McILRAITH v INSTITUTE of CHARTERED ACCOUNTANTS [2003] NSWSC 208

New South Wales Supreme Court

CITATION : McILRAITH v INSTITUTE of CHARTERED ACCOUNTANTS [2003] NSWSC 208 HEARING DATE(S) : 18/03/2002 JUDGMENT DATE : 26 March 2003

JUDGMENT OF : Dowd J DECISION : Declaration that decisions of the Disciplinary Committee and the Appeal Committee are void. Declaration that plaintiff was denied procedural fairness. Defendant restrained from publishing those decisions that were declared void. Costs reserved.

CATCHWORDS : Disciplinary body - judicial review - procedural fairness - obligations of domestic tribunal. Allesch v Maunz (2000) 203 CLR 172 CASES CITED : Bond v Australian Broadcasting Tribunal (No 2) (1988) 19 FCR 494 Lee v Showmen's Guild of Great Britain [1952] 2 QB 329 Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 PARTIES : John Howard McIlraith (Plaintiff) Institute of Chartered Accountants in Australia (Defendant) FILE NUMBER(S) : SC 30007/02 COUNSEL : J W Stevenson (Plaintiff) G Flick SC with G K Burton (Defendant) SOLICITORS : Holman Webb Lawyers (Plaintiff) Abbott Tout Solicitors (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

DOWD J

Wednesday 26 March 2003

30007/02 JOHN HOWARD McILRAITH v INSTITUTE of CHARTERED ACCOUNTANTS

JUDGMENT 1 HIS HONOUR: The plaintiff, by way of summons, sought judicial review of the proceedings of a Disciplinary Committee and an Appeal Committee of the defendant, the Institute of Chartered Accountants (the "Institute"), and claimed against the Institute the following orders: 1. A declaration that the decision made by the Disciplinary Committee of the defendant of 5 April 2001 that the plaintiff be suspended from membership of the defendant for two years and pay $6,100.00 plus GST for costs is void. 2. A declaration that the decision of the Appeal Committee of the defendant of 27 June 2001 set out below is void: "To affirm the determination of the Disciplinary Committee that the allegation contained in the Notice of Disciplinary Action has been established. To vary the decision that you be suspended from membership of the Institute for a period of two (2) years to a severe reprimand. To affirm the decision that you be required to pay the amount of six thousand one hundred dollars ($6,100.00) plus GST towards the costs of the Institute in dealing with the Notice of Disciplinary Action. To affirm that your name is to be included in the report of the findings and sanctions to be published in the Institute's journal. To order that you be required to pay the amount of two thousand four hundred and fifty dollars ($2,450.00) plus GST towards the costs of the Institute in dealing with the Notice of Appeal." 3. A declaration that the plaintiff was denied procedural fairness and natural justice before both the Disciplinary Committee and the Appeal Committee of the defendant. 4. A declaration that the defendant has not committed any act, omission or default which was or is likely to bring discredit upon himself or the defendant or the profession of accountancy within the meaning of By-Law 40(j) of the By-Laws of the defendant. 5. A declaration that neither the Disciplinary Committee nor the Appeals Committee of the defendant had jurisdiction to hear or determine the complaint which gave rise to their decisions of 5 April 2001 and 27 June 2001 respectively. 6. An injunction restraining the defendant from publishing or otherwise giving effect to the decision of the Appeal Committee of 27 June 2001. 7. Costs. 2 Number 4 was not pressed at the hearing and number 5 was only pressed as to natural justice. 3 The plaintiff is a member of the Institute, the defendant in the proceedings. On 8 March 2001 the plaintiff received a "Notice of Disciplinary Action" which alleged liability for disciplinary action in accordance with By-Law 40(j) in that he had brought discredit on himself, the Institute and the profession of accountancy because of his actions towards three named persons: Mr Brian R Taylor from 31 May 1999 to 27 August 2000, Mrs Noeline Haile from 9 February 1998 to 28 June 2000 and Mr Alex Ilkin in a letter dated 1 September 2000. 4 The original dispute had arisen in 1998 as to whether there was a discrepancy of the accounts of a body corporate. The plaintiff, having been the former secretary, had sought an explanation as to an alleged "discrepancy" of some $6,837.00. The three persons named in paragraph 2 above were respectively the auditor of the owners' corporation, one of the managing agents of the owners' corporation and the solicitor acting for the company under which Mrs Haile operated. 5 The dispute led to an application for mediation by the Strata Schemes Office which was refused and an appeal against that refusal was rejected. The dispute contended that Mr Taylor had failed to observe Australian accounting standards and alleged dishonest and criminal conduct against the company Suechris Holdings Pty Ltd, under which Mrs Haile operated. 6 A complaint was then lodged by Mr Taylor against the plaintiff with the Institute and the matter was investigated by an officer of the Institute. 7 On 25 March 2001 the plaintiff requested particulars of the allegations against him and, in particular, the information provided to the Institute by the three named persons. The plaintiff also sought the names of any witnesses proposed to be called and asked the Institute to provide further and better particulars of the disputed factual matters relied on by the Institute in order to maintain its complaints against him with respect to one of the three persons, Noeline Haile. The plaintiff also sought deferral of the proceedings to allow preparation by him. 8 He received a letter on 29 March 2001 advising that the matter would proceed on 5 April 2001 before the Disciplinary Committee in the expectation that it would be dealt with on that day unless the committee agreed to a postponement. The letter on behalf of the Institute advised that the material relied on would be in the case file and that material in another file, in another complaint number 86.99, which is a complaint made by the plaintiff against the Mr Brian Taylor, one of the three named above, would not be before the committee. The letter advised that it was not proposed to call witnesses without further notice. 9 On 5 April 2001 the proceedings before the Disciplinary Committee were heard, the decision of the committee, without reasons being given, being: i. The allegation contained in the Notice of Disciplinary Action has been established. ii. That the plaintiff be suspended from membership of the defendant for two years. iii. That the plaintiff pay the amount of six thousand one hundred dollars ($6,100.00) plus GST towards the costs of the Defendant in dealing with the Notice of Disciplinary Action. iv. On any application for reinstatement to membership the plaintiff satisfy the defendant that he is a fit and proper person. 10 The plaintiff lodged a Notice of Appeal, the primary issue being that actions taken by him in relation to the three named persons were in the plaintiff's capacity as Chairman and Treasurer of the owners' corporation of "The Owners-Strata Plan 17839" and that he was perfectly entitled to take such action and that certain of the plaintiff's actions were taken respectively as Treasurer of the owners' corporation and as immediate past Treasurer of the owners' corporation. 11 The plaintiff contended that he was unfairly prejudiced and denied natural justice in the proceedings before the Disciplinary Committee by reason of the following factors: "16.1 The failure of the Institute to define particulars of the allegations against the plaintiff, including the actions and conduct which were referred to in the Notice of Disciplinary Action. 16.2 The failure of the Disciplinary Committee to allow the plaintiff sufficient time to prepare an adequate and proper defence, and produce copies of relevant documents. 16.3 The failure of the Disciplinary Committee to allow the plaintiff to inspect certain documents in the possession of the Institute, filed by Mr Taylor in answer to the plaintiff's complaint against him (the Institute's file reference: N107.00). 16.4 No evidence was adduced by the Institute to demonstrate or which demonstrated that any actions and conduct were motivated by malice, or the absence of good faith. 16.5 A Disciplinary Committee is not competent to determine issues of fact and law raised by the plaintiff's complaint against Suechris filed with the Department of Fair Trading on 28 June 2000. 16.6 A Disciplinary Committee is not competent to determine the issues of fact and law raised by the plaintiff's complaint against Mr Brian Taylor, filed with the Department of Fair Trading on 28 June 2000. 16.7 A Disciplinary Committee is not competent to determine the issues of fact and law raised by the publication of defamatory material by Mrs Haile, Mr Taylor, Mr Ilkin, Mr and Mrs Bunyan and the owners corporation, with respect to the plaintiff." 12 The appeal asserted that the conduct complained of in relation to the plaintiff: (a) Involved no failure to observe a proper standard of professional care, skill or competence in the course of carrying out the plaintiff's professional duties; (b) did not arise from the conduct of the plaintiff's professional duties; (c) in no way reflected on or arose out of the plaintiff's professional or business conduct or competence; (d) did not involve the commission of a criminal statutory or any other offence; (e) did not involve any act of dishonesty; (f) did not involve any matter concerning professional standards of practise; and (g) accordingly, did not bring and was incapable of bringing discredit on the plaintiff, or the Institute, or the profession of accountancy such as would warrant the intervention of the Institute. 13 The plaintiff further alleged that the penalty was imposed having regard to the nature of the conduct complained of and the fact is that he did not engage in the conduct complained of in any professional capacity and that the membership records of the Institute showed that the plaintiff was in good standing and not previously disciplined, and was thus excessive. 14 Shortly prior to the hearing of the Appeal Committee, Messrs Holman Webb, solicitors for the plaintiff, wrote to the Institute seeking precisely what "conduct" and "actions" the Institute relied upon in support of its contention that the plaintiff had brought "discredit" upon himself, the Institute or the profession of accountancy. The letter pointed out that the case file that the Institute sought to rely upon comprised some three hundred and fifty pages of documents. That letter sought a reply by the close of business on 20 June 2001. 15 By letter dated 25 June 2001 which was faxed to the plaintiff's solicitors on that day, the solicitors for the defendant inter alia set out the following: "We note that the main ground of your client's appeal is that your client claims that he was not afforded procedural fairness and was denied natural justice for the reason that he was not given adequate particulars of the complaint made against him. We are instructed that in addition to the Notice of Disciplinary Action date 8 March 2001, your client was provided with the following material in relation to the complaint: a) A copy of the original letter of complaint from Mr B Taylor date 20 October 2000 which was forwarded to your client under cover letter dated 23 October 2000; b) A copy of the Disciplinary Case File which was forwarded to your client under cover letter dated 9 March 2001; and c) A copy of the Appeal Case File which was forwarded to your client under cover letter dated 14 May 2001. We are instructed that the Appeal Case File includes, inter alia, a copy of the transcript of the proceedings before the Disciplinary Committee. That being the case, both your firm and your client are aware of the nature of the allegations against your client that are the subject of this appeal. They are sufficiently detailed in the original letters of complaint, the correspondence in the original case file, and the extra documents tabled at the hearing before the Disciplinary Committee and the transcript of those proceedings which are contained in the Appeal Case File." 16 At the hearing before the Appeals Committee, which took place on 27 June 2001, the plaintiff was represented by Mr James Stevenson of counsel, instructed by Mr Richard Allsop of the plaintiff's solicitors. At this hearing it was submitted on behalf of the plaintiff that the Notice of Disciplinary Action is the only document in which any statement is made by the Institute as to the conduct which, it contends, warranted disciplinary action in the terms of By-Law 40(j) if the plaintiff had brought discredit upon himself, the Institute or the profession.