COURT FILE NO.: 137/04
DATE: 20050714
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MATLOW, E. MACDONALD And sWINTON JJ.
B E T W E E N:
A FORMER STUDENT OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ONTARIO
Applicant
- and -
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ONTARIO
Respondent
Cynthia Amsterdam and Brad Elberg, for the Applicant
Bryan Finlay, Q.C. and Caroline E. Abela, for the Respondent
HEARD at Toronto: June 28, 2005
SWINTON J.:
[1] A former student of the Institute of Chartered Accountants of Ontario ("the applicant") has brought this application for judicial review of a decision of the Appeal Committee of the Institute of Chartered Accountants of Ontario ("ICAO"), which allowed an appeal from the sanction imposed by the Discipline Committee and ruled that the student's name was to be disclosed in the publication reporting the sanction and that his discipline file was not to be sealed.
[2] The issue on this application for judicial review is whether the Appeal Committee was entitled to interfere with the Discipline Committee's decision on sanction.
Background Facts
[3] The applicant was a registered chartered accounting student working for a mid-sized firm in early 2001. To supplement his income, he also worked part-time for his father's bookkeeping and accounting business. In April, 2002, while working for his father, the applicant prepared two cheques for his own benefit in the total amount of $20,000, which were drawn on the bank account of a client of his father's. One cheque for $10,000 was payable to Canada Customs and Revenue Agency ("CCRA") to be applied to his 2001 tax account, while the other cheque was deposited to his personal account. The cheques were signed by a cheque signing machine and posted to trade suppliers of the client. The applicant's actions were discovered when one of the cheques put the client's account over its credit limit, and the bank notified the client.
[4] The applicant was charged with professional misconduct, and he entered a plea of guilty before the Discipline Committee. After hearing the evidence, the Discipline Committee held that the applicant was guilty of professional misconduct.
[5] Pursuant to Bylaw 575(1) of the ICAO, the Discipline Committee may give notice of any decision and/or order in such form and manner as it determines. As well, Bylaw 575(4) provides that notices given under the bylaw shall disclose the name of the person or firm unless the Discipline Committee orders otherwise. The main issue which the Discipline Committee was required to determine in this case, and which is the subject of this application, was whether the applicant's name should be disclosed.
[6] The Discipline Committee heard evidence and submissions on sanction and ordered that the applicant be reprimanded in writing; that he be fined $1,500; that he be struck off the register of students; that notice of the decision and order disclosing the applicant's name be given to the Canadian Institute of Chartered Accountants; that notice of this decision and order, without disclosing the student's name, be published in CheckMark (the magazine of the ICAO); and that the record of proceedings be sealed, and the student's name be deleted in the decision, order, reasons, and charges.
[7] In reaching its decision on publication, the majority of the Discipline Committee emphasized the principle of rehabilitation of the applicant (at paras. 33, 35 of its reasons). In particular, they stated:
We cannot emphasize enough the impact of the youth of the student on our decision. The student was not only very young in fact, being just 21 years old at the time of the misconduct, and 22 years old at the date of the hearing, but was very young also in both appearance and demeanour. The student made one very serious mistake. It may have been a stupid, impetuous act, or it may have been an unconscious effort to communicate with the father, but it was not a carefully considered scheme, and it disclosed virtually no guile or methodical planning. Given the financial position and relatively small cash flow of the client, the theft was certain to be discovered immediately. We must also emphasize that the student was at a very early career stage, and had attained little practical experience that will assist in the search for another career or alternative employment.
The majority of the panel determined that the circumstances of this case were sufficiently rare and unusual to warrant the withholding of the student's name from the notice to be published in CheckMark, and thought it was the appropriate order to help advance the rehabilitation of the student. These panel members were of the view that it was appropriate in this case to base their publication decision on the rehabilitation principal [sic]of sanctioning, and were convinced that the student's rehabilitation would be harmed if publication of his/her name in CheckMark were ordered. The majority also felt that no additional specific deterrent effect would be achieved through publication of the student's name in Checkmark than had already been achieved through this young person's involvement in the discipline process.
They went on to hold that the order would not be effective without an order sealing the record of proceedings and deleting the applicant's name from the decision, order, reasons and charges. In contrast, the two dissenting members of the panel were of the view that the principles of specific and general deterrence should outweigh the principle of rehabilitation.
[8] The Professional Conduct Committee appealed the non-publication order and the sealing order to the Appeal Committee. The Appeal Committee allowed the appeal and ordered that the applicant's name be published in CheckMark and set aside the sealing order on the basis that the Discipline Committee had no jurisdiction to make such an order.
[9] In its reasons, the Appeal Committee stated that it would not interfere with the sanction imposed by the Discipline Committee unless that body had made an error in principle or imposed a sanction outside the appropriate range of sanctions for such misconduct (at para. 24 of its reasons). The Appeal Committee went on to find that there had been three errors in principle with respect to the issue of publication, namely,
failing to recognize the applicant's misconduct as an act of moral turpitude;
determining that the circumstances of the case were sufficiently rare and unusual to warrant withholding the name from publication; and
giving too much weight to the principle of rehabilitation and not enough weight to the principles of specific and general deterrence and the aim of maintaining public confidence in the Institute's disciplinary process (at para. 25).
The Issues
[10] The applicant argued that the Appeal Committee acted outside its jurisdiction, because it changed the primary findings of fact made by the Discipline Committee without first finding that the Discipline Committee made a palpable and overriding error in determining the facts. In addition, the Appeal Committee erred in failing to consider the impact of publication on him and in holding that the Discipline Committee had no jurisdiction to make the sealing order.
[11] The respondent submitted that the decision of the Appeal Committee was reasonable, given its conclusion that the Discipline Committee had made three errors of principle.
The Style of Cause
[12] At the outset of the hearing, a motion was heard to permit the proceedings to be styled so as not to disclose the applicant's identity. That motion had been brought early in the process, but was heard, on consent at the time of the hearing of the application. The motion was granted, after the applicant's name and address were revealed to the Court and the motion record containing that information was sealed.
The Standard of Review
[13] The applicant argued that the standard of review need not be addressed, as the Appeal Committee exceeded its jurisdiction. However, the Supreme Court of Canada has made it clear that the standard of review must be determined in each case through the application of the pragmatic and functional test (Pushpanathan v. Canada, 1998 778 (SCC), [1998] 1 S.C.R. 982 at paras. 27-37). The four factors to consider are the presence or absence of a privative clause or a statutory right of appeal; the expertise of the tribunal; the purpose of the legislation as a whole and the provision in particular; and the nature of the problem – that is, a question of fact, law or mixed fact and law.
[14] In this case, there is no privative clause nor a statutory right of appeal from the Appeal Committee contained in The Chartered Accountants Act, 1956, S.O. 4-5 Elizabeth II, c. 7. However, the ICAO Bylaws state that the Appeal Committee's orders are final, binding and conclusive (Bylaw 601(7)).
[15] The Appeal Committee is comprised of members of the profession plus one lay member. In matters of professional regulation, they have greater expertise than this Court. In addition, the ICAO has developed a body of jurisprudence which guides its committees in their decision-making.
[16] The purpose of The Chartered Accountants Act, 1956 is to give the ICAO the jurisdiction to discipline and regulate the profession of chartered accountancy in the public interest. Finally, the question before the Appeal Committee – the appropriate sanction for professional misconduct- is a question of mixed fact and law.
[17] Given the expertise of the Appeal Committee in dealing with issues of professional misconduct, the role of the ICAO and the nature of the question before the Appeal Committee, the appropriate standard for review is reasonableness. This standard has been applied by this Court in Silverman v. Institute of Chartered Accountants of Ontario, [1997] O.J. No. 411 at para. 3; Moore v. College of Physicians and Surgeons of Ontario, [2003] O.J. No. 5200 at para. 8). While this Court has also applied the standard of patent unreasonableness in Lapedus v. The Institute of Chartered Accountants of Ontario (unreported, February 7, 1997), there was no discussion of the pragmatic and functional approach in that case.
[18] Moreover, the Supreme Court of Canada has applied the standard of reasonableness in the review of the penalty decisions of a self-governing profession in Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247 at para. 42. In that case, the Court described the standard of reasonableness at para. 55 of the reasons:
A decision will be unreasonable only if there is no line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived. If any of the reasons that are sufficient to support the conclusion are tenable in the sense that they stand up to a somewhat probing examination, then the decision will not be unreasonable and a reviewing court must not interfere.
Analysis
[19] Pursuant to Bylaw 601(6), the Appeal Committee has all the powers conferred on the Discipline Committee and can "confirm, reject or vary any decision" of the Discipline Committee or make any order which, in its discretion, may be required by the nature of the case or the rules of natural justice. In exercising its powers in an appeal from the sanction imposed by the Discipline Committee, the Appeal Committee has consistently adopted a restrained role, interfering only if there has been an error in principle or if the penalty was outside the appropriate range.
[20] In this case, the Appeal Committee concluded, as stated above, that the Discipline Committee made three errors of principle. First, the Appeal Committee determined that the Discipline Committee erred in failing to find that the applicant's conduct was an act of moral turpitude (at para. 26). At paras. 27 and 28 of its reasons, it stated:
This was not a case of someone happening across a sum of money left unattended and scooping it up without any forethought. Such an act could be characterized as impetuous. In this case, the respondent drew two cheques on his client's bank account, one payable to Canada Customs and Revenue Agency which he mailed to CCRA for credit to his personal income tax account, and the other payable to himself which he deposited to his own bank account and subsequently drew cheques on. He attempted to cover up the unauthorized cheques by posting them to trade suppliers in his client's books. In preparing the cheques he used a cheque-signing machine knowing that this would avoid the necessity of having to present the cheques to his client for approval and signature. While we do not disagree with the discipline committee's finding that this "was not a carefully considered scheme" [paragraph 34] , it was a scheme nevertheless, and one involving moral turpitude. [The Student] had to have known that what he was doing was dishonest, and he had the time and opportunity to put an end to it. Instead he was caught and confronted.
The precedent cases put before the panel, most of which dealt with members, held that publication, including disclosure of name, was appropriate in matters of moral turpitude. The principle of general deterrence and the importance of fostering public confidence in the openness of the Institute's disciplinary process were the primary factors leading to the publication orders in those cases.
[21] Where the misconduct is an act of moral turpitude, the jurisprudence of the ICAO has held that the guilty party's name should be published (see, for example, ICAO v. Bogart, Discipline Committee, September 9, 2002, aff'd April 29, 2003 by the Appeal Committee). The reasons of the Discipline Committee do not address the issue of whether the applicant's conduct was an act of moral turpitude, and it is evident from the Appeal Committee's reasons that the members found the Discipline Committee's failure to find moral turpitude was unreasonable, given the facts before it. On the uncontested evidence, the applicant engaged in the theft of $20,000 from a client. The Appeal Committee emphasized that there was a scheme by the applicant, albeit one that was not carefully considered, and that the applicant must have known that his conduct was dishonest and he could have put a stop to it. In the view of the Appeal Committee, it was an error in principle for the Discipline Committee not to find that the deliberate act of theft was an act of moral turpitude in light of the ICAO jurisprudence and the facts of this case. In my view, that conclusion was a reasonable one for the Appeal Committee to reach.
[22] In addition, the Appeal Committee found that the Discipline Committee erred in principle in giving undue weight to the factor of rehabilitation. At para. 32 of its reasons, the Appeal Committee stated:
We did, however, conclude that the discipline committee erred in placing too much emphasis on the principle of rehabilitation and not enough on the principles of specific and general deterrence. The principle of rehabilitation should not outweigh the principles of deterrence, especially general deterrence, in cases involving moral turpitude, whether on the part of a member or a student.
[23] According to the jurisprudence of the ICAO, when the misconduct involves moral turpitude and, in particular, in cases of fraud or theft, the principle of general deterrence is of primary importance, while rehabilitation is less important (ICAO v. Long, Discipline Committee, August 27, 1991; ICAO v. Lutvack, Discipline Committee, June 20, 1989). The normal range of sanctions for fraud and theft are expulsion and publication (Lutvack and Long, supra; ICAO v. Otto, Discipline Committee, July 29, 1998).
[24] As the Supreme Court of Canada observed in Re Cartaway Resources Corp., 2004 SCC 26, [2004] 1 S.C.R. 672 at para. 64, unreasonable weight given to a particular factor, such as general deterrence, may make a penalty decision unreasonable. Given the ICAO jurisprudence, the Appeal Committee acted reasonably in finding an error in principle by the Discipline Committee when it put primary weight on rehabilitation and the youth of the applicant and failed to give appropriate consideration to general deterrence in the circumstances of this case.
[25] Finally, the Appeal Committee concluded that the Discipline Committee erred in finding that the applicant's youth and inexperience were rare and unusual circumstances which warranted a publication ban. The ICAO jurisprudence has held that a member's age and experience do not affect the determination of whether there should be a non-publication ban (see, for example, ICAO v. Beech, Appeal Committee, February 8, 1989). Moreover, in cases of moral turpitude, the ICAO jurisprudence places less weight on the impact of the publication on the member and places primary emphasis on the factor of general deterrence (see, for example, ICAO v. Bogart, supra).
[26] The cases in which a publication ban has been ordered are very few in number, and they have not involved theft from a client (see, for example, ICAO v. Greenidge, Discipline Committee, October 26, 2000; ICAO v. Re: a Member, Discipline Committee, June 27, 2001).
[27] In my view, the decision of the Appeal Committee was reasonable, given its findings with respect to the errors in principle made by the Discipline Committee. It did not substitute its findings of fact for those made by the Discipline Committee, and it did consider the impact of publication on the applicant. Therefore, the application for judicial review is dismissed. Given our conclusion with respect to the Appeal Committee's decision on publication, there is no need to deal with the issue of the Discipline Committee's jurisdiction to order that the discipline file be sealed.
[28] For these reasons, this application is dismissed. If the parties are unable to agree on costs, the respondent may make written submissions within 21 days of the release of this decision, with responding submissions from the applicant within 15 days thereafter.
Swinton J.
Matlow J.
E. Macdonald J.
Released: July 14, 2005
COURT FILE NO.: 137/04
DATE: 20050714
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MATLOW, E. MACDONALD AND sWINTON JJ.
B E T W E E N:
A FORMER STUDENT OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ONTARIO
Applicant
- and -
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF ONTARIO
Respondent
REASONS FOR JUDGMENT
Swinton J.
Released: July 14, 2005