Unchecked Qualifications

“Trust but verify” is a diplomatic term that applies just as well to architectural practice. Give your team members enough space to exercise their own skills, but always maintain a discreet watchful eye. Lack of professional oversight contributes to several problems, and those problems lead to claims.

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Chapters

• 0:12 Introduction
• 0:52 Episode Summary
• 1:31 Slippery Slope
• 11:01 Lessons Learned from Slipper Slope
• 15:14 Architects and Self-Proclaimed Architects
• 22:10 Lessons Learned from Architects and Self-Proclaimed Architects
• 23:29 Credits and Thanks

Transcript

ARCHITECTS' CLAIMS STORIES – SEASON 2, EPISODE 4 - FINAL TRANSCRIPT

 Welcome to Claims Stories – actual accounts of professional liability claims against Ontario-licensed architects, chosen from the 6,000-or-so cases, defended by Pro-Demnity Insurance Company.

 The Pro-Demnity Claims Stories were originally written by David Croft.

 The Stories are factual, but some elements have been altered to protect the identity of all parties involved – the guilty as well as the innocent.

 Architectural practice, it seems, can be far more exciting than most people imagine.

 … But in architecture, as in life, the wrong kind of excitement can be perilous.

•••••

There’s an old saying in diplomatic circles: “Trust but verify.” It’s a bit of advice that applies equally well to architectural practice. Give your team members enough space to exercise their own skills, but always maintain a discreet, watchful eye.

In these two stories, a technologist and a draftsperson are given enough freedom to assume the role of a qualified professional, but without an experienced architect looking over their shoulder. This lack of professional oversight contributes to several problems, and those problems lead to claims.

 •••••

 The idea of living in a house on a hill has always captivated novelists, songwriters, and architects. There’s the view; the sense of importance; and the feeling of breaking free of earthly bonds – that is, unless mother nature and the laws of physics decide to intervene. 

 Take a house on a hill. Add water, plus a happy marriage, and an inexperienced technologist. Those are the perfect ingredients for a “Slippery Slope.”

 •••••

Arnold Fortas was a wealthy oil executive. His partner, Derek Fortas was a dentist with a successful practice. To celebrate the 20th anniversary of their happy marriage, they had purchased a dramatic, steeply sloping lot overlooking a lake, on which they proposed to build a Hollywood-style dream home. Architect Veronica Spilling was commissioned to design it for them.

 To make sure nothing could go wrong, the couple engaged Spilling with a full-service contract, including design, documentation and supervision – and they didn’t quibble about paying for any additional consultants that their Architect chose to hire. After all, this was going to be their “home-on-a-hill.”

 The Architect’s design solution was every bit as sensational as the site. Taking full advantage of the terrain, she stepped the structure up the hill in a series of five levels, cut into the slope. The interior spaces were spectacular. The views from every level were breathtaking.

 If drama was what the Clients wanted, it is certainly what they got, but perhaps not entirely in the way they expected.

 •••••

 Problems with the house began even before the couple moved in. But the extent of these problems didn’t come to light until the Architect informed Pro-Demnity that her Clients might be preparing a claim against her.

 As Spilling explained it, the foundation work was a little tricky, so she had assigned a new technologist, Anna McBrae, to oversee the work, on an almost-daily basis. McBrae was an enthusiastic employee but had little experience in site work. So, when sinkholes began to spontaneously appear, she did what her intuition told her to do. She ordered truckloads of crushed stone to fill the holes in again. And, as proof that these minor site problems had been resolved, she photographed the whole process. McBrae had no idea that she was recording a catastrophe in the making.

 Much later in the development of the case, when the fledgling technologist was interviewed by the Claims Manager, she proudly produced her photographs and described the circumstances using the polished jargon of a soils expert. It was not until these photographs were subsequently shown to an actual soils expert, hired by Pro-Demnity, that their true significance became evident. By filling the gaps in with gravel, the technologist was acknowledging that an extremely serious problem existed: Subsoil was being washed away – and along with it, the building’s foundational support.

•••••

 When construction was complete, and all the holes had been filled in, the couple moved into their splendid hillside home. But, before long, they began to experience a truly annoying problem. The catch basins at the lowest level were constantly getting clogged. To prevent flooding of the garage, Arnold found it necessary to remove a bucket of sandy sludge every day.

 The Architect inspected. The soils engineer inspected. The structural engineer inspected. They all said that there was nothing to be concerned about. The matter would soon clear up. 

 When summer arrived, the problem, as predicted, cleared up. However, with the autumn rains, clogging of the drains resumed with a vengeance. By the following spring, sludge removal had reached two buckets a day. The clients were getting worried … and angry.

 Pro-Demnity engaged soils specialists to study the matter. After visiting the site and examining all the files – except for the photographs, whose existence was still unknown – they issued a vague opinion that was more useful in shielding them from liability than in providing any helpful solutions.

 Meanwhile, another year had gone by, and another summer had provided temporary relief. But the problem returned the following autumn – accompanied by a new and possibly more ominous development.

 Every now and then, without warning, the house would shiver – and ghostly groaning sounds would rise from the floor. Derek Fortas, convinced that their dream had now become a bona fide nightmare, complete with evil spirits, flatly refused to remain in the house. By this point, both Derek and Arnold, patient and trusting until now, had lost all faith in their Architect and her advisors. They engaged a lawyer who promptly threatened action unless something was done.

 •••••

 Pro-Demnity convened a meeting with the potential defendants, the original soils engineer, the Architect’s excess insurer, represented by an agent, and their legal counsel. The structural engineer refused to show up.

 The soils engineer was in an aggressive mood. He knew what the solution was. For $3,500, a couple of French drains could be installed at the midpoint of the hill; the pressure would be relieved; and the problem would be solved once and for all. And that was as much free advice as he was willing to offer. He had no insurance and no money, and was not about to contribute to anything.

 The excess insurer’s agent was reluctant to get involved. He had been assured by Anna McBrae – the technologist who reviewed, directed and photographed the work – that there was no problem. Since she spoke with the voice of authority, he took her word for it. 

 Fortunately, the excess insurer’s lawyer was an experienced and competent construction claim specialist. He agreed with us that a serious problem was lurking somewhere. Furthermore, he agreed to share the costs of another, more comprehensive study.

 •••••

 For this task, a multi-disciplinary engineering firm was hired, and a field inspector was dispatched to the site. After being shown McBrae’s incriminating sink-hole photographs, the inspector immediately had a hole cut in the concrete rear wall of the lowest level, so he could examine the condition of the supporting soil. He was stunned to find himself looking into a cave. Where there should have been soil supporting the concrete floor of the second level, there was empty space. The soil had simply washed away.

 Entering the cave with a flashlight, a notebook, … and considerable trepidation …  the inspector looked upward to the next highest level, the third floor, where he observed yet another cave. Above this cave, he could see a grade beam intended to support the floor above it. But the beam, having no grade to rest on for most of its length, was sagging dangerously.

 This was enough. Realizing that he was in imminent personal danger, he got out as fast as he could and called Pro-Demnity. We acted right away to have the house vacated, condemned and notices posted, pending remedial work, which, it was apparent, would have to be heroic.

 •••••

 The unhappy Owners were reluctant to abandon their house completely but had no choice. It was apparent that the structure could implode at any moment: Once the floors caved in, the walls and roof would soon follow. The situation was extremely delicate … and perilous. If the undermining could not be stopped, the total loss of a two-million-dollar residence would certainly ensue.

 Finding a soils specialist willing to take on the remedial work, proved to be an extremely difficult task. But eventually a geotechnical engineering firm was found; a soil slope analysis was made; and a plan was devised. It involved inserting perforated pipes at intervals down the slope and pumping weak concrete under pressure, until all the caves were filled. Then a series of dry wells and a soil drainage network could be installed to keep the water table below the unstable material. It would cost a million dollars, at least.

 Added to this were the costs of making good all the damage to the interior, and 12 months’ worth of hotel bills. The project had already eaten deeply into the couple’s savings, and these new expenses would be ruinous.

 •••••

 Pro-Demnity was clearly exposed to its maximum coverage. A deal was negotiated whereby the Architect’s insurers – both Pro-Demnity and the excess insurer – paid the Clients to the Architect’s coverage limits, as per her policy, and shared the engineering costs between them. In return, the clients would issue releases and indemnify against any future claims. They were free to sue the engineers in a separate action.

Even though this story began as a Hollywood-inspired dream, it unfortunately did not have a happy Hollywood ending. The Fortases’ marriage, which had survived 20 years, didn’t hold up under the strain … and ended in divorce.

 •••••

 But, for the rest of us, there are lessons to be learned.

 Lesson No. 1: Architects should encourage their staff to gain onsite experience, but under supervision. It’s a wise idea to have both a performance management program and a project management system in place, so that mentoring, as well as development and progress reports, can be made on a regular basis. Along similar lines, architects should not be too trusting of their staff’s claimed expertise. Self-proclaimed experts are frequently not actual experts. As the saying goes: “You say you’re an expert, I’ll say you’re an expert, but would an expert say you’re an expert?”

 Lesson No. 2: Steep slopes provide wonderful opportunities for romantic stories and dramatic buildings. On a mountainside made of solid rock, a monastery can perch for a thousand years. But on a hillside made of mud, briefer lifespans are to be expected. 

 When building on a steeply sloping site, a soil slope analysis should be made to determine stability at different levels. And, especially, where the building is complicated, geotechnical engineers … with insurance … should be engaged by the owner to make proposals and to perform site supervision during the foundation stages.

 Lesson No. 3: It’s often a wise decision, as your firm grows, to increase your

insurance coverage limits. When you do, there are distinct advantages to

carrying “increased limits” with Pro-Demnity, rather than “excess limits” with

another insurer.

 The first advantage is a “seamless” claims experience with Pro-Demnity. In

the event of a claim, your defence is handled by one team with unequalled

experience, and covers any claims that lie within the terms and limits of your

policy. This is time-saving and hassle-free because you don’t have to draw

another insurer into your claim.

 Equally important is the way defence costs are treated. In Pro-Demnity

policies, defence costs are “in addition” to claims limits … in other words,

the entire amount of your increased limit is available to settle the claim,

regardless of the defence costs incurred, which are covered by Pro-

Demnity. In other insurers’ policies, defence costs are typically removed

from the claims limits … meaning that the costs of defence – often quite

significant – are subtracted from the amount available to pay damages.

 In this claim, the excess insurer was reluctant to get involved, and then

ultimately supported Pro-Demnity’s defence.

 •••••

In a small town, rules and regulations can sometimes get overlooked, in the belief that community well-being is more important than red tape. But, as we discover in this story, other beliefs are less flexible. Believing, for example, that politics will protect you from zoning bylaws, or that you can be an architect by simply believing you are one, can lead to unforeseen complications, involving the important distinction between “Architects and Self-Proclaimed Architects.”

 •••••

 Gideon Hoag was a prominent and somewhat colourful figure in Elah Valley, a small central-Ontario town. His major business interest was his auction house, which provided significant profits and constant public exposure. Hoag was a very large fish in a tiny pond.

 Having acquired a large shed on Main Street, Hoag proposed to move his auction business and inventory – which typically contained everything from bric-à-brac to bulldozers – to the new location. His plans also included an all-season hamburger stand and, for special events, a separate, provincially licensed beer pavilion.

 To realize this ambitious plan, Hoag paid a visit to the Main Street office of Architect Al Harrison. There, he met with Ezra Browne, the Architect’s office manager, and briefed him on his planning requirements.

 Based on his understanding of Hoag’s instructions, Browne prepared a site plan, carefully adhering to the town’s by-laws. On the plan, he indicated that the “large existing shed” would require certain improvements to comply with Code requirements. With respect to parking arrangements, he showed an appropriately designed parking area with entry and exit points at the correct locations.

 Hoag was not at all pleased with this plan. In fact, he was incensed by all the fussy details, which he viewed as extravagant and entirely unnecessary. As a result, he initiated a pitched battle with both the Architect and the local building official, from which he emerged as the inevitable victor.

 The auction house opened and began full operation. People happily parked in a patch of mud, with no driveways, curbs or drainage. The shed was largely unaltered, and guests seemed content to line up in front of portable toilets. No Notices to Comply were ever issued by the town.

 •••••

 Hoag had now decided that the Architect’s frivolous site planning had caused a three-month delay, and that the fees paid were a waste of money, since the advice obtained was “useless”. He had given specific directions to Browne, who had conferred with the local building official, and then proceeded, based on the official’s advice, while ignoring many of Hoag’s instructions. A proper architect, Hoag declared, should know how to get around red tape. 

 As a result of this delay, Hoag claimed to have suffered great aggravation, as well as the financial loss of carrying his loan for three extra months along with any anticipated profits. He was claiming for $250,000 against the Architect.

 The Architect, Al Harrison, had a very straightforward defence. He had personally discussed the site plan with the building official and had instructed Browne to follow the official’s advice, which was, not surprisingly, to adhere to the local by-law site requirements. Toilets and other building matters were only shown diagrammatically but conformed to Provincial Code. Harrison didn’t consider, but might have suspected, that the regulations would be tossed out the window by the town, in order to please a prominent local businessman.

 •••••

 On the face of it, Hoag had an extremely weak case. But, upon investigation, Pro-Demnity uncovered facts that complicated matters significantly. The Architect had offices in two adjacent towns. The Elah Valley office was not the one he worked in, although he visited frequently. This office was managed by Ezra Browne.

 When Gideon Hoag had visited the office, he was greeted by Browne, who introduced himself as “president of the firm,” which he more-or-less was. So, Hoag had naturally assumed that he was the Architect. This was fine with Browne, who was not actually an architect, and held no architectural or engineering qualifications of any kind. He was a competent draftsperson and a local resident who was quite successful in attracting work.

 It came to light that, as a tax-relief scheme, a business arrangement had been established in which Browne was not an employee of the Architect, but instead, the president of Ezra Browne Drafters, Inc., which billed the Architect for services rendered.

 While this was a useful tax arrangement, it was not helpful in the unfolding circumstances, since, in addition to suing the Architect and the town building official, Hoag was also suing Browne … personally.

 As Pro-Demnity explained to the indignant president, who had informed us that he was “an architect, but not a registered or stamping one,” we could cover him only if he could demonstrate that he was an employee of Harrison. This would require payroll or tax slips, Canada Pension Plan receipts, or similar documents, which he obviously didn’t have, since he was clearly not an employee. He would need to hire his own counsel.

 To add to Browne’s woes, Pro-Demnity now had no choice but to cross claim against him. This placed Harrison in an embarrassing situation since, as he now realized, his business arrangement had made him an adversary of his long-time trusted employee.

 Hoag’s claim was not just weak; it was absurd. Architects can’t suggest by-law or Code violations on their drawings. It would provide a clear path to a successful action against them. But Harrison’s position was not without hidden perils. When Browne introduced himself as “the president” of Harrison’s office, it wasn’t unreasonable for Hoag to believe that he was talking to an architect. What commitments had Browne made at that meeting? Credibility is a major factor in winning or losing lawsuits, and Browne’s credibility was at issue.

 Hoag was a determined man. In his world, rules were made to be broken, or ignored, at least by people as important as he deemed himself to be. The fact that he had no case, didn’t stop him from pursuing it. So, the matter dragged on for years until he and his lawyers were thoroughly worn out, and the proceedings fizzled to an end. We counted ourselves extremely fortunate that the messy matter did not get to court.

 •••••

 We don’t know for certain whether any of the participants in this claim gained any wisdom from it, but there are valuable lessons that the rest of us can learn.

 Lesson No. 1: Architects with multiple offices must retain real control over them and not just drop in from time to time. The general public can’t always distinguish between an architect’s various representatives and an actual architect. So, it is critical that clients understand the roles and scope of team members.

 Lesson No. 2: This story demonstrates the value of professional qualifications as well as the legal and insurance protections that they provide … along with the responsibilities and obligations that come with being a professional.

 Lesson No. 3: Local politics and finances are never to be discounted, as they may outweigh seemingly technical trifles like zoning and parking by-laws. A small town, in need of employment and business taxes, might not see the harm in bending a few rules to keep a local tycoon happy. Architects enjoy no such luxury.

 •••••

Thanks for listening to this edition of Claims Stories. We hope it was instructive and entertaining … as well as cautionary.

 Remember that every jurisdiction and ever case is different. Always refer to the laws, and regulations governing your local jurisdiction and consult a legal, architectural and insurance professional about the unique circumstances of your own case.

 The Pro-Demnity Claims Stories were originally written by David Croft.

The audio episodes are read by Liam Gadsby and produced by Revelateur Studio, Toronto.

The publisher and the executive producer of the written stories and audio episodes is Pro-Demnity Insurance Company, Toronto. 

For more information, including the full legal disclaimer, visit prodemnity.com.