Harris v. The Appeal Committee Of The Institute Of Chartered Accountants Of Scotland [2005] ScotCS CSOH_57 (04 May 2005)

[ Home ] [ Databases ] [ World Law ] [ Multidatabase Search ] [ Help ] [ Feedback ] [ DONATE ] Scottish Court of Session Decisions You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Harris v. The Appeal Committee Of The Institute Of Chartered Accountants Of Scotland [2005] ScotCS CSOH_57 (04 May 2005) URL: https://www.bailii.org/scot/cases/ScotCS/2005/CSOH_57.html Cite as: [2005] ScotCS CSOH_57, [2005] CSOH 57 [ New search ] [ Help ] Harris v. The Appeal Committee Of The Institute Of Chartered Accountants Of Scotland [2005] ScotCS CSOH_57 (04 May 2005) OUTER HOUSE, COURT OF SESSION [2005] CSOH 57 P558/05 OPINION OF LADY SMITH in the Petition of LEONARD HARRIS Petitioner; against ROBERT FYFE (Chairman), PROFESSOR T. A. LEE, W. T. STEVENSON, N. MENZIES, J. M. GREENE, T. GILMOUR AND MR CHAPMAN comprising THE APPEAL COMMITTEE OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SCOTLAND, a body incorporated under Royal Charter and having their administrative offices at CA House, 21 Haymarket Yards, Edinburgh Respondents: for Judicial Review ________________ Petitioner: Logan, Advocate; Russel & Aitken Respondents: Currie, Q. C., Johnston; Maclay Murray & Spens 4 May 2005 Introduction: [1] The petitioner is a Chartered Accountant and a member of the Institute of Chartered Accountants of Scotland ("the Institute"), having qualified in Scotland. He practises from an address in Manchester. He also practises as an Insolvency Practitioner. Following upon the lodging of a complaint with the respondents by the Institute's Investigation Committee, a hearing took place before their Discipline Committee the outcome of which was that he was found guilty of some but not all of the charges contained in the complaint, he was fined, severely censured, his insolvency permit was withdrawn for a period of twelve months and he was found liable, to a limited extent, for costs. [2] The petitioner appealed against the penalties imposed and his appeal was determined by the respondents. He now seeks judicial review of their decision dated 21 March 2005. The Institute of Chartered Accountants of Scotland: [3] The Institute was incorporated by Royal Charter and conducts its affairs under published rules which are amended from time to time. The relevant rules for present purposes are those which were published in January 2004 ("the 2004 Rules"). The Institute is also an approved body under and in terms of the Insolvency Act 1986 authorised to issue insolvency permits to its members. Members are subject to the disciplinary scheme that is contained in chapter XII of the 2004 Rules which renders them liable to disciplinary action in the event of misconduct, bringing themselves, the Institute or the profession into disrepute or breaching any of the rules. [4] The 2004 Rules provide for the appointment of an Investigation Committee which is obliged to enquire into any matter coming to its attention that indicates that a member may have become liable to disciplinary action (Rule 59(2)(a)). The Investigation Committee does not have disciplinary powers. The 2004 Rules provide for the appointment of a separate Discipline Committee. If, having made its enquiries, the Investigating Committee is of the opinion that a case for disciplinary action has been made out, it has the power to determine that: "a formal complaint should be preferred to the Discipline Committee; and shall send to such Committee a summary of the facts and matters and any further information in the Committee's knowledge and on which its opinion is based which were before the Investigation Committee, together with a summary or copy of any representations made by the member ....." (Rule 59(2)(b)) [5] The Discipline Committee is obliged to fix a hearing on receipt of a formal complaint from the Investigation Committee and if it is of the opinion that the complaint has been proved in whole or in part, has power to make a finding to that effect and to impose one or more of the list of penalties that appears in rule 60(3)(a), depending upon which they consider to be appropriate having regard to: "the status of the defender and the Committee's views as to the nature and seriousness of the complaint and other circumstances which the Committee considers relevant." Those penalties range from expulsion from the Institute to admonition. [6] A right of appeal to an Appeal Committee is provided for by rule 61. The respondents were such a committee. Rule 61 (3)(a) is relevant and its provisions include: "On any appeal, the Appeal Committee shall take into consideration the record of the evidence given before, and the documents produced to, the Discipline Committee on its hearing of the formal complaint and the written report of the Chairman of the Tribunal on the formal complaint generally and on the grounds contained in the notice of appeal ...................................................... The Appeal Committee shall carry out any other procedure as is necessary in the individual case to afford compliance with Article 6(1) of the European Convention on Human Rights and Fundamental Freedoms." There is no further right of appeal provided for whether under statute or under the 2004 Rules. Background: [7] On 26 March 1997, the petitioner was appointed liquidator of a company called Auto Dairy Ltd ("Auto Dairy"). Its directors also owned the shares in Faircrest Ltd. Unknown to the petitioner, those directors had conspired to confer on Faircrest Ltd, the benefit of Auto Dairy's assets. The mechanics of the liquidation were badly handled in the petitioners' office, administrative staff did not document matters which should have been documented and they were not properly supervised. The petitioner took little active part in the liquidation and did not read the file regularly or thoroughly, did not visit Auto Dairy's premises, did not regularly debrief his manager, did not interview the directors nor warn them sufficiently as to their possible liabilities in respect of proposed transactions, delayed in following up the details of a building society account and failed to follow up work in progress. [8] The petitioner's approach was such as to mean that warning signs that something was amiss went unnoticed and repeated opportunities to uncover and halt the fraud that was being perpetrated were lost. It was acknowledged on behalf of the petitioner that his failures and omissions facilitated, to some degree, that fraud. [9] By June 1997, the petitioner and his staff realised that there was fraudulent activity taking place and reported the matter to the police. The directors and a man with whom they were involved in these dealings, Mr Corrin, were subsequently prosecuted and convicted. During the investigations that followed on their report, the matter was drawn to the attention of the Institute by the police and enquiries by the Investigation Committee, as required by the rule 59(2)(a) of the 2004 Rules, followed. Proceedings before the Discipline Committee [10] In July 2003 and January 2004, two complaints were served on the petitioner (6/2 and 6/3 of process), each charging the petitioner with misconduct. They contained fourteen allegations of varying severity, which are referred to by the Discipline Committee as "charges". Many of those charges had subheadings, each containing separate allegations. There were, taking into account the subheadings, 36 separate allegations before the Discipline Committee. The most serious was the first one on the second complaint (6/3) which alleged that the petitioner had conspired with the directors and Mr Corrin to liquidate Auto Dairy so as to advance their interests. Some of the other "charges" expressly alleged dishonesty by way of making false representations and knowingly acceding to a delay which would enable the directors to benefit Faircrest to the prejudice of Auto Dairy's creditors. In a similar vein were two which alleged that the petitioner had received a cash payment of £2000 from Mr Corrin, which he did not disclose and that he had agreed to pay Mr Corrin an introduction fee of £750 so as to secure the Auto Dairy liquidation business. Others contained various allegations of breaches of duty. [11] Attached to each complaint were documents headed: "Summary of Facts and Matters" ("summaries") which contained detailed narratives of the findings of and conclusions reached by the Investigating Committee from which, clearly, all the allegations in the charges had been drawn. It would appear that a number of statements contained in those summaries were based on matters set out in Mr Corrin's affidavit (7/2/18). [12] There was a hearing of evidence before the Discipline Committee which concluded on 28 May 2004 following which the petitioner was found guilty of some but not all of the "charges". [13] The findings in respect of each "charge" and each subheading were detailed in a letter dated 8 June 2004 from the clerk to the Discipline Committee to the petitioner. The source of the information in that letter was the judgment given orally by the Chairman to the Discipline Committee, Mr Ogg, QC, at the end of the hearing, the transcript of which forms 6/4 of process. In the course of that judgment, Mr Ogg said: "We wish to make it clear that we have formed the view that Mr Harris was not a part of any criminal or fraudulent conspiracy to defraud creditors by means of an abuse of the phoenix mechanism. We do not find convincing evidence of such a serious allegation. There is evidence which raises a suspicion of that possibility and we are not surprised if people remain sceptical, but we did not feel able to conclude on that suspicion as a matter of fact. Accordingly, everything we say hereafter must be read in the light of that finding. That is, that we do not find Mr Harris to have acted dishonestly." (at p. 147 -8) [14] He indicated the Discipline Committee's findings in respect of each of the "charges" and their subheads. A number of them had been "struck down" in the course of the hearing and some had been withdrawn, findings of guilt were made in respect of 18 of them and the petitioner was acquitted in respect of others, including the allegations of conspiracy, misrepresentation and knowingly acceding to delay to which I have already referred. He was also acquitted of the charges regarding his receipt of monies from and payment of monies to Mr Corrin. As regards the latter, Mr Ogg said: "...we were not prepared to rely upon un-cross-examined affidavits of a convicted fraudster which in our view we would have required to do to make an adverse finding ..." (at p.152) [15] The affidavit of Mr Corrin to which reference was made contained much that was prejudicial to the petitioner, including an expression of the view that he in fact knew what was going on. [16] Full details of the Investigating Committee's findings and conclusions in respect of the "charges" which were struck down, withdrawn and resulted in acquittals had been included in the summaries. In particular, detailed findings and conclusions to the effect that the petitioner had acted dishonestly were included. [17] Mr Ogg provided a report for the respondents (6/8 of process), in which he included the following comments: "The Investigating Committee's Counsel argued their thesis that this was indeed a fraudulent conspiracy. I wish to make it crystal clear that the Committee unanimously rejected that view." (paragraph 3), "We felt this was an extreme case, albeit it was short of dishonest or corrupt. Had it been found to the latter (as urged upon us by counsel for the Investigating Committee) we would have imposed a far more severe penalty, that of expulsion from membership." (paragraph 7) and, in the last paragraph, under reference to the withdrawal of the petitioner's Insolvency Permit: "Absent the element of dishonesty or corruption we took the view that a longer period than one year would be too draconian ....". It is necessary to refer to two "charges" specifically, since much reliance was placed by the respondents on the findings of guilt in respect of them in the course of the hearing before me. Firstly, I would refer to "charge" 4(ii) in the first complaint: "4. By virtue of having arranged and effected on 15 May 1997, the sale of the Auto Dairy assets disclosed in the said Statement of Affairs to the said Faircrest, a company he knew was owned and controlled by the said Auto Dairy directors, fail: ....... (ii) in respect of the conduct of the said sale, to act or to be seen to act, with the integrity, independence and objectivity required of him in terms of Statement 2 Insolvency Practice, implemented on 1 June 1993, of the Institute's Guide to Professional Ethics;" Secondly, I would refer to "charge" 4 in the second complaint, the parts in respect of which the petitioner was found guilty being as follows: "4. Throughout the period whilst he was advising the Directors of Auto Dairy and whilst he was assisting them in the preparation of a Statement of Affairs and Report, all prior to his appointment as Liquidator of Auto Dairy on 26 March 1997: (i) Fail to advise the Directors of the need for full disclosure of connected party transactions contrary to the standard of competency to be expected of a reasonably competent insolvency practitioner, as demonstrated by the Guidance for Insolvency Practitioners, Statement of Insolvency Practice 13, para.4.2.2; ............ (ii) Fail to advise the Directors of Auto Dairy that transactions planned and executed by them might result in their incurring civil criminal liability including:- 1. continuing to allow Auto Dairy to trade whilst knowing that the company was insolvent and after they had resolved to place the company in liquidation; 2. Agreeing with the Directors of Faircrest, a connected person, that it use a prohibited name, namely trading as A. D. International; 3. agreeing to dispose of assets of Auto Dairy to a connected person; 4. agreeing to transfer the benefit of Auto Dairy contracts and Work - in progress to a connected person and in the absence of any independent valuation; ................................ (iv) Fail to act in accordance with the standards of integrity, independence of mind and objectivity required in the conduct of insolvency work and the profession of Chartered Accountant as required by Statement of Professional Conduct 2, paragraph 1.0 of the Guide to Professional Ethics." and as regards the findings of guilt in relation to "charge" 4(ii) in the first complaint and 4(iv) in the second complaint, Mr Ogg said, when delivering judgment: "Charge 4(i) and (ii) we find guilty. One simple example of market testing, whatever the outcome of it might have been, would have been to contact Charles Waite and Company or even to reply to their contacts with him." (6/4 p. 152) and "Charge 4(i) we find guilty, (ii) we find not guilty and (iii) we find proved in terms of the failure to advise in terms of SIPI3, paragraph 3. That relates to facts 1 to 4. We find facts 5 and 6 not proved in that charge. But you should understand that 4(iii) as an individual charge is proved but the particulars 5 and 6 are not accepted by the Committee as established. No. (iv) we find not guilty and we would explain Mr McNeill's evidence did not go so far as to suggest in the absence of a conspiracy to do so that to allow such a delay was an obvious failure. Charge 4(v) we find guilty in that it follows on from what had gone before in Charge 4." (6/4 p.152-3) [18] The Discipline Committee imposed the penalties to which I have already referred. Proceedings before the Appeal Committee: [19] The petitioner having been granted leave to appeal against the penalties imposed by an adjudicator, Mr Ian R. Abercrombie, QC, on 21 November 2004, a hearing was fixed. The respondents were provided with a number of documents prior to and for the purpose of the hearing. Those documents included the two summaries, the petitioner's responses to both complaints in their entirety, and a number of affidavits including the affidavit of Mr Corrin. They also had Mr Ogg's report. [20] The hearing took place on 21 March 2005. As at that date, counsel instructed for the petitioner was aware that the respondents had been given the two summaries but he was unaware that they also had the affidavits to which I have referred. At the start of the hearing, he made a motion that the hearing should be adjourned to a fresh hearing before a newly constituted tribunal which should not have sight of those summaries as they were, he submitted, prejudicial to the petitioner in respect that they indicated that he had been guilty of fraud and conspiracy, something which was not borne out by the findings of the Discipline Committee. He questioned whether anyone who had read those documents could ever form an independent view on the charges of which the petitioner had actually been convicted. Justice would not, he submitted, be seen to be done in that situation. Counsel referred the respondents, in support of his submission, to the case of Murphy v General Teaching Council 1997 SLT 1152. The motion was opposed by Dr McMorrow, who appeared for the Investigation Committee and submitted that Murphy could be distinguished because the prejudicial material seen by the General Teaching Council had concerned totally different and extraneous conduct and that Rule 61(3)(a) required the respondents to see the material. After an adjournment the respondents refused the motion, saying: "The Committee has considered the submissions. It is the decision of the Committee that Murphy can be distinguished on the facts and circumstances to the present case. That the submission by Dr McMorrow is to be preferred, and that the Committee will apply Rule 61(3)(a)." (7/4 p. 30-1) The hearing proceeded. [21] Towards the end of the hearing, when counsel for the petitioner was addressing the respondents, Mr Gilmour, the sixth named respondent, questioned him as follows: "I have two questions. Could I refer to Production 4.7 which is a Statement of Insolvency Practice and may I just read it out? 'The first and second fundamental principles direct the attention of each member to the overriding importance in his or her professional life of integrity and objectivity. These elements are important in the acceptance on(sic) conduct of insolvency work as in any other area of professional life and in certain insolvency roles the preservation of objectivity needs to be protected and demonstrated by the means......(reads)....but must also be mindful of how our acceptance and conduct will be perceived by others.' Could I then just refer to complaint 2, the charges and summary of facts and matters at page 5? And where I am infact looking is at paragraphs nine and ten, and 11." (7/4 p. 150-1) Counsel for the petitioner reminded Mr Gilmour of his original submission in relation to the summaries and Mr Gilmour asked the Chairman of the respondents for a direction. No audible response appears to have been given by the Chairman since none appears on the transcript of the hearing (7/4 p.151). Senior counsel for the respondents advised that it was thought that he had indicated with a shake of the head that the question should not be insisted on. It was withdrawn. [22] The respondents quashed the decision of the Discipline Committee and imposed sentences of a fine of £25,000 and the immediate withdrawal of the petitioner's Insolvency Permit without limit of time. The amount of the fine represented an increase from the original fine which appeared to be in response to the petitioner's counsel having invited them to do so in place of any order for costs. The withdrawal of the Insolvency Permit without limit of time went significantly beyond the penalty sought by Dr McMorrow who had submitted that a withdrawal of two or three years would be appropriate (7/4 p.122-3). The Present Petition [23] First orders were granted in terms of an interlocutor dated which also ordered the respondents to lodge certain documents. The document no. 7/3 of process was one of those lodged by the respondents in response. At p.2, paragraph 2, they explain their reasons for refusing the motion to adjourn: "The Appeal Committee withdrew to consider the submissions. After deliberation, the Appeal Committee decision was to reject the motion to adjourn made by Mr Logan. It was the decision of the Appeal Committee that the facts and circumstances in the case of Murphy could be distinguished from the facts and circumstances in the present case. Further, in terms of Rule 61(3)(a) the Appeal Committee 'shall take into consideration' the documents produced to the Discipline Committee. The summary of facts and matters in each of the charges was produced to the Discipline Committee. In the circumstances there was no proper reason why the Appeal Committee could not have the summary of facts and matters before the Committee. On that basis, the motion to adjourn was refused." [24] Further information can be gleaned from an affidavit from the Chairman, Mr Fife (7/6) dated 6 April 2005. It records that he read the complaints and affidavits, including that of Mr Corrin, prior to the hearing. At paragraph 4, he states: "In my deliberations concerning the Appeal Committee's decision, I did not have any regard to the summaries of facts or circumstances appended to the complaints 1A and 2. Moreover, I specifically made a direction to the members of the Appeal Committee, during the course of our deliberations, that they must not have regard to these facts and circumstances. I am satisfied that each of the members of the Appeal Committee understood my direction in that regard." No explanation is given of the reasons for or circumstances in which he made a direction which differed from the ruling made in response to Mr Logan's motion at the start of the hearing. At p. 5, paragraph 2 of 7/3, the respondents set out their approach to penalty: "The Appeal Committee considered the breach of integrity combined with the category of failures on the part of Mr Harris was so serious that the public interest should be protected by withdrawal of the insolvency permit without limit of time." [25] Mr Fife, in his affidavit, refers to the competing submissions made and to some of the documents and then states: "I also had regard to the findings of the Discipline Committee that Mr Harris was guilty of a breach of integrity coupled with what was considered a catalogue of departures from appropriate standards of professional conduct. I considered the severity of the charges Mr Harris had already pled guilty to or subsequently been found guilty of. I took account of the suggestion made by Mr Harris' agent that there was no breach of integrity, but concluded that that submission was plainly contradicted by the finding that there had been such a breach and that there had been a great deal of evidence before the Discipline Committee that supported the finding." [26] In these circumstances, it was averred in the petition that the decision of the respondents dated 21 March 2005 had been vitiated by their having had prejudicial and irrelevant material before them along with the Chairman having failed to give appropriate directions. It was also averred that, in the circumstances, the decision was perverse. Submissions for the petitioner: [27] Mr Logan, counsel for the petitioner, submitted that the contents of the summaries and the affidavits, particularly that of Mr Corrin, were clearly deeply prejudicial. Such material should not have been before the respondents: Murphy v General Teaching Council 1997 SLT 1152; Brown v Executive Committee of Edinburgh District Labour Party 1995 SLT 985. The respondents were not as a body, experienced judges well used to ignoring irrelevant material when required to do so. As was evident from the terms of a letter from the respondents' agents dated 8 April 2005 (6/12), the members were non lawyers with limited experience and they did not sit on a regular basis. In the case of two of them, this hearing was their first. It appeared from a comparison of what was said by the Chairman at the time the motion to adjourn was refused and what, according to his affidavit, was said to the members during their deliberations, that he had changed his mind regarding the relevance of the material in the summaries. Mr Logan asked, rhetorically, when it was that he had done so and why it was that he had not been given an opportunity to make submissions regarding their change of front? [28] He also submitted that even if the first part of Rule 61(3)(a) required production of the summaries, the second part of the rule, which called for compliance with the European Convention on Human Rights required that it should not be produced, since to do so was in conflict with the provisions of Article 6. He referred to R v Securities and Futures Authority 2001 2 AER (Comm) 481, Montgomery v HMA 2000 SCCR 1044 , and McLean v HMA 2001 SCCR 526 . [29] Mr Logan submitted further that the conduct and disposal of the appeal gave rise to the inference that the respondents had in fact been influenced by the material in the summaries. That could be inferred from the nature of Mr Gilmour's intervention and from the decision reached by the respondents, both of which were indicative of the view of the respondents being that the petitioner had been guilty of dishonesty. The penalty ultimately imposed by the respondents was consistent with their approach having been that that was the case since it was an excessive penalty for a case where there had been no dishonesty: Robson v Council of the Law Society of Scotland 2005 SLT 244. Submissions for the respondents: [30] Mr Currie, QC, for the respondents, submitted that it was untenable and misguided for the petitioner to seek to argue that there had been no finding of a lack of integrity. That that was so was evident from the list in the letter of 8 June 2004, which set out a clear exposition of what charges were and were not established. Where Mr Ogg had referred, when issuing the Discipline Committee's judgment, to their not having found that the petitioner acted dishonestly, he was, it was submitted, only referring to the fraud charge. His submission, accordingly, was to the effect that the petitioner had been found to be dishonest. The letter had also, he said, set out the result in respect of each of the charges so the respondents could have been in no doubt as to what they were dealing with. [31] It was, he submitted, important to focus fully on the primary consideration which was the reputation of the Institute: Gupta v General Medical Council [2002] 1 WLR 1691 . This was a case in which the Discipline Committee had, according to the report 7/9 of process (also at 6/8), commented that they were "moderately appalled" at the degree of unprofessionalism, that the petitioner had engaged in "what almost bordered on a wilful blindness" and in conduct which was "reckless in the extreme". The Discipline Committee had, he submitted, paid too little attention to the public interest and the reputation of the Institute and too much attention to the mitigation for the petitioner that was advanced. The respondents did not, though, impose the most severe sanctions that were available to them. Their decision was well within the range of reasonable responses. [32] Regarding the summaries, Mr Currie submitted that they constituted the various constituent parts of the charges and that, together with the complaints, they formed the charges. Regarding the affidavits, he submitted that the transcript of the Discipline Committee made it clear that they refused to convict on the basis of unendorsed affidavits. Regarding the fact that the Chairman had, nonetheless, according to his affidavit, read them, Mr Currie said that he had no idea why he had done so but that he would have been under no illusion as to what they were. There was no authority to suggest that a body determining sentence should not know what charges were taken but not proved. The authorities relied on by the petitioner, including Murphy could be distinguished on that ground. Although he accepted that in the case of a body which comprised persons including a lay majority, it was necessary to be more cautious about putting irrelevant material before them, the decision reached in this case did not, he submitted, give rise to the inference that they had in fact been influenced by the material in the summaries. There was no indication that Mr Gilmour had, for instance, misunderstood what the summaries were, albeit that it had to be accepted that an objective bystander would at least conclude that he had read them. Discussion: Whether or not the Discipline Committee found that the petitioner had acted dishonestly: [33] It is readily apparent that the Discipline Committee found that the petitioner had not committed any acts of dishonesty. The Chairman, Mr Ogg, was at pains to make that abundantly clear in what he said at the time that he was delivering judgment (6/4) and in his report (6/8). I reject the respondents' submission to the effect that he was only meaning to refer to the fraud charge when indicating that they did not find that the petitioner had been dishonest. It is not appropriate to seek to analyse the text as though it were a conveyancing document but even if that approach were to be adopted, it would not produce that result. At p.148 of 6/4, the Chairman said: "Accordingly, everything we say hereafter must be read in the light of that finding. That is, that we do not find Mr Harris to have acted dishonestly." [34] Further, even if reading the transcript in 6/4 left one in any doubt as to the Discipline Committee's findings regarding dishonesty, which clearly it should not, it would be resolved by the references in the Chairman's report (6/8) to wishing to make it "crystal clear" that they unanimously rejected the Investigating Committee's view that the petitioner had acted fraudulently and, when referring to the case in its entirety, stating that his conduct was "short of dishonest or corrupt". [35] The petitioner was, however, convicted of two charges which refer to him failing to act with the required standards of integrity. Integrity is a word that is often used as a synonym for honesty. The Oxford English Dictionary nd ed . includes for it the following definition which is relevant for present purposes: "Soundness of moral principles; the character of uncorrupted virtue esp. in relation to truth and fair dealing; uprightness, honesty, sincerity." and the question that then arises is: how could the Discipline Committee find the petitioner guilty of those two charges whilst at the same time articulating so firmly that they were not making any finding of dishonesty? The answer lies in the terms of the paragraph in the Guide to Professional Ethics on which the two charges are based. It provides: "The first and second Fundamental Principles direct the attention of each member to the overriding importance in his or her professional life of integrity and objectivity. These elements are as important in the acceptance and conduct of insolvency work as in any other area of professional life. In certain insolvency roles, the preservation of objectivity needs to be protected and demonstrated by the maintenance of a member's independence from influences which could affect his objectivity. Before a member accepts or carries out those roles, which are detailed in the guidance which follows, the member must not only be satisfied as to the actual objectivity which he or she can bring to his or her judgment and decisions, but must also be mindful of how his acceptance and conduct will be perceived by others." [36] Accordingly, it is possible for a member of the Institute to breach the rule by failing to act with integrity and objectivity thus, given the relevant meaning of the word "integrity", giving rise to the inference that he has in fact acted dishonestly or to breach it by failing to be seen to act with integrity and objectivity, something which does not give rise to such an inference. Clearly, that is how the findings of the Discipline Committee fall to be understood, given their quite unambiguous explanation of their nature. Further, examination of the context of each charge where the reference to integrity is made is also indicative of the petitioner's breaches being in the latter sense. Whether the material before the respondents included prejudicial items and if so, to what effect? [37] Turning then to the question of whether or not the facts and summaries contained prejudicial material, I have no doubt that they did. They state as fact, in considerable detail, numerous transgressions by the petitioner, some said to involve dishonesty, in respect of which he was, ultimately, acquitted. Those matters were elaborated in the affidavits, particularly that of Mr Corrin. I am not persuaded that they fall to be regarded as part of the charges. The charges are set out in relatively succinct allegations contained in numbered paragraphs and conclude with the signature of the convenor of the Investigating Committee. The summaries are separate. Mr Currie's submission on this matter did not extend to the affidavits. Neither the summaries nor the affidavits should, in my opinion, have been put before the respondents. I so conclude for two reasons. [38] Firstly, it was a clear breach of the respondents' own rule 61(3)(a) that they took the material into consideration for any purpose. They were obliged to invoke any procedure necessary to ensure compliance with Article 6 of the European Convention on Human Rights and Fundamental Freedoms which provides for the right to a fair hearing before an independent and impartial tribunal. In the present context, I am satisfied that that required the removal from the documents being submitted to the respondents of any irrelevant prejudicial material, including the summaries and the affidavits. When the petitioner's case came before them, the question of the extent of his guilt of the various charges had been determined and it was not being subjected to any review. I do not, in these circumstances, see that there was any need for the respondents to read or consider any material for the purposes of the hearing before them that was irrelevant in the sense that it related only to charges in respect of which the petitioner was acquitted. Further, by doing so in circumstances where that irrelevant material was also prejudicial to the petitioner the fairness of the hearing afforded to the petitioner fell immediately to be called into question on account of the risk of loss of the requisite appearance of impartiality. The Institute has more than one legally qualified Chairman available to them and it does not seem that it would have been difficult to set up a system whereby, for instance, a Chairman other than the one who is due to sit in an appeal considers all the papers before the Discipline Committee and sifts out any irrelevant material, particularly where such material is prejudicial to an appellant. Their own commitment to compliance with the requirements of Article 6 would appear to demand at least such a procedure, particularly in the context of a tribunal that involves a number of inexperienced and lay members who may not, unlike legally qualified judges, be familiar with the techniques of excluding irrelevant material from their consideration. [39] Secondly, I agree that the case of Murphy is relevant and the decision in it lends support to the view that the fact that the respondents had irrelevant prejudicial material before them vitiated their decision. The prejudicial material in that case, as in the present, did not amount to a finding of guilt of any prior offence and the disciplinary committee of the General Teaching Council for Scotland stated that they were treating the appellant as a first offender, but it was of potentially negative effect. In those circumstances, their decision fell to be quashed. At p.1156, the Lord Justice Clerk said: "We recognise that in the decision letter there is nothing to suggest that the disciplinary committee were in fact influenced by their knowledge of the earlier police warning, and that they were given adequate directions as to the test which they should apply in determining this complaint. However, it is axiomatic that, in proceedings of this nature, justice must not merely be done, but must be seen to be done. In our opinion, even though the disciplinary committee may have applied the correct test, justice was not seen to be done because the members of the disciplinary committee had before them material which was irrelevant and which was prejudicial to the appellant." [40] It makes no difference, in my view, that the petitioner in the present case was appealing only against sentence. His entitlement to natural justice and compliance with the requirements of article 6 applies to a hearing on sentence just as much as it does to a hearing on the substantive merits of the case. An analogy can, perhaps, be drawn with the practice in the criminal courts where an accused person's plea of guilty to only one of two charges on an indictment is accepted. In those circumstances, the Crown restricts the narrative given to the sentencing judge to that which is relevant to the charge to which the accused has pled guilty. It is recognised that it would be quite inappropriate and unfair to give the judge details of the narrative relevant to the charge of which the accused has been acquitted. [41] Further assistance can be derived from the case of Brown that was also relied on by the petitioner. Although the factual circumstances differed from those of the present case, the general statement in Lord Osborne's opinion as to when it can be concluded that there has been a denial of natural justice are apt. At p. 990, he said: "The question for me is whether the circumstances founded upon amount to a basis for the reasonable apprehension of 'something so prejudicial to a fair and impartial investigation of the questions to be decided as to amount to a denial of natural justice.' ... if there are circumstances so affecting a person acting in a judicial capacity as to be calculated to create in the mind of a reasonable man a suspicion concerning that person's impartiality, those circumstances are themselves sufficient to disqualify, although in fact no bias exists." [42] A similar approach was adopted in the criminal context in the case of McLean where Lord Cameron of Lochbroom, delivering the opinion of the court, said, at p. 532: "...the allegation contained in the report was capable of causing the appellant and any objective observer to hold legitimate doubts as to the impartiality of the court, which doubts are objectively justified." [43] I consider that the circumstances of the present case do give rise to an apprehension of the sort referred to by Lord Osborne and Lord Cameron of Lochbroom, particularly since not only was the material provided to all the respondents but it is confirmed that that material had in fact been read and considered by at least the Chairman and Mr Gilmour prior to the hearing and a confused picture emerges as to what exactly was the respondents' approach regarding it. On the available information, which includes the respondents having had sight of the irrelevant, prejudicial material and the imposition of a penalty which was harsher even than that which was sought by Dr McMorrow on behalf of the Investigating Committee, the possibility of their having been influenced by it cannot be ruled out. Mr Fife states in his affidavit that he had read the material and it is evident from Mr Gilmour's questioning of Mr Logan that he had done so. The passages to which Mr Gilmour referred were those contained in paragraphs 9, 10 and 11 of the summary attached to complaint 2. The narrative contained in them clearly seeks to give rise to the inference that the petitioner was complicit in the fraudulent arrangements being proposed and, further, that he had received a cash payment of £2,000 for doing so. None of that narrative was reflected in the findings of guilt ultimately made by the Discipline Committee and it should not, accordingly, have been considered as relevant at all. It is, though, evident from Mr Gilmour's questions that he at least had in mind that the damning narrative contained in those paragraphs was in some way relevant to his deliberations. [44] Whilst the Chairman appears to have given some indication to Mr Gilmour that the question ought not to be pursued, no express direction was given. Mr Fife states, in his affidavit, that he gave a direction in the course of the respondents' deliberations that they must not have regard to the facts and circumstances but there is no explanation of the stage at which that direction was given nor of the reason for giving a direction which, on the face of it, contradicted the position adopted at the beginning of the hearing when Mr Logan's motion was refused on grounds which included that the respondents were instructed by Rule 61(3)(a) to take the summaries into account. Nor was Mr Logan given the chance to make submissions regarding this apparent change of front. Further, it is at the very least puzzling to read in Mr Fife's affidavit of the reference to there having been a "great deal of evidence" that supported a finding of breach of integrity when that does not seem to be borne out by what was said or reported by the Chairman of the Discipline Committee or by a proper consideration of the two charges where integrity is referred to, which I have already discussed. Similarly, Mr Fife's report, 7/3, makes reference, at p.5, to the respondents having considered the breach of integrity combined with the catalogue of failures on the part of Mr Harris' to have been "so serious" as to merit the penalty imposed by them in the public interest. The reasonable inference from both documents is that the respondents approached the petitioner's case on the basis that he had been found guilty of actual dishonesty and the whole circumstances are such, in my view, as inevitably create a suspicion in the mind of the reasonable observer that the respondents were influenced so as to reach that result by the prejudicial irrelevant material to which I have referred. [45] In summary, the facts of this case are such that I am satisfied that justice has not been seen to be done in that the objective bystander would have been bound to have a reasonable suspicion that the respondents were influenced by prejudicial irrelevant material which they should not have seen. That means that their decision of 21 March 2005 is vitiated and falls to be quashed. [46] The petitioner made a motion in respect of the expenses incurred in respect of the hearing before the respondents on 21 March 2005. I am satisfied that I have no jurisdiction to deal with that matter and will, accordingly, refuse that motion. All questions of expenses arising out of the present process in respect of which a motion was also made, will, however, be reserved. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII URL: https://www.bailii.org/scot/cases/ScotCS/2005/CSOH_57.html