Successive sets of professional disciplinary proceedings based on the same conduct – The Institute of Chartered Accountants in England and Wales was estopped from bringing disciplinary proceedings in respect of a member’s conduct, where another complaint based on the same conduct had been dismissed. The effect of the Court’s decision was that a chartered accountant, who had been convicted of failing to comply with a direction issued by the Jersey Financial Services Commission, was permitted to continue to practice. The case highlights the need for careful interpretation of disciplinary rules and drafting of complaints.
Key points
The principles of res judicata mean that a cause of action cannot be re-litigated once it has been subject to a final determination by a judicial tribunal. The Supreme Court’s decision confirms that these principles apply in the context of successive proceedings before a disciplinary tribunal, even where the regulator is a non-statutory body created by Royal Charter and the disciplinary tribunal is set up under bye-laws.
As a result of a misconstruction of the bye-laws the first complaint had to be dismissed. The dismissal amounted to a final determination on the merits of the complaint, preventing it from being re-litigated in a second set of proceedings. The Court of Appeal had erred in finding that the charges in the two sets of proceedings were not the same.
Given the unfortunate consequences of the Court’s judgment on the principal point given the facts of this case, the Institute proposed that there should be a public interest exception to the strict application of the doctrine in the disciplinary context. This would take account of the particular public interest in maintaining standards in the professions and public confidence in their integrity. However, the Court held that this was a matter for Parliament.
The disciplinary proceedings
The appellant chartered accountant was convicted of failing to comply with a direction issued by the Jersey Financial Services Commission prohibiting him from removing client files and records from his company offices. This led to the bringing of a complaint under the Institute’s bye-laws on the basis that…in the course of carrying out professional work… [the appellant] had committed an act or default likely to bring discredit on himself, the Institute or the profession of accountancy.
Under another bye-law, entitled “proof of certain matters” it was provided that the fact of a conviction for an offence corresponding to one which was indictable in England and Wales would be conclusive evidence of the commission of an act or default. In other words, under the bye-laws, in seeking to prove a complaint relating to conduct which had led to a conviction, the Institute could choose to rely on the fact of that conviction rather than adducing other evidence. This is what the Institute did. It was a strategic decision, intended to avoid the need to gather evidence about the appellant’s conduct. However, there was no corresponding indictable offence in England and Wales. Since the Institute had relied on no other evidence in support of the complaint, it had to be dismissed.
The Institute subsequently brought a second complaint, based on the same underlying conduct, but this time not referring to the conviction. The appellant argued that the second complaint should be dismissed on the grounds that it related to the same allegations as a complaint which had already been dismissed. When the tribunal refused to dismiss the application, the appellant brought judicial review proceedings which failed at first instance and in the Court of Appeal, on the basis that the 2 complaints were not the same.
A comparison of the two complaints
The Court of Appeal had found that the two complaints were not the same. This was because the first complaint related to the appellant’s conviction (in other words, the conviction was the alleged act of misconduct) and the second complaint related to the appellant’s actions in trying to remove the company files. The Supreme Court found that this conclusion was based on a misconstruction of the bye-laws. There was nothing in the relevant bye-law to suggest that a conviction could itself be an act or default of the kind specified. The provisions relating to “proof of certain matters” did not make a qualifying conviction discreditable conduct.
In any event, when the Supreme Court looked closely at the drafting of the two complaints, it concluded that in fact the first complaint did not allege that the conviction itself was the misconduct. It merely relied on the conviction as proof of the alleged misconduct. The misconduct was precisely the same as that alleged in the second complaint – namely, the act of attempting to remove the company files.
Res judicata
The Supreme Court went on to consider the legal effect of its conclusion that the two complaints were the same. It first found that cause of action estoppel (the particular type of res judicata involved in this case) could apply to proceedings before a disciplinary tribunal set up under bye-laws, since the provisions of the Royal Charter which created the Institute were akin to statutory provisions. Indeed, Lord Clarke (who gave the leading judgment) was of the view that even if the bye-laws created only private rights as between the Institute and its members, cause of action estoppel could still apply.
In its consideration of the constituent elements of cause of action estoppel, the main issue for the Court was whether the decision on the first complaint was “final” and “on the merits”. It found that these requirements were fulfilled. The Court found that if the tribunal had found that the offence committed by the appellant in Jersey had an equivalent in England and Wales, it would have found the complaint proved. There would have been no doubt that such a decision would have been final and on the merits, so it followed that the decision to dismiss the complaint also fulfilled those criteria.
Comment
The members of the Supreme Court were well aware of the unfortunate consequence of their decision, that an individual convicted of an offence constituting discreditable conduct in Jersey should be permitted to practise nonetheless. Such a decision is clearly at odds with the fundamental objectives of professional regulation, namely to protect the public, to maintain public confidence in the integrity of the profession and to uphold proper standards of behaviour. The Institute had proposed that, given the potential gravity of the consequences of a case like this, there should be a public interest exception to the application of cause of action estoppel in the disciplinary context. However, although their Lordships saw the force behind this proposal, they concluded that it was a question of policy better suited to Parliament than the judiciary. For now, therefore, the case should serve as a warning to professional regulators and disciplinary bodies to take great care in the drafting of complaints to avoid the possibility of them being dismissed on a technicality.
R (Coke-Wallis) v Institute of Chartered Accountants in England and Wales [2011] UKSC 1
Loading...