Chartered Professional Accountants of Alberta (Complaints Inquiry Committee) v Mathison, 2024 ABCA 33

In the Court of Appeal of Alberta Citation: Chartered Professional Accountants of Alberta (Complaints Inquiry Committee) v Mathison, 2024 ABCA 33 Date: 20240129 Docket: 2103-0146AC Registry: Edmonton Between: Complaints Inquiry Committee of the Chartered Professional Accountants of Alberta Respondent - and - Darrell Mathison Appellant _______________________________________________________ The Court: The Honourable Justice Thomas W.

Wakeling The Honourable Justice Jo'Anne Strekaf The Honourable Justice Jolaine Antonio _______________________________________________________ Memorandum of Judgment of the Honourable Justice Strekaf and the Honourable Justice Antonio Dissenting Memorandum of Judgment of the Honourable Justice Wakeling Appeal from the Decision by an

Appeal Tribunal of the Chartered Professional Accountants of Alberta Dated the 27th day of May, 2021 ( 2021 ABCPA 10 ) _______________________________________________________ Memorandum of Judgment _______________________________________________________ Strekaf and Antonio JJA: Introduction [ 1 ] The appellant is a chartered professional accountant and the subject of a complaint of unprofessional conduct made to his regulating body, the Chartered Professional Accountants of Alberta (CPAA). Following a hearing before a Discipline Tribunal of the CPAA, he was found guilty of unprofessional conduct.

The Discipline Tribunal imposed sanctions including a two-year suspension of his registration. An Appeal Tribunal of the CPAA heard an appeal and cross-appeal. The Appeal Tribunal upheld the finding of unprofessional conduct and increased the sanction, cancelling the appellant’s registration as a chartered professional accountant. [ 2 ] The appellant appeals both aspects of the Appeal Tribunal’s decision to this Court. The appeal of the decision upholding the finding of unprofessional conduct is dismissed as it does not disclose reviewable error. The appeal on sanction is allowed.

The cancellation of the appellant’s registration is overturned and the sanctions imposed by the Discipline Tribunal are reinstated. Background [ 3 ] The appellant, Darrell Mathison, was Chief Financial Officer (CFO) of Canada Pump and Power (CPP). The Chief Executive Officer (CEO) of CPP, Jeremy Leonard, initiated a complaint that the appellant had engaged in unprofessional conduct in his employment as CFO.

After a preliminary investigation of the complaint by the Complaints Inquiry Committee of CPAA, a Discipline Tribunal was formed to hold a hearing and assess the allegations. [ 4 ] The hearing before the Discipline Tribunal took place in person over four days in September and October 2018 and included evidence from the appellant, Mr Leonard, and five other witnesses connected with CPP, as well as documentary evidence such as email correspondence and financial records. [ 5 ] By written decision dated December 19, 2018, the Discipline Tribunal found the appellant guilty of unprofessional conduct: Mathison (Re) , 2019 ABCPA 8 at paras 1-106 [ DT Merits Decision ].

In particular, it found the appellant ( DT Merits Decision at para 59 ): 1. For the months April to September 2015, received $8,000 per month from Canada Pump and Power Corporation (CPP) while Chief Financial Officer (CFO) of CPP, when he knew or ought to have known that he was not authorized to receive it; 2.

Did not perform his duties as CFO of CPP with integrity and due care, in that he: a. paid, or authorized the payment of, funds that were payable to a supplier/third party to one or more companies in which he was a shareholder when he was specifically instructed by Jeremy Leonard, Chief Executive Officer (CEO) of CPP, not to do so ; and b. paid a bonus to himself, or authorized the payment of a bonus to himself, from CPP that he knew or ought to have known was to be used to offset a loan owed by him to CPP. [ 6 ] The Discipline Tribunal issued its decision on sanctions and publication on March 28, 2019: Mathison (Re) , 2019 ABCPA 8 at paras 107-165 [ DT Sanction Decision ].

It ordered ( DT Sanction Decision at para 133): a. a two-year suspension of the appellant’s registration; b. a written reprimand by the Discipline Tribunal Chair be placed in the appellant’s CPAA member file; c. the appellant to successfully complete a course on professional ethics;

d. the appellant to pay a total fine of $15,000; e. the appellant to pay 100% of the costs of the investigation, hearing, and compliance with the Discipline Tribunal’s orders within 180 days of being served with a statement of costs; f. mandatory publication of the outcome of the hearing and notice of suspension in the Edmonton Journal; and g. immediate cancellation of the appellant’s registration if he fails to comply with each order of the Discipline Tribunal or any requirement of or restriction on a suspended member. [ 7 ] The Complaints Inquiry Committee appealed the sanction decision, arguing that it should be varied to impose cancellation of the appellant’s registration.

The appellant cross-appealed, seeking to have both the merits and sanction decisions vacated. [ 8 ] The appeal and cross-appeal were heard virtually by the Appeal Tribunal over two days in December 2020. Pursuant to s 116(1) of the Chartered Professional Accountants Act , SA 2014, c C-10.2 [ CPA Act ], the Appeal Tribunal may “quash, confirm, vary or reverse all or any part” of a decision of the Discipline Tribunal. [ 9 ] In thorough reasons, the Appeal Tribunal reviewed the evidence and findings of the Discipline Tribunal on the merits in some detail: Mathison (Re) , 2021 ABCPA 10 [ AT Decision ].

It upheld the Discipline Tribunal’s determinations on each of the three allegations described above, and its findings that the appellant’s behavior constituted unprofessional conduct. [ 10 ] The Appeal Tribunal then turned to the sanction decision, noting the Discipline Tribunal’s findings that the appellant’s actions were serious, and lacked honesty, integrity and transparency. It noted “[t]he Discipline Tribunal held that while Mr Mathison’s conduct was egregious, it did not demonstrate the ‘same level of fraudulent intent’ as in other cases that have resulted in cancellation”: AT Decision at para 178.

Based on that finding, the Discipline Tribunal had determined that a suspension of two years combined with a written reprimand was “a sufficiently stern sanction” to make it clear to the appellant that his conduct was unacceptable, to discourage members of the accounting profession from conducting themselves in a similar way, and to protect the public interest and maintain the integrity of the accounting profession: DT Sanction Decision at para 134. [ 11 ] The Appeal Tribunal disagreed with that determination, concluding that “the Discipline Tribunal made an error of law, an error of principle, or its Sanctions and Publication decision is not reasonable, or not reasonably sustainable”: AT Decision at para 191. [ 12 ] In particular, the Appeal Tribunal held that “[i]t was an error for the Discipline Tribunal to limit its own discretion to order cancellation” and held that cancellation “should not be reserved for only the most serious cases and only the most serious of offenders”: AT Decision at para 197.

It also held that it was an error “to conclude that Mr Mathison lacked the same level of intent as in previous cases of fraud, embezzlement or misappropriation of funds that resulted in cancellation”: AT Decision at para 198. [ 13 ] The Appeal Tribunal concluded at para 197: Cancellation may be appropriate where the Discipline or Appeal Tribunal is satisfied that any lesser sanction would not reflect the seriousness of the offences or adequately deter others and preserve public confidence in the profession.

In this case the Discipline Tribunal omitted to consider whether cancellation was warranted given the seriousness of the offences and the need for deterrence and public confidence. The Discipline Tribunal instead ruled out cancellation because it believed that Mr. Mathison lacked what it held was the necessary level of fraudulent intent. The Discipline Tribunal omitted any discussion of why cancellation would be too severe but a long suspension would be sufficient to address its findings of fact and the proven unprofessional conduct.

There was a disconnect between those findings and the orders in the Sanctions and Publication decision. [ 14 ] The Appeal Tribunal vacated the sanctions imposed by the Discipline Tribunal and substituted its own. The key distinction between the two was that the Appeal Tribunal ordered the appellant’s CPA registration cancelled instead of suspended for two years.

Issues on Appeal [ 15 ] The appellant appeals both the merits and sanction decisions of the Appeal Tribunal, pursuant to s 122 of the CPA Act . [ 16 ] The essence of the issues advanced on appeal are that the Appeal Tribunal erred in: its application of the proper standard of review to the Discipline Tribunal’s decisions; its

interpretation of the CPA Act ; its review of the Discipline Tribunal’s merits decision; and increasing the sanctions imposed. Standard of Review [ 17 ] Since the CPA Act provides for a direct right of appeal to this Court from decisions of the Appeal Tribunal, the Court is to apply appellate standards of review to the decision: Canada (Minister of Citizenship and Immigration) v Vavilov , 2019 SCC 65 at paras 37 , 49 [ Vavilov ]; Yee v Chartered Professional Accountants of Alberta , 2020 ABCA 98 at paras 29-30 [ Yee ]; Alsaadi v Alberta College of Pharmacy , 2021 ABCA 313 at para 15 [ Alsaadi ].

Questions of law are reviewed for correctness, while findings of fact are owed deference and are not overturned on appeal absent palpable and overriding error. Questions of mixed fact and law “lie along a spectrum” and are reviewed on a “more stringent standard”; where the legal principle is not readily extricable they are reviewed for palpable and overriding error: Housen v Nikolaisen , 2002 SCC 33 at para 36 , cited in Vavilov at para 37 . [ 18 ] Sanctions in professional disciplinary matters involve questions of mixed fact and law that engage the professional judgment

of the governing body and are reviewed for reasonableness. Such sanctions should not be disturbed on appeal unless they are demonstrably unfit or based on an error in principle: Alsaadi at para 16 ; Zuk v Alberta Dental Association and College , 2020 ABCA 162 at para 15 . [ 19 ] Also relevant to this appeal is the internal standard to be applied by the Appeal Tribunal in its review of the decisions of the Discipline Tribunal.

As this Court pointed out in Yee at para 31 , the legislation governing the professional disciplinary tribunals sets up a tiered system of discipline, pursuant to which the decision of a discipline tribunal can be appealed to an appeal tribunal [1] . [ 20 ] As was noted in Yee at paras 34-35 , the role assigned to the appeal tribunal by the governing statute is of central importance in assessing the internal standard of review: [34] ...The wording of the Act makes it clear that the appeal tribunal is to conduct “appeals”.

Its decision is to be “based on the decision of the body from which the appeal is made”, signalling that the primary role of the appeal tribunal is to review that decision. It follows that the appeal tribunal is not to re-conduct the entire proceeding de novo , a conclusion that is affirmed by the provision in s. 111(1)(

b) that the appeal proceeds on the “record”: [ Newton v Criminal Trial Lawyers’ Association , 2010 ABCA 399 ] at para. 64.

The provision allowing the introduction of fresh evidence on appeal is not intended to displace the presumption that the appeal is on the record, and fresh evidence must be allowed with caution in order to avoid undermining the proceedings before the disciplinary tribunal: Newton at para. 81 . [35] When reviewing the decision of a discipline tribunal, the appeal tribunal should remain focused on whether the decision of the discipline tribunal is based on errors of law, errors of principle, or is not reasonably sustainable.

The appeal tribunal should, however, remain flexible and review the decision under appeal holistically, without a rigid focus on any abstract standard of review : Halifax (Regional Municipality) v Anglican Diocesan Centre Corporation , 2010 NSCA 38 at para. 23 , 290 NSR (2d) 361. (emphasis added) [ 21 ] The Court at para 35 went on to set out a series of guidelines, which include:

a) findings of fact made by the discipline tribunal, particularly findings based on credibility of witnesses, should be afforded significant deference ;

b) likewise, inferences drawn from the facts by the discipline tribunal should be respected , unless the appeal tribunal is satisfied that there is an articulable reason for disagreeing;

c) with respect to decisions on questions of law by the discipline tribunal arising from the profession’s home statute, the appeal tribunal is equally well positioned to make the necessary findings. Regard should obviously be had to the view of the discipline tribunal, but the appeal tribunal is entitled to independently examine the issue, to promote uniformity in

interpretation, and to ensure that proper professional standards are maintained;

d) with respect to matters engaging the expertise of the profession, such as those relating to setting standards of conduct, the appeal tribunal is again well-positioned to review the decision under appeal. The appeal tribunal is entitled to apply its own expertise and make findings about what constitutes professional misconduct : Newton at para. 79 . It obviously should not disregard the views of the discipline tribunal, or proceed as if its findings were never made. However, where the appeal tribunal perceives unreasonableness, error of principle, potential injustice, or another sound basis for intervening, it is entitled to do so;

e) the appeal tribunal is also well- positioned to review the entire decision and conclusions of the discipline tribunal for reasonableness , to ensure that, considered overall, it properly protects the public and the reputation of the profession; ... (emphasis added) [ 22 ] These guidelines and comments on standard of review are relevant to the Appeal Tribunal’s review of both the merits and sanction decisions of the Discipline Tribunal.

Analysis Review of the Appeal Tribunal’s decision on the merits [ 23 ] As noted previously, the Discipline Tribunal found that the appellant’s conduct in three areas of his dealings with his employer CPP amounted to unprofessional conduct. In doing so, the Discipline Tribunal in each case preferred the evidence of CPP CEO Mr Leonard over that of the appellant, finding that it was corroborated by other witnesses and the documentary record. The three allegations have been referred to as the “loan allegation”, the “payment allegation”, and the “bonus allegation”.

In considering the appeal from these findings, the Appeal Tribunal reviewed the evidence as well as the factual findings, inferences drawn and credibility assessments made by the Discipline Tribunal in some detail.

Credibility assessment of Jeremy Leonard [ 24 ] The appellant contended before the Discipline Tribunal that his testimony should be preferred to that of Mr Leonard. He argued Mr Leonard had an interest in the outcome of the discipline proceedings, because a finding of unprofessional conduct would assist in establishing that CPP had cause to terminate his employment. Nevertheless, the Discipline Tribunal found Mr Leonard to be a credible witness, noting that his testimony was consistent with other evidence adduced at the hearing.

The appellant submitted that the Discipline Tribunal erred in this regard, and that the Appeal Tribunal erred in failing to set aside the Discipline Tribunal’s decision on that basis. [ 25 ] It has been suggested the Discipline Tribunal failed to appreciate it could consider Mr Leonard’s interest in the outcome of the proceedings when assessing the credibility of his evidence. That suggestion relies on the emphasized text below ( DT Merits Decision at paras 73-76 ): 73. A substantial amount of evidence and argument was presented throughout this hearing.

In the Discipline Tribunal’s view, some of the evidence and argument presented was outside the scope of this discipline hearing . 74. Specifically, the Discipline Tribunal heard submissions relating to civil litigation and employer-employee issues involving Alberta Employment Standards.

The Discipline Tribunal did not consider those matters in its decision-making since they involved different legislation, different legal and evidentiary principles, different processes and different objectives as compared to the CPA Act , the public protection mandate of CPA Alberta and the legislated role of the Discipline Tribunal. 75. The Discipline Tribunal also heard submissions relating to Mr. Leonard’s possible motive in using the CPA Act complaint and discipline process to establish or assist in establishing that there was cause to terminate Mr. Mathison’s employment.

Consideration of that issue, much less a determination of it, is clearly beyond the scope of CPA Alberta and the Discipline Tribunal and was not relevant to assessing the facts in this matter and whether they constituted unprofessional conduct for the purposes of the CPA Act . 76. The scope of this hearing was confined to the determination of whether each allegation is factually proven and, if proven, does the proven allegation rise to the level of unprofessional conduct.

In making its determinations, the Discipline Tribunal focused on the evidence relevant to the allegations made . (emphasis added) [ 26 ] Paragraphs 73, 74 and 76 convey that the Discipline Tribunal viewed its task as limited to determining whether each of the allegations against the appellant was proven and, if so, whether they amounted to unprofessional conduct.

Consideration of allegations in other proceedings (civil litigation or employment standards) were outside the scope of the discipline proceedings. [ 27 ] The question becomes how the statement in paragraph 75 that Mr Leonard’s motive in bringing the complaint is “beyond the scope of CPA Alberta and the Discipline Tribunal and was not relevant to assessing the facts in this matter and whether they constituted unprofessional conduct for the purposes of the CPA Act ” should be interpreted. [ 28 ] If the Discipline Tribunal is viewed as having precluded itself from considering any potential benefit that Mr Leonard might derive from the discipline proceeding when assessing his credibility, that would have been an error.

It is well recognized that “[t]he fact that a witness has an interest in the outcome of the proceedings is, as a matter of common sense, a relevant factor, among others, to take into account when assessing the credibility of the witness’s testimony”: R v Laboucan , 2010 SCC 12 at para 11 . However, inferring that was done by the Discipline Tribunal would be reading too much into the subject language. The excerpted paragraphs make no reference to credibility, which was a very live issue before the Discipline Tribunal.

There is no good reason to presume that the Discipline Tribunal, when it assessed Mr Leonard’s testimony, disregarded the commonsense proposition that a witness’ interest in the outcome of a proceeding may affect their credibility. [ 29 ] The Discipline Tribunal’s comments with respect to Mr Leonard’s motives should be viewed in the context of their timing relative to the disciplinary proceedings in Yee . The appeal tribunal in Yee released its decision on the merits of that matter in February 2018, months prior to the DT Merits Decision in this matter.

Mr Yee had argued the discipline tribunal in his case was biased, and that CPAA should have refused to consider the complaint against him because it was made with an improper motive. The appeal tribunal rejected both arguments. On the latter issue, it concluded the CPAA “has a statutory duty to receive and, if it deems appropriate, to investigate complaints, regardless of the rationale of the complainant for making such complaints”: Yee at para 48 . It was in this context the Discipline Tribunal’s comments about Mr Leonard’s motives were made. [ 30 ] This Court’s decision in Yee was released in March 2020.

In three concurring judgments, the panel agreed the decision of the appeal tribunal should be set aside as the decision of the discipline tribunal had been tainted by bias. Two members of the panel addressed the further question of whether CPAA can stay discipline proceedings brought by a complainant for an improper purpose. Each reached a different conclusion.

Slatter JA recognized that “serious complaints must be treated seriously, despite the motivation behind them” but that the CIC chair, a discipline tribunal and an appeal tribunal “have a discretion to divert discipline proceedings in appropriate cases” and that it was an error not to have considered that possibility: Yee at para 49 . McDonald JA disagreed and concluded that “the motivation behind a complaint is irrelevant. … meritorious complaints have sometimes been made by those with ‘an axe to grind’ including embittered ex-spouses and disgruntled former clients”: Yee at para 88 .

He held “it would be wrong for an otherwise meritorious complaint to be dismissed owing to the motivation of the individual making that complaint”: Yee at para 89 . [ 31 ] It is not necessary for the purpose of this decision for us to decide between the alternative approaches taken in Yee to the question of whether an otherwise potentially meritorious complaint can be dismissed or diverted pursuant to the CPA Act based on the complainant’s motives. [ 32 ] The appellant’s hearing before the Appeal Tribunal in this case took place in December 2020.

He submitted the Discipline Tribunal had failed to consider that Mr Leonard’s complaint was “improper” and “strategically and economically motivated” to minimize

his financial obligations. His counsel highlighted the approach taken by Slatter JA in Yee and argued, “The discipline tribunal should... have assessed the motivation behind the complaint at the very outset and assessed whether a disciplinary hearing was really the right forum to decide these various issues”. [ 33 ] The Appeal Tribunal noted the Discipline Tribunal was “clearly aware of Mr Leonard’s alleged motivations for the complaint and parallel civil litigation but it held the scope of the hearing should be limited to determining the allegations so it did not consider those matters”: AT Decision at para 124.

The Appeal Tribunal characterized this Court’s decision in Yee as confirming “that Discipline and Appeal Tribunals can and should consider a complainant’s motivations when questions about them are raised. If a complaint has been filed out of spite, for revenge as a result of a personal grievance, in order to improperly pressure a regulated member of CPA Alberta to do something, or for another collateral purpose, or if proceeding with a hearing would be an abuse of process or contrary to the public interest or the interests of the profession, then it may be appropriate to stay or dismiss the allegations.

The power to do so may be inferred, though it should be exercised cautiously”: AT Decision at para 125. [ 34 ] As the Discipline Tribunal had not set out an assessment of Mr Leonard’s motives, the Appeal Tribunal “reviewed the evidence of Mr Leonard’s intentions” and came to its own finding on the issue: AT Decision at para 125.

Section 116(1) of the CPA Act contemplates that an appeal tribunal “may… make any finding… that in its opinion the [discipline tribunal] ought to have made”. [ 35 ] The Appeal Tribunal noted that it was suggested to Mr Leonard in cross-examination before the Discipline Tribunal that he had “asked the CIC’s investigator to find evidence of cause to terminate Mr Mathison”. He could not recall what he said.

The transcript of an investigative interview conducted by the Complaints Inquiry Committee indicated that Mr Leonard had stated “that he complained about Mr Mathison to CPA Alberta because he believed it was the prudent thing to do when someone is being dishonest...[and] he thought CPA Alberta would want to know about it.” The Appeal Tribunal noted Mr Leonard had acknowledged that repayment of money CPP had loaned to the appellant depended on whether he had been terminated for cause.

Nevertheless, it concluded “the evidence did not demonstrate that the issues raised by Mr Leonard’s complaint were tainted or undermined by ulterior motivations”: AT Decision at para 127. The Appeal Tribunal recognized that Mr Leonard “was unhappy and frustrated with Mr Mathison when he complained, but that does not make [his] complaint improper, or an abuse of process”. The allegations were “serious allegations about the conduct of a regulated member of CPA Alberta”. There was evidence in support of each allegation.

The complaint was not “baseless” or filed “only out of spite, or for revenge against Mr Mathison, or to pressure him to do something”: AT Decision at para 128. [ 36 ] The Appeal Tribunal was clearly addressing what it viewed as a direction from Yee to consider whether Mr Leonard’s motive gave rise to concerns that his complaint was an abuse of process. It concluded that it was not. The assessment of motive is a question of fact with respect to which the Appeal Tribunal is entitled to deference.

We see no basis to interfere with that conclusion, which does not disclose palpable and overriding error. [ 37 ] The Appeal Tribunal acknowledged that “Mr Leonard’s involvement in parallel civil litigation may also have been a factor in the assessment of his credibility” and noted that “Mr Leonard was the complainant. He could not be expected to be impartial”: AT Decision at para 128.

This suggests the Appeal Tribunal recognized that such matters may have been considered by the Discipline Tribunal when assessing Mr Leonard’s credibility, as distinct from the question of abuse of process. [ 38 ] The Appeal Tribunal noted the Discipline Tribunal had “relied upon corroborating evidence to find Mr Leonard’s evidence credible, and a lack of corroborating evidence to reject Mr Mathison’s evidence”: AT Decision at para 117.

Indeed, the Discipline Tribunal identified a number of reasons for preferring the evidence of Mr Leonard over that of the appellant, including because it was “clear”, “consistent” with the evidence of other witnesses, and “corroborated” by the documents: DT Merits Decision at paras 72, 87, 95 and 103 . [ 39 ] In addition to making its own determination that Mr Leonard’s complaint was not tainted or undermined by ulterior motivation and reviewing the basis for the Discipline Tribunal’s credibility assessments, the Appeal Tribunal also conducted its own detailed review of “all of the evidence” with respect to each of the three allegations to satisfy itself that the factual findings made by the Discipline Tribunal were supported: Appeal Tribunal at paras 88-99, 102-103, 107-117, 130-140, 144-149, 156-164, 168-174.

In the circumstances, we are satisfied that the Appeal Tribunal’s approach accorded with the instructions provided by this court in Yee at para 35 , that an “appeal tribunal should… remain flexible and review the decision under appeal holistically, without a rigid focus on any abstract standard of review”. [ 40 ] We do not find any error of law or palpable and overriding error has been established regarding the Appeal Tribunal’s approach to the concerns raised about the Discipline Tribunal’s assessment of Mr Leonard’s credibility.

Wording of the allegations [ 41 ] Both the loan allegation and the bonus allegation allege the appellant “knew or ought to have known” certain matters. The loan allegation alleged the appellant received $8,000 per month from CPP during a period “when he knew or ought to have known that he was not authorized to receive it”. The bonus allegation alleged the appellant paid or authorized payment of a bonus to himself “that he knew or ought to have known was to be used to offset a loan owed by him to CPP”.

While this wording was not challenged before the Discipline Tribunal, the Appeal Tribunal or by the parties on the appeal, this Court requested submissions as to whether any reviewable error arose from the fact that neither tribunal specifically determined whether the appellant “knew” independently from whether he “ought to have known”. [ 42 ] The appellant submitted that both tribunals failed to differentiate between whether they were finding that he “knew” he was proceeding without authorization or simply that he “ought to have known” that was the case.

If the former, he submits there are documents in the record which reasonably support his evidence that he understood the transactions were authorized. If the latter, the tribunals did not articulate the criteria on which that conclusion was based. He argued the failure to particularize their findings constituted reviewable error. [ 43 ] The respondent submitted that the mental element to establish unprofessional conduct can be either actual knowledge (that the

appellant knew he acted without authorization) or constructive knowledge (that the appellant ought to have known in the circumstancesthat he acted without authorization), depending on the circumstances. It was not necessary for the tribunals here to distinguish betweenthe two. [44] Actual knowledge, wilful blindness, recklessness, and constructive knowledge reflect different degrees of knowledge, each ofwhich may be sufficient to establish professional misconduct in appropriate circumstances.

Constructive knowledge is a “lowerthreshold” as compared to actual knowledge: Citadel General Assurance Co v Lloyds Bank Canada, (SCC), [1997] 3SCR 805 at paras 22, 31, 48, 49.

This lower threshold for finding unprofessional conduct can be appropriate for professional regulatorybodies such as the CPAA whose disciplinary process is intended to “protect the public interest”, “enforce practice standards and rules ofprofessional conduct”, and “preserve the integrity of the accounting profession”: CPA Act, s 64(1). [45] It is not challenged that a professional disciplinary body can find professional misconduct based upon conduct arising frommatters about which the professional “ought to have known”.

Rather, it has been suggested that when a professional is charged withprofessional misconduct arising out of factual matters they “knew or ought to have known” that the professional disciplinary panelengages in reviewable error if they fail to make an express finding either that the professional: (i) “knew” of those matters; or (ii) “oughtto have known” of them.

In our view, such differentiation is not always required. [46] While there may be a different level of blameworthiness between actual as opposed to constructive knowledge, where thelower threshold of constructive knowledge is sufficient to establish unprofessional conduct, a finding of whether or not there was actualknowledge is not necessary.

Finding that the professional “knew or ought to have known” is equivalent to finding that the lowerthreshold of constructive knowledge has been met: the professional at least ought to have known, regardless of whether they actually didknow. [47] To the extent actual knowledge may sometimes justify a more serious sanction than constructive knowledge, that is a matterfor the penalty stage where the sanctions imposed will depend upon the underlying facts found by the tribunal. [48] That a finding of “knew or ought to have known” can be sufficient to find professional misconduct is reflected in the caseauthorities.

It is not uncommon for citations in professional disciplinary proceedings to use those words and for disciplinary panels tofind professional misconduct without distinguishing between whether the professional “knew” as opposed to “ought to have know”about the matters in issue.

A few examples include: Coffey v College of Licensed Practical Nurses (Man), 2008 MBCA 33, a nurse wasfound guilty of unprofessional conduct for circulating information about salaries he “knew or ought to have known was false” in thecontext of a fee dispute; Segal v Law Society of Saskatchewan (1999), 94 ACWS (3d) 381, (SKCA), a lawyer wasfound guilty of conduct unbecoming where he entered into an advantageous contingency fee agreement “when he knew or ought to haveknown that his client felt she was signing the Agreement under duress and/or not of her own free will”; College of Physicians andSurgeons of Ontario v Fagbemigun, 2022 ONPSDT 11, a physician was found guilty of professional misconduct for billing for studies“he knew or ought to have known he was not eligible to bill”; and Ontario College of Teachers v Rocco, 2021 ONOCT 42, a teacher wasfound guilty of professional misconduct for signing a document “he knew or ought to have known contained a false, improper ormisleading statement”. [49] In some cases, where professionals have been charged with unprofessional conduct arising out of matters they “knew or oughtto have known”, disciplinary tribunals have made that finding, even where it was established that the professional had actualknowledge.

A few examples include: Cole v The Law Society of British Columbia, 2023 BCCA 199, a lawyer engaged in unprofessionalconduct for counselling or facilitating a client to indirectly purchase shares when he knew or ought to have known that indirectparticipation contravened the directive of a securities regulator, where the lawyer acknowledged he knew of the directive; McLeod v LawSociety of British Columbia, 2022 BCCA 280, a lawyer instituted a contempt application when he knew or ought to have known that theapplication was unfounded, premature, and/or without merit where the panel found the contempt application was unsupported by thefacts as the lawyer acknowledged he had no intention of pursuing it, but just wanted to force negotiations; Ahluwalia v College ofPhysicians and Surgeons of Manitoba, (MBCA), a physician submitting a document to the College which he knewor ought to have known would be understood was a patient’s medical record, which was not the case, where the panel found the doctorhad “the intention that the College would accept the chart as the original”.

We see no reason to suggest that these cases were wronglydecided because despite clear evidence of actual knowledge the tribunals made findings that unprofessional conduct was established bymatters the professional “knew or ought to have known”, without differentiating between the two. [50] While the issue was not expressly addressed in Danyluik v Institute of Chartered Accountants of Alberta (Complaints InquiryCommittee), 2014 ABCA 78, this Court upheld the decision of an appeal tribunal of the Institute of Chartered Accountants of Albertathat found three accountants guilty of being associated with financial statements which they “knew or should have known were false andmisleading”, without a finding distinguishing between whether the accountants “knew” or “should have known” that was the case. [51] The Appeal Tribunal did not commit any error in principle by upholding the findings of unprofessional conduct on the basisthat the appellant “knew or ought to have known” of the matters alleged.

The failure to distinguish between whether the appellant“knew” or “ought to have known” was not an error. We next consider whether the Appeal Tribunal committed any other reviewable errorin upholding the Discipline Tribunal’s findings in respect of each of the three allegations. The loan allegation [52] The essence of the loan allegation was that the appellant had, without authorization, taken a monthly loan of $8,000 fromCPP, beyond the alleged end date of the loan agreement which was March 31, 2015.

It was undisputed that the appellant drew monthlyloan payments of $8,000 for six months after March 2015: from April 2015 to September 2015. At issue was whether the appellant knewor ought to have known that those payments had not been approved. [53] The documentary evidence showed approval for continuation of the loan payments only to March 2015. Mr Leonard testifiedhe never agreed to extend the loan payments beyond that: “there were not to be anymore loan payments after March 2015”.

Theappellant testified to the opposite: “On March 30, 2015, Mr Leonard and I had a conversation about how we would continue on with that

payment... the $8,000 payment would continue to March of 2016”. [ 54 ] The Discipline Tribunal expected that if a further extension had been granted, it would have been documented, because: Mr Leonard demonstrated a pattern of consistently transcribing conversations into writing; all loan extensions up to March 2015 had been documented; and there was a progressively deteriorating professional relationship between the men: DT Merits Decision at para 86 .

That there was no document evidencing a further extension in the circumstances supported that there had been no extension. [ 55 ] The Discipline Tribunal found Mr Leonard’s evidence regarding the loan allegation “credible and preferred it over Mr Mathison’s evidence”. It noted that the more significant elements of Mr Leonard’s testimony were supported and corroborated by the exhibit evidence: DT Merits Decision at para 87 . It concluded ( DT Merits Decision at para 88 ): The Discipline Tribunal finds that Mr.

Mathison chose to continue to take loan payments to his financial benefit when he knew or ought to have known that he was not clearly approved to do so. Mr. Mathison did not act with honesty, transparency, or integrity and chose his own best interests over that of his employer to whom he owed a fiduciary duty. The Discipline Tribunal found Mr.

Mathison’s conduct to be unprofessional conduct. [ 56 ] Applying the internal standard of review set out in Yee , the Appeal Tribunal noted that it afforded “significant deference” to the factual findings made by the Discipline Tribunal: AT Decision at para 105. [ 57 ] Nevertheless, it conducted a detailed review of the testimony and documentary evidence.

It noted: Mr Leonard had written to the appellant, “I like to make my agreements in writing and in advance”; the appellant had periodically written to Mr Leonard proposing extensions to the loan, with Mr Leonard confirming in writing by reply; in April 2014, the appellant emailed Mr Leonard and requested that the loan be extended to March 2015; Mr Leonard replied by email stating that he approved that extension; the appellant testified Mr Leonard had agreed to a further extension in March 2015; Mr Leonard testified there had been no such agreement; there was nothing in writing and no other evidence corroborating any extension beyond March 2015; and there was no documentary evidence the appellant made any effort to write to Mr Leonard to ensure he was authorized to continue taking the loan payments: AT Decision at paras 96, 97, 105, 107, 112 and 123. [ 58 ] The Appeal Tribunal concluded that the Discipline Tribunal was entitled, on the evidence, “to find that Mr Leonard had not approved any extension of the loan beyond March 2015 and that Mr Mathison knew or ought to have known this”: AT Decision at para 114.

It noted, “Mr Mathison and Mr Leonard were documenting their agreements but no evidence of any agreement to extend the loan beyond March 2015 could be produced by either party. This supports the Discipline Tribunal’s inference that no such agreement was made”: AT Decision at para 115.

It stated, if the appellant “believed he was authorized to take [the loan payments], that belief was wrong and unreasonable”: AT Decision at para 123. [ 59 ] Both the Discipline Tribunal and Appeal Tribunal accepted Mr Leonard’s evidence that he never agreed to extend the loan payments beyond March 2015, disbelieved the appellant’s evidence, and accepted that the appellant knew or should have known he was not authorized to take the additional loan payments but did so anyway. Absent palpable and overriding error, it is not for this Court to interfere with these determinations.

There was no such error. [ 60 ] With respect to the conclusion of the Discipline Tribunal that the appellant’s conduct amounted to unprofessional conduct, the Appeal Tribunal wrote ( AT Decision at para 118): The Discipline Tribunal also considered whether Mr. Mathison’s conduct amounted to unprofessional conduct and concluded that it did. The Tribunal held that Mr. Mathison “chose” to continue to take the loan payments for his own benefit when he knew or ought to have known that he was not authorized to do so. The Tribunal held that Mr.

Mathison’s actions represented a failure to act with honesty, transparency or integrity. It held that he “chose” his own best interests over that of his employer to whom he owed a fiduciary duty. The Appeal Tribunal determined that conclusion was reasonable and saw no basis to intervene, concluding that “it properly protects the public and the reputation of the profession”: AT Decision at para 119. Again, we see no reviewable error in the Appeal Tribunal’s conclusion in this regard.

The bonus allegation [ 61 ] The “bonus allegation” was that the appellant had authorized the payment of a bonus to himself when he knew or ought to have known it should have been issued to offset the aforementioned accumulating monthly loan. [ 62 ] From the beginning of his employment at CPP, the appellant was part of an annual bonus plan called the ‘Profit Sharing Program’ (PSP). Under the PSP, certain individuals would receive both a short-term and long-term bonus.

The short-term bonus, composing 25% of the entire bonus amount, would be paid out within 10 days of the approval of the annual accounts of the previous financial year. The long-term bonus, composing the remaining 75% of the bonus amount, would be paid out four years later. The PSP was administered under the sole authority of the Statutory Director of CPP, who had complete authority to construe, interpret, amend and rescind any rules related to the plan.

Mr Leonard was the Statutory Director under the meaning of the PSP. [ 63 ] On July 21, 2014, the appellant emailed Mr Leonard and requested approval of both the short and long-term PSP bonus amounts for 2013. On July 22, 2014, Mr Leonard responded: “Profit share approved as pf [sic] today’s date turn into payables for disbursement or credit to outstanding debt.” Mr Leonard testified that by this email instructing the appellant to “turn” bonuses owed to the appellant and others “into payables for disbursement or credit to outstanding debt” he had directed the appellant to set his bonus amount against the loan.

He explained: Jim Davies would receive the cash that was due to him because he didn't have any loans with Canada Pump & Power. And Mr.

Mathison, prior to this date, had suggested that he would be putting a hundred percent of any bonuses to pay off his outstanding debt. And so then Mr. Mathison would receive a credit against his outstanding debt and not receive any cash. … In Jim Davies’ case, he would have received a cheque for the amount of profit sharing which was our agreement. And in Darrell Mathison's case, he would receive a credit which would reduce the amount of debt that was outstanding by that amount.

And that was my instructions, and that is what I understood happened at that time . (emphasis added) [ 64 ] In contrast, the appellant testified that he understood from the email that “the short-term portion [of the bonus] was to be paid. The long-term portion was to remain on that

schedule as an accrued amount for future years to be applied 50 percent to the outstanding advanced loan that was out at that point.” The appellant approved payment to himself of the short-term bonus amount. [ 65 ] The Discipline Tribunal accepted that the email instructed the appellant to apply the short-term bonus payment to reduce his loan balance. It noted that between 2012 and August of 2014, extensions to the loan agreement had increased the outstanding loan balance far beyond the parties’ original expectations. Even if, on an

interpretation charitable to the appellant, there was ambiguity as to whether the bonus should be paid or applied to the loan, it held, a chartered professional accountant would be expected to seek clarification before adopting an ambiguous

interpretation that personally favoured his interests. There was no evidence the appellant made any attempt to seek clarification: DT Merits Decision at paras 99-100 . [ 66 ] While the Discipline Tribunal stated the appellant chose to pay himself the short-term profit share in circumstances where he “knew or ought to have known” he was not approved to do that, it is apparent the tribunal was at least satisfied he “ought to have known” the payments were not authorized as he failed to take steps to clarify any ambiguity in the instructions.

The Discipline Tribunal concluded unprofessional conduct had been established: DT Merits Decision at para 104 . [ 67 ] Applying the internal standard of review set out in Yee , the Appeal Tribunal “was satisfied there were no errors of law or errors of principle in the decision” and that the decision was “reasonably sustainable”: AT Decision at para 168. [ 68 ] It again reviewed the evidence in detail, noting, among other things, that: by July 2014, the appellant had borrowed $200,000 from CPP which was far in excess of the parties’ original expectations; the appellant had previously proposed an accelerated repayment of the loan by allocating 100% of any bonuses to the loan balance; in responding to the PSP request, Mr Leonard was providing directions for the treatment of the bonus payments not just for the appellant, but also for others who did not owe CPP money.

It concluded, “While Mr Leonard might have explained his intentions for the CPP profit share payment more clearly, it was open to the Discipline Tribunal” on the record to reach the conclusions it did: AT Decision at paras 168-174. [ 69 ] The Appeal Tribunal also upheld the Discipline Tribunal’s conclusion that the appellant’s actions with respect to the bonus amounted to unprofessional conduct, writing ( AT Decision at para 176): After incurring a very large personal debt to his employer, CPP Mr. Mathison either disregarded Mr.

Leonard’s instructions to allocate the CPP profit share payment to the loan balance, or he disregarded the need to clarify Mr. Leonard’s instructions. Mr. Mathison instead treated the profit share payment as a disbursement for his personal benefit and authorized payment to himself. The Appeal Tribunal considered that this demonstrated a lack of integrity in the specific circumstances. It was detrimental to the interests of the public who depended on Mr.

Mathison, namely CPP and its shareholders, and it harms the integrity of the accounting profession for a CPA to prefer his own interests over those of his client or employer. The Appeal Tribunal therefore upholds the Discipline Tribunal’s decision that Mr. Mathison’s conduct was unprofessional on allegation 2(b). [ 70 ] The approach of the Appeal Tribunal to its review of the Discipline Tribunal’s decision in these regards discloses no reviewable error.

The payment allegation [ 71 ] The payment allegation considered by the Discipline Tribunal was that the appellant had misdirected payments owed by CPP to a corporation owned by a third party, Jim Davies. The alleged misconduct was that rather than properly directing the payments to Mr Davies’ corporation, 1137801 Alberta Ltd (113), the appellant had instead directed the payments to two other numbered corporations in which he was a shareholder, when he knew or ought to have known that was contrary to Mr Leonard’s express instructions.

These two corporations were 1618816 Alberta Ltd (161) and 1518820 Alberta Ltd (151). 151 was solely owned by the appellant, while the appellant and Mr Davies were the shareholders of 161, with each of them owning 50%. [ 72 ] The Discipline Tribunal noted Mr Leonard had explicitly stated in an email that all payments to 113 were to be made payable to 113 only: DT Merits Decision at para 92 .

Indeed, by email dated August 7, 2014, Mr Leonard issued the following direction to the appellant: Note that another change (which I had already put in place but we regressed backwards): In this period and at all times going forward, all payments provided to [113] or Jim Davies are done with checks written to those names . We can continue to split up the funds to pay Jim's invoices on his behalf, but any checks must be written to Jim or his company.

Jim can sign the back of the check and write "for deposit only to Ed.... (or whatever)" BUT [capitalization original] the person the check is payable to must be Jim Davies or [113]. (emphasis added)

[ 73 ] Contrary to this direction, during the period from December 2014 to May 2015, CPP issued a number of payments owed to 113 instead to 151 and 161. [ 74 ] The appellant explained, “the standard process was that Mr Davies would determine where his money was to be distributed” and that the subject “directions came from Mr Davies”. Mr Davies confirmed the appellant contacted him for approval. The appellant rejected that the August 2014 email directed a process change. He characterized it as a mere “request”.

His characterization as a “request” is difficult to reconcile with the express direction contained in the email. [ 75 ] The appellant testified that he had subsequently explained to Mr Leonard that the revised process would not work, and that Mr Leonard understood this. But when Mr Leonard was asked whether he had any conversations with the appellant in this regard, he testified, “No, absolutely not.” [ 76 ] The Discipline Tribunal preferred the evidence of Mr Leonard.

It emphasized that “[n]o documentary evidence was presented that stated Mr Leonard regressed or recanted from” the position set out in his August 2014 email: DT Merits Decision at para 92 . It expressed concern, generally, with arguments by the appellant that documents that did not support his position had been amended in subsequent discussions not reduced to writing: DT Merits Decision at para 101 . It rejected Mr Leonard’s characterization of written directions as mere “requests”: DT Merits Decision at para 102 .

It concluded the appellant had committed unprofessional conduct by directing the payments contrary to Mr Leonard’s explicit instructions forbidding such payments: DT Merits Decision at para 96 . [ 77 ] Before the Appeal Tribunal, the appellant submitted that the Discipline Tribunal misapprehended the evidence, came to unreasonable conclusions, and unreasonably found that he had disregarded Mr Leonard’s specific directions contrary to his fiduciary duty to CPP. [ 78 ] The Appeal Tribunal reviewed the evidence and the reasons of the Discipline Tribunal, and held as follows ( AT Decision at paras 141-142): The Discipline Tribunal found this allegation proven.

It held Mr. Mathison owed a fiduciary duty to serve his employer’s best interests. He was also a shareholder in two other companies, 151 Ltd. and 161 Ltd. and he oversaw payments of amounts owing from CPP to 113 Ltd. being made directly to 151 Ltd. and 161 Ltd. between December 2014 and May 2015. This was despite Mr. Mathison’s Employment Agreement prohibiting him from taking up any employment or contract of service with anyone other than CPP without Mr. Leonard’s written approval. It was also despite Mr. Leonard having explicitly directed that all payments owing from CPP to 113 Ltd. must be made payable to 113.

Ltd. There was no documentary evidence that Mr. Mathison [sic] had recanted this direction. There was also no documentary evidence clearly demonstrating that Mr. Mathison had told Mr. Leonard that he held shares in these companies and was providing services to 161 Ltd., or that payments owing to 113 Ltd. were being re-directed to 151 Ltd. and 161 Ltd. This demonstrated a lack of honesty, transparency or integrity. The Discipline Tribunal held that Mr. Mathison disregarded Mr.

Leonard’s specific directions and re-directed the payments for his financial benefit when he knew or ought to have known that he was not approved to do so. This was held to amount to unprofessional conduct. The Discipline Tribunal weighed the witnesses’ testimony and discounted Mr. Davies’ testimony because of its inconsistencies. The Discipline Tribunal found that Mr. Mathison had handled financial matters relating to Mr. Davies’ businesses. Mr. Mathison objects that there was no evidence of Mr. Mathison “handling” Mr. Davies’ affairs, but Mr.

Davies had testified to this himself… This was also consistent with Mr. Leonard’s evidence and the evidence of Ms. Burns and Ms. Glenn. The Discipline Tribunal concluded that Mr. Leonard’s testimony was corroborated by substantial documentary evidence and this outweighed the uncorroborated evidence of Mr. Mathison and Mr. Davies. There was nothing to corroborate Mr. Mathison’s testimony that he and Mr.

Leonard had agreed after August 7, 2014 to revert to the previous arrangement. (emphasis added) [ 79 ] As with the other two allegations, the Appeal Tribunal reviewed the assessment of the evidence and witness testimony conducted by the Discipline Tribunal with respect to the payment allegation, reviewed the evidence itself, and concluded the findings reached by the Discipline Tribunal were reasonably supported: AT Decision at paras 130-140, 144-149.

There is no error in this approach or in the result reached. [ 80 ] The Appeal Tribunal also upheld the conclusion that the appellant’s conduct amounted to unprofessional conduct ( AT Decision at para 154): It was reasonable and reasonably sustainable for the Discipline Tribunal to conclude that Mr. Mathison’s conduct lacked honesty, transparency or integrity and was unprofessional. If Mr. Mathison had felt it necessary to continue re-directing payments to companies other than 113 Ltd. and in which he held shares, he could have disclosed this to Mr. Leonard and obtained Mr. Leonard’s approval in writing. Mr.

Mathison instead chose to continue the previous practice contrary to Mr. Leonard’s express directions and without disclosing his interests in the companies to which he was re-directing payments. A CPA’s involvement with transactions having an undisclosed financial benefit for the CPA is a very serious matter. Mr. Mathison’s conduct breached the trust that CPP and PPP placed in him and he oversaw transactions which placed his own interests ahead of those of his employer.

This was detrimental to the interests of the public who depended on him, namely CPP, PPP and their shareholders, and it harms the integrity of the accounting profession. It was unprofessional conduct. [ 81 ] The approach of the Appeal Tribunal to its review of the Discipline Tribunal’s decision in these regards discloses no reviewable error. [ 82 ] Unlike the other two allegations, the wording of the payment allegation did not refer to matters which the appellant “knew or ought to have known”.

The Complaints Inquiry Committee simply alleged the appellant “paid, or authorized the payment of, funds that were payable to a supplier/third party to one or more companies in which he was a shareholder when he was specifically instructed by

Jeremy Leonard, Chief Executive Officer (CEO) of CPP, not to do so”. While the tribunals used the language of “knew or ought to have known” with respect to this allegation ( DT Merits Decision at para 96 ; AT Decision at para 150), both were clearly satisfied the elements of the payment allegation were established. Their use of this language does not affect the substance of their findings. [ 83 ] We find no reviewable error with respect to the third allegation. Conclusion on the merits [ 84 ] The appeal from the decision of the Appeal Tribunal on the merits is dismissed.

Review of the Appeal Tribunal’s decision on sanction [ 85 ] The Appeal Tribunal gave appropriate deference to the factual findings made by the Discipline Tribunal in its review of the merits decision, in accordance with the guidelines set out by this Court in Yee .

The same cannot be said of all aspects of the Appeal Tribunal’s review of the sanction decision, however. [ 86 ] In reviewing sanction, the Appeal Tribunal recognized the Discipline Tribunal made a “number of important factual findings that warrant deference”, including that the appellant chose to take loans when he knew or ought to have known he was not authorized to do so, that he made a choice to prefer his own best interests over the interests of his employer, and that he chose to receive a bonus payment for his own benefit when he knew or ought to have known it was not approved, among others: AT Decision at para 192. [ 87 ] The Appeal Tribunal also noted the finding of the Discipline Tribunal that the appellant’s conduct, while egregious, did not have the same level of fraudulent intent as was found in other cases where a member’s registration had been cancelled.

In particular, the Discipline Tribunal had found ( DT Sanction Decision at para 134): However, while this conduct is both egregious and egoistic, the Tribunal believes there was not the same level of fraudulent intent in Mr. Mathison’s actions as described in the cases that [CIC counsel] referred to. The Discipline Tribunal explained that the members in those other cases had clearly “defrauded”, “embezzled”, or “misappropriated” funds. It explained the appellant’s conduct did not rise to that level.

This finding led the Discipline Tribunal to impose a two-year suspension, which, in conjunction with a written reprimand and ethics training, was, in its view, a “sufficiently stern sanction” to satisfy the objectives of denouncing the conduct as clearly unacceptable, deterring similar conduct in other members of the profession, and protecting the public interest and maintaining the integrity of the profession: DT Sanction Decision at paras 134, 158. [ 88 ] The Appeal Tribunal held that the Discipline Tribunal erred in concluding “that Mr Mathison lacked the same level of intent as in previous cases of fraud, embezzlement or misappropriation of funds that resulted in cancellation”: AT Decision at para 198.

It found the Discipline Tribunal erroneously limited its own discretion to order cancellation, noting “[c]ancellation should not be reserved for only the most serious cases and only the most serious offenders”: AT Decision at para 197. However, that is not what the Discipline Tribunal did. Rather, it heard all the evidence and reached a factual conclusion with respect to the seriousness of the conduct and exercised its discretion as to the appropriate sanction based on its findings.

These were findings and conclusions the Discipline Tribunal was entitled to make and the Appeal Tribunal fell into error by characterizing it as a fettering of discretion. [ 89 ] Moreover, the Appeal Tribunal’s statement that “it is appropriate to recognize a legitimate public expectation that a CPA who chooses to engage in the intentional and wrongful taking of a client or employer’s money should no longer be a CPA” ( AT Decision at para 195) went too far in relation to the appellant.

Both instances where the appellant was found to have taken monies personally involved allegations that he did so when he “knew or ought to have known” that he lacked authorization. To describe such conduct as “the intentional and wrongful taking of a client or employer’s money” goes beyond the findings that were made. This is particularly apparent with respect to the bonus allegation. [ 90 ] Having regard to the errors made by the Appeal Tribunal, its alternate finding that the sanction imposed by the Discipline Tribunal was “not reasonable, or not reasonably sustainable” ( AT Decision at para 191) is tainted.

The decision of the Appeal Tribunal to replace the sanction imposed by the Discipline Tribunal with its own was erroneously made and cannot stand. Accordingly, the appeal on sanction is allowed. Conclusion [ 91 ] The appeal from the Appeal Tribunal’s decision on the merits is dismissed. The appeal from the Appeal Tribunal’s decision on sanction is allowed and the sanctions imposed by the Discipline Tribunal are reinstated. In the result, as success before this Court and the Appeal Tribunal was divided, the parties shall each bear their own costs of those proceedings.

Appeal heard on September 8, 2022 Memorandum filed at Edmonton, Alberta this 29 th day of January, 2024

Authorized to sign for Strekaf J.A. Antonio J.A. Table of Contents I. Introduction . 24 II. Questions Presented . 25 A. Overview of Key Facts . 25 B. Issues . 33 III. Brief Answers . 40 IV. Statement of Facts . 42 A. Canada Pump Retained Mr. Mathison as Its Chief Financial Officer from April 1, 2012 to December 27, 2015 . 42 B. Mr. Mathison Drew on the $8,000 Monthly Loan from April 1, 2012 to March 31, 2015 with the Unquestioned Approval of Mr. Leonard . 53 C. Mr. Mathison Received a Short-Term Bonus for 2013 . 69 D. Mr. Mathison Was Involved with Mr. Davies Outside His Employment with Canada Pump . 76 E. Mr.

Mathison Instructed the Controller of Canada Pump To Allocate Payments Due to Davies Contracting to Its Creditors . 86 F. On December 27, 2015 Canada Pump Terminated Mr. Mathison’s Employment for Cause . 94 G. Mr. Leonard Filed a Complaint Against Mr. Mathison with the Chartered Professional Accountants of Alberta . 101 H. The Discipline Tribunal Found Mr. Mathison Guilty of Unprofessional Conduct and Suspended Him for Two Years . 103 1. The Discipline Tribunal Held that Mr. Mathison Should Not Have Taken Six $8,000 Monthly Loans After March 31, 2015 . 105 2. The Discipline Tribunal Found that Mr.

Mathison Should Not Have Directed to 151 and 161 Alberta Ltd. Payments Canada Pump Owed to 131 Alberta Ltd. 107 3. The Discipline Tribunal Found that Mr. Mathison Should Not Have Paid Out His 2013 Canada Pump Short-Term Bonus in Cash . 109 4. The Discipline Tribunal Suspended Mr. Mathison for Two Years . 111 I. .... The Appeal Tribunal Upheld the Findings of Unprofessional Conduct and Cancelled Mr. Mathison’s Registration . 112 1. Mr. Mathison Argued that the Discipline Tribunal Was Wrong To Find Him Guilty of Unprofessional Conduct 113 2. The Complaints Inquiry Committee and Mr.

Mathison Each Argued that the Discipline Tribunal Was Wrong to Impose the Sanctions It Did . 114 3. The Appeal Tribunal Agreed that Mr. Mathison Engaged in Unprofessional Conduct 115 4. The Appeal Tribunal Cancelled Mr. Mathison’s Registration . 120 J. .... Mr. Mathison Appeals to the Court of Appeal 122 V. Applicable Sections of the Chartered Professional Accountants Act 123 VI. Analysis . 132 A. The Discipline Tribunal and the Appeal Tribunal Failed To Ask the Right Questions in the Correct Order 132

B. No Adjudicator Acting in Accordance with Generally Accepted Legal Principles Could Have Adjudged Mr. Mathison Guilty of Any of the Charges Against Him .. 136 1. Tribunals Must Evaluate Evidence in a Principled and Rational Way . 138 2. The Failure of the Discipline Tribunal and the Appeal Tribunal to Recognize that Mr. Mathison Was a Partial Witness and Assess the Impact This Had on the Veracity of His Evidence Strips Their Decisions of Any Legitimacy . 150 VII.

Conclusion . 157 _______________________________________________________ Dissenting Memorandum of Judgment _______________________________________________________ Wakeling, J.A.: I. Introduction [ 92 ] This is an important professional regulatory case of interest to all Canadians.

It brings into question the standards a professional regulator [2] must adhere to before it deprives a regulated member of the right to practice a profession and earn a livelihood and the appropriate response of a professional regulator that has good cause to believe a complainant is weaponizing the professional regulator’s complaint process. [ 93 ] Regulators of professionals exercise powers that may destroy a regulated member’s career and deprive him or her of a livelihood. The public and regulated members accept that this is a necessary consequence of protecting the public interest.

But they expect regulators to wield their enormous powers fairly and with the utmost care, keenly aware of the adverse effects a regulated member may suffer as a result of a finding of unprofessional conduct. [3] And they also expect appeal courts to set aside regulatory dispositions that fall short of this high standard. [4] In doing so, a court protects the public interest, the regulated member charged with misconduct, other regulated members, the regulator, and the complainant. No one benefits if a court upholds an errant disciplinary decision.

The community needs highly skilled professionals in the workforce doing what they are trained to do. [ 94 ] Darrell Mathison [5] appeals [6] the decision of the appeal tribunal of the Chartered Professional Accountants of Alberta upholding a decision of the discipline tribunal finding him guilty on three counts of unprofessional conduct and cancelling his registration. [7] [ 95 ] This decision cannot survive judicial scrutiny. The appeal tribunal committed numerous major legal errors. [ 96 ] The appeal tribunal never decided the specific question presented by the allegations of unprofessional conduct.

In addition, it failed to recognize that the prosecutor’s star witness was partial to the prosecution and hostile to the regulated member and to assess the impact this had on the veracity of his evidence. [ 97 ] The appellant, to say the least, “has been dealt with somewhat hardly”. [8] He is the victim of a miscarriage of justice – a grave miscarriage of justice. II. Questions Presented A. Overview of Key Facts [ 98 ] Mr.

Mathison was the chief financial officer of Canada Pump and Power Corporation from April 1, 2012 to December 27, 2015 [9] when Canada Pump terminated his employment – allegedly for cause. [ 99 ] The Society of Management Accountants granted Mr. Mathison the certified management accountant designation on April 27, 1990.

He became a chartered professional accountant effective July 1, 2015, the date the Chartered Professional Accountants Act [10] came into force. [11] He had a discipline-free record until December 19, 2018, when the discipline tribunal adjudged that he was guilty of unprofessional conduct – a period of over twenty-eight years. [12] [ 100 ] Mr. Mathison’s problems started sometime in September 2015 when Jeremy Leonard, the chief executive officer of Canada Pump and its sole shareholder, [13] reported to the Royal Canadian Mounted Police that Mr. Mathison had stolen $48,000 from Canada Pump. Mr.

Leonard claimed that Mr. Mathison, exercising functions assigned to him as chief financial officer of Canada Pump, had authorized, after March 31, 2015, six monthly loan payments of $8,000 to himself. [14] Mr. Leonard made this report despite knowing that he had approved thirty-six $8,000 monthly loan payments to Mr. Mathison before April 1, 2015. [15] Canada Pump owed Mr.

Mathison in long-term bonuses more than Mr. Mathison owed Canada Pump for the loans, [16] Mr. Mathison was always forthright when Mr. Leonard inquired about Mr. Mathison’s compensation and he had considered that Mr. Mathison had been an excellent employee. [17] Had Mr. Leonard checked corporate records available to him he could easily have discovered that the six post-March 31, 2015 payments were recorded in Canada Pump’s financial statements. [18] [ 101 ] Mr. Leonard’s decision to contact the R.C.M.P. is troubling.

Senior executives do not go to the police and accuse another senior officer of criminality in the absence of compelling evidence. Criminals are not in the habit of recording their thefts in writing and informing the victim of their thievery. One wonders why Mr. Leonard, given the facts of which he must have been aware, would have thought it appropriate to do this. Mr. Mathison had served as the chief financial officer of Canada Pump for approximately 2.5 years and, according to Mr. Leonard, had provided exemplary service. [19] [ 102 ] This is a civil dispute and nothing more. [ 103 ] Mr.

Leonard should have raised his concerns with Mr. Mathison and asked for an explanation justifying the continuation of the monthly loans after March 31, 2015. If Mr. Mathison’s explanation did not satisfy Mr. Leonard, Mr. Leonard should have informed Mr. Mathison that Canada Pump would not make any more monthly loans to him and discuss repayment terms. [ 104 ] In fact, this is largely what Mr. Leonard did after reporting Mr. Mathison’s alleged thievery to the police. [20] [ 105 ] Far more troubling is Mr. Leonard’s September 17, 2015 email to Mr.

Mathison informing him of his meeting with the RCMP: [21] “K Division has left it with me to work things out with you first to try to achieve an amicable solution without laying criminal charges, but the file is started and that option [laying criminal charges] is available to me in the future”. In essence, Mr. Leonard threatened to lay criminal charges against Mr. Mathison if Mr. Mathison did not agree to repayment terms acceptable to Mr. Leonard. Without suggesting that Mr.

Leonard, in doing so, was committing an offence, there are authorities that put the propriety of this sort of communication into question. [22] In addition, the police, not Mr. Leonard, would determine whether a criminal investigation would be initiated. [23] [ 106 ] Mr. Mathison’s agreement with Mr. Leonard not to draw any more monthly loan payments, [24] notwithstanding his firm belief that Mr. Leonard earlier authorized the continuation of the $8,000 monthly loans until March 31, 2015, appeared to appease Mr. Leonard and bring this dispute to a close. Support for this view is Mr.

Leonard’s September 17, 2015 email informing Mr. Mathison that he was still prepared to work with him. [25] [ 107 ] In doing so, Canada Pump probably condoned any breach of contract that Mr. Mathison may have committed. [26] [ 108 ] But this condonation was short lived. The issue came up again several months later. [ 109 ] Mr. Leonard, in a December 27, 2015 email to Mr. Mathison, informed him that Canada Pump terminated his employment for cause. The termination email effectively stated that Mr. Mathison had stolen from the company. [27] This was how Mr.

Leonard characterized the six $8,000 monthly loans post March 31, 2015 and the one bonus payment. These are the same loans that did not prompt Mr. Leonard to terminate Mr. Mathison’s employment a few months earlier on September 17, 2015. [ 110 ] In contravention of sound business practices and for no obvious legitimate reason, [28] Mr. Leonard copied the termination email to Canada Pump’s outside bankers and auditors and exposed himself and Canada Pump to a defamation action. Did he do this to intimidate Mr.

Mathison and deter him from suing Canada Pump for wrongful dismissal arising from the failure of Canada Pump to give Mr. Mathison reasonable notice or pay in lieu of reasonable notice of the termination of his employment? [29] Probably. An employee in Mr.

Mathison’s senior position with his period of service who was not dismissed for cause could reasonably expect to receive damages equal to the sums he would receive had his employment continued for another twelve months. [30] This sum may have exceeded $200,000. [ 111 ] At the end of 2015, one would have thought that both sides would retain legal counsel and resolve their differences either by negotiation or litigation or both. This appeared to be a straightforward contract dispute with few contested facts. At worst, both sides would commence actions. Canada Pump would seek payment of the outstanding loan amount.

Mr. Mathison, in turn, would sue alleging wrongful dismissal, seeking pay in lieu of reasonable notice of the end date of his employment, the accrued unpaid long-term bonus or other entitlements [31] and full-indemnity costs on account of the theft allegations. [ 112 ] On October 11, 2016 – almost ten months after Canada Pump terminated Mr. Mathison’s employment on December 27, 2015 and with litigation no doubt in the contemplation of both Mr. Leonard and Mr. Mathison – Mr. Leonard filed a complaint against Mr.

Mathison with the Chartered Professional Accountants of Alberta. [32] He acknowledged that he did so to secure an advantage in his civil dispute with Mr. Mathison. [33] He realized that Mr. Mathison was not obliged to pay back the amount Canada Pump lent him if Canada Pump terminated Mr. Mathison without cause. [34] Mr. Leonard believed that a determination by the regulator that Mr. Mathison had committed unprofessional conduct would improve Canada Pump’s bargaining position in defending any forthcoming wrongful dismissal action. [35] [ 113 ] This complaint is also very troubling on several levels. Mr.

Leonard out-and-out admitted that he used the complaint process under the Chartered Professional Accountants Act [36] to assist him resist any wrongful dismissal lawsuit Mr. Mathison might bring against him. [37] He has converted the complaint process into a civil litigation weapon. No regulator should allow itself to be used in this way. Mr. Leonard, in effect, caused the regulator to deploy its considerable statutory powers and resources against Mr. Mathison and to assist Canada Pump in its civil dispute with Mr. Mathison. [ 114 ] Mr.

Leonard’s questionable motive did not dissuade the regulator from charging Mr. Mathison with unprofessional conduct: [38] The Complaints Inquiry Committee alleges that you, Darrell Mathison, CPA, CMA are guilty of unprofessional conduct in that you: 1. For the months April to September 2015, received $8,000 per month from Canada Pump and Power Corporation (CPP) while Chief

Financial Officer (CFO) of CPP, when he knew or ought to have known that he was not authorized to receive it; 2.

Did not perform his duties as CFO of CPP with integrity and due care, in that he: a. paid, or authorized the payment of, funds that were payable to a supplier/third party to one or more companies in which he was a shareholder when he was specifically instructed by Jeremy Leonard, Chief Executive Officer (CEO) of CPP, not to do so; and b. paid a bonus to himself, or authorized the payment of a bonus to himself, from CPP that he knew or ought to have known was to be used to offset a loan owed by him to CPP … . [ 115 ] Mr. Leonard was the prosecutor’s – the complaints inquiry committee – star witness.

Without his testimony, the prosecutor had no case. [ 116 ] The discipline tribunal refused to determine whether Mr. Leonard was a partial witness [39] and the effect this may have on the likelihood he would tell the truth. [40] It accepted Mr. Leonard’s evidence that he ordered Mr. Mathison not to undertake the three acts with which Mr. Mathison was charged and determined that the allegations of unprofessional conduct were made out. [41] It suspended Mr.

Mathison’s registration for two years, imposed a $15,000 fine, ordered him to pay costs of $77,000, and published the decision. [42] [ 117 ] The complaints inquiry committee appealed the two-year registration suspension sanction to the appeal tribunal. [43] It sought a life-time ban. [ 118 ] Mr. Mathison cross-appealed the discipline tribunal’s merit and sanction decisions. [44] [ 119 ] The appeal tribunal, accepting the discipline tribunal’s finding of facts, allowed the complaints inquiry committee’s appeal. It quashed the two-year-registration suspension and cancelled Mr.

Mathison’s registration. [45] [ 120 ] The appeal tribunal seems to have concluded that Mr. Leonard’s complaint was not improperly motivated to benefit him, and that his partiality or lack thereof did not matter in assessing his credibility. [46] As a result, the appeal tribunal never considered the impact Mr. Leonard’s partiality may have had on the veracity of his evidence. [ 121 ] The appeal tribunal dismissed Mr. Mathison’s cross appeals. [ 122 ] Mr. Mathison appeals to the Court of Appeal of Alberta. [47] B.

Issues [ 123 ] Did the appeal tribunal ask the right questions in the correct order? [48] The failure to do so usually jeopardizes the soundness of any adjudicator’s decision. [ 124 ] In a professional misconduct case, the adjudicator must first acquire a clear understanding of the essential elements of the allegations of unprofessional conduct − the charges − laid against the regulated member. [49] [ 125 ] The adjudicator must carefully read the charges against the regulated member. [ 126 ] What does the charge allege the regulated member did wrong? [ 127 ] Next, the regulator must be satisfied that the facts alleged constitute professional misconduct. [ 128 ] Suppose a dentist runs for political office and a person who is not a patient of the dentist files a complaint alleging that the dentist was rude to another candidate during an all-candidates debate.

Even if the allegation is true, does it constitute professional misconduct? [ 129 ] At the outset, it is important to note that two of the allegations of unprofessional conduct against Mr. Mathison contain two very distinct charges. As a result, there are, in effect, five charges of unprofessional conduct – not three – against Mr. Mathison. [ 130 ] For the first allegation, the first charge alleges that Mr. Mathison took six loans totalling $48,000 after March 31, 2015 when he knew that he was not authorized to do so. [ 131 ] As part of that same allegation, the second charge alleges that Mr.

Mathison took six loans totalling $48,000 after March 31, 2015 when he ought to have known that he was not authorized to do so. [ 132 ] While the second allegation is not phrased in these terms – it states that Mr. Mathison “paid … funds that were payable to a supplier/third party to one or more companies in which he was a shareholder when he was specifically instructed by Jeremy Leonard … not to do so” – the discipline tribunal assessed it in the same manner as the other charges – “The Discipline Tribunal finds that Mr. Mathison chose to disregard specific directions from Mr.

Leonard as CEO of CPP and redirect payments CPP owed to 113 to 151 and 161 to his financial benefit when he knew or ought to have known that he was not approved to do so”. [50] So did the appeal tribunal. [51] [ 133 ] There is a world of difference in terms of blameworthiness between an actor who knew he or she acted in contravention of a binding order and the actor who did not have this blameworthy state of mind. [52] The actor’s blameworthiness in the second scenario is his or her failure to assess the facts in the same manner as a reasonable objective observer aware of all the relevant facts would.

The degree of blameworthiness in the second scenario is orders of magnitude lower than in the first scenario. [ 134 ] In addition, one of the allegations is that Mr. Mathison contravened the “specific” instructions of Mr. Leonard when he authorized payments to companies in which he held shares. T

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