HONG KONG INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS v. DISCIPLINARY COMMITTEE AND OTHERS

HCAL 135/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 135 OF 2005

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REASONS   FOR   DECISION

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I.       Introduction

1. The Institute seeks leave for judicial review of the Disciplinary Committee's decision in proceedings involving the Respondents (PW and Ho).

2. The Institute brought the proceedings on 3 complaints of alleged professional negligence in the audit of the accounts of Cosco International (Holdings) Limited for the period ending 31 December 1997.

3. At the hearing, the Institute based its case almost entirely on the contents of a Report dated 23 September 2003 prepared by the Institute's Investigation Committee.

4. The hearing started on 11 July 2005.  Mr. Hunsworth (solicitor for the Institute) opened the case against the Respondents.  He called Mr. Raphael Ding (then the Institute's Director of Compliance) as a witness to produce the Report.  Mr. Ding was involved in preparing the Report as secretary of the Investigation Committee.  Mr. Ding said that, as secretary, he had reviewed working papers provided by PW and Ho.  Having through Mr. Ding adduced the Report as well as some working papers not in the Report, Mr. Hunsworth called no further witnesses.

5. On 14 July 1995 Mr. Coleman (counsel for the Respondents) submitted that there was no case to answer.  The Disciplinary Committee agreed.  It handed down Reasons for Decision on 2 August 2005.  The application for judicial review was brought within 3 months of the latter date.  I believe it was within time.

6. The Institute says that the Reasons are flawed in law.  More specifically, the Institute complains that the Disciplinary Committee:-

(1) wrongly held that the Institute had to call expert evidence;

(2) adopted the wrong standard of proof;

(3) applied too stringent a test against the Institute in deciding that there was no case to answer;

(4) took the wrong approach to the working papers adduced as evidence; and,

(5) failed to take account of statutory declarations by Mr. Martin Harold Bloom, an accountancy expert whom the Respondents were proposing to call.

7. In my view, the proposed judicial review is bound to fail. The 5 grounds advanced are untenable.  Leave to apply for judicial review was accordingly refused on 11 November 2005.  I set out my reasons below.

II.      Discussion

A.      Ground 1: Expert evidence

A.1    The Disciplinary Committee's reasoning

8. In its Reasons the Disciplinary Committee said that it found the Report’s conclusions on the standard or quality of the conduct of an audit of “little probative value”.  It noted that Mr. Ding had not claimed the opinions in the Report to be his own and in any event Mr. Ding had not been called as expert.  This was hardly surprising since, as secretary of the Investigation Committee, Mr. Ding “could not have given expert evidence of value as an independent expert witness”.

9. The Disciplinary Committee found Mr. Ding's evidence to be unsatisfactory and useless.  It observed that Mr. Ding had never described the precise role which he played in the investigation by the Investigation Committee.  For all one knew, Ding “may only have been involved in the preparation of the Report by providing secretarial or clerical assistance only”.

10. The Report zeroes in on the Institute's case that the absence of certain records in the working papers was self-explanatory in the sense of establishing a prima facie case of negligence.

11. The Disciplinary Committee pointed out that on Complaints 1 and 2 the Respondents were essentially charged with failing to obtain sufficient appropriate audit evidence.  In contrast, there was no complaint of failing to prepare proper working papers. 

12. Mr. Hunsworth had submitted that the working papers tended to show by the absence of certain records that certain appropriate steps had not been taken.  But the Disciplinary Committee disagreed.  The absence of records in the working papers could not be seen in isolation.  The Disciplinary Committee thought that “[t]he mere absence of records could not without more prove the alleged failure to obtain sufficient appropriate evidence”.

13. The Disciplinary Committee drew attention to SAS 230.  Although SAS 230 required auditors to compile working papers which were sufficiently complete and detailed, that did not mean an auditor had to keep notes of everything that he had done.  This was implicit in SAS 230 itself.  That standard made it clear that working papers might not enable even an experienced auditor to acquire a complete understanding of an audit.  This meant (the Disciplinary Committee emphasised) that “the mere fact that the working papers may not contain ... records of the steps taken to obtain sufficient and appropriate evidence is not by itself conclusive to show that those steps were not taken”. 

14. In this case the Disciplinary Committee felt that the working papers could not be understood “simply by looking at them on their face”.  It stated:-

“If the Complainant rests its case on the working papers as being self-explanatory, they are not so self-explanatory at all, for what are shown by some of the documents to be missing are in fact supplanted by what was recorded on the face of other documents.”

It was “most unsatisfactory” for the Institute (the tribunal felt) to rely solely on part of the working papers.

15. The Disciplinary Committee instead believed that:-

“Evidence should have been called to explain these working papers to us and to prove why some of the documents which purported to record certain work done was either not reliable or incorrect.  Evidence should have been adduced to prove to us that there had in fact been a failure to obtain the requisite audit evidence, and not just a failure to record what had or had not been done”.

16. The Disciplinary Committee thought that the Institute should have led expert evidence on what would amount to “sufficient appropriate evidence” for the purposes of an audit.  Instead, the Institute:-

“had simply assumed that this Disciplinary Committee would be able to say that such evidence which the Respondents had obtained were not sufficient or inappropriate.  We do not see how we can make any such assumption in the absence of evidence that establish what should have been obtained by way of audit evidence in compliance with SAS 400 and 420”.

17. The Disciplinary Committee accepted Mr. Coleman's submission that the SAS' relevant to Complaints 1 and 2 were complex.  An auditor had to exercise judgment and experience as to what sufficient appropriate evidence.  Even if (as the Institute contended) the Respondents had relied on assertions and estimates of the company audited, expert evidence was needed to enable the Disciplinary Committee to determine whether such reliance was or was not reasonable.

18. A Disciplinary Committee normally consists of 5 members, some of whom are professional accountants and some of whom are not.  Exceptionally in this case, one lay member could not participate due to last minute personal reasons.  With the agreement of all, it was decided to proceed with a hearing by only 4 members: 2 professional accountants and 2 lay persons.

19. The Disciplinary Committee distinguished between its normal composition and that of a specialised tribunal made up wholly of professional members.  The Disciplinary Committee did not think that it was desirable for its professional members (whether or not a majority) to advise lay members “for the purpose of resolving any issues which would otherwise require expert evidence to prove.” 

20. This was because:-

“[t]hose professional members of the Disciplinary Committee could not act as experts for the remaining members, and provide what in effect is expert evidence on any aspect of auditing through the process of deliberation, a process not open to the parties.  To do so would mean that the Disciplinary Committee would be receiving expert evidence without the knowledge of the parties and without affording the parties the opportunity of testing the same by way of cross-examination.  In our view, this would not be right.”

21.  Moving to Complaint 3 (negligence in the conduct of the profession), the Disciplinary Committee believed that was a serious charge which required proof of “such want of care and skill which a reasonably competent professional accountant would have taken in the conduct of his profession”. 

22.  In consequence of this:-

“[o]ne would have thought that in order to prove such a charge, expert evidence would be required to prove what a reasonably competent professional accountant would have done, and what steps would have been taken by him in connection with the auditing work in question.  In the absence of such expert evidence, it is impossible for this Disciplinary Committee to find that the Respondent's conduct of their professional [duties] had fallen short of what was reasonably expected of a professional accountant.”

23.  Again it would not be right (the tribunal thought) for the professional members on the tribunal to make up for a deficiency in expert evidence on Complaint 3 by “educating” its lay members.

A.2    The Institute's criticism

24.  Mr. Warren Chan SC (appearing for the Institute) submits that professional members of the Disciplinary Committee can inform lay members about matters of expert evidence. 

25.  Mr. Chan says that his submission is consistent with practice in Hong Kong and English professional disciplinary tribunals. 

26.  Mr. Chan cites the practice of the Hong Kong Law Society.

27.  He also relies on the following passage from Aaron v. Law Society [2003] EWHC 2271 (QB Division: Auld LJ and Goldring J) (at §59):-

“The [Solicitors' Disciplinary] Tribunal, which consisted of two practising solicitors and one law member, clearly considered that it had sufficient collegiate experience as to the propriety of a solicitor's behaviour in conveyancing matters such as this at the material time not to need expert assistance on the matter and, in particular, not such assistance in the form of venturing the very value judgment that it was itself required to make.”

28.  Mr. Chan argues that otherwise there would be practical difficulties.  In particular, the Investigation Committee already consisted on 3 qualified accountants.  There would have to be duplication of effort if further expert evidence were required for a Disciplinary Committee hearing.  There would be increased costs as a result and, in any event, the pool of available experts in Hong Kong is not large.

29.  Mr. Chan distinguishes among 3 types of issues:-

(1) Category A: Issues which do not involve knowledge of professional standards.

(2) Category B: Issues which involve knowledge of standards which are widely accepted within the relevant profession.

(3) Category C: Issues which involve knowledge of standards which may be in controversy within the relevant profession.

30.  Mr. Chan suggests that Category A issues do not need expert evidence.  For Category B issues, a Disciplinary Committee should be entitled to rely on the expertise within its membership (whether or not comprising a majority of the tribunal) to decide the relevant questions.  It is only in Category C issues that expert evidence may be required.

31.  Mr. Chan faults the Disciplinary Committee for failing to identify which of Complaints 1, 2 and 3 raise issues (and if so what particular issues) necessitating Category C expertise.  The Disciplinary Committee (Mr. Chan complains) simply treated all questions relating to what the Respondents should have done as matters requiring expert evidence.

32.  Mr. Chan submits that this was a Category B case.  Accordingly, there was no reason why the Disciplinary Committee (including 2 professionals) could not rely on its “collegiate experience” to come to some determination in respect of the 3 complaints.

33.  I am not persuaded by Mr. Chan's submissions.

34.  Read in context, the Disciplinary Committee was plainly saying that the 3 complaints in this case raised complex issues within Mr. Chan's Category C.   Accordingly, the tribunal felt that expert evidence was needed.  The complexity of the principal issues thrown up by the 3 complaints was such that the professional members felt that they could not “educate” the lay members on the applicable audit standards without being unfair to the Respondents.

35.  I do not see how one can fault the tribunal in its assessment.  It is especially difficult to fault the Reasons where the Disciplinary Committee believed (as it was entitled to do) that the Report was useless as prima facie proof of the specific charges levied. 

36.  Different committees may draw the line among Mr, Chan's categories differently, while still acting reasonably.  I cannot find that the Disciplinary Committee's exercise of discretion was here so flawed as to be unreasonable and to warrant review.

37.  Opposing the submission of no case, the Institute would have had the chance to submit that (contrary to what the tribunal might think) the Report was “self-explanatory” and the Institute was justified in adducing no further evidence.  But ultimately the Disciplinary Committee had to come to its own view on expert evidence in the circumstances of this case.

38.  I would add that on this question the practice of other tribunals is of little guidance.  For example, the members of a solicitors' disciplinary panel (whether professional or lay) may be comfortable in applying the professional standards applicable to solicitors.  It does not follow that accountants would generally feel comfortable in judging whether their fellow accountants have complied with SAS', especially complex ones such as SAS 230 requiring recourse to personal judgment and experience.  It may all depend on the standards at issue in a case.

39.  I do not read the tribunal as laying down any blanket approach such that in all cases, even when (say) the requisite standard is well-known (possibly even outside the profession) and accords with commonsense.  The matter is properly left to the discretion and discernment of a particular tribunal.

40.  Nor do I think that the practical difficulties alleged by the Institute are any pointer to the Disciplinary Committee being in error.  The mere fact that it may be cheaper or more expedient for the Institute to forego expert evidence has no logical bearing on whether the Report is more or less probative or the disciplinary process more or less fair. 

41.  Indeed, there are logical difficulties in the point of “no available local expertise” advanced by Mr. Chan.  The lack of local expertise is irrelevant on Category A issues where no expert evidence is required.  On Category B, Mr. Chan is essentially submitting that, if expert evidence were required, that would be unworkable because there would be no Hong Kong expertise.  But how can that be, when category B issues are supposedly about matters generally accepted by the Hong Kong profession?  As for Category C matters, Mr. Chan accepts that a tribunal may be entitled to call for expert evidence in such case.  That would hold true whether or not expertise was locally available.  The lack of Hong Kong experts would simply be irrelevant in relation to Category C situations.

B.      Ground 2: Standard of proof

B.1    The Disciplinary Committee's reasoning

42.  The Disciplinary Committee felt that, because professional reputations were at stake, the appropriate standard was somewhere between the civil standard of “the balance of probability and the criminal standard of “beyond reasonable doubt”.   Realistically, the tribunal felt that it was impossible to “quantify” just where on the scale between the civil and criminal burdens the requisite standard fell.

43.  In its support, the tribunal referred to “well-settle principle” (against which neither party argued) that:-

“in disciplinary proceedings, the standard of proof varies with the gravity of the charge, and a standard of proof is commensurate to the seriousness of the charges faced by the respondent”.

44.  Nonetheless, the Disciplinary Committee stated:-

“We make it clear however that we consider that in the present case the Complainant must prove the Complaints on clear and compelling evidence.  Although the charges do not involve dishonesty, fraud or criminality, in our view anything short of proof by clear and compelling evidence would not be sufficient to condemn a professional man (or firm) for these charges, and this is particularly so for the charge of negligence.”

B.2    The Institute's criticism

45.  Mr. Chan argues that the Disciplinary Committee applied too high a standard.  He reads the tribunal as requiring a standard of “clear and compelling evidence”.  He submits that the normal civil burden of a balance of probability is applicable.

46.  In my view, there is nothing in this criticism.

47.  The tribunal realised that the reputation of a professional should not be lightly destroyed by a charge of negligence.  Its statement of well-settled principle (apparently accepted by the Institute at the hearing before the Disciplinary Committee) seems unimpeachable.  Applying that principle, the tribunal believed that, whatever might be the standard in civil claims before the Court, for the purposes of disciplinary proceedings a somewhat higher standard was necessitated.  I think the tribunal was right.

48.  What, however, does one make of references to “clear and compelling evidence”?  On a fair reading, it is plain that by such the Disciplinary Committee was merely stressing that, when applying the standard identified, it was only prepared to draw inferences based on “clear and compelling” evidence.

49.  Consider, for example, the absence of records in audit working papers.  The Institute was inviting the tribunal to infer from such absence that on the balance of probability “sufficient appropriate evidence” had not been obtained.  But the thrust of the Reasons is that the Disciplinary Committee felt unable to draw any inference (on any standard) from mere omissions in the working papers.  This was because, as far as the tribunal was concerned, the working papers did not amount to “self-explanatory” evidence from which inferences of failing to compile “sufficient appropriate evidence” could be drawn.

50.  I think that Mr. Chan's criticism wrongly conflates 2 concepts; the quality of evidence on the one hand and the standard of proof on the other.  The 2 concepts may be complementary.  The better the evidence, the easier to discharge a burden of proof (whatever it may be).  The more ambiguous the evidence, the less likely that the burden (including the normal civil burden) will be met.  But the 2 concepts are not identical. 

51.  Essentially, the Disciplinary Committee was warning the parties that it would not lightly infer professional negligence from evidence of poor quality.  I do not think that such approach can be faulted in law.

52.  I note that, in the course of submission, Mr. Chan latched on the use of the word “conclusive” in Reasons para.39(a) (quoted here at para.13 above).  He submitted that this showed the tribunal imposed too strict a burden on the Institute.  I disagree.  In para.39(a), the tribunal was only stating that SAS 230 made clear that the absence of records of certain steps in audit working papers was “not by itself conclusive to show that those steps were not taken”.

C.      Ground 3: No case to answer

C.1    The Disciplinary Committee's reasoning

53.  Rule 15(1)(b) of the Disciplinary Committee Proceedings Rules (DCPR) provides:-

“[A]t the conclusion of the presentation of the case against the respondent, he ... may make either or both of the following submissions in relation to any complaint in respect of which evidence has been adduced:-

(i) that sufficient evidence has not been adduced upon which the Disciplinary Committee can find that the facts alleged in the complaint have been proved;

...

and where such submission is made, a reply thereto may be made by the complainant ... and the respondent may answer such reply,....”

54.  Reasons paras.46-47 state:-

“For justice to have been done it was essential for the Complainant to have taken the Disciplinary Committee to each particular of each allegation against the Respondent and to have made good each particular by evidence.  With respect to the great amount of work that has been done by the Investigation Committee, simply tendering Mr. Ding to produce a copy of a version of the Investigation Report and then offering him for cross examination was not sufficient for this purpose.  The process must be particularly thorough and detailed in circumstances where two members of the Disciplinary Committee who heard these complaints are lay members, who can be expected not to know of the working practices and procedures followed by professional accountants.

Mr. Hunsworth proceeded as though it was the duty of the Respondents to address the issues raised in the Complainant's Opening and to rebut each of the Complaints.  That in our view is not correct.  The burden rests squarely upon the Complainant to establish its case by sufficient evidence so that, if the respondents do not proceed to lead evidence in their defence, the evidence of the Complainant would be sufficient to enable this Disciplinary Committee to find the Complaint proved.  The Respondents are entitled not to answer the charge against them and not to lead any evidence in defence if the Complainant failed to lead such sufficient evidence.  To put in layman's terms, if the Complainant fails to establish its case in the first place, the Respondents are not called upon to answer.  It is not for the Disciplinary Committee to speculate whether if the Respondents are called upon to answer, they might start giving evidence incriminating themselves in such a way as to fill in the gaps of evidence left open by the Complainant.  The Respondents simply had no duty to answer a charge which was not made out by the time the Complainant closed its case.”

C.2    The Institute's criticism

55.  Mr. Chan says that too high a standard was set for Institute on the no case submission.  Assume (Mr. Chan argues) that, as a matter of principle, omissions in the working papers are inconclusive as to steps not having been taken.  Nevertheless, the possibility would remain that there are omissions in the working papers precisely because steps were not taken.  The incomplete working papers must on any view be prima facie evidence of the complaints.  The working papers must constitute evidence on the basis of which the matters complained of “can” be found within the terms of Rule 15(1)(b)(i). 

56.  It follows (Mr. Chan concludes) that the Disciplinary Committee was wrong to say that there was no case to answer.  It was sufficient to rebut the submission of no case to show that the evidence could support an inference of professional negligence.  If the tribunal required the Institute to adduce more evidence than that to rebut the submission of no case, the tribunal would be applying too stringent a test.

57. I am not persuaded that the criticism has substance.

58. The Disciplinary Committee repeatedly stressed that, on the charges brought, the material in the Report and the working papers could not amount to prima facie (“self-explanatory”) evidence.  Especially in the absence of expert evidence, the Disciplinary Committee could not draw any inference one way or another as to whether something was done or not done.

59. Mr. Chan asserts that on the balance of probability one can infer from omissions in the working papers that the Respondents did not collect sufficient and appropriate evidence. The Disciplinary Committee did not agree.  The tribunal found the Institute's evidence to be gravely deficient so as not even to present a prima facie case.  As far as the tribunal was concerned, it could draw no adverse inference from omissions in the working papers.

60. Mr. Chan does not suggest that such conclusion of the Disciplinary Tribunal was irrational.  He submits that the Disciplinary Committee applied the wrong standard on the no case submission.  I do not see how. 

61. On the tribunal's premises, the evidence adduced by the Institute could in no way sustain the complaints raised.  If the Disciplinary Committee thought that the report and working papers were useless as evidence, they rightly acceded to the submission of no case. 

62. It seems to me that the tribunal applied precisely the test advocated by Mr. Chan.  The only difference between the tribunal and Mr. Chan is in their assessment of the evidence.

63. Mr. Chan referred to the approach of the High Court where there is a submission of no case to answer in a criminal trial.  In HKSAR v. Poon Lai Lin and Leung Wai Yat CACC 720/1996  (26 May 1998) Mortimer VP stated:-

“	(a)	Where the judge comes to the conclusion that the prosecution evidence, taken at its highest, is such that a jury properly directed could not properly convict upon it, it is his duty, upon a submission being made, to stop the case.
	(b)	Where however the prosecution evidence is such that its strength or weakness depends on the view to be taken of a witness' reliability, or other matters which are generally speaking within the province of the jury and where on one possible view on the facts there is evidence upon which a jury could properly come to the conclusion that the defendant is guilty, then the judge should allow the matter to be tried by the jury.
	There will of course, as always in this branch of the law, be borderline cases.  They can safely be left to the discretion of the judge.”

64.  The Disciplinary Committee in fact said much the same thing:-

“In our view, the test at this stage is this: assuming that the respondent adduces no evidence in his own defence, is the evidence of the complainant sufficient to prove the charge to the requisite standard?  If the answer is ‘yes’, there is a case to answer.  If the answer is ‘no’, there is no sufficient evidence that can prove the charge.  The very essence of a submission of no case to answer is to test the sufficiency of the complainant's case.  That exercise cannot be substituted by one which requires the consideration of the possible evidence of the respondent, which evidence he may or may not lead, and which by definition would not have been properly tested by adversarial cross-examination at that stage of the proceedings.”

65.  Mr. Chan says that this case falls within Mortimer VP's limb (b).  The Disciplinary Committee thought that it was a limb (a) case.  There may be borderline cases.  But I do not think the Disciplinary Committee's statement of the test can be faulted.

D.      Ground 4: Working papers

D.1    The Disciplinary Committee's reasoning

66.  I have already summarised the tribunal's approach to the working papers in this case.

D.2    The Institute's criticism

67.  I have touched on this issue in my discussion of Ground 3. The Institute says that omissions in the working papers must at least be prima facie evidence of negligence.  It cites SAS 230 in support of its case.

68.  As I have discussed, the Disciplinary Committee was entitled to form the view that, without the aid of expert evidence, it was unable to draw any adverse inference against the Respondents on the 3 complaints advanced.  For the reasons given by the Disciplinary Committee (which I have summarised above), I do not think that SAS 230 assists the Institute's case for a judicial review on Ground 4.

E.      Ground 5: Statutory declaration

E.1    The Disciplinary Committee's reasoning

69.  DCPR Rule 17 provides:-

“	(1)	The Disciplinary Committee may either as to the whole case or as to any particular fact or facts proceed and act upon evidence given by statutory declaration:
	Provided that any party to the proceedings may require the attendance upon summons of any declarant to any such statutory declaration for the purpose of giving oral evidence and of being cross-examined, unless the Disciplinary committee are satisfied that the declarant is absent from Hong Kong or is for any other good and sufficient reason unable to give evidence in person at the hearing.
	(2)	Every witness shall be examined by the party producing him and may then be cross-examined by the other party and thereafter be re-examined upon matters arising out of such cross-examination by the party producing him.
	(3)	The Disciplinary Committee may decline to admit the evidence of any declarant to a statutory declaration who is not present for, or who declines to submit to, cross-examination.
	(4)	The Disciplinary Committee may put such questions to the parties or to any witness as they may think expedient.”

70.  Mr. Hunsworth invited the tribunal to assess whether or not there was a case to answer by reference to the Report and to “admissions” alleged to be in Mr. Bloom's statutory declaration. The Respondents intended to tender Mr. Bloom for examination and cross-examination in the event that the submission of no case failed.  But at the time of the submission of no case Mr. Bloom had not given live evidence.

71.  The Disciplinary Committee declined to look at Mr. Bloom's statutory declaration.  This was because it was untested by examination.  The tribunal drew an analogy between witness statements and statutory declarations.  Just as in High Court proceedings witness statements could not be evidence before a party opened his case, so (the tribunal said) with the Respondent's statutory declarations in this case.

E.2    The Institute's criticism

72.  The Institute says that the statutory declarations being on oath and having been filed voluntarily, the Disciplinary Committee could look at them.  The Institute does not accept the witness statement analogy.

73.  The admissions which the Institute contends are to be found in Mr. Bloom's declaration include the following:-

(1)   “4.2 The procedures listed in the Record of Work Done would have resulted in the accumulation of sufficient audit evidence to comply with the provisions of SAS 400 and SAS 420.  My opinion is qualified to the extent that the audit working papers do not provide details of the work done to the degree which normally be found in such a file.”

(2)   “5.34 The procedures listed in the Record of Work Done would have resulted in the accumulation of sufficient audit evidence to comply with the provisions of SAS 400 and SAS 420.  My opinion is qualified to the extent that the audit working papers do not provide details of the work done to the degree which would normally be found in such a file.  I note that the complaints do not address the issue of audit documentation, which is dealt with in SAS 230.”

(3)   “6.16 In my view, however, the 1997 audit did not take sufficient account of the fact that a number of the receivables had been outstanding for a considerable period of time and that debt settlement often involved a negotiation process.  The 1998 audit procedure, which did have regard to an aged analysis of receivables with a provision for doubtful debts related to age, is one which an RCA would adopt.  I am unable to quantify the increase in the provision for doubtful debts, if any, which an RCA would have recommended to management had that procedure been adopted in 1997.”

(4)   “6.17 In my opinion, the audit procedures adopted by PW in the 1997 audit are documented adequately to enable assessment of the adequacy of those procedures with one possible exception.  Ho:SD:66 states: '....  it is incorrect to assert that PW based its conclusions substantially on the representations of the SSCE management.  Checks were carried out through the audit team's review of the contract files and correspondence contained therein to assess the reasonableness of representations received.'  I have not located any supporting evidence of such checks, in this context, in the audit working papers.”

74. Mr. Bloom's overall conclusion is that none of the 3 complaints are made out.  But assume in favour of the Institute that one can look at discrete passages of Mr. Bloom's statement, as opposed to the thrust of his evidence as a whole. 

75. Even then I am unable to see how the paragraphs from Mr. Bloom's evidence can by themselves, without cross-examination of Mr. Bloom as to his meaning, amount to “admissions” of the complaints.  At best, the paragraphs highlighted show that Mr. Bloom could not find certain records or did not believe that sufficient account had been taken of certain matters in the 1997 audit.  But it is not evident how such beliefs on Mr. Bloom's part without more could be prima facie evidence of the complaints.

76. Thus, it seems to me that, in practical terms, whether or not its analogy between witness statements and statutory declarations was apposite, the tribunal rightly declined to look at Mr. Bloom's evidence as Mr. Hunsworth invited.

77. Even if Mr. Chan were right that the tribunal erred in law in refusing to look at Mr. Bloom's statutory declarations, the mistake would not have been causative.  Looking at Mr. Bloom's evidence, a right-minded tribunal would still have found the Institute's case deficient.

78. But was the tribunal wrong in law to refuse to look at the statutory declarations?  Rule 17 gives the Disciplinary Committee a wide discretion.  If at any stage, it feels that it should not look at a statutory declaration which has (say) not been tested by examination or cross-examination, it may refuse to have regard to the material.  It “may” act upon a statutory declaration, but it is not obliged.  That principle holds even though the declaration is in the form of an oath.

79. The Disciplinary Committee expressly recognised that it had a power to look at the statutory declarations in the no case submission stage.  But it believed that it would normally be unfair and wrong in principle to do so when the deponent had yet to be examined.  There was the added element here that the alleged “admissions” relied upon by the Institute do not, on careful inspection, appear compelling.  In those circumstances, I am unable to see how the tribunal's conclusion can be attacked as wrong.

III.     Conclusion

80. The 5 proposed grounds of review advanced by the Institute cannot be made out.  Consequently, leave to apply for judicial review was refused.

81. In the course of oral submission, I asked Mr. Chan whether I could entertain this review at all.

82. Certainly, I can review the decisions of a Disciplinary Committee where a decision is said to be either Wednesbury unreasonable or beyond jurisdiction. 

83. But Mr. Chan does not suggest that the Disciplinary Committee came to a decision which was Wednesbury unreasonable.  Instead, Mr. Chan says that it is enough to trigger judicial review by the Institute, if there was an arguable case that the Disciplinary Committee erred in law (whether procedural or substantive law).

84. The Professional Accountants Ordinance (Cap.50) (PAO) governs proceedings before a Disciplinary Committee.  My concern stems from the fact that PAO s.41 only gives a respondent to disciplinary proceedings the right to appeal to the Court of Appeal from the decision of a Disciplinary Committee.  The Institute as “prosecutor” has no statutory right of appeal. 

85. There are good policy reasons for this.  If a professional is acquitted on a charge of misconduct by a disciplinary tribunal which includes his peers, the matter should probably come to an end.  Following acquittal, a professional's reputation should not continue under the shadow of appeals to the Court of Appeal by the “prosecutor”.

86. But, if Mr. Chan is right, then contrary to the apparent intent of PAO s.41, the “prosecutor” would effectively have a right of appeal against every decision of a Disciplinary Committee.  This is because it is not difficult to dress up factual issues as questions of law.  One merely states that the tribunal erred in law in coming to a conclusion of fact of which there was no or no sufficient evidence.

87. It might be argued that a Disciplinary Committee has no jurisdiction to commit errors of law.  Mr. Chan's contentions may amount to no more than a submission that the tribunal exceeded its jurisdiction by committing errors of law.  The Court would on that theory be dealing with a question of ultra vires, an undoubted staple of judicial review applications. Nonetheless, I am troubled by the implications such a result would have on the deliberately asymmetrical right of appeal conferred by PAO s.41.

88.  In any event, in light of my conclusions on the 5 proposed grounds of review, I do not have to resolve my concern.  I do not wish it to be thought, however, that I necessarily accept that any error of law whatsoever by the Disciplinary Committee is a sufficient basis on which the Institute can review the acquittal of a professional.