Duggan v Irish Auditing and Accounting Supervisory Authority
| Jurisdiction | Ireland |
| Judge | Mr Justice Garrett Simons |
| Judgment Date | 08 November 2019 |
| Neutral Citation | [2019] IEHC 748 |
| Docket Number | 2018 No. 1049 J.R. |
| Court | High Court |
| Date | 08 November 2019 |
[2019] IEHC 748
THE HIGH COURT
JUDICIAL REVIEW
Garrett Simons
2018 No. 1049 J.R.
Judicial review – Statutory inquiry – Inadequate reasons – Applicant seeking to challenge the manner in which the respondent exercised its discretion – Whether the reasons provided for the respondent’s decision were inadequate
Facts: The applicant, Mr Duggan, made two related complaints against Deloitte to the Institute of Chartered Accountants of Ireland (ICAI). The ICAI dismissed the first complaint on the basis that there was no case to answer, and the second complaint on the basis that it did not concern a disciplinary matter. The applicant subsequently sought to have the manner in which the complaints had been dealt with by the ICAI enquired into by the respondent, the Irish Auditing and Accounting Supervisory Authority. The Supervisory Authority declined to initiate a statutory enquiry in response to the applicant’s complaint on the basis (i) that the matters raised were not “sufficiently significant” to warrant the exercise of the statutory power, and (ii) that an alternative course of action could be followed within the Authority’s general supervisory powers. The applicant sought, by way of judicial review proceedings, to challenge the manner in which the Supervisory Authority exercised its discretion. The principal grounds of challenge were as follows: first, it was said that the reasons provided for the decision were inadequate; secondly, it was said that the Supervisory Authority failed to meet the formal requirements governing the conduct of enquiries as prescribed under the relevant regulations (S.I. No. 96 of 2012); and thirdly, it was submitted that the Supervisory Authority took into account irrelevant considerations.
Held by Simons J that: first, the Supervisory Authority had provided the applicant with ample reasons for its decision not to initiate a statutory enquiry under s. 933 of the Companies Act 2014; secondly, the decision not to initiate an enquiry was lawfully made at Board level; and thirdly, the Board did not take into account irrelevant considerations in reaching its decision.
Simons J held that the application for judicial review would be dismissed.
Application dismissed.
These judicial review proceedings have their genesis in two related complaints made by the Applicant against a well-known firm of accountants, Deloitte. The complaints had been made to the Institute of Chartered Accountants of Ireland ( “the ICAI” or “the Institute”) . The ICAI dismissed the first complaint on the basis that there was no case to answer, and the second complaint on the basis that it did not concern a disciplinary matter.
The Applicant subsequently sought to have the manner in which the complaints had been dealt with by the ICAI enquired into by the Irish Auditing and Accounting Supervisory Authority (“the Supervisory Authority”). One of the principal objects of the Supervisory Authority is to supervise how prescribed accountancy bodies regulate and monitor their members. The Supervisory Authority has a statutory discretion to enquire into the conduct of an investigation by a prescribed accountancy body for the purpose of determining whether that body has complied with its investigation and disciplinary procedures. The Court of Appeal has characterised this discretion as falling at the wider end of discretionary powers. ( Nowak v. Irish Auditing and Accounting Supervisory Authority [2016] IECA 301).
The Supervisory Authority declined to initiate a statutory enquiry in response to the Applicant's complaint on the basis (i) that the matters raised were not “sufficiently significant” to warrant the exercise of the statutory power, and (ii) that an alternative course of action could be followed within the Authority's general supervisory powers.
The Applicant now seeks, by way of these judicial review proceedings, to challenge the manner in which the Supervisory Authority exercised its discretion. For introductory purposes, the principal grounds of challenge can be summarised as follows.
First, it is said that the reasons provided for the decision are inadequate. This complaint is made notwithstanding the fact that—as part of its opposition papers in the judicial review proceedings—the Supervisory Authority has since exhibited the relevant extracts from the minutes of the Board meeting at which the decision was made, and has also exhibited the detailed paper circulated in advance of the Board meeting.
Secondly, it is said that the Supervisory Authority failed to meet the formal requirements governing the conduct of enquiries as prescribed under the relevant regulations ( S.I. No. 96 of 2012). Specifically, it is said that the decision not to initiate an enquiry should have been made by a particular committee of the Supervisory Authority, and not by the Board itself.
Thirdly, it is submitted that the Supervisory Authority took into account irrelevant considerations. It is said that the Authority erred in applying a standard of “sufficient significance”. It is also said that insofar as the Authority relied on the possibility of an alternative course of action being taken to prevent any recurrence of a breach on the part of the ICAI, this too was an irrelevant consideration.
The Applicant, Mr Neal Duggan, is dissatisfied with the manner in which the Institute of Chartered Accountants of Ireland ( “the ICAI” or “the Institute“) dealt with two complaints made by him against Deloitte. In brief, the complaints relate to the notification of the resignation of Deloitte as auditors of Irish Press plc and their subsequent reappointment as auditors. Mr Duggan is a shareholder in Irish Press plc.
Deloitte is a member firm of the ICAI, and, as such, it is subject to the Institute's investigation and disciplinary procedures. These procedures are subject to approval by the Supervisory Authority.
The ICAI dismissed the complaints made by the Applicant. The first complaint had been dismissed on the basis that there was no case to answer, and the second complaint on the basis that it did not concern a disciplinary matter.
The Applicant then referred the matter to the Supervisory Authority and requested that the Authority initiate a statutory enquiry. The Applicant through his solicitors, Hayes Solicitors, sought to identify what were said to be breaches by the ICAI of its investigation and disciplinary procedures as approved by the Supervisory Authority. These alleged breaches are set out in detail in a letter dated 6 April 2018 from Hayes Solicitors to the Supervisory Authority.
By way of example only, one of the complaints made was that the ICAI had allegedly been “significantly influenced” by legal advice which had been received by Deloitte, and to which Mr Duggan had, initially, been denied access. (It seems that the legal advice was subsequently provided to Mr Duggan on 10 February 2017).
The complaints made on behalf of the Applicant were the subject of a detailed report (described as a “Board Paper”) which had been circulated to the Board of the Supervisory Authority in advance of its meeting on 17 September 2018. This Board Paper has been exhibited as part of the affidavit of Mr Kevin Prendergast sworn on 1 March 2019.
The approach taken in the Board Paper was to review the manner in which the investigation of the two complaints had been conducted by the ICAI, with a view to identifying whether or not there had been non-compliance by the ICAI with its investigation and disciplinary procedures.
Section 4 of the Board Paper makes the following observations on the status of the Applicant as a complainant rather than the subject of the complaint.
“4. Fair procedure and legal arguments
Hayes letter of 6 April 2018 alleges that ICAI did not act in accordance with ‘fair procedures’ particularly with regard to the fact that the complainant was not provided with the member firm's response to the complaint, including legal advice submitted by the firm and which appears to have influenced the ICAI's decision to close the cases.
The Section 933 process is focused on determining whether the PAB has complied with its approved investigation and disciplinary procedures. In this case, the ICAI's approved procedures do not provide complainant's with a right to be provided with documentation or to comment on legal advice and, therefore, no potential breach arises in this regard.
Further, it is noted that the Executive has always understood the legal principle of ‘fair procedures’ including right of reply et cetera to apply mainly to the member under investigation rather than the complainant. That said, in the course of its general supervisory work, the Executive always seeks to ensure that reasonable rights are accorded to complainants in the PABs' processes. For Board members' information, we normally expect at least the following to be included in the PABs' disciplinary processes:
right to complain;
right to reason(s) for decision(s) made;
right of review where a case is dismissed prior to hearing (i.e. no finding against member); and
right to be notified of hearing(s).
It is outside IAASA's remit to assess the legal arguments on confidentiality and legal privilege in Hayes Solicitors' letter in this regard.”
Section 5.1 of the Board Paper identifies one area of potential non-compliance with the ICAI's constitutional documents. More specifically, a question was raised as to whether the independent reviewer may have been relying on an earlier version of disciplinary regulations which had since been amended. Relevantly, this question was not one which had been raised by the Applicant.
Section...
To continue reading
Request your trial
-
M. D. [Identity Protected] v Minister for Social Protection
...was made and whether it can be challenged.” 72 . In similar vein in Duggan v. Irish Auditing and Accounting Supervisory Authority [2019] IEHC 748, Simons J. held that given “ the broad statutory discretion which the Supervisory Authority” enjoys under the relevant section, there was “ no re......