COURT OF APPEAL FOR ONTARIO

DATE: 20000328

DOCKET: M25421

RE: REGINA ex rel Steeds (Applicant)

v. DAVID VENN (Respondent)

BEFORE: ROSENBERG J.A. (In Chambers)

COUNSEL: Michael D. Lipton, Q.C.,

for the applicant

David Wires,

for the respondent

HEARD: March 27, 2000

E N D O R S E M E N T

[1] This is a motion for special leave to appeal under s. 131 of the Provincial Offences Act, R.S.O. 1990, c. P.33. The issue concerns the interpretation of the exemption in s. 34 of the Public Accountancy Act, R.S.O. 1990, c. P.37 for management accountants.

[2] Leclerc J.P. found that the statements prepared by the respondent in 1993 and 1994, though on their face directed to management in accordance with the respondent's contractual relationship with the company, were intended for other uses. These uses included disclosure to the company’s banker and to a prospective purchaser of the Coach House. The justice of the peace held that the respondent knew or in effect was wilfully blind to the fact that the statements would be used for reasons other than those identified on the statements. The justice of the peace therefore applied the decisions of this court in R. v. Manuel (1982), 1982 1973 (ON CA), 38 O.R. (2d) 321 and R. v. Rayner (1982), 38 O.R. (2d) 336 and found the respondent guilty.

[3] In his reasons on appeal, Fitzgerald J. held that “even if Mr. Venn were aware that the statements he had either prepared, or was preparing for the Coach House, would come to the attention of the bank and, or the purchaser, the nature of the statements had not been changed, nor had the relationship between Mr. Venn and the Coach House changed”. He went on to hold that in the result, the respondent was not purporting to act as an “independent accountant, or auditor”. Later, Fitzgerald J. held that the fact that the respondent knew certain persons outside management would use the statement “does not change the nature of the statements nor the practice in which Mr. Venn was engaged”. He then purported to apply the reasons of Blair J.A. in Manuel and allowed the appeal.

[4] Mr. Wires argues that this case is nothing more than an application of settled law to a particular set of facts and therefore this is not a proper case for granting special leave.

[5] I do not agree. In my view, this case raises a question of law alone concerning the interpretation of s. 34 of the Public Accountancy Act. More importantly, it raises an issue that Blair J.A. seems to have left open in R. v. Manuel. In that case he held as follows at p. 331:

The evidence as to the use or intended use of the accountant's statements is clear and uncomplicated in this case and the Rayner case. It is not difficult to envisage cases where it may not be. More searching questioning of clients might reveal that they used or intended to use such financial statements in the ordinary course of business in dealing with banks, creditors or others. Where such use was possible it would be difficult for accountants to establish that they did not know or ought not to have known that their statements would be used by third parties. [Emphasis added]

And at p. 332:

It should be emphasized that third party use is not the same as third party reliance, which the appellant maintained was the distinctive characteristic of public accountancy. Third party reliance is related to the function of the auditor who independently investigates and certifies accounts. But the use to be made of statements is a narrower concept and does not include the requirement of certification upon which reliance may be placed. Accountants preparing statements for use by management are exempt from the licensing requirement, but the disclosure or the reasonable prospect of disclosure of such statements to third parties for their use in dealing with management may disentitle the accountant to the exemption. I have used the words "may disentitle" advisedly so as not to preclude full consideration of this issue in future. However, my view is that if certified general accountants were to act outside the narrowly defined role of the management accountant, they would be trespassing in the field of public accounting for which they are not licensed. [Emphasis added]

[6] Blair J.A. contemplated that the very issue raised in this case might arise in the future. In my view, it is essential in the public interest and for the due administration of justice that the issue be resolved. As matters presently stand there is considerable uncertainty as to the scope of the s. 34 exemption in light of the caveat in Manuel and the reasons of Fitzgerald J. It also seems to me that this is a matter that is bound to recur, especially in light of the reasons of Fitzgerald J.

[7] Accordingly, special leave to appeal is granted.

(signed) "M. Rosenberg J.A."