Professionals facing disciplinary actions might be concerned about protecting their legal position and their reputation. A frequently asked question by professionals is whether the disciplinary action they face can stay private.
The Hong Kong Court of First Instance recently quashed an order made by a disciplinary committee (“DC”) of the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) to constrain publication of the sanction imposed on two accountants in a disciplinary proceeding (“Non-Publicity Order”), Registrar of HKICPA v Disciplinary Committee of HKICPA.
The Non-Publicity Order was made as the DC upheld a complaint that the accountants were in breach of the Professional Accountants Ordinance (“PAO”) by failing or neglecting to observe, maintain or otherwise apply Hong Kong Accounting Standard 39 (“Disciplinary Order”). The DC spelt out a number of mitigating circumstances and decided to make the Non-Publicity Order because of the strong mitigating circumstances relating to the accountants’ contravention.
There was no application to hear the disciplinary complaint in private and the hearing was held in public. During the hearing, the accountants submitted, if publication of the case details was necessary for the education of members of the profession, it should be on a “no name” basis. The Committee did not indicate that it might make an order constraining publication and the Registrar’s representative did not address the point.
The Non-Publicity Order constrained the publication of the sanction but not the accountants’ identity, and it followed that the Disciplinary Order and the DC’s written reasons relating to sanction should not be published without the accountants’ consent.
The accountants lodged an appeal to the Court of Appeal against the Disciplinary Order and the Registrar filed a cross-appeal in respect of the Non-Publicity Order. Both the appeal and the cross-appeal were unsuccessful. Thereafter, the Registrar obtained leave to apply for judicial review of the Non-Publicity Order.
The judicial review
It was the Registrar’s case that the Non-Publicity Order was unlawful, because:
- It ran contrary to the principle of open justice and the legislative intent under the PAO; and
- It was irrational.
By the time the judicial review was heard, the accountants’ appeal to the Court of Final Appeal against the Disciplinary Order had failed, and they had consented to the publication of the full version of the DC’s written reasons. Concerned that it would set a precedent for future applications for non-publication orders, the Registrar proceeded with the judicial review nonetheless, as the Non-Publicity Order remained valid and binding. The Disciplinary Committee took a neutral stance in the judicial review proceedings.
The court viewed that the principle of open justice applies to disciplinary proceedings regulating the accountancy profession envisaged under the PAO. In view of the legislative intent to maintain open justice and transparency, the DC should take into account the principle and give it sufficient weight.
The application of the principle is considered “plain” as,
- Section 36(1A) of the PAO requires disciplinary proceedings generally to be held in public, subject to a DC’s discretion to do it otherwise in the interests of justice.
- The DC is exercising a quasi-judicial function in regulating accountants, who play an important role in society and are entrusted by the public. The function of the disciplinary mechanism is to hold the profession accountable and subject to public scrutiny, in turn safeguarding the reputation of the profession as a whole.
- The “interests of justice” to be considered by the DC should include the principle of open justice for the benefit of the public.
- The DC should bear in mind the importance attributed to the principle by the legislature, as proceedings are by default to be held in open hearings to ensure transparency.
The court held that, in making the Non-Publicity Order, the DC had not given any consideration to the principle of open justice. It also found the order to be irrational in any event, as it intended only to prohibit the publication of the sanction made against the accountants but not their identity. On this basis, the court quashed the Non-Publicity Order.
This appears to be the first court case on the principles that apply in the making of a non-publicity order in HKICPA disciplinary proceedings. The court has made it clear that there is a heavy tilt in favour of maintaining open justice. Accountants who wish to suppress publicity of disciplinary findings will likely find themselves fighting an uphill battle.
This does not indicate the court will never accede to applications for non-publication as it boils down to the “interests of justice”. Professional embarrassment and damage to professional reputations are not themselves sufficient reasons to suppress publication.