CGA successful on judicial review in setting aside liability and penalty decisions in a professional misconduct matter

21. June 2017 0

Administrative law – Decisions of administrative tribunals – Certified General Accountants – Judicial review – Evidence – Credibility – Standard of review – Reasonableness – Professions – Accountants – Disciplinary proceedings – Procedural fairness

Richmond v. Discipline Committee of the Certified General Accountants Assn. of Ontario, [2017] O.J. No. 2078, 2017 ONSC 1765, Ontario Superior Court of Justice – Divisional Court, April 26, 2017, D.C. Shaw R.S.J, A.M. Molloy and L.A. Pattillo JJ.

In 2005, Richmond became a Certified General Accountant. He had a small practice which eventually grew to include a tax preparation business.

Then, five of his clients and one of his Certified General Accountant colleagues filed complaints against him to the CGAO. The matter was referred to the Professional Conduct tribunal for hearing.

The allegations included failing to complete work that clients had retained him to do, failing to file tax returns or filing inaccurate tax returns, and making substantial bookkeeping errors.

A disciplinary hearing was held over six days in June 2014. A liability decision of 95 pages in length was issued, finding Richmond guilty of professional misconduct in respect of 32 of the 33 allegations against him.

A one day penalty hearing followed in which Richmond was reprimanded, his membership in CGAO was revoked, and he was ordered to pay a fine and costs in the amount of about $61,000. In addition, there was to be publication of the disciplinary matter in various industry and CPGA media and in the local Kitchener-Waterloo paper.

Richmond appealed and the appeal was dismissed in respect of both the liability and penalty decisions. The appeal tribunal found there was no obvious error of fact, law or application of relevant accounting principles or assurance standards.

The appeal panel further found that the Professional Conduct Tribunal’s findings on credibility were not unreasonable and were owed deference.

On penalty, the appeal tribunal found that the penalty was not harsh, excessive or grossly disproportionate in relation to Richmond’s conduct.

On judicial review, Richmond argued that the liability decision, the penalty decision, and the appeal decision were unreasonable.

He indicated that the tribunal’s interpretations of the professional standards and/or conclusions on guilt were not transparent and intelligible and that they had made formulaic findings of credibility and conclusory findings of fact.

As a preliminary issue, the court considered whether counsel for the appeal tribunal could make submissions on the reasonableness of the appeal tribunal’s decision, where the merits of the decisions had been fully addressed by counsel for the discipline committee. The court noted that the determination of standing is ultimately a matter of discretion. There is a need for the court to balance the requirement for fully informed adjudication against the importance of maintaining tribunal impartiality. A court must consider whether the tribunal’s governing statute grants the tribunal standing to argue the merits, whether the review is otherwise unopposed or whether there are parties available to oppose, and whether the tribunal carries on an adjudicatory function rather than a policy making, regulatory or investigative role. Applying these principles to determine whether it should exercise its discretion to permit tribunal standing, the court noted that the appeal tribunal’s statute does not grant it the right to argue the merits of a decision on a review. In addition, the issues raised by the appellant here would not be unopposed. Parties before both levels of the tribunal included the disciplinary committee of the CGAO and Richmond and therefore the merits were properly addressed between these two adversarial parties. As well, the appeal tribunal’s role is as an adjudicatory body whereas the discipline committee is a party and plays an adversarial role. It also has investigative policy making and public interest roles and the knowledge and expertise to fully address the issues raised. Therefore, the court unanimously determined that the appeal tribunal did not have standing to argue the merits of the underlying decisions and not to be restricted to arguing the standard of review.

All parties agreed that the standard of review should be reasonableness. The reasonableness standard of review is well established in respect of conduct and appeal tribunals of self governing professions including the CGAO.

The court noted that in order to be reasonable, a decision must be justified, transparent, and intelligible. Here, there were a number of significant issues in the liability decision which left it lacking justification, intelligibility and transparency. In particular, no basis was given for the decision reached in order to assess the reasonableness of the outcome. The liability decision used formulaic, repetitive language and was largely a “cut and paste job”. It did not include an analysis of the evidence in relation to the allegations and so the finding was conclusory without an analysis as to how it was reached.

There was no discussion, in the reasons, about how the facts constituted a breach of the rule or code in question. Despite the length of the liability decision, it was not amenable to judicial review.

Credibility assessment was an area of particular difficulty. The Professional Conduct Tribunal repeated the same language for each witness, with the exception of the witness’ name. This type of formulaic approach included no consideration of the witness’ actual evidence, nor how that evidence compared to other evidence. It lacked specific concrete examples and there was no attempt to analyze the evidence of witnesses, or Richmond, against any other exhibits or other evidence. Richmond’s credibility was considered without reference to specific evidence as well and there was no analysis of the allegations having regard to what Richmond said in response to each allegation.

The court decided:

In the absence of any meaningful credibility assessment by the Professional Conduct Tribunal, it is simply not possible to understand how it came to its decision concerning the facts and in respect of the allegations of misconduct. Simply put, the liability decision does not lend itself to meaningful judicial review. (paragraph 51)

This was a circumstance where the inadequacy of the Professional Conduct Tribunal’s reasons was such that it was not possible to remedy that inadequacy by looking at a review of the record. The liability and penalty decisions were therefore set aside and the entire matter was remitted back to the Professional Conduct Tribunal, differently constituted, for rehearing. Costs were awarded to Richmond as the successful party on the application for judicial review.

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