Power v Appeals Council of the New Zealand Institute of Chartered Accountants
[2023] NZHC 3605
•11 December 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-745
[2023] NZHC 3605
UNDER the Judicial Review Procedure Act 2016 IN THE MATTER
of a review of a decision of the Appeals Council of the New Zealand Institute of Chartered Accountants dated 13 July 2023
BETWEEN
RICHARD JAMES POWER
Applicant
AND
THE APPEALS COUNCIL OF THE NEW ZEALAND INSTITUTE OF CHARTERED ACCOUNTANTS
First Respondent
THE PROFESSIONAL CONDUCT COMMITTEE OF THE NEW ZEALAND INSTITUTE OF CHARTERED ACCOUNTANTS
Second RespondentTHE NEW ZEALAND INSTITUTE OF CHARTERED ACCOUNTANTS
Third Respondent
Hearing: 5 December 2023 Appearances:
H Evans for Applicant
R Moon for Respondents
Judgment:
11 December 2023
JUDGMENT OF McQUEEN J
POWER v THE APPEALS COUNCIL OF THE NEW ZEALAND INSTITUTE OF CHARTERED ACCOUNTANTS [2023] NZHC 3605 [11 December 2023]
Table of Contents
Para Nos
Preliminary matter of confidentiality [8]
Regulation of Chartered Accountants [9]
What happened? [12]
Background events [12]
Disciplinary Tribunal decision [17]
Appeals Council decision [25]
The application for interim orders [36]
Approach to applications for interim orders [41]
Are interim orders reasonably necessary to preserve Mr Power’s position?
[45]
The strength of Mr Power’s case [56]
The public and private repercussions of granting relief [61]
Overall justice of the case [68]
Next steps to substantive hearing [74]
Result [75]
Orders [76]
[1] Mr Richard Power seeks judicial review of decisions made by the Appeals Council of the New Zealand Institute of Chartered Accountants, (the Appeals Council), the Professional Conduct Committee of the New Zealand Institute of Chartered Accountants (the PCC), and the New Zealand Institute of Chartered Accountants (NZICA) (or collectively ‘the respondents’).
[2] Mr Power challenges decisions made by the respondents during disciplinary proceedings brought against him in his practice as a chartered accountant. Specifically, the NZICA’s Disciplinary Tribunal (the Tribunal) found Mr Power guilty of conduct unbecoming an accountant and of breaching the fundamental principles of professional behaviour and objectivity, as contained in the NZICA’s Code of Ethics. The Tribunal then ordered that Mr Power’s membership of NZICA be terminated, that he pay costs of $87,000, and that its decision be publicised.
[3] The Appeals Council allowed an appeal by Mr Power in part, only overturning the Tribunal’s finding that Mr Power had breached the principle of objectivity. The Appeals Council dismissed Mr Power’s appeal as to penalty, costs and publication, and ordered him to pay the NZICA 90 per cent of the costs of the appeal.1 The quantum of that costs order is still to be determined.
[4] The matter that is before me is an application by Mr Power for interim orders pursuant to s 15 of the Judicial Review Procedure Act 2016. Pending the determination of his substantive application, Mr Power seeks reinstatement of both his membership of the NZICA and his name to the Register of Chartered Accountants (the Register). He seeks also orders restraining publication of the decisions of the Appeals Council and enforcement of all orders of the Appeals Council. Mr Power alleges various errors of law, as well as unreasonableness and procedural impropriety on the part of the PCC, the Tribunal, and the Appeals Council.
[5] Mr Power’s application for interim orders is opposed by the respondents. The respondents have already removed Mr Power’s name from the Register and published the results decision of the Appeals Council on the NZICA’s website. The Tribunal’s liability, penalty, costs and publication decision has been on the NZICA website since July 2022. That decision was marked with a banner noting that the decision was subject to appeal. The NZICA has recently removed that banner and replaced it with a direction to refer to the decision of the Appeals Council.
[6] The respondents submit that there is no impediment to Mr Power continuing to practise as an accountant as opposed to a chartered accountant, that the nature of the complaints against him have been in the public domain for some time, and that his substantive application has little merit. If the application for interim relief is declined, the NZICA intends to enforce the orders made by the Tribunal and Appeals Council.
[7] For the reasons below, I consider that Mr Power’s application for interim orders should be allowed in part.
1 Other than allowing the appeal against an order that notice of the decision be published in The Press.
Preliminary matter of confidentiality
[8] Mr Power requests that the Court redact information referring to his health condition and the identity of a medical professional who currently treats him. The respondents do not object to this approach being taken in this judgment, consistent with the approach taken by the Tribunal and Appeals Council in their decisions. I have made redactions accordingly for the publicly available version of this judgment.
Regulation of Chartered Accountants
[9] Chartered accountants are regulated in New Zealand by way of the New Zealand Institute of Chartered Accountants Act 1996 (the NZICA Act).
[10] The NZICA Act and the NZICA regulate the use of the term “chartered accountant”, which means “a member of the Institute who, under the rules of the Institute, is entitled to use the designation chartered accountant”.2 It is an offence for a person who is not a member of NZICA to use in connection with their business, employment, or profession, any material intended to cause, or which may reasonably cause, any person to believe they are a member of NZICA.3
[11] The functions of the NZICA include a duty to control and regulate the profession of accountancy as conducted by its members in New Zealand.4 That duty includes the investigation and hearing of complaints, appeals, and disciplinary matters.5 Further guidance relating to powers and procedure is provided by the NZICA Rules, which are secondary legislation made pursuant to the NZICA Act. The PCC is established to investigate complaints against members (including former members). The PCC’s functions include the laying of charges against members. The Tribunal is established to hear complaints and matters referred to it by the PCC, and the Appeals Council is established to hear appeals from decisions of the Tribunal. No right of appeal exists from the Appeals Council to the High Court and this no doubt explains why Mr Power has brought judicial review proceedings.
2 New Zealand Institute of Chartered Accountants Act 1996, s 2.
3 Section 14(1).
4 New Zealand Institute of Chartered Accountants Act 1996, s 5A(b).
5 Section 5A(2)(a).
What happened?
Background events
[12] Mr Power has been a chartered accountant since 1987 and has practised as a sole practitioner under the name of Richard J Power Chartered Accountants. He has previously been the subject of disciplinary proceedings before the NZICA, in 2013, 2015, and 2016. In December 2016, he was suspended as a member for 12 months and ordered to undertake rehabilitative/development work.
[13] In terms of the charges presently at issue, Mr Power was charged on 28 September 2021 by the PCC following an investigation which followed two complaints against Mr Power by clients. The complainants are described as ‘Mr W’ and ‘Mr L’.6
[14]The PCC filed two charges against Mr Power. These charges were:
THAT in terms of the New Zealand Institute of Chartered Accountants Act 1996 and the Rules made thereunder, and in particular Rule 13.50, the Member is guilty of:
1.Conduct unbecoming an accountant; and/or
2.Breaching NZICA’s Rules and/or Code of Ethics
[15] The particulars of these charges in relation to Mr W were that Mr Power behaved unprofessionally in his dealings with Mr W in that he:
a)did not provide an engagement letter setting out the scope of work, fees and/or the terms of service; and/or
b)agreed a fixed monthly accounting fee for his accounting work to be paid by automatic payment (the Fixed Fee Agreement), without confirming the assumptions upon which the agreement was based; and/or
c)invoiced additional fees for work already within the scope of the Fixed Fee Agreement; and/or
d)invoiced for fees over and above the Fixed Fee Agreement without agreeing the scope and cost of the additional work in advance; and/or
6 The names and any means of identifying the complainants were suppressed by the Tribunal and the Appeals Council under r 13.78 of the NZICA Rules.
e)failed to communicate promptly with Mr W when he queried and/or refused to pay the additional invoices; and/or
f)refused to perform work agreed within the scope of the Fixed Fee Agreement unless additional fees were paid; and/or
g)failed or refused to release Mr W’s accounting records to his new accountant despite there being no outstanding fees owed; and/or
h)failed to return to Mr W fees paid in advance (totalling $2,557.08 or, alternatively, $1,136.83),
in breach of the Fundamental Principles of Professional Behaviour and/or Objectivity.
[16]The particulars of the charge in relation to Mr L were that Mr Power:
2.Provided incorrect and/or conflicting accounting and/or tax advice to Mr L regarding two term deposit bank accounts in the name of K Limited including:
a)advising him to close the two term deposit accounts and invest the money in Mr and Mrs L’s personal names (the Term Deposit Issue); and/or
b)charging Mr L to correct the tax issues arising as a result of the term deposit issue, in breach of the Fundamental Principles of Professional Behaviour and/or Objectivity; and/or
3.Acted in a manner that was unprofessional in relation to the dispute with Mr L regarding the mattes outlined at paragraph 2 above, by:
a)refusing to negotiate and/or compromise; and/or
b)refusing to release Mr L’s accounting records to his new accountants until the outstanding fees were paid,
in breach of the Fundamental Principles of Professional Behaviour and/or Objectivity; and/or
4.Suggested, in his letter of 10 March 2021 to the PCC, that because the Complainant had difficulty understanding his report that there “may be a health issue”, in breach of the Fundamental Principle of Professional Behaviour
Disciplinary Tribunal decision
[17] The Tribunal’s decision on liability, penalty, costs and publication was released on 25 July 2022, following hearings in April and July 2022.7
[18] As to Mr W’s complaint, the Tribunal found that each of the particulars alleged were made out.8 It held that Mr Power did not provide an engagement letter, had agreed to a fixed monthly fee arrangement, and should have done more to confirm the assumptions on which that agreement was based. It held that Mr Power rendered invoices claiming additional fees for work that was within the scope of the agreement when it was unclear whether any of the work claimed for was over and above the agreement. It held that Mr Power failed to communicate promptly with Mr W, and that there was no justification for Mr Power to refuse to complete further work, release Mr W’s records, or delay the repayment of the existing credit.
[19] The Tribunal then went on to find that Mr Power’s conduct in respect of Mr W was in breach of the fundamental principles of professional behaviour and objectivity. The Tribunal stated:9
The Tribunal finds that the Member was motivated by a misplaced and unjustified sense of entitlement to charge on a basis different to what had been agreed, and that he acted entirely in his own interests and contrary to those of his client.
[20] As to Mr L’s complaint, the Tribunal found that Mr Power had provided incorrect accounting advice, as he knew and should have made clear that if the term deposits were altered in the manner advised that there would be adverse tax consequences. The Tribunal considered that as Mr Power was responsible for those consequences, he should not have charged for the work required to correct them. However, the Tribunal did not consider that Mr Power had failed to respond to Mr L promptly, or that it was unreasonable to withhold Mr L’s records before payment of fees. The Tribunal considered the comment Mr Power made as to Mr L’s health to be
7 Re Power [2022] NZICADT. [Disciplinary Tribunal Decision]. The members of the Tribunal were Matthew Casey KC and two chartered accountants Andree Atkinson and John Murray. The liability decision was first released on 9 June 2022 then released together with the penalty, costs and publication decision on 25 July 2022.
8 At [70].
9 At [110].
inappropriate and found that the particular relating to this had been made out. The Tribunal then went on to say:10
The Member’s refusal to accept that the instruction he gave to Mr L was at best ambiguous and his continuing claim that it could only be read as applying to one of the term deposits demonstrates a lack of objectivity and professionalism. What occurred should have been readily apparent to the Member and he should have dealt with it in a way that did not involve the confusion and conflict that followed.
As the Member’s lack of clear advice and his incorrect instruction to Mr L was the direct cause of the problem, it was his professional responsibility to rectify it. His actions in charging Mr L for the extra work involved were unprofessional and lacked objectivity.
…
As well as unprofessional and causing unnecessary distress to Mr L, [the comment made] is another example of the Member’s propensity to cast blame or fault on others, rather than to have insight into his own role and its impact on his clients. The comment, made in the context, was a clear breach of the Fundamental Principle of Professional Behaviour.
[21] As to penalty, the Tribunal recorded its view that the appropriate penalty was to terminate Mr Power’s membership of NZICA and to remove his name from the Register. Mr Power instead sought a 12 month suspension. In its consideration of penalty, the Tribunal described Mr Power’s previous disciplinary record, noting the PCC’s view that Mr Power’s record was the “worst of any member, in terms of the number of complaints and of appearances before the PCC and Disciplinary Tribunal”.11
[22] The Tribunal noted that there were similarities between the present case and previous disciplinary decisions. Specifically, in 2013, the Tribunal found that Mr Power had failed to respond reasonably and in a timely manner to a client in relation to a costs matter. Then, in 2016, the Tribunal found Mr Power guilty of conduct unbecoming an accountant, which included: undertaking/charging for work without authority, not explaining costs, charging improperly and unreasonably, failing to act in a timely manner when requested to transfer files, failing to provide an engagement letter, and making insulting and unprofessional insinuations about a client. In relation to that decision, the Tribunal recommended that Mr Power’s name
10 Disciplinary Tribunal Decision, above n 7, at [117]–[120].
11 At [128].
be removed from the Register. That decision was overturned by the Appeals Council which instead substituted a 12 month period of suspension with a comprehensive rehabilitation programme.
[23] The Tribunal considered that the conduct in the present case was a repeat of the patterns of behaviour described in earlier decisions, and that therefore Mr Power was either unable or unwilling to bring about the necessary changes to his professional behaviour. Given that the Appeals Council in 2016 described its decision as offering a ‘last chance’ to Mr Power, the Tribunal considered that removal from the Register was warranted and reflected the need to protect the public and maintain professional standards. It then imposed a costs order of $87,000, noting that the extent of that order reflected the ‘no stone unturned’ approach taken by Mr Power in his defence.
[24] As to publication, the PCC sought publication in Acuity (the official publication of the Chartered Accountants Australia and New Zealand) and The Press (a daily newspaper circulating where Mr Power’s practice is located). The Tribunal did not accept Mr Power’s argument that the consequences of publication in The Press for his health outweighed the public interest, despite receiving reports from Mr Power’s doctor. The Tribunal accordingly ordered that its decision be publicised as sought by the PCC, accompanied by a statement that the decision would not take effect pending the determination of any appeal by Mr Power, as required by r 13.59 of the NZICA Rules.
Appeals Council decision
[25] Mr Power then appealed the Tribunal’s decision. He also sought interim orders from the Appeals Council preventing publication of the Tribunal’s decision pending resolution of the appeal. The grounds on which Mr Power sought those orders were that publication would have “dramatic consequences” and that the interests of justice required that publication await the result of the appeal. Specifically, Mr Power said that publication would have an adverse impact on his health and cause irreversible harm to his business.
[26] Mr Power’s application for interim orders was declined by the Appeals Council on 4 November 2022.12 The Appeals Council recorded the following reasons for its decision:13
(a)There is no evidence that publication would have irreversible and highly prejudicial effects on the Member’s practice….
(b)There is a strong public interest in transparency in the disciplinary process….
(c)Rule 13.59 recognises those strong public interest principles and creates a presumption in favour of publication…
(d)Any reputational effects of publication are ameliorated, at least to some extent, by the requirement under Rule 13.59 that the publication include a statement that the decision of the Disciplinary Tribunal does not take effect pending determination of the appeal…
(e) …there is no suggestion
that the Appellant’s condition cannot be managed or that it will have serious and long-lasting effects on the Appellant’s health.
(f)Even if the Member’s appeal was wholly successful, there is nothing in the evidence which would suggest grounds for any order supressing publication of the Member’s name and details in Acuity and on the Institute’s website. The interim orders, even if granted, would be unlikely to achieve other than temporary relief from publication….
[27] The Appeals Council’s decision on liability was issued (to the parties only) on 13 July 2023.14 Following a lengthy summary of the facts and evidence, the Appeals Council addressed the particulars of the charge in respect of Mr W. The Appeals Council concluded that:
(a)Mr Power had failed to comply with the requirement to provide terms of engagement, and to ensure that they were clearly understood and clearly recorded (particular 1(a));15
12 Power v PCC [2022] NZICAAC [Appeals Council Interim Decision] The members of the Appeals Council were Les Taylor KC as Chair and two chartered accountants Chrissie Murray and Kathryn Roberts.
13 At [17].
14 Power v PCC NZICAAC [Appeals Council Liability Decision]. The members of the Appeals Council were Les Taylor KC and two chartered accountants Chrissie Murray and Kathryn Roberts.
15 At [104].
(b)Mr Power had failed to clearly articulate the intention that the monthly figure quoted for the fee arrangement would be an estimate only (if that was his intention) and that was a failure to clearly state the assumptions upon which the agreement was based (particular 1(b));16
(c)the excess fees claimed over and above the work which was covered by the fixed fee agreement was not agreed in advance of the invoices being raised, and Mr Power was not entitled to charge more for those services (particulars 1(c) and 1(d));17
(d)Mr Power had failed to respond promptly to Mr W’s emails and also to clearly explain the basis on which he claimed he was entitled to charge additional fees for work over and above the estimate upon which the monthly fee arrangement was based (particular 1(e));18
(e)Mr Power’s failure to address the fee dispute and demand for additional payment for services within the scope of the fee agreement that had not been completed was unprofessional (particular 1(f));19
(f)in circumstances where Mr Power held a credit balance for fees in favour of Mr W, there was no proper basis for him failing to provide all of Mr W’s accounting documentation within a reasonable time, and no sufficient justification for his failure to release some of the records until nearly a year after the initial request (particular 1(g));20 and
(g)Mr Power had failed to make payment of the credit balance promptly without reasonable excuse.21
[28] As to the particulars of the charge relating to Mr L, the Appeals Council concluded:
16 At [125].
17 At [127]–[128].
18 At [131]–[132].
19 At [137]–[139].
20 Appeals Council Liability Decision, above n 14, at [149]–[151].
21 At [154].
(a)particular 2(b) could not have been proved before the Tribunal, as Mr L’s instructions to the bank to transfer the term deposits into the joint names of Mr and Mrs L had occurred after Mr Power had advised them there would be negative tax consequences, and Mr Power had no knowledge that the transfer had occurred prior to him providing correct advice to Mr L at a later date;22
(b)Mr Power had provided incorrect advice by instructing Mr L to transfer the money in the term deposits into the joint names of Mr and Mrs L (particular 2(a));23 and
(c)the statement made by Mr Power as to Mr L’s health was unprofessional and unjustified (particular 4).24
[29] As to Mr Power’s culpability, the Appeals Council agreed with the Tribunal in respect of its findings as to Mr Power’s breaches of the NZICA Rules and/or Code of Ethics in respect of each of the particulars except particular 2(b) for the reasons noted above.25 The Appeals Council was, however, not persuaded that Mr Power’s failure to respond appropriately to complaints in respect of fee disputes constituted a breach of the principle of objectivity.26 As such, in its decision on liability, the Appeals Council concluded that while particular 2(b) was not proved, in all other respects, Mr Power’s conduct was unprofessional and unbecoming an accountant.27
[30] On 24 October 2023 the Appeals Council issued both a Results Decision and a decision on penalty, costs, and publication (the Penalty Decision).28 In the Penalty Decision, the Appeals Council agreed with the Tribunal that removal from the Register was the appropriate penalty. The Appeals Council considered that its finding in relation to particular 2(b) did not significantly affect its view that Mr Power’s conduct in
22 At [187]–[188] and [227]–[228].
23 At [221].
24 At [240].
25 At [247], [259], and [266].
26 Appeals Council Liability Decision, above n 14, at [269]–[270].
27 At [271].
28 Power v PCC [2022] NZICAAC [Appeals Council Penalty Decision]. The members of the Appeals Council were Les Taylor KC and two chartered accountants Chrissie Murray and Kathryn Roberts.
28 At [104].
relation to both Mr W and Mr L was serious, and in light of Mr Power’s previous history, raised major concerns as to his fitness to remain a member of the NZICA.29 As to consistency with previous cases, the Appeals Council noted:
43.In the particular circumstances of this case, and given the unique nature of the Member’s long and concerning disciplinary history and patterns of behaviour, we do not derive much assistance from consideration of cases where the conduct in question is more serious in nature (involving elements of dishonest, lack of integrity or serious incompetence) than the Member’s conduct in this case and previous cases where the Member’s conduct has been found to be in breach of the Institute’s standards. The fundamental issue in this case is whether, given the Member’s previous disciplinary history and attempts at rehabilitation, the Member’s rehabilitation proposal combined with a penalty of suspension, is an appropriate penalty or whether, in all the circumstances, the important factors of protection of the public (including deterrence) and maintenance of professional standards require termination of the Member’s membership of the Institute and removal of his name from the Register of Members.
[31] The Appeals Council accepted that Mr Power’s conduct of itself was not sufficiently serious to justify removal from the Register. However, it went on to conclude that:30
The real concern, however, is that the conduct of the Member is similar to the types of conduct discussed in the Appeals Council’s 2016 Decision and suggests an inability of the Member to learn from his mistakes and respond in a courteous and professional manner when faced with a situation of conflict with his clients.
…
Unless we could be satisfied that the proposed penalty of suspension, combined with the proposed extensive 24-month (possibly longer) rehabilitation programme would be sufficient to protect the public and maintain standards, we consider that the repeated breaches of the Institute’s standards and the need to protect the public and maintain standards would require that the Member’s membership of the Institute be terminated and his name removed from the Register of Members.
[32] Having assessed the proposed rehabilitation programme and Mr Power’s evidence and submissions on his health, the Appeals Council concluded:31
We have no confidence that the proposed rehabilitation programme is likely to result in any change in behaviour when the Member is next confronted with
29 At [29].
30 At [50]–[55].
31 Appeals Council Penalty Decision, above n 28, at [129]–[130] and [145].
a situation of conflict with his clients. We do not accept that the absence of any further complaints since the complaint by Clients A and B is evidence that the previous rehabilitation programme has worked or that the Member has learned from his mistakes, including the conduct which gave rise to the findings against him in this case.
For the reasons discussed above we are not satisfied that the Member has any true insight into the reasons for his unacceptable pattern of behaviour…
….
… we are firmly of the view that the only appropriate penalty is termination of the Member’s membership from the Institute and removal of his name from the Register…
[33] The Appeals Council did not disturb the Tribunal’s orders as to costs or publication in Acuity.32 It did, however, conclude that publication in The Press would be inappropriate and accordingly quashed the Tribunal’s order in that respect.33 The Appeals Council also ordered that Mr Power pay 90 per cent of the costs of the appeal to the NZICA. The deduction of 10 per cent reflected the fact that particular 2(b) was not proved.34
[34] The NZICA posted the Results Decision to its website on 25 October 2023 and shortly afterwards removed Mr Power’s name from the Register. It also annotated the Tribunal’s decision on the NZICA website to cross refer to the Appeals Council Results Decision. It is the NZICA’s expectation that Mr Power will, within a reasonable period, make the necessary changes to his business (including its letterhead, signage and advertising material) to reflect that he is no longer registered as a member of the NZICA.
[35] In the normal course, the NZICA would publish the Appeals Council’s Liability Decision and Penalty Decision on its website and notice of these decisions in Acuity. These steps have not been taken pending my decision on Mr Power’s application for interim relief.
32 At [156].
33 At [178].
34 At [186].
The application for interim orders
[36] Mr Power applies pursuant to s 15 of the Judicial Review Procedure Act 2016 for orders:
(a)reinstating his NZICA membership until determination of the substantive application;
(b)restraining publication of the Appeals Council’s decisions on liability and penalty on the NZICA website and in Acuity until determination of the substantive application;
(c)restraining enforcement of all orders; and
(d)any further orders the Court deems necessary to preserve his position pending the determination of the substantive application.
[37]Mr Power relies on the following grounds:
a.The applicant has filed an application for judicial review against the first respondent’s decisions as to liability and penalty.
b.If the third respondent is permitted to enforce these decisions before the substantive application for judicial review is heard and determined, then the judicial review application will be rendered nugatory.
c.The applicant’s primary source of income is his business Richard J Power Chartered Accountants, which the applicant will not be able to operate if the applicant’s membership of the NZICA is not reinstated.
d.The applicant has a good arguable case.
e.The applicant will comply with any orders or undertakings that the Court may require pending the hearing of the substantive application.
f.An order for interim relief will not determine the issues in the substantive application.
g.The overall justice is in favour of granting interim orders.
h.It is necessary to make the interim orders to preserve the applicant’s position.
[38] Mr Power has filed two affidavits in support of his application for interim orders. The first affidavit is extensive, with over 2000 pages of annexures which constitute papers relating to the disciplinary proceedings before both the Tribunal and the Appeals Council.
[39]The respondents oppose the application on the grounds that:
(a)the interests of justice favour dismissing the application;
(b)there is no impediment to Mr Power continuing to operate business as an accountant provided he does not describe himself as a Chartered Accountant;
(c)Mr Power continued to operate the same business successfully when his membership of the NZICA was suspended for 12 months during 2017;
(d)the nature of the complaints against Mr Power and how they have been determined have been in the public domain for some time;
(e)Mr Power adopted a “no stone unturned” approach to his defence, increasing the overall costs of the proceedings, and the NZICA will be able to return any portion of the costs paid should that be necessary; and
(f)the merits of the substantive application do not appear strong, particularly given the opportunity Mr Power has had to defend the charges in two hearings before independent panels, each chaired by King’s Counsel, which upheld the complaints concerned, and before which Mr Power was represented by experienced counsel.
[40] Ms Hayman, Senior Investigator in the PCC team at the NZICA, has filed an affidavit in support of the respondents’ opposition to the application.
Approach to applications for interim orders
[41]Section 15 of the Act provides:
15 Interim orders
(1)At any time before the final determination of an application, the court may, on the application of a party, make an interim order of the kind specified in subsection (2) if, in its opinion, it is necessary to do so to preserve the position of the applicant.
(2)The interim orders referred to in subsection (1) are interim orders—
(a)prohibiting a respondent from taking any further action that is, or would be, consequential on the exercise of the statutory power:
(b)prohibiting or staying any proceedings, civil or criminal, in connection with any matter to which the application relates:
(c)declaring that any licence that has been revoked or suspended in the exercise of the statutory power, or that will expire by the passing of time before the final determination of the application, continues and, where necessary, that it be deemed to have continued in force.
…
(4)An order under subsection (2) or (3) may—
(a)be made subject to such terms and conditions as the court thinks fit; and
(b)be expressed to continue in force until the application is finally determined or until such other date, or the happening of such other event, as the court may specify.
[42] Section 4 also defines the term “licence” as including “any permit, warrant, authorisation, registration, certificate, approval, or similar form of authority required by law”.
[43] Counsel agree on the approach to applications made under s 15. This was conveniently summarised by Gault J in his recent decision in Insley v Minister of Climate Change:35
35 Insley v Minister of Climate Change [2022] NZHC 1388 at [36] citing Minister of Fisheries v Antons Trawling Company Ltd [2007] NZSC 101; (2007) 18 PRNZ 754 at [3], citing Carlton & United Breweries v Minister of Customs [1986] 1 NZLR 423 (CA) at 430 per Cooke J. See also Tuna v Te Urewera Board [2022] NZHC 2924.
… if the Court is satisfied that an interim order of the kind available is reasonably necessary to preserve the position of the applicant (the threshold question), the Court has a wide discretion to consider all the circumstances of the case, including the apparent strengths or weaknesses of the applicant’s claim for review, and all the repercussions, public and private, of granting interim relief.
[44]I turn then to consider:
(a)whether an interim order is reasonably necessary to preserve Mr Power’s position pending final determination of his application for judicial review;36 and
(b)whether all the circumstances of the case, including the apparent strengths or weaknesses of his claim, and all the repercussions, public and private, weigh in favour or against granting interim relief.
Are interim orders reasonably necessary to preserve Mr Power’s position?
[45] The first issue is to assess whether interim orders are reasonably necessary to preserve Mr Power’s position. I clarified with Mr Evans, counsel for Mr Power, that the focus of Mr Power’s application is his status as a chartered accountant. Although the application for interim relief includes restraining enforcement of all orders, Mr Evans accepted that that the disciplinary processes faced by Mr Power are in the public domain. Mr Evans did not argue before me that Mr Power was not able to pay the costs ordered by the Tribunal, nor those yet to be determined by the Appeals Council.
[46] The effect of the disciplinary decisions is that Mr Power may no longer practise as a chartered accountant, but he may still practise as an accountant, thus losing a designation but not his occupation.
[47] Critically, the NZICA Act regulates those who can use the designation ‘chartered accountant’. For that privilege, a person must go through prescribed
36 The Court is not to take an overly formalistic approach to the threshold question: See Insley v Minister of Climate Change, above n 35, at [37]; citing Greer v Chief Executive, Department of Corrections [2018] NZHC 1240, [2018] 3 NZLR 571 at [22]-[25].
training, gain practical experience, and commit to compliance with professional and ethical standards, including being subject to continuing educational requirements and disciplinary procedures. While there are some elements of work that can only be undertaken by a chartered accountant, it appears this does not affect Mr Power’s practice.
[48] Mr Moon accepts that the ability to use the designation is valuable. But he says that Mr Power has provided no evidence that restoration to the register of members would make a material difference to his circumstances, other than a simple assertion that he will lose clients. Mr Moon emphasises that the loss of the designation, as opposed to the occupation, can be contrasted with other professional regulation, such as for lawyers, where being struck off the roll of barristers and solicitors prevents a person holding themselves out as a lawyer at all. Mr Moon argues that Mr Power can continue to provide accountancy and business advice services while not holding the designation, although he accepts that he would need to explain the change to his clients.
[49] Mr Moon’s submission is that for these reasons the application for interim relief fails at the threshold test. While Mr Moon properly draws a distinction between occupation and designation, it is the position of holding that designation that Mr Power has lost. That is his position to preserve. Regulation of the designation gives value to it, in light of the comprehensive requirements that must be met to acquire and hold it. While it is fair to say that Mr Power’s evidence about the impact on his business of losing the designation is brief and not detailed, he does refer to the loss of clients and revenue that he experienced when he was suspended in 2017, as well as the toll that took on him. There is an inference that this will be worse on
removal from the Register as opposed to suspension.
[50] I accept that the position to be preserved for Mr Power is his designation as a “chartered accountant”. I consider that to conclude that Mr Power does not have a position to preserve in relation to that designation would be taking an overly formalistic approach and accordingly I find the threshold test is met on this aspect.
[51] However, I am not satisfied that it is reasonably necessary to preserve Mr Power’s position, as a general matter, to make orders preventing publication of the disciplinary processes Mr Power has faced. I discuss further below the orders I consider appropriate as to publication. Nor do I consider it reasonably necessary to prevent the enforcement of costs orders made against Mr Power by the Tribunal or the Appeals Council.
[52] Mr Evans suggested in written submissions that allowing the NZICA to enforce the costs award “will potentially subvert any value that the substantive judicial review may provide for Mr Power and would certainly render any result in his favour nugatory”. I do not accept this to be the case and Mr Evans did not pursue this argument at the hearing.
[53] There is no evidence about an inability on the part of Mr Power to pay costs. I am not persuaded by Mr Evans’ concern that the NZICA would be unable to repay those costs if Mr Power is successful in his substantive application. While Mr Evans considers the language of Ms Hayman’s affidavit to be equivocal about whether the NZICA could repay any costs should that be necessary, I do not accept that her affidavit is properly read in this way. I do not consider it to be a realistic risk that the NZICA would not be able to repay any costs to Mr Power should that be required.
[54] Thus, I do not find the threshold test met in relation to interim orders as to publication and costs.
[55] I turn now to the second step, that is, to consider all the circumstances of the case, and whether they weigh in favour of granting interim relief or not.
The strength of Mr Power’s case
[56] Mr Evans submits that Mr Power’s case is seriously arguable. Mr Moon disagrees, submitting that Mr Power’s case has little merit. Neither counsel addressed all of the grounds for review, preferring simply to highlight some grounds in support of their position. This reflects that it is not the Court’s role to make substantive findings on an application for interim orders and that a statement of defence is yet to be filed
by the respondents (although it can safely be said that they do not accept that the grounds are made out).
[57] I nevertheless briefly outline the allegations made to identify their character. These are:
(a)Mr Power alleges that both the Tribunal and Appeals Council erred in admitting his prior disciplinary record at their liability hearings rather than the penalty hearings. He says that each disciplinary body “placed itself in a position of pre-judging the charges against the Applicant”, and that the Appeals Council “failed to independently determine the appeal and took an irrelevant consideration into account”.
(b)Mr Power alleges that the Appeals Council was required to decide his appeal by way of a de novo hearing and that it failed to do so by analysing the issue of whether there was a fixed fee agreement in terms of whether the Tribunal’s finding was open to it. He alleges also that the Appeals Council’s finding that his use of the words ‘indicative’ and ‘estimate’ were too ambiguous was also an error as those words have a plain meaning.
(c)Mr Power alleges that the Appeals Council provided inadequate reasons for the finding that there was a fixed fee agreement and relied on contradictory evidence. He takes issue with the Appeals Council’s view that it was not necessary to resolve the differences between his evidence and Mr W’s evidence, and repeats his allegation as above regarding the plain meaning of the words “indicative” and “estimate”.
(d)Mr Power says that the Tribunal and the Appeals Council both found that it was not clear whether he had invoiced Mr W for work over and above the agreed scope of work, but then went on to find that particular 1(d) was established. He says that these findings were unreasonable.
(e)Mr Power alleges that the Appeals Council made an error of law in finding that his comment about Mr L was unprofessional, saying that he genuinely believed that Mr L may have had a health issue, and thereby acted responsibly in communicating his concern to the PCC. He highlights the Appeals Council’s finding that Mr L’s evidence was “somewhat confusing, and to an extent contradictory”. He says that the Appeals Council also improperly relied on his previous disciplinary history to find that his comment was unreasonable.
(f)Mr Power says that it was procedurally improper for the PCC to bring a charge against him arising from his response to a complaint, to which he was required to respond, and because his comment as to Mr L’s health was a responsible suggestion.
[58] I have read the lengthy and thoroughly reasoned decisions of the Tribunal and the Appeals Council, which are properly established quasi-judicial bodies. The Tribunal and Appeals Council are each chaired by King’s Counsel. It is plain from the Tribunal’s decisions (and material annexed to Mr Power’s first affidavit) that extensive evidence was given (including cross-examination) and legal argument made. In hearing the appeal, the Appeals Council conducted a do novo hearing. Further evidence was admitted on the appeal. Again, detailed legal argument was advanced. Experienced counsel appeared for both the PCC and Mr Power. The Appeal Council’s comment that Mr Power ‘left no stone unturned’ in advancing his appeal appears well- founded.
[59] Nonetheless, the fact King’s Counsel chair the decision-making processes of these bodies does not of itself affect the strength of Mr Power’s case, as seems to have been implied by Mr Moon. While there may something to Mr Moon’s point that one could certainly expect those chairs to be very mindful of the requirements of natural justice, several of the grounds of review relate to specific findings which are not matters of natural justice as such.
[60] Ultimately, my impression of Mr Power’s substantive case is that while aspects of it may be arguable, it is not strong.
The public and private repercussions of granting relief
[61] The Tribunal and the Appeals Council have both decided that Mr Power is unfit to continue to use the designation of chartered accountant in the interests of protecting the public and maintaining public confidence in the profession.
[62] Mr Moon argues that, as a result, the factors of public protection and confidence in the profession outweigh Mr Power’s personal interests. He emphasises that no professional has a right to the work of a particular client and clients should be able to make that choice in an informed way. He notes that it is open to Mr Power to explain to his clients what is going on, including to explain that he is seeking relief from the High Court. Mr Moon says that an important consideration is that Mr Power has already had the benefit of an appeal hearing so that his substantive position has been considered twice—and both times he has been unsuccessful.
[63] Mr Evans suggests that while the making of interim orders might frustrate the respondents, there will be no significant prejudice to them. I do not accept that is the case. The prejudice to the respondents is that Mr Power will be able to continue to practise as a chartered accountant when the disciplinary bodies of the NZICA have concluded that he is not an appropriate practitioner to be a member.
[64] Information is already in the public arena as to the disciplinary steps taken against Mr Power. Mr Power was unsuccessful in seeking name suppression under the NZICA’s rules. The Tribunal decision was published in July 2022 (although marked as subject to appeal). The Appeals Council results decision was published on 24 October 2023. This information, together with Mr Power’s own evidence that some clients left his practice when he was suspended in 2017, makes it clear that “the cat is out of the bag”, along with whatever reputational damage has been suffered by Mr Power as a result. Information is also publicly available about earlier disciplinary processes against Mr Power.
[65] However, Mr Power has continued to practise as a chartered accountant for eighteen months since the Tribunal decision to remove him from the register of members in July 2022. Mr Evans says there have been no further complaints against Mr Power since then and this was not refuted by Mr Moon.
[66] Mr Moon cautioned against perceiving Mr Power’s conduct as minor, noting that he has the worst disciplinary record of a member of the NZICA to date. Mr Moon emphasises that what is troubling is that Mr Power has been mentored twice and yet the same behaviour has occurred. I acknowledge this, but nonetheless consider that the need for public protection in Mr Power’s case is not as high as in cases of more serious misconduct. This is supported by the comments of the Appeals Council in support of its decision to overturn the Tribunals’ decision to require public notice to be published in The Press:37
Although publication in a newspaper would normally be appropriate in circumstances where a Member has been removed from membership of the Institute, that removal is normally a result of serious misconduct such as dishonest, lack of integrity or incompetence of such a degree that the public need to be notified of the risks dealing with the Member. The Member’s conduct in this case, however, is not serious misconduct of the kind that has resulted in newspaper publication in previous cases. In this case, the Member’s removal from membership of the Institute is a result of repeated instances of unprofessional and unbecoming conduct involving an apparent inability to recognise and properly deal with situations of conflict involving his clients. Although the repeated nature of that behaviour has resulted in the decision of the Tribunal and the Appeals Council to remove the Member from the Institute, the need for public protection is not as high as it is in cases of serious misconduct by the member.
[67] Mr Evans emphasises that Mr Power cannot simply continue business as an accountant rather than as a chartered accountant. He says that Mr Power will have to change his letterhead, signage and website, and update clients and suppliers, which will all involve time and cost, especially as he is a sole practitioner with two contracted accountants. He says he will also have to discuss with his clients the disciplinary actions taken against him by the respondents. Mr Power deposes that this will be stressful. Mr Power says his experience of suspension in 2017 justifies his prediction of a substantial negative effect on his practice. Mr Power deposes that it was very stressful to explain his 12 month suspension to clients and some clients left immediately. He says that he suffered a loss of revenue, and it took a toll on him both professionally and , to the point where in
2018. He was treated by from that time and . He says he is unlikely to recover from being removed from the Register.
37 Appeals Council Penalty Decision, above n 28, at [177(a)]. See also discussion at [146].
Overall justice of the case
[68]While Mr Power asserts he will lose clients and suffer further stress and harm if he remains removed from the Register at this time, should he
be successful in his substantive claim, he would be able to return to practice as a chartered accountant. While I accept as a matter of common sense that he will suffer further stress through removal from the Register, it is not possible to make any real assessment of the likely loss of clients in the absence of evidence. Mr Power has not filed any detailed evidence in this regard. Given the length of time Mr Power has been practising, it seems likely to me that he will have some loyal clients to whom he would be able to explain the disciplinary events, emphasising that he is still contesting them. One might also think that he would have addressed the disciplinary processes underway with his clients from the beginning.
[69] On the other hand, he has continued to practise as a chartered accountant right through the disciplinary process, seemingly without further issue, and the determination of the substantive judicial review application will not take too much further time when considered from an overall perspective. The nature of the charges, relating to a pattern of behaviour said to demonstrate an inability to deal professionally with clients particularly in relation to fees, is not inherently the most serious kind of misconduct. Notably, the charges do not relate to dishonesty or to serious technical incompetence. Further, Mr Power’s condition remains relevant in terms of considering the personal repercussions for him.
[70] I consider that, by a fine margin, the overall justice of the case favours granting Mr Power interim relief. But that relief is limited to restoring his membership of the NZICA pending the determination of his substantive application. As provided in s 15(4)(a) of the Judicial Review Procedure Act, the power to grant interim relief includes a discretion on my part to impose terms and conditions as I see fit.
[71] While I have concluded earlier that the threshold test is not established in relation to publication, I note that I consider it appropriate for the NZICA to be able to publish the outcome of its disciplinary processes. This is important for two reasons. First, it is consistent with the fundamentally public way that the NZICA runs its
disciplinary processes, thereby recognising the value of open justice. Second, making these decisions publicly available meets the important goal of public protection and reflects the fact that the disciplinary steps taken against Mr Power have been in the public domain since at least July 2022 (and earlier if the previous disciplinary charges he has faced are included). The information publicly available should be accurate and up to date. As such, even if I am incorrect in that Mr Power has no position to preserve in relation to publication, the overall justice of the case does not favour the making of the orders sought.
[72] The same is true in respect of costs. I also consider that there should be no constraint on the NZICA recovering the costs ordered by the Tribunal and the Appeals Council. While Mr Power is of course entitled to pursue an application for judicial review, having had two substantive and ultimately unsuccessful hearings already, my view is that it is appropriate for him to pay costs in respect of those matters in the usual way.
[73] Mr Power is therefore to be restored to the Register until the determination of the substantive application before this Court, or other order of the Court.
Next steps to substantive hearing
[74] I discussed with counsel whether the hearing of the substantive application could take place in late February or early March 2024. Since the hearing, counsel have filed a memorandum setting out an agreed timetable to hearing. Unfortunately, that timetable means a hearing may not take place before May 2024. The registry will liaise with counsel over a hearing date in the usual way.
Result
[75]The application for interim relief is granted in part.
Orders
[76]For the reasons above, I order that:
(a)The NZICA is to restore Mr Power’s name to its Register of Members pending determination of his substantive application for review in this Court or other order of the Court.
(b)The NZICA may publish on its website and in its official publication Acuity the Appeals Council Liability Decision and Penalty Decision (as one or two decisions, or as a summary) so long as the material published clearly and prominently indicates that Mr Power is seeking review of the decisions in the High Court. The Tribunal’s decision on the website is to be similarly marked.
(c)Mr Power is to pay costs as ordered by the Tribunal and Appeals Council and, for the avoidance of doubt, I confirm that the NZICA is entitled to take steps to enforce payment as required.
(d)Costs are reserved pending the determination of the substantive application for judicial review.
(e)Timetable orders as sought in the joint memorandum of counsel dated 7 December 2023 are made by consent.
McQueen J
Solicitors:
Young Hunter, Christchurch for Applicant
Richard Moon Legal Ltd, Wellington for Respondents
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