Judith Cluney Applicant And: Association of Chartered Professional Accountants of Newfoundland v. Labrador, 2023 NLSC 146

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Cluney v. Association of Chartered Professional Accountants of Newfoundland and Labrador , 2023 NLSC 146 Date : November 10, 2023 Docket : 202301G4136 Between: Judith Cluney Applicant And: Association of Chartered Professional Accountants of Newfoundland and Labrador Respondent Before: Justice Peter N. Browne An application to stay pending appeal from a Decision of the Association of Chartered Professional Accountants of Newfoundland and Labrador , dated the 12 th day of May, 2023. Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: November 1, 2023

Summary: The Applicant, Judith Cluney, appealed the Respondents’ Merits and Sanctions decision. As part of her appeal, Ms. Cluney filed an interlocutory application for a stay of these decisions.

The application was dismissed on the basis that Ms. Cluney was not able to establish irreparable harm or that the balance ofinconvenience favoured a stay. Appearances: Cletus E. Flaherty Appearing on behalf of the Applicant Augustine F. Bruce, K.C. Appearing on behalf of the Respondent Authorities Cited: CASES CONSIDERED: RJR-MacDonald Inc. v. Canada (Attorney General), (SCC), [1994] 1 S.C.R. 311; Weir’sConstruction Limited v. Warford Estate, 2016 NLCA 65; Shea v.

Law Society of Newfoundland and Labrador, 2020 NLSC 91; Walsh v.Johnson, 2010 NLCA 6; Newfoundland and Labrador (Royal Newfoundland Constabulary Chief of Police) v. Newfoundland andLabrador (Royal Newfoundland Constabulary Public Complaints Commissioner), 2014 NLTD(G) 31; Kirby v. Association of CharteredProfessional Accountants of Newfoundland and Labrador, 2021 NLSC 159 STATUTES CONSIDERED: Chartered Professional Accountants and Public Accountants Act, SNL 2014, c. C-10.1 REASONS FOR JUDGMENT Browne, J.: OVERVIEW [1] The Applicant (“Ms.

Cluney”) was found guilty of professional misconduct deserving of sanction in relation to 3 out of 4allegations (the “Allegations”) by a decision of a tribunal (the “Tribunal”) of the Association of Chartered Professional Accountants ofNewfoundland and Labrador (the “CPANL”) dated May 12, 2023 (the “Merits Decision”). [2] The Merits Decision resulted from two allegations filed with the Tribunal; the first by an e-mail dated February 26, 2021 fromSusan Galgay; and the second by letter dated March 5, 2021 from the Office Practice Inspection Committee (the “OPIC”) of theAssociation. [3] The Tribunal, by Decision and Order dated July 31, 2023 (the “Sanctions Decision and Order”), imposed various sanctions onJudith Cluney based on its findings in the Merits Decision.

These sanctions included: (

i) a written reprimand placed on Ms. Cluney’s CPANL file; (ii) that Ms. Cluney provide CPANL with a list of clients that she currently has within ten (10) days of the date of this Decision andOrder; (iii) that a Monitor be appointed by CPANL for a period of twelve (12) months to perform periodic random review of files, indocumentary and electronic form as applicable, and to provide reports to CPANL; (iv) a

summary of the Decision and Order of the Tribunal disclosing the Member’s name, Judith Cluney, to be published and to bemade available to the public including all of Ms. Cluney’s current clients, to all members of CPANL and to all provincial and territorial

accounting regulatory bodies; and (

v) a fine of $2,500.00 along with costs in the amount of $15,000.00. [ 4 ] Ms. Cluney appealed the findings of the Tribunal Merits and Sanctions Decisions, in their entirety, and asked that they be reversed. She has also filed an Interlocutory Application, dated August 29, 2023, seeking a stay of the Order of the adjudication tribunal pending disposition of the within Appeal. [ 5 ] It is the stay of execution application that I must decide in this proceeding.

POSITION OF THE CPANL [ 6 ] The Association has refrained from enforcing the Sanctions Decision and Order given that the Application for a stay of the Tribunal Decisions has been brought to the Court expeditiously. Ms. Cluney has not made any payment on the fine imposed or the costs ordered, nor has she provided a list of clients as required.

Instead, she indicated through her counsel that she has no current clients for which she is providing public accounting services, and that she is not intending to take on any new public accounting clients. [ 7 ] Aside from a new allegation currently under investigation, the Association is not aware of whether there are any former clients of Ms.

Cluney who have concerns as to her work being completed; whether inquiries from clients have been responded to in a timely and appropriate manner; and, whether any request from a client to transition files to a successor accountant has been appropriately actioned within forty-five (45) days of the request, as contemplated by the Tribunal Sanctions Order. POSITION OF MS. CLUNEY [ 8 ] Ms. Cluney, through her legal counsel, says that she has numerous grounds of appeal that focus primarily on issues of bias, procedural fairness,

interpretation of the Chartered Professional Accountants and Public Accountants Act , SNL 2014, c. C-10.1 , along with the accompanying Regulations and Rules of Professional Conduct (“the Act and the Regulations and Rules”), as well as evidentiary errors and the severity of the sanctions. [ 9 ] If she isn’t granted a stay then she will suffer irreparable financial and reputational harm which include costs, loss of income, loss of reputation and mental and emotional distress. By virtue of the wording of

section 44 of the Act she is deprived of any mechanism to recoup certain losses should she be successful on appeal. [ 10 ] Finally, the proceedings taken against Ms. Cluney were for the purpose of specific and general deterrence and not on the basis that her continuing to practice would risk harm to her clients and the public at large. MAIN ISSUE Has Ms. Cluney met the requirements of the three-prong test for a stay of the Sanctions Decision and Order pending the outcome of her appeal? Sub-Issues 1. Has Ms. Cluney demonstrated that there is a serious issue to be tried in her appeal? 2. Has Ms.

Cluney demonstrated that she will incur irreparable harm should the Court refuse to issue a stay of the Sanctions Decision and Order pending the outcome of her appeal? 3. Has Ms. Cluney demonstrated that the balance of inconvenience favours a stay of the Sanctions Decision and Order pending the outcome of the appeal? [ 11 ] For the reasons that follow, Ms. Cluney’s application for a stay of execution is dismissed. ANALYSIS Applicable legislation and legal principles The Act and Regulations

Definitions 2. (f) "public accountant" does not include a person who engages only in bookkeeping or cost accounting or in the installation of bookkeeping, business or cost systems or who performs accounting or auditing functions exclusively in respect of a public authority or a commission, committee or emanation of one, including a Crown corporation;

Association established Section 3(3) states : The objects of the Association are to promote and increase the knowledge, skill, and proficiency of chartered professional accountants and public accountants; to protect the integrity of the profession; and to serve and protect the public interest in all matters relating to the conduct of chartered professional accountants and public accountants. Membership 10.

(1) A person is entitled to be certified as a chartered professional accountant by the association where that person

(5) As a condition of receiving a certificate or a licence, a person shall provide proof that he or she has obtained professional liability insurance coverage in a form and amount satisfactory to the board. (6) Subsection (5) does not apply to a person who does not provide services as a chartered professional accountant directly to the public. Filing and publication of decisions Section 37(3) (

d) and (

e) state

(3) The registrar shall publish a

summary of a decision or order of an adjudication tribunal in a newspaper of general circulation in or nearest to the community in which the respondent practises within 14 days of the expiry of the appeal period under

section 43, unless a court orders otherwise, where the decision or order (

d) specifies conditions for the continuing practice of the respondent; or (

e) requires that a

summary of the decision or order be published.

(4) The

summary of the decision published under subsection (3) shall include (

a) the name of the respondent and the address where he or she practises; (

b) the date, location and a brief description of the conduct of the respondent that was found to be deserving of sanction; (

d) the contents of the order in relation to the actions referenced in paragraphs (3)(

a) to (d); and (

e) other information specified for publication in the decision or order.

(5) Where a decision published under this

section is confirmed, varied or set aside, the registrar shall within 14 days of the filing of the subsequent decision or order publish a

summary of the decision or order and subsections (2) and (3) apply, with the necessary changes.

(6) The registrar may give notice of the decision and information respecting the decision to the other persons the board may direct and shall include a

summary of the decision in a certificate of good standing issued in relation to the respondent. Action prohibited

Section 44 An action for damages shall not lie against the association, the board, disciplinary panel, an adjudication tribunal or the individual members of those bodies, a person appointed to conduct an investigation under subsection 31(5), the registrar, or an officer or employee of the association for (

a) an act or failure to act, or a proceeding initiated or carried out in good faith under this Act, or carrying out their duties or obligations as an officer, employee or member under this Act; or

(

b) for a decision or order made or enforced in good faith under this Act. Stay of Enforcement of an Order pending Judicial Review [12] The three-prong test for a stay of enforcement of an order pending appeal is well established as stated by the Supreme Court ofCanada’s decision in RJR — MacDonald Inc. v. Canada (Attorney General), (SCC), [1994] 1 S.C.R. 311. This Courthas repeatedly applied the test (see e.g. Weir’s Construction Limited v. Warford Estate, 2016 NLCA 65, (at paras. 3-5). Applicable law and findings Sub-Issue #1 Question: Has Ms.

Cluney demonstrated that there is a serious issue to be tried in her Notice of Appeal? Answer: Yes. The threshold for a serious issue to be tried is low and the Court is not expected to delve too deeply into the merits of theappeal. While some of the grounds of appeal may be unstainable, from a preliminary review not all grounds are without merit. [13] The parties agree that the RJR - MacDonald test indicates that the question of whether there is a serious issue to be triedrequires the applicant to show that the claim is not frivolous or vexatious.

The Court is not expected to delve too deeply into the meritsof the ground(

s) put forth by an appellant. [14] In the recent decision in Shea v.

Law Society of Newfoundland and Labrador, 2020 NLSC 91, Boone, J. (as he then was)described circumstances where the first prong could be met in an administrative law context. [15] The Court in Shea held that in circumstances where it was required to review the record of proceedings before a loweradministrative body in conjunction with appropriate case law, then as long as the Court was able to determine from a preliminary reviewthe issues raised are not frivolous or vexatious, then the threshold has been met (see para. 63). [16] During oral argument, I remarked to Ms.

Cluney’s counsel that the number of grounds of appeal could be possibly narrowed. Inresponse, counsel informed the Court that the reason for such a large number (23 grounds) was because many were rooted in the fact thatthere was bias and a conflict of interest on the part of the Complaints Authorization Committee (the “CAC”), namely the Chair, BethPorter. Counsel alleged that Ms. Porter and his client had a strained professional relationship arising from an incident involving a transferof clients. This provided an animus towards Ms.

Cluney in CAC’s referral of the allegations to the Tribunal. [17] Counsel for CPANL responded to this issue by stating that the CPANL were aware that approximately 10 years ago there was atransfer of two files by Ms. Cluney to Ms. Porter, but were not aware of any animus. He refers this Court to the Court of Appeal decisionin Walsh v.

Johnson, 2010 NLCA 6, at paragraphs 18 to 22, for the proposition that in order for a notice of appeal to be consideredfrivolous or vexatious, it must be obvious that it is unstainable or without merit to the point that there is no justiciable question before thecourt. [18] I am reminded of the court’s comments in Newfoundland and Labrador (Royal Newfoundland Constabulary Chief of Police) v.Newfoundland and Labrador (Royal Newfoundland Constabulary Public Complaints Commissioner), 2014 NLTD(G) 31) (“Janes”), atparagraphs 8 and 9, that when examining the first prong of the RJR-MacDonald test that once a court was satisfied the application wasneither vexatious nor frivolous, the motions judge should proceed to consider the second and third prongs, even if it is of the opinion thatthe applicant is unlikely to succeed at trial.

A prolonged examination of the merits is generally neither necessary nor desirable. [19] Based on my preliminary assessment of the Notice of Appeal, I cannot determine that it does not raise a justiciable question, orconstitutes an abuse of process. Sub-Issue #2 Question: Has Ms. Cluney demonstrated that she will incur irreparable harm should the Court refuse to issue a stay of the SanctionsDecision and Order, pending the outcome of her appeal? Answer: No. The evidence provided is too speculative. Her license has not been suspended or revoked. [20] Ms.

Cluney’s counsel argues she will suffer irreparable harm if she: a. is required to pay the costs order; b. incurs damage to her reputation and loss of income arising from any publication of the Merits Decision and the Sanctions Decisionand Order; c. incurs emotional and mental distress from the publication; and

d. incurs financial loss from payment of costs and fines because

section 44 of the Act does not allow her to recoup these payments should she be successful on appeal. [ 21 ] In response to the

section 44 argument, counsel for CPANL informed the Court that this provision was a statutory protection against civil liability for the adjudication tribunal and its members for decisions made in good faith. He acknowledged that should Ms. Cluney make any payments towards the fine and costs and be subsequently successful on appeal, then these monies would be reimbursed by the CPANL. [ 22 ] The onus of establishing irreparable harm through evidence rests with Ms. Cluney (see RJR - MacDonald Inc. , at para. 341). In Kirby v.

Association of Chartered Professional Accountants of Newfoundland and Labrador , 2021 NLSC 159 , at paragraph 24 , Boone, J. (as he then was) held that the CPANL is in a position to repay any monies paid out as a result of a costs and fine order should an appellant be successful on appeal. [ 23 ] The Court in Kirby also addressed the impact financial sanctions could have. There the appellant argued that they might result in his having to claim bankruptcy. It determined that this was too speculative to constitute evidence of irreparable harm. [ 24 ] In the current case, Ms.

Cluney’s registration or licence has not been suspended or revoked. In fact, she has asserted through her counsel that she no longer intends to practice as a public accountant, but instead plans to service private clients through a bookkeeping role. Under

section 2(

f) of the Act persons performing bookkeeping services are excluded from the definition of a public accountant and this is consistent with

section 20 of the Regulations which excludes the operational components of bookkeeping. [ 25 ] In Ms. Cluney’s case she plans to collect raw data from clients, place it in an accounting software program and then provide the organized information to a registered CPA for analysis and opinion. [ 26 ] If the stay is not granted, then Ms. Cluney would suffer irreparable harm because a publication of the Tribunal Merits and Sanctions Decisions would cause harm to her professional reputation as a bookeeper. [ 27 ] Counsel for CPANL argues that Ms.

Cluney has not been suspended or lost her licence; instead she has left the profession voluntarily. Because she still remains a CPANL member, a stay of the decisions would, in effect, leave the CPANL without a means to monitor Ms. Cluney’s practice should she decide to resume her work as a chartered professional accountant prior to the outcome of her appeal. [ 28 ] While it may be recognized that the publication ordered by the Tribunal could cause some reputational harm to Ms. Cluney, her circumstances do not lend themselves to supporting a stay based on this factor.

This is especially so given her decision to move from her practice as a public accountant. Instead, the potential for any harm can be remediated by requiring the CPANL to indicate, as part of its public and professional

summary of the Tribunal Merits and Sanctions Decisions, that both decisions are currently under appeal by Ms. Cluney. [ 29 ] I find that Ms. Cluney has not discharged her evidentiary onus of establishing irreparable harm to her professional reputation, irrecoverable financial loss or evidence of mental harm. The evidence provided to the Court is too speculative; therefore, she has not met the second prong of the test. Sub-Issue #3 Question: Has Ms. Cluney demonstrated that the balance of inconvenience favours a stay of the Sanctions Decision and Order pending the outcome of her appeal? Answer: No.

The legislature has made a policy choice that the protection of the public will outweigh any risk of financial or reputational harm to the member. The onus to establish that a balance favours a stay will only occur in exceptional circumstances. Ms. Cluney has not met that evidentiary threshold. [ 30 ] Counsel for Ms. Cluney argues that in the professional regulatory context, courts weigh the regulators’ statutory duty to protect the public against the level of harm to be suffered by an appellant if a stay is not granted. [ 31 ] The disciplinary proceedings taken against Ms.

Cluney pertain to procedural matters rather than behaviour or actions that harmed clients, and that the subsequent sanctions imposed reflect the principles of specific and general deterrence, denunciation and rehabilitation. This would mean that the dominant purpose of the sanctions is to punish Ms. Cluney for her actions, and not the protection of the public. [ 32 ] Counsel for CPANL argues that the circumstances of the two Complaints were not simply “procedural” matters which did not harm clients; nor is there a basis for asserting that the sanctions were designed to “punish” Ms.

Cluney. [ 33 ] The Sanctions Decision and Order were not only designed to provide specific and general deterrence but also to allow the CPANL to obtain the information necessary to satisfy itself that the client files maintained by Ms. Cluney were dealt with appropriately.

The ordering of a monitor would help the CPANL carry out its public protection mandate under section 3(3) of the Act by determining whether work was being completed in a timely manner, whether inquiries from clients were responded to in a timely and appropriate manner, and whether requests to transition files were being appropriately actioned. [ 34 ] Counsel for CPANL pointed to a sample review conducted by the Practice Reviewer which showed that of a total of twenty- seven clients, a sample of ten files were selected for review. Out of these ten files, seven files were produced to the Practice Reviewer.

Of those seven, five demonstrated that Ms. Cluney had not been properly serving her clients (see the Report of Practice Reviewer, January 10, 2022, at paras. .07 and .09a). [ 35 ] The CPANL’s mandate to protect the public includes an obligation to publish the

summary of the Sanctions Decision and

Order (see ss. 37(3) and (4)). Unlike the circumstances in Shea where the appellant went back to practice in an employment setting where he would not be providing legal service to the public, Ms.

Cluney continues to have the right to provide accounting services in the public sphere. [ 36 ] In addressing the balance of inconvenience prong in Shea , the Court determined that in situations where the legislative purpose behind the requirement for publication is the protection of the public, then the legislature has obviously chosen that reputational harm, even in the event of a successful appeal, is less important than the goal of public protection.

Where a Court is considering a stay of publication pending appeal, the balance of convenience will match that policy choice by the legislature. [ 37 ] Later in Kirby , Boone, J. (as he then was), at paragraphs 28 to 31 revisited his analysis on the balance of inconvenience prong in Shea adding that “[a] stay should only be granted in exceptional circumstances” (see para. 30).

In the chartered public accountant context the loss of accountancy income and the reputational harm that would be incurred were inevitable consequences of the tribunal findings and were not exceptional circumstances that outweighed the public interest (see para. 31). [ 38 ] CPANL argues that public protection concerns exist in these circumstances as Ms. Cluney still has the right to provide accounting services to private clients. Added to this concern is that there is another complaint being investigated.

Her clients’ files need to be transitioned so a delay of 10 months of not advising the public of the sanction and measures taken is contrary to what is contemplated by the legislation. [ 39 ] The cases provided to the Court by Ms. Cluney’s counsel are not similar to Ms. Cluney’s situation as they deal with interim or full suspensions. Nor do I accept her counsel’s argument that the Court’s conclusion in Kirby (that a stay should only be granted in exceptional circumstances) is an incorrect statement of the regulatory jurisprudence in Canada.

Counsel was not able to point me to any jurisprudence in support of his position. In the circumstances of Ms. Cluney’s case, the evidence of her private interest in avoiding reputational or financial harm does not outweigh the public interest. CONCLUSION AND DISPOSITION [ 40 ] The application for a stay of the Merits Decision and the Sanctions Decision and Order is dismissed. The publication and any dissemination of the orders shall include a reference that Ms. Cluney has appealed both decisions. Costs will be in the cause on a Column III basis. ____________________________ Peter N. Browne Justice