Professional disciplinary proceeding – Adequacy of
notice of charges – Adequacy of reasons –
Jurisdiction to order costs
These appeals arise from the professional disciplinary
proceedings against three members of the Institute of Chartered
Accountants of Ontario ("ICAO") for
their roles in the now defunct Livent Inc.'s
("Livent") 1997 audited financial
statements. The Court of Appeal allowed ICAO's appeal and
reinstated the ICAO's discipline committee's convictions
and costs award. The members' appeals were accordingly
In 2004, the ICAO laid charges against J. Douglas Barrington,
Anthony Power and Claudio Russo for failing to ensure that
Livent's financial statements complied with Generally Accepted
Accounting Principles ("GAAP"). The
ICAO's discipline committee found the three members guilty of
professional misconduct in February 2007 and imposed penalties and
costs in September 2007. These two decisions were upheld by the
ICAO's appeal committee in February 2009. In March 2010 the
Divisional Court quashed four of the eight convictions against
Power and Russo and all of the convictions against Barrington. It
also quashed the discipline committee's costs order. Power and
Russo appealed from the Divisional Court's decision seeking to
have the remaining convictions quashed, while the ICAO appealed to
have the convictions and costs award reinstated.
The issues on appeal are (1) whether the members had adequate
notice in relation to the charges (2) whether the discipline
committee had provided adequate reasons for finding misconduct and
(3) whether legislative amendments subsequent to the Divisional
Court's decision retroactively validate the discipline
committee's costs order.
On the first issue of adequate notice in relation to the
charges, the Court of Appeal held that the Divisional Court
mischaracterized the nature of the charge as the put agreement was
not a new allegation. The discipline committee had found the
members guilty of misconduct for recognizing income without
reasonable assurance that the significant act of construction would
be completed. The put agreement was relevant evidence to the
charged based upon the discipline committee's interpretation of
the GAAP and Canadian Institute of Chartered Accountants handbook.
The discipline committee was entitled to consider the evidence led
by the members despite the fact that no concerns were raised about
the put agreement by the prosecution. A trier of fact is not bound
by the prosecution theory of the case but is entitled to follow a
different route to liability. Furthermore, the members were neither
surprised nor prejudiced by the discipline committee's reliance
on the evidence surrounding the put agreement.
On the second issue of the adequacy of reasons, the Court of
Appeal reaffirmed that a tribunal is not required to refer to all
evidence or to answer every submission. All that is required is for
the discipline committee to identify the "path" taken to
reach its decision. It was not necessary to describe every landmark
along the way. The discipline committee had articulated the correct
test that any departure from the professional standards must be so
significant that it constitutes professional misconduct. Its
reasons demonstrated that the panel members had turned their minds
to the proper test, the issues and key evidence relied upon, and
that they had applied their expertise in articulating their
On the final issue of costs, the ICAO challenged the Divisional
Court's decision to quash the discipline committee's costs
award on the basis that it lacked jurisdiction to order costs. The
Divisional Court had held that s. 17.1 of the Statutory Powers
Procedure Act ("SPPA")
prevailed over the discipline committee's by-law adopted
pursuant to s. 8 of the Chartered Accountants Act, 1956.
The ICAO submitted that the Divisional Court's decision on
costs should be overturned in light of s. 38 of the Chartered
Accountants Act, 2010, enacted two months after the Divisional
Court's decision. Section 38 provides that the discipline
committee may award costs of a proceeding and that it applies
despite section 17.1 of the SPPA. The Court of Appeal
ultimately agreed that s. 38 expressly applies to validate orders
made on or after December 6, 2000 and that it has the effect of
retroactively validating the discipline committee's costs
Accordingly, the Court of Appeal allowed the ICAO's appeal,
set aside the Divisional Court's decision and reinstated the
discipline committee's decision. The appeal of Power and Russo
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