Case update: R (Hill) v Institute of Chartered Accountants in England and Wales, [2013] EWCA Civ 555

28 May 2013

Court of Appeal considers whether to continue to hear evidence in the temporary absence of panel member in disciplinary proceedings is a breach of natural justice.

In 2009 the appellant chartered accountant (H) faced a charge before his professional body, the Institute of Chartered Accountants in England and Wales (the Institute), that he had committed an act or default likely to bring discredit on himself, the Institute or the profession of accountancy.  In summary, it was alleged (and largely undisputed) that H had been the Finance Director of a company (KPSS) and trustee of the KPSS pension scheme and had incorporated his own company (PVAM).  He had then caused £100,000 to be transferred from KPSS to PVAM and caused PVAM to buy premises that were occupied by KPSS, which were later sold for profit.  None of the transactions had been disclosed in KPSS’s accounts or to the auditors.  H contended during disciplinary proceedings that he had not appreciated that there was anything wrong or unprofessional about these transactions.

The hearing took place over the course of 6 days, on various dates in November and December 2009 and January and April 2010, before a disciplinary tribunal consisting of two professional members and a lay member (the Tribunal).

On Day 4 of the hearing, the Chairman of the Tribunal outlined that M (the lay member) had an appointment which meant he could sit no later than 5pm that day.  It had been hoped that H’s cross examination would have been completed by that stage but, in the event, H was still giving evidence in chief at 3.00pm.  An exchange occurred between the Chairman and Counsel for H which essentially was to the effect that H had no objection to M leaving at 5pm and the hearing proceeding in his absence, so long as there was a transcript of the evidence that he could consider.   This course was duly taken and cross examination concluded at 6.30pm. 

On 12 February 2010, the Tribunal decided that H was guilty of unprofessional conduct and that he was to be excluded from membership of the Institute.  He was fined £25,000 and required to pay costs of £32000.  An appeal to the relevant Appeal Committee was dismissed on 4 February 2011 (although the costs bill was reduced).

High Court Decision
H appealed to the High Court where Lang J held that there was power for the Tribunal to allow M to leave and later return after reading a transcript.  It was held that that there had been a breach of the rules of natural justice (‘he who decides must hear’) but that the breach had been waived by the agreement by H’s Counsel to the procedure which was voluntary, informed and unequivocal. 

The Court of Appeal Decision
It was submitted on H’s behalf that Bye-law 19 ¹  allowed for a member to depart and for the remaining members to continue to hear the case, but that did not explicitly allow for the return of that member, even if the parties agreed.  Longmore LJ rejected this argument; to interpret the provision in this way would introduce a ‘degree of rigidity into the proceedings’ which would be ‘undesirable’.  The learned Judge referred to the sentiments of Stanley Burton LJ in Virdi v Law Society [2010] 1 WLR 2840 28-31 that when one is dealing with bye-laws and regulations of professional bodies one cannot expect every contingency to be foreseen and provided for; ‘the right question to ask of any procedure adopted should therefore be not whether it is permitted but whether it is prohibited’.  Given that the procedure was not prohibited by the bye-laws, it was therefore permissible. 

Natural Justice
The Court ventilated the problems that can arise for professional disciplinary tribunals in this area and the difficulties that exist in resolving those problems in accordance with the strict rules of natural justice.  It is clearly often undesirable for a lengthy hearing to start from scratch, with the associated added cost, resources and the general anxiety to parties.   The Court agreed with the position as extrapolated from the authorities by Lang J in the lower Court; that the principle of ‘he who decides must hear’ has been strictly applied in criminal cases and in cases with juries but has been more flexibly applied in civil cases without a jury.  The Court held that;

‘In professional disciplinary cases the tribunal is, subject to the relevant bye-laws or other rules, master of its own procedure.  If there is a hearing with live witnesses giving their evidence orally, it will normally be a breach of rules of natural justice for a member of the tribunal (in the absence of agreement) to absent himself while a witness is giving evidence and later return to participate in the decision.  This will not normally be cured by the absent member reading a transcript of the evidence given in his absence, unless the evidence is comparatively uncontroversial….Such absence will be difficult (if not impossible) to justify if the evidence being given is that of the defendant or respondent to the disciplinary proceedings’

However, the Court then asked itself whether it would still be a breach of the rules of natural justice if a defendant or his advocate agreed to the proposed course, and answered in the negative;

‘for my part I see no reason to think that there is a breach of the rules of natural justice.  Of course, the agreement must be voluntary, informed and unequivocal but, if it is, there is something peculiarly unattractive in a litigant agreeing to this course, continuing to participate in the hearing and then, on finding that the discussion is adverse, alleging that the decision has been reached in breach of the rules of natural justice and must therefore be treated as a nullity and quashed’. 

However, the Court did depart from the reasoning of Lang J in one respect; it held that it was more appropriate to hold that the agreement meant that there been no breach of the relevant rule of natural justice at all rather than, as Lang J had characterised it, a breach that had been waived. 

It was further argued on behalf of H that the Tribunal should have satisfied themselves by asking H directly whether he agreed personally to the procedure being adopted, rather than relying on the advocate’s response.  The Court rejected this; 

‘a professional (or indeed any other) tribunal must usually be entitled to rely on the agreement of a properly qualified advocate to any proposed procedural course without having to go behind the advocate and check that his client personally agrees with what the advocate has said’.

If there is any evidence however, that the waiver is not voluntary or based on concealed material facts, then this would be a different matter.  The fact that the transcript did not show any consultation between H and his barrister prior to the agreement on his behalf did not matter; if H had felt genuine unease about the proposed course, he could have raised that concern at the time or indeed during the 6 week gap before the Tribunal resumed.  H had not done so.

Beatson LJ and Underhill LJ agreed with the decision and reasoning of Longmore LJ and the appeal was consequently dismissed. 

Beatson LJ stressed the distinction between cases where there has been a breach of one of the requirements of procedural fairness which has been subsequently waived by the person affected and cases where at a stage in the process before there has been a breach, an individual has freely agreed to that proposal in full knowledge of the facts.  In the latter, the correct analysis is not to regard the situation as a breach of natural justice that has been waived, but as there being no breach at all. 

This case helpfully sets out the legal position in situations where a difficulty arises in a full panel/tribunal remaining throughout a hearing. Generally it will be a breach of the rules of natural justice for a member of a panel/tribunal to absent himself during the evidence of a witness and then to later participate, in the absence of agreement.  Where there has been an informed agreement, made unequivocally and voluntarily, it will not amount to a breach.

Such an approach has considerable practical benefits, including that of flexibility.  In short cases which can more readily or easily be restarted, it is clearly preferable to start again.  However, where both parties agree that the ‘lesser evil’ would be to continue in the absence of a panel member for a proportion of the time/the rest of the hearing, and as long as that decision is unequivocal, voluntary and informed (and not prohibited by the relevant legislation) it will not amount to a breach of natural justice.  Once such a concession is so made, it will not be open to either party to rely on the departure from procedure on appeal.

Sarah Harris

¹ The Council has made Disciplinary Bye-laws which govern the exercise of the Institute’s disciplinary functions in relation to its members.

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