed or supervised by architects or engineers with formal qualifications, and in response to requests from members for assistance in identifying what categories of persons, other than formally qualified architects and engineers, would be asked to provide certificates, the Law Society has regularly reviewed the position and updated its recommendations. In relation to paragraph 4.33, which appears to be the basis for Recommendation 7, the solution envisaged by the Authority and set out in the first sentence of paragraph 4.33 and in Recommendation 7(a) is acceptable to the Law Society. However, the solution envisaged in the second sentence of paragraph 4.33 and contained in Recommendation 7(b) is not acceptable to the Society. The Law Society does not consider that the ability to obtain professional indemnity insurance, perhaps on a oneoff basis, or for a period as limited as one year, or in respect of categories of work that are limited by reference to the certifier s professional qualifications, would be a suitable criterion for deciding whether a person is a suitable person to provide opinions on compliance. An insurance company might well agree, for commercial reasons, to give cover to a person for one year, but not renew it, which might leave the person without cover when claims arise in following years. It is only where professional indemnity cover is mandatory in a profession that reliance can be placed on the fact that a person has current cover. Many people reading the report might not be aware that in order to have cover under professional indemnity insurance it might well be necessary in relation to some policies of insurance that the insured person have cover at the time the negligence occurred and also at the time the claim is made, which might be many years later. The first sentence of paragraph 6.12 states that Opinions on Compliance with Building Regulations are not a legal requirement and suggests that they are only 5

6 required by financial institutions. As previously stated, it is not only financial institutions that require certificates of compliance. It is the view of the Law Society that such Opinions (and opinions on compliance with planning permissions) are an essential and reasonable requirement by prudent people who are either buying or leasing property in order to ensure that they are not buying premises that have been constructed in breach of planning legislation. The statement contained in the second sentence of paragraph 6.12 (that The Law Society s list. excludes practically trained architects that are not on the Minister s List ) is incorrect, for the reasons previously stated and as is evident from a proper reading of the Society s practice note. In relation to the third sentence of paragraph 6.12, the Law Society confirms that it will continue to monitor the categories of persons offering opinions on compliance with planning permissions, particularly in the light of the new Building Control Bill, and re-evaluate its list from time to time. However, the Society does not believe that the possession of professional indemnity cover should ever be the criterion for inclusion in any list. The Conveyancing Committee of the Law Society would be happy to meet with the Competition Authority to discuss any aspect of this submission. Contact can be made either with the Secretary of the Committee, Catherine O Flaherty, at , or the Chairman of the Committee, William Devine, at The Conveyancing Committee has placed this submission on the Society s website for the information of its members and other professionals. Conveyancing Committee Law Society of Ireland July