Grounds for Lawsuit Against the Appraisal Institute
of Canada and/or the New Brunswick
Association of Real Estate Appraisers
The following information will show that the Appraisal Institute of Canada (AIC) has a responsibility to establish and enforce Professional Appraisal Standards and it's Code of Professional Ethics for all of it's AACI member appraisers throughout
It will show that the New Brunswick Association of Real Estate Appraisers (NBAREA) has a responsibility to ensure that AACI appraisers in this province abide by the standards as set out by the AIC, both by agreements made between the two organizations, and by legislation of the Province of New Brunswick which established the NBAREA.
It will be shown that the NBAREA is controlled by employees of the NB Government and by appraisers doing business with the Provincial Government and that they are refusing to enforce standards for appraisals done for expropriation purposes in this province.
It will be shown that the Manager of Land Acquisitions for the NB Department of Transportation, Jennifer Logan, is married to the founding President, Leslie Smith, of the NBAREA.
It will be shown that the AIC is refusing to enforce the agreements it has with the NBAREA which require enforcement of standards.
It will be shown that before I filed a complaint against Daniel Doucet, I received assurance from Terry Gifford, Executive Vice-President of AIC, Claudia Simmonds Lipka, Executive Director of NBAREA, and from Gerry McCoombs, then President of NBAREA, that if I were to file such a complaint, it would be dealt with properly. Because of these assurances, I spent a great deal of time and effort in preparing a comprehensive and very serious complaint against Mr.Doucet which was forwarded to the NBAREA on Jan.6,2000.
It will be shown that the NBAREA Complaints Committee did not deal with the substance of my complaint.
It will be shown that an appeal was filed with the Board of Directors of the NBAREA of the Complaints Committee ruling on Aug.18,2000.
It will be shown that on Nov.20,2000, a letter was sent to the NBAREA pointing out that very serious conflicts-of-interest existed with most of the members of their Board of Directors in dealing with this matter and a request was made that these conflict-of- interests be acknowledged and those members involved should step aside from dealing with my appeal. At some point in time, Mr.D.Thibideau who was then the President of NBAREA and who was employed with the NB Department of Supply and Services, did tender his resignation from the Board of NBAREA. It is not known if any other members of the Board declared their conflicts-of-interest.
On Dec.19,2000, the NBAREA advised that they were satisfied that the matter was properly considered and dealt with by the Complaints Committee for the reasons stated in it decision dated Aug.11,2000.
If a lawsuit is filed against the NBAREA for non-enforcement of Standards, it should not be a problem to demonstrate to the Court that as a Professional Self-regulating Association, the NBAREA does have the legal responsibility to enforce the AIC's Professional Appraisal Standards and the AIC's Code of Ethical Conduct.
It should also not be a problem to demonstrate to the Court that in the case of Gerard Levesque and in my own case, that the NBAREA has refused to properly deal with complaints against Daniel Doucet as they are required to do under the Act which created them and under agreements they have with the AIC.
In my case the NBAREA's Complaints Committee avoided dealing with the complaint by claiming the matter had been before the Courts and that a Judge had ruled in Favour of Mr.Doucet's report. Most Judges are not experts in valuing real estate or in appraisal procedures or standards. Judges must, therefore, depend on Expert Witnesses to provide them guidance in these areas. When an appraiser goes before a Judge and provides false and/or misleading information as Mr.Doucet did, this makes a Judge's job very difficult. In this case, the Judge had little knowledge of Real Estate and had a great deal of difficulty in understanding the testimony. The decision he made in no way indicated that there was no professional misconduct on the part of Mr.Doucet. Should this matter end up back in Court, it appears that the NBAREA will argue that appraisers do not have to abide by the AIC's Professional Appraisal Practices or the AIC's Code of Professional Ethics as long as a Judge can be convinced that their appraisal is valid. An argument like that is not likely to be well received in Court.
Filing such a lawsuit will allow us to do a proper discovery process in which we can examine in more detail the workings of the NBAREA and it's relationship with government and the AIC.
Some of the areas which need to be explored are:
1. The AIC has indicated that they have agreements with the NBAREA which require the NBAREA to enforce standards. These agreements need to be examined.
2. The Government of NB appoints one member to the NBAREA Board of Directors, currently Ken Harding, Clerk for the Town of
3. One of the most important positions in any organization is Chairperson of the Elections Committee. The person that controls this position, controls the organization. This post was initially filled by Judy McCann of the NB Department of Transportation but has since been filled by Nirah Sproul of
4. The operation of the NBAREA complaints committee needs to be closely examined. Do they have a proper procedures manual for dealing with complaints ? Do they see their role as enforcement of standards or protecting appraisers from complaints ? Are any steps taken to ensure that members of the committee are not biased toward the appraisers being investigated ? Did they do a detailed examination of my complaint and determine if each point raised in my complaint was valid or not ? Did Daniel Doucet have his lawyer threaten any of them with a lawsuit if they found in my favour ? Daniel Doucet was given an opportunity to respond to my complaint. What was his response and did the complaints committee accept it without question or further investigation ? In view of the fact that my complaint indicated that Mr.Doucet had fabricated and massaged data, why did the complaints committee not take steps to secure his files so that he could not destroy or alter them ?
5. How did the NBAREA Board of Directors handle my appeal of the complaints committee decision ? Did they do a detailed analysis of my complaint, point by point, and determine it was not valid or did they just rubber stamp the decision of the complaints committee ? Did all members of the Board deal with my appeal or was it handled by a small committee who reported back to the Board ? If so, which members of the NBAREA Board of Directors dealt with it ? Did any members of the NBAREA Board of Directors declare a conflict-of -interest in this matter and step aside and not take part in the decision ?
Should it be possible to show that there has been collusion between the NB Government and the NBAREA to not enforce Standards for appraisals done for expropriation purposes, it would open the door to a multi-million dollar class-action lawsuit against the NBAREA and the NB Government.
Background
Between 1977 and 1987
The expropriation law of
If you consider the case of a farmer who has a 100 acre farm which is a marginal operation: If you take away 10 acres in an expropriation, then that farm could become unviable. If that 10 acres happens to be in the middle of a farm, as is often the case, thus splitting the farm in two pieces and making access from one part to the other part difficult, then the result can be devastating to the farmer. In that case the expropriation law rightfully requires that injurious affection be taken into account and the property must be valued by taking the difference between which the value of the farm is before the taking and the value of the farm after the taking. This can result in a settlement which is fair to the property owner, but far in excess of what 10 acres of farmland would normally be worth. The guiding principle of expropriation law is that the property owner should not be any worse off after the taking then they were before the taking, i.e., they should be left financially whole.
In addition to injurious affection, the expropriation law requires that property being expropriated must be valued to its "highest and best use". If you take the case of a farm close to a large urban center, a farmer may have been planning on converting his farm to a residential subdivision to finance his retirement. If that were the "highest and best use", then for expropriation purposes, the land must be valued on that basis rather than on it's value as farmland.
These two factors, "injurious affection" and "highest and best use", as are required by the expropriation law, resulted in some substantial awards by the Expropriations Review Board. Although these awards were fair to the property owners, some in government were unhappy and in 1987, the Expropriation Review Board was abolished and it was then necessary to appeal such matters to the Court of Queen's Bench. This resulted in two problems, (a) Many Judges were not familiar with property values and appraisal procedures and standards and, (b) it was very expensive for the property owner to appeal and in the case of many poor farmers, they could not afford to appeal and had to accept whatever the Government offered. The Government has been taking advantage of the situation and has not been valuing property to it's "highest and best use", nor have they been taking into account "injurious affection" as is required by the Expropriation Law. This has resulted in many individuals facing financial hardship due to having some or all of their property expropriated.
There were a couple of other things happening in the late 80's and early 90's which affected the present situation.
In the early 80's, the crisis in the Savings and Loan industry in the
In 1986, nine professional appraisal organizations, including the Appraisal Institute of Canada (AIC), formed the AdHoc Committee on the Uniform Standards of Professional Appraisal Practices (USPAP). These standards were adopted by the AIC in 1987. If these new appraisal standards were to be enforced in
The question that has to be asked is, why are these standards not being enforced in
In 1994,
The Appraisal Institute of Canada (AIC)
Founded in 1938, the Appraisal Institute of Canada is the national society of professional real estate appraisers. The Institute claims that it is dedicated to serving the public interest through advancing high standards of the appraisal profession. All NBAREA members are governed by the AIC Code of Ethics and Uniform Standards of Professional Appraisal Practice (USPAP) which establishes minimum standards of performance in rendering professional services.(Excerpts from a document titled 'Your Career as a Real Estate Appraiser' as found on the NBAREA website. (NBAREA-1))
In it's struggle with the Minister of National Revenue to obtain deductibility of dues for it's members, (See AIC-1) the AIC argued it and its provincial affiliates were self-regulating professional associations analogous to the legal, medical and accounting professions. To obtain deductibility of Professional Dues under the Income Tax Act, Professional Associations must not only have professional standards, they must also enforce them.
Section XIII, of the Bylaws of the AIC (AIC-2) regarding Discipline states: 'The council or duly appointed committee or duly authorized Provincial Association may discipline, suspend use of designation or expel, after due inquiry into the complaint, any person for misconduct or violation of the Regulations, Uniform Standards of Professional Appraisal Practices (USPAP) and/or Bylaws of the Institute.'
Section XVII(5) of the Bylaws of the AIC regarding Transfer of Responsibilities to Provincial Associations states: 'Council may transfer responsibilities to Provincial Associations as it see fit, but retains the authority to establish national policy and standards in all institute matters.' (AIC-3). National standards cannot be implemented unless steps are taken to ensure they are enforced.
In an attempt to establish the relationship between the AIC and the NBAREA, I corresponded with the AIC. In an Email (AIC-4) received from Terry Gifford, Executive Vice-President of the AIC, he states, 'We have an agreement whereby if the N.B. Association does not comply with the terms, e.g. professional practice that the Institute has the authority to terminate the agreement.' He, thus, acknowledges that an agreement does exist with the NBAREA. Any such agreements between the AIC and NBAREA need to be examined in a Discovery process.
On June 11,1999, in an E-mail from Terry Gifford (AIC-11) Jane Geisbrecht wrote "I am confident that any complaint received by the Association (NBAREA) will be dealt with fairly, thoroughly and in compliance with the Act." She goes on to say "I do know that when a conflict of interest occurs that the individual with the conflict removes himself/herself from any discussion, deliberation or decision on the matter."
On Aug.18,2000, I sent a letter (AIC-5) to Mr.Gifford requesting that action be taken to investigate the NBAREA for non-enforcement of standards. In his reply on Sept.13,2000, (AIC-6) he states that since my complaint is still under review by the NBAREA, the AIC will not deal with complaints for which the process has not been completed by the NBAREA. He implies that the AIC will investigate should the NBAREA not deal properly with my complaint.
On Nov.20,2000, I sent a further letter (AIC-7) pointing out that the NBAREA had completed their review and had refused to deal with my complaint and I again requested that the AIC take action to investigate the NBAREA, as Mr.Gifford had previously implied it would. In his response on Feb.8,2001 (AIC-8), Mr.Gifford backtracked and claimed that the New Brunswick Government Authorities are responsible for the administration of the legislation and that the AIC would take no action until requested by the N.B. Government. I have not been able to find any N.B.Government Authorities who accept responsibility for the administration of the legislation establishing the NBAREA. In reality, the AIC does have agreements with the NBAREA which require enforcement of standards and the AIC is refusing to enforce those agreements.
On Feb.23,2001, I sent an Email to Mr.Gifford (AIC-9) requesting him to advise if AACI appraisers in New Brunswick were required to follow Appraisal Standards and the Code of Ethics established by the AIC. He did not reply, so I followed it up on April 5,2001, requesting a response. Again, he did not reply.
Part of the AIC's refusal to deal with my complaint may be related to Mr.Doucet's influence in that organization and the NBAREA. Mr.Doucet is the Moncton Manager for Hardy Appraisals. The founding President of the NBAREA was Leslie Smith, the Fredericton Manager of Hardy Appraisals. Mr.Doucet has filled various positions on the executive of the NBAREA, including Vice-President, President and Past President, as well as two terms as the NBAREA representative on the National Governing Council of the AIC. In these positions, he would have worked closely with the executive of the AIC and they may be, therefore, reluctant to take disciplinary action against him. In any self-regulating professional association, the organization cannot allow itself to be influence by any member who may try to use his position to prevent disciplinary action being taken against him. It is noted that, at the time Mr.Gerard Levesque filed a complaint with the AIC against Mr.Doucet, Mr.Clarles Hardy, the founder of Hardy Appraisals, was on the AIC Adjudicating Committee.(AIC-10) Did Mr. Hardy use his influence to prevent Mr.Levesque's complaint to the AIC from being dealt with? Mr.Hardy has been active on the executive of the Nova Scotia Appraisal Association and no doubt has a great deal of influence with the AIC.
The New Brunswick Association of
Real Estate Appraisers (NBAREA)
The NBAREA was formed by an act of the Provincial Legislature in 1994. Its founding President was Leslie Smith, Fredericton Manager of Hardy Appraisals and husband to Jennifer Logan, the Manager of Property Acquisition for the New Brunswick Department of Transportation. All members of the executive in the first year were associated with Hardy Appraisals including Daniel Doucet as Past President and as chairman of the complaints committee for the first two years.
Of the 62 person years of members who served on the executive or Board of Directors of the association from 1995 to 2001, only 6 have not been employees of the Provincial Government or have not been associated with appraisal firms doing business with the Provincial Government (NBAREA-2). In that period of time the Provincial Department of Transportation paid $2,419,604 for appraisal services of which $680,706 went to Hardy Appraisals (NBAREA-3).
Section 5 of the Act establishing the NBAREA lists its objects including:
(a)regulate the practice of real estate appraisal and to govern its members in accordance with this Act and the by-laws, in order to serve and protect the public interest;
(c)establish, maintain, develop standards of knowledge, skill and efficiency for the practice of real estate appraisal;
(d)establish, maintain, develop and enforce standards of qualifications for the practice of real estate appraisal;
(e)establish, maintain, develop and enforce standards of professional ethics for its members.
Under Section 6 of the Act, the NBAREA was given a number of Powers including;
(a)provide for the discipline, government, control and honour of persons practising the profession of real estate appraisal in the Province, including the power to determine standards of professional conduct;
(l) enter into agreements on behalf of the Association as may be necessary, incidental or conductive to carrying out the objects of the Association, including entering into agreements with the Institute (AIC) for the purpose of adopting and enforcing its Code of Ethics and Rules of Professional Conduct, Standards of Professional Practice, educational requirements for the practice of the appraisal of real estate and for the purpose of awarding and maintaining designations;
(w)provide for investigations by the complaints and discipline committees, including the procedures to be followed. (this is an area which needs to be probed in a discovery hearing).
Section 9(1)(d) of the Act provides for the appointment of one lay person to act as lay representative on the Board of Directors, who shall be appointed by the Lieutenant-Governor in Council from a panel of not less than four persons nominated by the Board. This appointment is to supposedly to protect the public interest but I have been unable to find anyone in government who this individual reports to nor any terms of reference for the appointment. It is presently filled by Ken Harding, the Town Clerk of Woodstock.
Section 20(1) of the Act states that there shall be a complaints committee composed of:
(a)one member of the Board who shall be chairperson, and
(b)two other members of the Association appointed by the Board.
Since the Board is in complete control of the appointments, it can prejudice the outcome of investigations by selecting members it can count on to give the results it desires. Because Mr.Doucet wields a great deal of influence with the Board, it is unlikely they would appoint anyone to the complaints committee who are likely to find against him.
Section X1 of the Bylaws of the NBAREA titled 'ETHICS AND STANDARDS OF PRACTICE' reads:
The Association adopts and undertakes to enforce the
Code of Ethics and Rules of Professional Conduct and
the Standards of Professional Practice in force from
time to time with the Institute (A.I.C.).
In the Terms of Reference for the NBAREA Complaints Committee (NBAREA-10), a number of duties are listed including:
1. The Complaints Committee will become familiar with and adhere to the policies and procedures as developed on November 24,1999 by the Associations solicitor, David Norman,QC and attached hereto.(It's important to obtain a copy of these policies and procedures).
2. The Registrar shall attend the meetings of the Complaints Committee and record the proceedings of each as well as prepare all other correspondence on behalf of the Committee. The minutes of the meeting shall be forwarded to the Committee Members no later than 14 days after the date of the meeting. (It is important to obtain a copy of these minutes to determine exactly what procedures were followed by the Committee in assessing my complaint and to find out why the committee did not deal with the substance of my complaint).
6. The Complaints Committee will accept and proceed with the directions provided by the Board of Directors, Act, Bylaws and Strategic Plan of the Association in a timely manner unless the directions are contrary to the provisions for the Committee as per the Act to Incorporate the New Brunswick Association of Real Estate Appraisers. (What directions were provided by the Board of Directors to the Complaints Committee for dealing with my complaint and why did the Committee not deal with my complaint in accordance with the Act and their bylaws as they are required to do).
On October 28,1999, I visited the office of the NBAREA in
On December 17,1999, I phoned Gerry McCoombs, then President of the NBAREA at his office in
Based on assurances given, on January 6,2000, I forwarded a comprehensive and very serious complaint to the NBAREA against Mr.Daniel Doucet.
On May 3,2000, I telephoned the NBAREA seeking information on the status of my complaint. I was alarmed to be told that no action had been taken by the NBAREA to secure Mr.Doucet's files so that he could not alter or destroy them. I sent a letter to the NBAREA on May 4,2000, expressing my concerns (NBAREA-4).
On May 8,2000, in response of a request for information, the NBAREA advised that Herman Koops had been made chairperson of the Complaints Committee.
I sent a further letter to the NBAREA on May 11,2000, pointing out their obligations (NBAREA-5).
On August 11,2000, the NBAREA sent me a letter giving the decision reached by their Complaints Committee (NBAREA-6). In that letter they stated that since the matter had been to court and the Judge had said nothing in his decision to suggest any impropriety or lack of competence on the part of Mr.Doucet, therefore Mr.Doucet had done nothing wrong. This was nothing more than a lame excuse by the NBAREA to try and avoid dealing with my complaint. Many Judges are not experts in real estate valuation and appraisal practices and procedures and they must rely on expert witnesses for guidance in such matters. In this case, the Judge had a great deal of difficulty in understanding the testimony and his decision in no way indicated that Mr.Doucet had done nothing wrong. The NBAREA seems to think it is OK for an appraiser to do whatever he thinks he can get away with. The fact is Mr.Doucet had presented the Court with an appraisal which was not done in accordance to the required USPAP standards or the AIC Code of Ethics as he claimed it was. As was pointed out in my complaint, had Mr.Doucet applied proper adjustments to his data as is required by USPAP, then the value of my property he would have arrived at would have been slightly greater than that of my own appraiser.
In the final paragraph of their August 11,2000 letter, the NBAREA states: "It is not the function of the Association under its disciplinary powers to deal with disputes as to property value. This has to be dealt with by the Court as required by the Expropriation Act". This is a correct statement, the Courts set the property value based on evidence presented. The paragraph goes on to state that:"Under the New Brunswick Association of Real Estate Appraisers Act the Association only has jurisdiction to investigate and consider issues of professional misconduct and incompetence on the part of its members". Again, this statement is correct, it is the responsibility of the NBAREA to enforce professional standards and the AIC Code of Ethics. This is all I have requested them to do and they have refused to do that. My complaint was comprehensive and very detailed and showed numerous infractions of the USPAP standards and the AIC Code of Ethics on the part of Mr.Doucet. If the points raised in my complaint were not valid, then I'm sure the complaints committee would have gone over them, one by one, and pointed out the reasons for rejecting them. Since they chose instead to use a lame excuse for not dealing with them, it can be assumed that the complaints were valid and the objective of the Complaints Committee was to cover up for Mr.Doucet.
On August 18,2000, I sent a letter to the NBAREA requesting that the Board of Directors review the decision of their Complaints Committee (NBAREA-7).
On November 20,2000, I sent a further letter to the NBAREA, (NBAREA-8) which outlined my concerns of conflicts-of-interest which I considered many of the Board of Directors had in dealing with my complaint. At some point in time, Mr.D.Thibideau, then President of the NBAREA and an employee of the NB Department of Supply and Services, did resign his Office as President of the Association. It is not known if any other members of the Board declared their conflicts-of-interest and stepped aside from dealing with my complaint.
The Board of Directors of NBAREA were no doubt very aware of the fact that Mr.Doucet had done a large number of appraisals for the Provincial Government. Because of the seriousness of my complaint, had they ruled against him, they would have had to revoke his accreditation. This would have called into question the validity of all the appraisals he had done for the Government and could have potentially cost the Government millions of dollars. It is thus not difficult to understand why the Board of Directors, which was controlled by Government employees was reluctant to rule against Mr.Doucet.
The Board of Directors of the NBAREA sent me their decision of my appeal on December 19,2000 (NBAREA-9) which stated that they agreed with the decision of the Complaints Committee. The letter was signed by Andrew Leech as President of the Association.
Under the Act establishing the NBAREA, section 9(1) states that there shall be a Board of Directors of the Association consisting of (a) the president, past president, vice-president, secretary, and treasurer, and.....
Section 10(2) of the Act states that in the event of a vacancy occurring on the Board, except the office of President, the vacancy may be filled for the balance of the unexpired term as follows....
The Act specifically excludes filling the office of President for the balance of an unexpired term. It would therefore appear that it was not legal for Mr.Leech to complete the unexpired term of Mr.Thibideau who had resigned. Since the Board must have a President, then it was not legally constituted when it handed down its decision on my appeal.
As a self-regulating professional association, the NBAREA must deal with complaints it receives concerning members who do not do appraisals in accordance with USPAP standards and the AIC Code of Ethics as is required. When other self-regulating professional associations, such as the Barristers Society, receives a complaint against a member, they deal with it immediately. If the complaint is serious, they will go as far as to immediately suspend the member and have someone else take over their practice pending an investigation. They do not wait for a Court to find that the member was guilty of wrongdoing before taking action. It is the NBAREA's responsibility to investigate complaints and take action against appraisers who are guilty of malpractice.
Had the NBAREA been enforcing standards since its inception in 1994, then Mr.Doucet would have been required to prepare the appraisal he did on my property in accordance with the required standards. As it was, it appears that Mr.Doucet felt that he could take advantage of his influential position in the NBAREA and that he could get away with not doing appraisals to the required standards. As was shown in my complaint, had Mr.Doucet made proper adjustments to his data as is required by USPAP, then the value he arrived at for my property would have been slightly higher than that reached by my appraiser. Had that been the case, then it can be expected that it would have been possible to reach an agreement with the City on the value of my property back in 1995 and I would not have been forced to waste 6 ½ years of my life fighting for a proper settlement. During this time I have easily spent 50% of my time pursuing this matter which would otherwise been spent on more productive endeavors. I, therefore, feel I should be compensated for that time and for all the sleepless nights and mental distress caused by the NBAREA's failure to fulfill their obligations
Thursday, July 19, 2007
New Brunswick Expropriation Act. the game or gang
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