Keith Vance

The Institute of Chartered Accountants of Ontario (ICAO) appealed a Divisional Court decision that quashed professional misconduct convictions against three auditors regarding their 1997 audit of Livent Inc. The auditors cross-appealed the Divisional Court's decision upholding other convictions.

The Court of Appeal allowed the ICAO's appeal, finding that the Discipline Committee did not breach procedural fairness and provided adequate reasons for its findings of misconduct.

The Court also held that subsequent legislative amendments retroactively validated the Discipline Committee's costs award.

The auditors' cross-appeal was dismissed, and the Discipline Committee's original decisions and penalties were reinstated.

The applicants, three chartered accountants, sought judicial review of decisions by the Discipline Committee and Appeal Committee of the Institute of Chartered Accountants of Ontario finding them guilty of professional misconduct in relation to the 1997 audit of Livent Inc. The Divisional Court granted the applications in part.

The Court quashed the convictions on charges 1(i) and 1(iii) due to a breach of procedural fairness, as the applicants were convicted based on their treatment of a 'Put' agreement which was not part of the charges or the case they had to meet.

The Court also quashed the convictions on charges 1(iv) and 2(viii) as unreasonable.

However, the Court upheld the convictions on charges 2(ii), (iii), (iv), and (v), finding it was reasonable for the committees to conclude the auditors failed to exercise appropriate professional scepticism.

Finally, the Court quashed the costs award, holding that the Discipline Committee lacked jurisdiction to order costs because its by-law conflicted with the requirements of the Statutory Powers Procedure Act.