Audry Kawula Appellant (Applicant) v. Institute of Chartered Accountants, 2017 SKCA 70

Court of Appeal for Saskatchewan Docket: CACV2815 Citation: Kawula v Institute of Chartered Accountants of Saskatchewan , 2017 SKCA 70 Date: 2017-09-07 Between: Audry Kawula Appellant (Applicant) And Institute of Chartered Accountants of Saskatchewan and the Professional Conduct Committee Respondents (Respondents) Before: Jackson, Caldwell and Whitmore JJ.A. Disposition: Allowed Written reasons by: The Honourable Madam Justice Jackson In concurrence: The Honourable Mr. Justice Caldwell The Honourable Mr.

Justice Whitmore On Appeal From: 2015 SKQB 350 , Prince Albert Appeal Heard: September 14, 2016 Counsel: Ronald Cherkewich for the Appellant Reginald Watson for the Respondent Jackson J.A. I. Introduction [ 1 ] Audry Kawula appeals a decision of the Court of Queen’s Bench sustaining a discipline decision made pursuant to The Chartered Accountants Act, 1986 , SS 1986, c C-7.1 (repealed November 2014) [the 1986 Act ]. Ms. Kawula is a chartered professional accountant who, along with Frank Kawula, is a principal of the firm Kawula & Kawula.

As auditors, the firm reviewed the financial statements of Wahpeton Dakota Nation for the years 2004 and 2005 and provided audit reports. [ 2 ] For those years, Kawula & Kawula concluded Wahpeton had not received all of the education funding to which it was entitled from Indian and Northern Affairs Canada [INAC] [1] for the years 1997–2004.

On March 4, 2004, Kawula & Kawula sent a letter to Wahpeton setting out its conclusion in detail, indicating it believed $2,037,887 to be the amount of the shortfall and suggesting that Wahpeton meet with INAC to discuss the options available to provide proper funding for the debt and for the core funding calculation errors. [ 3 ] Following receipt of this letter, Wahpeton issued invoices to INAC claiming additional monies owed for education funding in the amount of $2,121,102.49 (which includes interest). Communications and a meeting between Wahpeton, INAC and Kawula & Kawula followed.

INAC took the position that no further funding was owing to Wahpeton. [ 4 ] Wahpeton included the amount of the shortfall as a receivable owing to it in its 2004 financial statements. Kawula & Kawula issued an unqualified audit report for the fiscal year ending March 31, 2004. The audit report did not raise any question, qualification or warning about the inclusion of the contested receivable. This scenario was repeated for the fiscal year ending on March 31, 2005. [ 5 ] An official with INAC complained to the Institute of Chartered Accountants in the fall of 2004.

Ultimately, a hearing was held in 2012 and the Discipline Committee of the Institute found Ms. Kawula guilty of two counts of contravening s. 15 of the 1986 Act (duty to comply). [ 6 ] Ms. Kawula appealed her convictions to the Council of the Institute. The Council dismissed her appeal. Ms. Kawula appealed to the Court of Queen’s Bench. [ 7 ] In a preliminary application in the Court of Queen’s Bench, Ms. Kawula sought to adduce additional evidence in the form of a report by the auditing firm KPMG, which had been prepared at the request of INAC. This report was not released to Ms.

Kawula until 2014, two years after her initial discipline hearing. The KPMG report reviewed many of the same factual matters that the Discipline Committee considered. In addition to referring to evidence that had not been placed before the Discipline Committee, the report took a more benign view of what Ms. Kawula had done on behalf of Wahpeton. The Court of Queen’s Bench Chambers judge dismissed her fresh evidence application. [ 8 ] On the hearing of her judicial review application in the Court of Queen’s Bench, Ms.

Kawula renewed her application to have the KPMG report adduced and claimed that she had been denied full disclosure and production. The Chambers judge repeated his earlier decision and dismissed her application. [ 9 ] On the merits, however, the Chambers judge allowed Ms. Kawula’s appeal in part. He found the Council had erred in law by sustaining the convictions in relation to the 2005 audit statements. He did so on the basis that the actual complaint that had been investigated, and for which a recommendation had been made, pertained to the 2004 audit year only.

He sustained the convictions relating to the 2004 audit report. He did, however, quash the penalty in relation to these convictions on the basis it may have been impermissibly augmented by Ms. Kawula’s 2005 actions. In doing so, he remitted the question of penalty to the Institute’s Discipline

Committee. His decision is reported at Kawula v Institute of Chartered Accountants of Saskatchewan , 2015 SKQB 350 , 5 Admin LR (6th) 91 [ Kawula ]. [ 10 ] Ms. Kawula now appeals to this Court, requesting her 2004 convictions be quashed, and that the Discipline Committee be prohibited from proceeding further on any charges against her, or that a new hearing in front of a new panel be directed. She seeks to overturn the decision refusing to admit the KPMG report.

She also challenges the decision refusing to order the release of what she alleges are missing pages from INAC’s original complaint and she contests the status of the original complainant. Finally, she asks this Court to allow the appeal on the basis that the Chambers judge could not have quashed the convictions as they related to the 2005 audit statement alone. [ 11 ] I have concluded that the appeal must be allowed on the footing that the KPMG report is highly relevant evidence and, taken with the other evidence, could reasonably have affected the result.

I would also have allowed the appeal on the basis that, once the Chambers judge decided the Discipline Committee lacked the jurisdiction to hear the complaint, as it related to the 2005 audit year, he was required to quash the convictions in their entirety. I would dismiss the balance of Ms. Kawula’s grounds of appeal. A new hearing is directed before a new Discipline Committee. II. Chronology [ 12 ] Twelve years have elapsed since INAC complained to the Institute and a number of procedural steps have been taken along the way, making the recitation of the evidence somewhat complex.

Needless to say, the evidence is voluminous.

The following chronology places the issues in context: Date Occurrence March 4, 2004 Kawula & Kawula wrote a “management letter” to Wahpeton setting out, in some detail, why it believed there had been a shortfall in education funding amounting to $2,037,887, which was owing from INAC March 31, 2004 Wahpeton issued invoices to INAC for education funding for 1997–2004 totalling, with interest, $2,121,102.49 April 5, 2004 INAC responded verbally denying owing any further amounts April 6, 2004 Kawula & Kawula issued a second “management letter” to Wahpeton explaining why INAC’s response was inadequate and suggesting that Wahpeton “give serious consideration to report the outstanding education funding, in the amount of approximately two million dollars, in the Wahpeton Dakota Nation consolidated financial position and to fully disclose the details in notes to the financial statements as at March 31, 2004” (AB193), and include the funding shortfall in its financial statements May 21, 2004 Ms.

Kawula and Mr. Kawula met with representatives of INAC, who took the position that the education shortfall was not owing to Wahpeton July 28, 2004 Kawula & Kawula issued an unqualified audit report with respect to the Wahpeton 2004 financial statements, which included the amount of $2,121,102.49 as a receivable owing from INAC October 18, 2004 Kirby Korchinski, Acting District Director of INAC’s North Central Region, wrote to Wahpeton on INAC letterhead taking issue with the inclusion of the receivable in the 2004 financial statements October 18, 2004 Mr.

Korchinski, on behalf of INAC, sent a letter to the Institute expressing concern about the inclusion of the contested receivable in the 2004 audited financial statements January 18, 2005 the Institute provided a notice to Mr.

Kawula that the Professional Conduct Committee had received a complaint that he may have violated bylaws 205 and 206 with respect to Wahpeton’s 2004 financial statements March 31, 2005 Wahpeton included the amount of $2,121,102.49 as a receivable owing from INAC in its financial statements January 23, 2006 two Professional Conduct Committee investigators attended at the offices of Kawula & Kawula August 1, 2007 the Professional Conduct Committee advised Ms.

Kawula that it was recommending to the Discipline Committee that a complaint be heard as it related to Wahpeton’s 2004 financial statements December 22, 2008 Ms. Kawula was provided with a complaint and notice of hearing pertaining to the financial statements of Wahpeton for March 31, 2004 and March 31, 2005 May 12, 2009 the Discipline Committee hearing commenced but was aborted due to the conflict of a panel member

October 20, 2009 the second scheduled hearing began October 20, 2009 Ms. Kawula applied to the Court of Queen’s Bench to quash the process on the grounds of delay, denial of procedural fairness and natural justice and abuse of process January 13, 2010 Acton J. of the Court of Queen’s Bench dismissed the delay application ( Kawula v Institute of Chartered Accountants of Saskatchewan , 2010 SKQB 11 , 348 Sask R 213 [ Kawula Delay ]) February 17, 2010 Ms.

Kawula appealed to the Court of Appeal June 23, 2011 the Court of Appeal dismissed the appeal on the basis of prematurity ( Kawula v Institute of Chartered Accountants of Saskatchewan , 2011 SKCA 80 , 375 Sask R 125) November 10, 2011 a new complaint and notice of hearing was served, fixing January 30, 2012, for the new hearing date January 27, 2012 the prosecutor requested an adjournment and then recused herself September 10–14, 2012 the hearing before the Discipline Committee took place November 19, 2012 the Discipline Committee issued its decision, finding Ms.

Kawula guilty of both counts (and imposing a penalty and costs order on December 21, 2012) October 28, 2013 the Council heard an appeal from Ms. Kawula November 25, 2013 the Council dismissed Ms. Kawula’s appeal December 12, 2013 Ms. Kawula appealed to the Court of Queen’s Bench February 6, 2015 Ms. Kawula applied to adduce fresh evidence in the Court of Queen’s Bench February 20, 2015 the Chambers judge denied the fresh evidence application November 4, 2015 the Chambers judge heard the appeal proper and promptly issued his reasons December 1, 2015 Ms. Kawula appealed to this Court Date Occurrence III.

Report of the Professional Conduct Committee [ 13 ] As indicated, the Professional Conduct Committee investigated the complaint and filed its report with the Discipline Committee on August 1, 2007. The Conduct Committee recommended that the Discipline Committee hear the complaint, “as noted in the attached Report to Discipline Committee” (AB268). The conduct report states that “[t]he complaint relates to the audit of the financial statements of Wahpeton Dakota Nation for the year ended March 31, 2004” (AB269). The complaint indicated that “the conduct of the member breached bylaws 201.4, 204.1, 205 and 206.1”.

IV. Complaint Placed before the Discipline Committee [ 14 ] When the hearing of the Discipline Committee ultimately took place, it was based on a “Complaints and Notice of Hearing”, dated November 10, 2011, outlining the following charges: TAKE NOTICE that the Professional Conduct Committee established pursuant to The Chartered Accountants Act, 1986 has recommended that the Discipline Committee established pursuant to the said Act do hear and determine complaints against you.

AND FURTHER TAKE NOTICE that the said complaints are as follows: Count No. 1 That you, Audry Kawula, C.A., of Prince Albert, Saskatchewan, being a member of The Institute of Chartered Accountants of Saskatchewan, did, as auditor of the Financial Statements for the years ended March 31, 2004 and March 31, 2005 for Wahpeton Dakota Nation Combined Funds issued an unqualified audit opinion on each of the financial statements and in so doing failed to provide a reservation in your audit report with respect to accounts receivable.

Further, you failed to obtain sufficient and appropriate audit evidence with respect to the appropriate evaluation of accounts receivable, particularly in light of the Indian and Northern Affairs Canada (INAC) confirmation that the receivable would not be paid by INAC. In so doing, you contravened

section 15 of The Chartered Accountants Act, 1986 , in one or more of the following ways: (

a) you did sign and associate yourself with reports, representations and/or financial statements which you knew, or ought to have known, were false or misleading, contrary to Institute Bylaw 205(a); (

b) you did fail to perform your professional services in accordance with generally accepted standards of practice of the profession, contrary to Institute Bylaw 206.1; Count No. 2 That you, Audry Kawula, C.A., of Prince Albert, Saskatchewan, being a member of The Institute of Chartered Accountants of Saskatchewan, did, as auditor of the Financial Statements for the years ended March 31, 2004 and March 31, 2005 for Wahpeton Dakota Nation Combined Funds provide services including analysis and calculations of a stated receivable allegedly owing from Indian and Northern Affairs Canada (INAC) and made representations concerning the validity of the receivable, thereby serving as an advocate with

respect to financial information contained in financial statements for which you are also engaged as the auditor, and in so doing contravened

section 15 of The Chartered Accountants Act, 1986 , in one or more of the following ways: (

a) you accepted an engagement to serve as an advocate for a client without ensuring that: (

i) the service was not an assurance or specified auditing procedures engagement; and … (iv) ... the position of the client could be argued or supported by you without you failing to comply with the objectivity standards required for other services which you had engaged to provide contrary to Institute Bylaw 201.4. (

b) with respect to the audit of the Financial Statements for the year ended March 31, 2004, you engaged in or participated in an engagement: (

i) to issue a written communication under the terms of an assurance engagement; or (ii) to issue a report on the results of applying specified auditing procedures in which you failed to be and remain objective such that you remained free of any influence, interest or relationship which, in respect of the engagement, impaired your professional judgment or objectivity or which, in the view of a reasonable observer, would impair your professional judgment or objectivity contrary to Institute Bylaw 204.1. (

c) with respect to the audit of the Financial Statements for the year ended March 31, 2005, you engaged in or participated in an engagement: … (iii) to issue a written communication under the terms of an assurance engagement; or (iv) to issue a report on the results of applying specified auditing procedures in which you failed to be and remain independent such that you, your firm, Kawula & Kawula (the “Firm”) and members of the Firm remained free of any influence, interest or relationship which, in respect of the engagement, impaired the professional judgment or objectivity of you or which, in the view of a reasonable observer, would impair the professional judgment or objectivity of you, the Firm or a member of the Firm contrary to Institute Bylaw 204.1. (AB1 and 2). (Complaints and notice of hearing document, appeal book at 1) V.

Decision of the Discipline Committee [ 15 ] In addition to contesting the substance of the complaint, Ms. Kawula put the following matters into issue: (

a) whether the hearing should be dismissed on the basis of delay; (

b) whether the charges properly named her as the person under investigation and, if the charges had, whether she had been informed, and, if so, when, and, finally, whether all of the documents and admissions gathered by the Professional Conduct Committee were admissible as evidence against her as that evidence had been collected before she had been properly informed; (

c) whether the charges properly included the Wahpeton 2005 financial statements; (

d) whether the charges properly included breaches of Institute Bylaws 201.4 and 204.1; (

e) whether the 2004 and 2005 audited financial statements of Wahpeton ought to be considered without the express consent of the client; and (

f) whether the complaint from Mr. Korchinski, an official with INAC, was a complaint from a “person” under s. 20(1) of the 1986 Act . [ 16 ] In an unreported decision, dated November 19, 2012 [ Committee Decision ], the Discipline Committee found against Ms. Kawula on each of these points. While commenting upon her motives as having been “altruistic” (at para 73), the Discipline Committee nonetheless found Ms. Kawula guilty of both counts. The Discipline Committee’s reasons will be considered in greater depth later in this judgment. VI. Decision of the Council of the Institute

[ 17 ] Ms. Kawula appealed to the Council of the Institute. Relying on Dunsmuir v New Brunswick , 2008 SCC 9 , [2008] 1 SCR 190, the Council indicated it would apply a standard of review of correctness to “questions of law, matters of jurisdiction and matters of procedural fairness” and a “reasonableness standard to other matters under review” (unreported decision, dated 25 November, 2013, at paras 4 and 5 [ Institute Decision ]). [ 18 ] Ms. Kawula argued all of the same matters that had been argued before the Discipline Committee. The Council rejected all of those arguments. [ 19 ] In addition, Ms.

Kawula submitted that the Committee Decision should be quashed on the basis of an apprehension of bias giving rise to a denial of natural justice. The substance of her concern was that the Discipline Committee had twice lost quorum and that three of the members had been carried over to successive panels. The Council determined “there was no evidence presented upon which to support Ms.

Kawula’s assertion that there was actual or perceived bias on the part of any of these individuals” ( Institute Decision at para 35). [ 20 ] On the substance of the matter, the Council found that the Discipline Committee’s “identification and application of applicable standards is within the range of reasonable outcomes” (at para 57). As to the second count, the Council also found that the Discipline Committee’s conclusion that “Ms. Kawula’s professional judgment and objectivity have been clouded in this case is within the range of reasonable outcomes” (at para 61). VII.

Decision of the Court of Queen’s Bench [ 21 ] Ms. Kawula appealed to the Court of Queen’s Bench. As the Chambers judge indicated, Ms. Kawula’s grounds of appeal were extensive, “including 47 discrete arguments, of which 34 relate[d] to conviction and 13 relate[d] to penalty and costs” ( Kawula at para 31). [ 22 ] The Chambers judge dismissed Ms. Kawula’s appeal with respect to the convictions relating to the 2004 audit report; but, in paragraphs 130 to 143, he allowed the appeal insofar as the charges related to the 2005 audit report.

He did so on the basis that the prosecution, with respect to the 2005 audit report, was not based on a recommendation of the Professional Conduct Committee. [ 23 ] As a result of partially allowing the appeal, in paragraphs 315 to 318, the Chambers judge quashed the Committee Decision with respect to penalty and costs in its entirety and remitted the matter with specific directions to the Discipline Committee for determination of penalty with respect to the convictions relating to the 2004 audit report and with respect to the costs of the proceedings before that Committee. [ 24 ] Ms. Kawula appeals.

She advances several grounds of appeal. VIII. Issues [ 25 ] The issues in this appeal are best expressed in the following manner and considered in the following order: (

a) Did the Chambers judge err by refusing to admit the KPMG report or by refusing to grant a remedy for the Institute’s failure to produce the KPMG report? (

b) Did the Chambers judge err by not quashing the convictions in their entirety, having found the hearing before the Discipline Committee improperly included a complaint about the 2005 financial statements? (

c) Did the Chambers judge select and apply the correct standard of review to the Council’s determination that INAC is a “person” capable of making a complaint under s. 20(1) of the 1986 Act and s. 27(1) of The

Interpretation Act, 1995 , SS 1995, c I-11.2? (

d) Did the Chambers judge err by not finding that the omission of some of the pages of the original complaint had resulted in an unfair hearing or a denial of natural justice? IX. Legislative Provisions Governing the Right of Appeal to the Court of Queen’s Bench and to This Court [ 26 ] The complaint against Ms. Kawula was filed under the 1986 Act . This 1986 Act was replaced by The Accounting Profession Act , SS 2014, c A-3.1, effective November 10, 2014 [the 2014 Act ].

Section 60 of the latter statute provides that discipline matters commenced under the former statute continue and are governed by the provisions of the new statute. [ 27 ] The Chambers judge found the change in statutes had no effect on the appeal to him. In paragraph 2, he noted that the power of the Court of Queen’s Bench on appeal is the same under both statutes. The following side by side comparison demonstrates this is the correct conclusion: The Chartered Accountants Act, 1986 The Accounting Profession Act

(2014) Appeal 28(1) A member who has been found guiltyby the discipline committee may appeal thedecision or any order of the disciplinecommittee within 30 days of the decision ororder to: (

a) the council by serving the secretary with acopy of the notice of appeal; or Appeal to board37(1) A registrant may appeal the decision orany order of the discipline committee to theboard by serving the registrar with a notice ofappeal within 30 days after the decision ororder is made if: (

a) the registrant has been found guilty ofprofessional misconduct or professionalincompetence by the discipline committee; or (

b) a judge of the court by serving thesecretary with a copy of the notice of appealand filing it with a local registrar of the court.… (

b) the registrant is subject to an order madepursuant to

section 34.

(4) On the application of the appellant or theinstitute, the council or a judge of the courtmay order that the appeal be heard by way oftrial de novo.

(2) An appellant shall set out the grounds ofappeal in a notice of appeal mentioned insubsection (1). …

(5) In hearing an appeal, the council or thejudge, as the case may be, shall:

(5) On hearing an appeal the board may: (

a) dismiss the appeal; (

b) quash the finding of guilty; (

c) direct a new hearing or further inquiriesby the discipline committee; or (

d) vary the order of the disciplinecommittee; (

a) dismiss the appeal; (

b) quash the finding of guilt; (

c) direct a new hearing or further inquiriesby the discipline committee; (

d) vary the order of the disciplinecommittee; or (

e) substitute its own decision for the decisionappealed from.and may make any order as to costs that it orhe considers appropriate. …

(6) The board may make any order as to coststhat it considers appropriate. …Appeal to the court 29 A member who is the subject of a decisionor an order of the council pursuant to section28 may appeal that decision or order to ajudge of the court within 30 days of thedecision or order of the council and section28 applies mutatis mutandis. Appeal to the Court 38 A registrant whose conduct is the subjectof an order of the board pursuant to

section 37may appeal that order to a judge of the courtwithin 30 days after the order of the board,and

section 37 applies with any necessarymodification.Interpretation 2 In this Act: … (b) “council” means the council of theinstitute mentioned in

section 7; (c) “court” means Her Majesty’s Court ofQueen’s Bench for Saskatchewan; … (e) “institute” means The Institute ofChartered Accountants of Saskatchewancontinued pursuant to

section 3 … .

Interpretation 2 In this Act: … (b) “board” means the board of the institute;… (f) “court” means the Court of Queen’sBench; … (i) “institute” means the institute establishedpursuant to

section 3 … . The Chartered Accountants Act, 1986 The Accounting Profession Act (2014) [28] In circumstances where the governing legislation is silent, the right of appeal to this Court is governed by s. 7(2) of The Courtof Appeal Act, 2000, SS 2000, c C-42.1, unless limiting words are used: Attorney General of Canada v Lees, (SKCA), [1977] 4 WWR 505 (Sask CA); Borrowman v Wickens (1986), (SK CA), 82 Sask R 295 (CA); and Silcorp Ltd.v KJK Holdings Inc. (1992), 90 DLR (4th) (Sask CA). Since the 2014 Act places no restrictions on a registrant’s ability to appeal to thisCourt, Ms. Kawula has a right of appeal. X.

Analysis A. Did the Chambers judge err by refusing to admit the KPMG report or byrefusing to grant a remedy for the Institute’s failure to produce the KPMG report? 1. Background to this issue

[ 29 ] It is common ground that Wahpeton was not satisfied with INAC’s response to its financial statements. Complaints were made to the minister in charge of INAC and to the Auditor General, which resulted in an investigation by the Audit and Evaluation Sector of INAC and then by KPMG. KPMG completed its report approximately three months before the 2012 Discipline Committee hearing. [ 30 ] A letter, dated September 5, 2012, purporting to summarize the KPMG report was placed before the Discipline Committee. The letter ultimately became Exhibit P-14, but the KPMG report itself was not introduced as evidence.

Exhibit P-14 is a letter, from Sylvie LeCompte, Director of Assessment and Investigation Services Branch of the Audit and Evaluation Sector of INAC, to Chief Leo J. Omani of Wahpeton. [ 31 ] Exhibit P-14 addresses the validity of the contested receivable. In relation to funding for on-reserve students attending provincial schools in 1997–1998 and 1998–1999, Exhibit P-14 concluded there was no shortfall: Based on KPMG’s review of internal [INAC] documents, the funding for these students was calculated by treating each provincial student as a student attending the Band-operated school.

For example, if a Band had a nominal roll of 30 on-reserve students attending the Band-operated school, and a nominal roll of 20 on-reserve students attending various provincial schools, [INAC] would provide education funding for a nominal roll of 50 on-reserve students attending the Band-operated school. This process was applied to all First Nations in the region whose provincial tuition had been paid by [INAC].

KPMG has reviewed internal [INAC] documents related to funding for [Wahpeton] during these years, and has identified detailed calculations that demonstrate funding received in 1997–98 and 1998–99 included a nominal roll of on-reserve students attending both the Band-operated school and provincial schools. It appears that the additional funding was provided in the Notice of Budgetary Adjustment (NOBA) 1 for the 1997–98 fiscal year.

Therefore, KPMG has concluded that [Wahpeton] has received funding for on-reserve students attending provincial schools for fiscal years 1997–98 and 1998–99, and has been treated consistently in comparison to other First Nations in the Region . (Emphasis added) [ 32 ] As to the other area of complaint, education funding from April 1, 1999, to March 31, 2004, Exhibit P-14 reviews the methodology and concludes as follows: KPMG has reviewed the annual price adjustments that were applied under the agreement, and has found them to be consistent with the adjustments applied to other First Nations under [Financial Transfer Agreements (FTA)] within the District and Region.

In addition, KPMG has examined the initial Core Funding provided in the first year of the FTA agreement, and have found that the amounts agreed to those included in the FTA agreement. … Based on its review, KPMG has concluded that education funding received by [Wahpeton] through the FTA from April 1, 1999 through March 31, 2004 has been consistent with the terms of the agreement, and in a similar manner to other First Nations within the Region . (Emphasis added) [ 33 ] The letter does not refer to KPMG’s report, but it was understood that such a document existed. However, neither the Institute nor Ms.

Kawula had a copy. This is the exchange that nonetheless led to the introduction of Exhibit P-14 and its acceptance as a full exhibit: MR. WATSON [Counsel for the Institute]: … Well, I -- I say the letter speaks for itself, but the -- the fairness tweak on this, as I see it, and I look to your direction on this, is that I anticipate that this would end up being a reserved judgment because I understand it from Mr. Harvey [INAC’s representative at the hearing] there is likely to be a meeting between INAC and the band where the full audit report referred to in the letter is disclosed, correct ? MR.

HARVEY: They’re offering that up . MR. WATSON: Yeah, that’s being offered to the band . Well, obviously the band -- I -- I guess the magic of that is then we get to see the audit report. So we’re prepared to have the audit report filed as soon as we receive it, which -- or as soon as anybody receives it, either side, which we don’t think will be very long. Now, it’s a little bit dangerous, I suppose, but Mr. Cherkewich’s [counsel for Ms. Kawula] concern is that this could be an

interpretation of the audit report. So if the audit report is different -- and having regard to the late disclosure on this, that would deal with any confusion that might arise out of this

interpretation. So, in effect, we’re raising -- or we’re waiving cross-examination on the audit report, if we agree to its filing . MR. CHERKEWICH: Maybe standing it down, yeah. MR. WATSON: Yeah, so, I mean -- well, I -- I don’t — MR. CHERKEWICH: I’ll speak to that part of it. MR. WATSON: Anyway, so that’s where I’m at. So the other thing just on relevance is that this case is about a foresight analysis at the

time of the statement, and the audit is about a hindsight analysis some years later. So, in my client’s view, this isn’t particularly -- like, it’s -- in the terms of relevance, it’s not really, really relevant, but it certainly does close the back door and gives us some certainty on the back end as to what the hindsight analysis looked like . So it’s -- it’s a little bit -- the use to which it can be put is limited , I think, but, anyway, it’s on that basis that I -- I offer it to you and ask to have it marked as an exhibit, and it’s a full exhibit, but -- and maybe we could hear from Mr.

Cherkewich because I don’t want any misunderstanding on what we have agreed to with respect to the use of this document because this isn’t how we usually run trials . Usually you have to have everything in, but I think, in fairness to the member, if the audit report is something that she wants in and it’s referred to in that letter, and if it exists and we just don’t have it, then it seems to me that that’s something that we might want to accommodate, if that’s what Mr. Cherkewich’s wish is. MR. CHERKEWICH [counsel for Ms. Kawula]: Okay. Yes.

I think my learned friend and I are both approaching this with the proper perspective having regard to not just the rules of evidence, but fairness. I just want -- I -- I think you would need -- and the reason we’re doing this is it’s going in as an exhibit, but, at the end of the day, our position will be, and I don’t think Mr. Watson’s position would be much different, that the weight you will be giving to this exhibit, which is an

interpretation of a -- a forensic audit which has not been filed, stands and falls. I mean, the person who did that is really giving opinion evidence, and it’s hearsay just as the person who wrote the letter that you will see writes a four-page letter speaking about the receivable, and she’s relying on her reading of the -- the report done by the forensic auditor . Now, a couple things that cause me legal concern, and I think Mr. Watson will appreciate, unfortunately, in the letter, it -- it mentions an accounting house, but the forensic auditor who is doing this -- because we have interviewed him.

He talked to us and interviewed him, and I’ll tell you why shortly, is a Mr. Vic Duret from Ottawa. And he’s with -- and he was engaged -- or he’s KPMG. Now, when we got the letter -- and we were communicating I think until about 9:30 last night. When we got the letter, we had no problem with the letter, provided it’s a proper

interpretation of Mr. Duret’s report . We contacted Mr. Duret, because we have his number and access to him, by email and letter. The information we got back this morning is that he -- and I’m going to trace this down -- he’s in a partnership meeting that’s going all week. Now, it sounds -- that’s -- we’re going to trace that down. What we propose to do to really short-circuit this, and I’ll tell you why we would do this, because we want to be consistent with the defence we’re presenting, we will, at one point, simply go to Mr. Duret and say, is that your report referred to in the letter? Yes.

If he says yes, please look at this letter. Is this letter -- does this letter properly state and a proper

interpretation of your findings under the forensic audit? If he says yes, the letter is in. If we had that report and he said that today, the letter would be in. Okay. You have to understand the history why there is a forensic audit going on. And I -- I -- I’m going to ask some literally of my learned friend because I explained to him why there is a forensic audit in place. There was this controversy about the receivable. You’ve heard, you know, and how -- what treatment it was supposed to receive and what valuation it was supposed to receive. Mr. Kawula -- this was Mr.

Kawula working on this file -- made several requests to INAC for written -- a written statement from them as to the receivable. He never ever got a written statement, and it was denied to him by INAC. All they would give him was verbal communications they are not paying it. … I can say that, with this letter, it’s the first written piece of paper from INAC that Frank Kawula, auditor of the band, has received which states in writing what INAC’s position is . The only other time Mr.

Kawula saw a written position of INAC was when he received from Harder and Kennedy a copy of the complaint letter which was at that meeting in January 26th, 2006. That was the first time. And, in there, you remember there’s a statement attributed to Mr. Korchinski, we’re not paying it, but no -- and their justification is there. You will also hear that -- you will see in the testimony that’s going to come forward that in that letter it says that a bunch of supporting documentation was presented by Mr. Korchinski to Frank Kawula at that meeting in May 2005 -- 2004 referred to in the letter.

There was nothing in writing. Mr. Korchinski -- you will hear evidence Mr. Korchinski was preoccupied in getting to his farming because his farming was behind, and Mr. Coffee had a golfing engagement that day that he wanted to go to. So you’ll hear that testimony. So, again, the letter -- and both of us are professionally, I think, concerned here that you understand that this letter is a -- is really an opinion. Someone who read a document. You have to form your own opinion. You could actually read the report and say she’s got it wrong. I -- you know, I don’t know. The best person for that is to have Mr.

Duret look at it. Yes, she’s got it right. But that report will also deal with the way INAC handled this file too, which may be very, very important for you in evaluating the conduct -- really, you know, she’s charged, but our position is, and you’ll hear testimony, this is Frank’s file. And we’ll introduce written evidence from the Institute and the Institute’s lawyers, not this lawyer, that this is Frank’s file.

So, having said that, that document can go in with those qualifications, that you would not evaluate it or do anything further or give any weight to it, other than opinion and an unqualified expert opinion, until we get the audit report . (Emphasis added, September 12, 2012, Discipline Committee hearing, transcript at 398–406) [ 34 ] Later in the hearing, just before it closed, the chairperson inquired about the actual KPMG report. After the prosecuting attorney had used exhibit P 14 to examine the expert witness and to cross-examine the defence witnesses, this is the exchange that followed: MR.

WATSON: I think it’s of marginal relevance, and I harken back to my earlier submissions where we’re dealing with a prospective rather than a retrospective analysis. The way lawyers think, we look at that that report, and we say, well, who is going to win because it’s the result that matters on the report, but, actually, that’s not the correct analysis. The correct analysis is, on the basis of the information that was available at the time that the statement was prepared, were we on board with the standards, which, of necessity, renders whatever KPMG found out irrelevant.

… MR. CHERKEWICH: -- well, I’m -- I’m kind of curious. As I have explained to you before, the -- you can do whatever you want with that item. The -- the problem is -- is that if you’re going to -- the -- the letter from INAC saying they read it, and this is their twist on it, and this is their conclusion that they’re going to meet with the band, that’s all supported by that. Now, that may come from a small part of the report or a large part . I don’t think -- see, the -- the First Nation and the Kawulas are comforted by having that report, at this point, because they’ll now finally be able to deal with that receivable. And -- and if the -- the -- INAC, in their letter, are correct in their

interpretation of the report -- remember, it was the band who invited this -- …. MR. CHERKEWICH: If you want to wait around for it, fine. If you don’t, that’s fine, too, with me. (Emphasis added, T1230–T1232) [ 35 ] Following this exchange, the chairperson ruled that the Discipline Committee was not prepared to wait in order to release its decision. The Discipline Committee released its decision, finding Ms. Kawula guilty of both counts on November 19, 2012. [ 36 ] As I have indicated, the Council heard her appeal on October 28, 2013, and dismissed it on November 25, 2013. Ms.

Kawula did not have either the draft or final KPMG report when she argued her appeal before the Council. 2. Application in the Court of Queen’s Bench to include the KPMG report [ 37 ] Prior to the hearing of her appeal in the Court of Queen’s Bench, Ms. Kawula applied to include the KPMG report in the appeal book on the basis that it was a document that should have been disclosed and produced, either at the Discipline Committee hearing or before the Council, and constituted fresh evidence for that purpose or in its own right. [ 38 ] In support of her application, Ms.

Kawula swore an affidavit attesting to the following matters: (

a) on November 28, 2012, Wahpeton wrote to Ms. LeCompte asking for the final KPMG report – no report was ever forthcoming through this avenue; (

b) on December 21, 2012, the same day the Discipline Committee released its decision about costs, Ms. LeCompte indicated that the KPMG report would have to be sent to the Department’s Access to Information and Privacy Branch for review before it could be released – no report was ever forthcoming through this avenue; (

c) on March 1, 2013, Ms. Kawula filed an access to information request with INAC, again requesting the KPMG report – Ms. Kawula was advised on April 2, 2013, that the document would be withheld from disclosure; (

d) on May 23, 2013, Ms. Kawula complained to the Office of the Information Commissioner; (

e) on September 4, 2014, after significant effort, Ms. Kawula received a copy of what was still listed as a draft KPMG report, bearing the date of June 12, 2012, which pre-dated the start of the September 2012 Discipline Committee hearing by almost three months; and (

f) on September 5, 2014, in response to an email written for that purpose, Ms. Kawula was informed that the draft report and the final report were identical, except for the removal of the word “draft” on the cover page – no change was made to the June 12, 2012, date. [ 39 ] Ms. Kawula attached the KPMG report as an exhibit to her affidavit filed with the Court of Queen’s Bench. With respect to the question of “Wahpeton Dakota Nation Education Program Funding”, the KPMG report reads as follows: 5.2.3

Summary In

summary, evidence does exist that indicates additional funding was provided to [Wahpeton (WDN)] for students attending provincial schools that would appear to be consistent with methods used in other Districts. While no direct evidence was provided that WDN was consulted on the funding method to be used, and the method was not formally documented in an amendment, evidence does exist that would indicate that an at a minimum WDN Chief and Council was aware of the policy change taking place, and clearly should’ve been aware of the increased cash flow.

While direct evidence of funding does exist, we note that was not provided to the auditors by [INAC (AANDC)] . Through [the Access to Information and Privacy Act ] requests, AANDC did provide an explanation of the approach used by AANDC to fund provincial students, however no evidence was provided to support that this additional amount was funded to WDN. KPMG was only able to verify the funding to worksheets provided by AANDC that were not provided to K&K .

In comparing Education Program funding including funding of students attending provincial schools in 1997–98 ($483,657) and 1998–99 ($541,487) to the planning variable amount for the Education Program in the [Financial Transfer Agreements] for 1999–00 ($749,577), we note a significant gap exists that could cause someone to legitimately question if the final two years of the [Alternative Funding Arrangement (AFA)] agreement are adequately funded, absent additional information .

We note that the difference includes $154,800 for post-secondary education funding, and various adjustments for changes to the nominal roll and other cost factors. (Emphasis added) [ 40 ] The report also addressed the communications between INAC (referred to as AANCD) and Ms. Kawula (referred to as K&K):

5.3 AANDC Communications with WDN Auditor Through their 2005 Management Letter, a timeline document provided to us, as well as information obtained from our interview, K&K has provided numerous examples of statements allegedly made to them by AANDC employees. In the opinion of K&K, the comments both individually and as a whole represent a bias that exists against both [Wahpeton (WDN)] Chief and Council and K&K themselves. As we have noted in

section 5.1 of this report, there appears to be a lack of indication between AANDC and K&K related to resolving the issues around the 2004 Management Letter. Outside of two meetings where the Management Letter was discussed, we have noted virtually no discussion about the receivable contained in the Management Letter, and little to no discussion about how the disagreement over the Education Program funding may have been resolved . In their letter, K&K stated in certain instances AANDC had provided little information that would allow them to verify that AANDC had met the Education Funding requirements.

Based on the information we have reviewed, as well as comments from K&K and AANDC employees, these statements by K&K would appear to be largely factual. KPMG has identified several AANDC documents that would appear to shed light on the issue at hand, and if appropriately shared may have allowed K&K to arrive at a different conclusion. In our discussions with AANDC, they acknowledged that in the case of the 1997–98 and 1998–99 provincial school tuition, AANDC did not attempt to resolve the issue in any meaningful way as they considered it irrelevant to the overall discussion .

It is clear in the management letter that the auditor feels strongly that AANDC was not adequately funding the First Nation regardless of the contract between the parties and this strongly held view may have made it difficult for AANDC and the auditor to resolve the matter in a reasonable way . (Emphasis added) [ 41 ] Specifically, regarding the complaint against Ms. Kawula, the KPMG report continues: 5.4 AANDC Complaint against the WDN Auditor Both K&K and AANDC have acknowledged that this matter has become personal.

In reviewing the complaint filed by AANDC against K&K, we have considered the reasonableness in terms of whether Kirby Korchinski, on behalf of AANDC had the authority to file the complaint, the facts stated in the complaint, and whether other options existed. As we have previously discussed, evidence provided by AANDC to us would appear to demonstrate that AANDC has met their funding requirements with regard to the WDN Education Program.

Based on the information reviewed, in our view, the comments within the complaint that the receivable is not payable by AANDC under their agreements with WDN are reasonable statements for AANDC to make. We note that although the statement that supporting documents were presented to K&K is not inaccurate based on our findings, it does not appear that all supporting documentation that might have been helpful was presented . KPMG met with Mr. Korchinski, along with Riel Belgarde, Regional Director General, and Rob Harvey, Associate Regional Director General, to discuss this matter.

We understand that while the letter was prepared by Mr. Korchinski, it was done with the full knowledge and support of the Regional Director General. However, while support was verbally confirmed, we understand that there are no internal memos that could detail the rationale behind the decision, or documents demonstrating approval from senior management. We also note that AANDC, while approaching the [Institute of Chartered Accountants of Saskatchewan (ICAS)] about options, did not seek a legal opinion or outside expert accounting advice prior to filing the complaint .

We note that other alternatives existed that may have resulted in a quicker resolution, or at least could have been used to ultimately demonstrate that th e complaint was f iled as a last resort . As noted i n sectio n 5.3 of the report , KPMG was able to review documents obtained through AANDC that do not appear to have been in the possession of K&K. Had these documents been appropriately provided to K&K , K&K may have had an opportunity to conclude differently . The complaint was initially filed i n October 2004 , and is still ongoing as of the time of reporting, nearly eight years later.

Clearly, as acknowledged by a ll parties in our interviews, this dispute became a personal matter for those involved, and as a result it appears an opportunity was missed to resolve the dispute in an efficient manner that would hav e been most beneficial to all parties, including WDN. (Emphasis added) [ 42 ] Notwithstanding the position it had taken before the Discipline Committee, the Institute opposed Ms. Kawula’s application to admit the KPMG report. 3.

Decision of the Court of Queen’s Bench regarding the admission of the KPMG report [ 43 ] The Chambers judge released a fiat on February 20, 2015 [ New Evidence Fiat ], denying Ms. Kawula’s application to have the KPMG report adduced as fresh evidence for the purposes of the appeal to the Court of Queen’s Bench. [ 44 ] Ms. Kawula renewed her application during the hearing proper of her appeal, arguing the Institute should have disclosed and produced to her the draft KPMG report when its existence came to light during the Discipline Committee hearing.

In the alternative, she also argued that the final KPMG report should be admitted into evidence for the purposes of her appeal and should, at the very least, merit a new hearing before the Discipline Committee. In response to her arguments, the trial judge reproduced that part of the New Evidence Fiat that he found to be applicable. [ 45 ] From the New Evidence Fiat , and on the question of disclosure and production, the Chambers judge referred to R v

Stinchcombe, (SCC), [1991] 3 SCR 326 [Stinchcombe]. He found that “the prosecution did not have the KPMG report todisclose” (at para 44) as only a “draft” report existed in October of 2012. The Chambers judge also found the report was not relevant – apoint that he expanded upon in connection with the fresh evidence argument. [46] With respect to fresh evidence, the Chambers judge relied upon R v Stolar, (SCC), [1988] 1 SCR 480[Stolar], for the governing principles. He found the report was not relevant and could not have been expected to affect the result.

Theseare the salient paragraphs: [154] … I addressed this argument, however, in my February 20, 2015 fiat on the parties’ application to determine the contents of theappeal book. In that fiat I said … … [49] More important to relevance, the KPMG report is an opinion. It relates the review of the circumstances of this case that wasconducted by KPMG, and it relates the conclusions that KPMG has come to following that review. Such an opinion, in the absence ofqualification of the opiner (or agreement between the parties) is of no probative value. The KPMG report has no evidentiary value.

It isnot logically probative on an issue, and it could not have been expected to affect the result of the case. [50] This is the conclusion that the parties and the discipline committee came to at the hearing. At pages 398–408 and 1230–1232 of thetranscript, the consensus was that:

a) the letter, P14, was only someone’s

summary of an opinion, and so of little or no relevance to the proceedings; and

b) the discipline committee was free to put the KPMG report in evidence, if the report was received by the committee -- but it was notimportant to either the prosecution or the appellant whether the report went in evidence or not. (Emphasis added, Kawula) [47] As part of her appeal to this Court, Ms. Kawula appealed the Chambers judge’s refusal to admit the final KPMG report. 4. Analysis [48] Ms. Kawula argued principally that the prosecution had breached its disclosure obligations for which she was entitled toreceive a remedy.

Her subsidiary argument was that the Chambers judge ought to have admitted the KPMG report as fresh evidence andto have acted on it accordingly. The Chambers judge concentrated his reasons on the fresh evidence issue and it is to that aspect ofMs. Kawula’s arguments that I will turn first. [49] The Chambers judge considered Stolar as the authority governing the admission of fresh evidence in this case. McIntyre J.,writing for the Supreme Court in Stolar, confirmed the Court’s earlier decision in Palmer v The Queen, (SCC), [1980] 1SCR 759 [Palmer] – a decision that McIntyre J. had also authored.

In both decisions, he refers to the now well-settled criteria for theadmission of fresh evidence:

(1) The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial provided that this generalprinciple will not be applied as strictly in a criminal case as in civil cases: see McMartin v. The Queen.

(2) The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial.

(3) The evidence must be credible in the sense that it is reasonably capable of belief, and

(4) It must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affectedthe result. (Stolar at 486) [50] Palmer and Stolar are criminal law cases. This, of course, is an appeal from the decision of an administrative tribunal – thereview of which is governed by administrative law principles. [51] Admitting fresh evidence on a judicial review application is not without its controversy, particularly when it is being adducedfor the purposes of contesting the merits or a finding of fact.

For example, I note in Sara Blake’s Administrative Law in Canada, 4th ed(Markham: LexisNexis, 2006) [Administrative Law], the author states “fresh evidence, discovered since the tribunal made its decision, isnot admissible on judicial review” (at 198). In support of this proposition, the author cites Beci v Canada (Minister of Citizenship &Immigration), (FC), 130 FTR 267 (Fed Ct TD).

A decision expressing a similar view is Silverman v Alberta (HumanRights Commission), 2012 ABQB 152, 66 Alta LR (5th) 408. [52] While the test developed in Palmer and Stolar has been applied in the administrative law context, its application often resultsin the evidence being refused.

In that regard, see Wade v Strangway (1996), (BC CA), 72 BCAC 316 (BCCA) at paras 8–12; Dechant v Law Society (Alberta), 2000 ABCA 265 at para 8, 266 AR 249; Canadian Union of Public Employees,Local 59 v Saskatoon (City), 2001 SKCA 67 at paras 11–12, 207 Sask R 222; Wall v Independent Police Review Director, 2014 ONCA884, 123 OR (3d) 574; B.(L.) v Canada (Minister of Human Resources and Skills Development), 2012 FCA 310 at para 2; EllisDonCorporation v Ontario Sheet Metal Workers’ and Roofers’ Conference, 2014 ONCA 801 at para 25, 123 OR (3d) 253; Yellow CabCompany v British Columbia (Passenger Transportation Board), 2014 BCCA 329 at paras 46–51, [2014] 10 WWR 446; Albu vUniversity of British Columbia, 2015 BCCA 41 at para 31, 366 BCAC 304; and Provincial Court Judges’ Association of BritishColumbia v British Columbia (Attorney General), 2017 BCCA 63 at para 23, 409 DLR (4th) 492.

[53] Decisions where fresh evidence has been admitted using the Palmer criteria are fewer in number: Nova Scotia (CommunityServices) v T.G., 2012 NSCA 43 at paras 77–85, 316 NSR (2d) 202. Other cases apply a test comparable to that set out in Palmer inorder to admit fresh evidence: see, for example, Ryan v Law Society of New Brunswick, (NB CA), 187 DLR (4th)270 (NBCA) (also cited in Administrative Law at 155–156, footnote 53).

As well, I note that some administrative tribunals have citedPalmer as the correct test for an application to adduce fresh or new evidence: Guttman v Law Society (Manitoba), 2010 MBCA 66 atparas 43–44, [2010] 8 WWR 385; and Shier v Manitoba Public Insurance Corporation, 2008 MBCA 97 at paras 7, 19, 39–40, and 54–58, [2009] 1 WWR 31.[2] [54] This Court did not receive extensive argument on whether fresh evidence can or should be admitted in the administrative lawcontext or, if so, what the correct test should be.

According to the authorities that I have reviewed, fresh evidence, which seeks to setaside a finding of fact or otherwise attacks the merits of an administrative law decision, can be admitted in limited circumstances, but thereviewing court must remain cognizant of the differing roles played by an appellate court when performing judicial as opposed toappellate review.

Since the majority of the Canadian decisions on point utilize the Palmer criteria to either refuse or admit the profferedfresh evidence, I will do so in this appeal. [55] The Chambers judge found the application to admit fresh evidence failed on two bases: relevance and the potential effect onthe result. The usual standard of review regarding the admissibility of evidence is correctness, particularly when the decision regardingadmissibility does not involve the exercise of discretion: see Donald J.M.

Brown, Civil Appeals, loose-leaf (Rel 2017-2, April 2017) vol2 (Toronto: Thomson Reuters, 2017) at para 12:5320, and the cases referred to therein, including Catholic Charities Clothes Bank ofLethbridge v Roman Catholic Diocese of Calgary, 2012 ABCA 390 at para 6, 539 AR 343; R v Alves, 2014 SKCA 82 at para 54, [2014]12 WWR 63 [Alves]; Alpugan v Baykan, 2014 ABCA 152 at para 20, 45 RFL (7th) 1; and O’Grady v Canada (Attorney General), 2016FCA 221 at para 2. Note also Roger P. Kerans and Kim M.

Willey, Standards of Review Employed by Appellate Courts, 2d ed(Edmonton: Juriliber, 2006) at 133–135, where the authors affirm that the correctness standard of review traditionally applies to thereview of decisions regarding the

interpretation and application of rules regarding the admission of evidence (opposed to assessing itsprobative value). [56] Specifically in the context of a fresh evidence application, I note that the Court in Khela v Mission Institution, 2011 BCCA450, 90 CR (6th) 149, described the Chambers judge’s decision on fresh evidence as an “exercise of discretion” (at para 90).

Then, inFrance (Republic) v Diab, 2014 ONCA 374 at paras 89–92, 120 OR (3d) 174, the Court did not expressly state the applicable standard ofreview of a lower court’s decision on a fresh evidence application, but appeared to employ a correctness standard. In light of suchdecisions as Alves, however, I see no reason to apply any standard of review other than one of correctness to the decision of theChambers judge refusing to admit the fresh evidence. [57] The Chambers judge correctly acknowledged that he was reviewing the Council’s decision, not the Discipline Committee’sdecision.

The question for him was whether the KPMG report met the Palmer criteria in the context of the Council’s decision. Thequestion is, however, the same for each of this Court, the Court of Queen’s Bench and the Council: whether the fresh evidence, ifbelieved, could reasonably, when taken with the other evidence adduced before the Discipline Committee, be expected to have affectedthe result of the Discipline Committee’s deliberations.

While the question is the same for each reviewing authority, there is a difference.At the time of the Discipline Committee’s hearing in September of 2012, the final report was not available. It does, however, appear tohave been available by the time of the Council hearing but the report was then being withheld by INAC. [58] Applying the Palmer criteria, there is no question that Ms. Kawula’s fresh evidence application meets the “due diligence”criterion. At every turn, she sought to receive the KPMG report and it was only due to her extensive efforts that it was finally madeavailable to her.

There is also no question that the evidence is credible in the sense that its factual components, at least, are reasonablycapable of belief. Insofar as the report contains opinion evidence, it is apparently credible. The real issues are the ones addressed by theChambers judge: (

a) relevance and (

b) effect on the result. I will address each of these in turn. a. Relevance [59] The Chambers judge found that the KPMG report was not relevant because it was an expression of opinion only and of noprobative value. I agree with the Chambers judge that opinion evidence would not, as a general rule, constitute evidence admissible asfresh evidence. Usually, an expert’s opinion would be obtained after the fact. It would often be an untested, inherently self-servingattempt to re-litigate issues already decided.

In my respectful view, however, the unusual nature of the circumstances of this case meansthat the nature of the report as opinion evidence is not dispositive of its relevance for four reasons. [60] First, the Discipline Committee is not limited in the same way as a court with respect to the rules of evidence. Section 22(4) ofthe 1986 Act provides that “[t]he discipline committee may accept any evidence that it considers appropriate and is not bound by rules oflaw concerning evidence”.

Section 31(5) of the 2014 Act repeats this provision. [61] Second, and no doubt having regard for s. 22(4) of the 1986 Act, the Discipline Committee admitted Exhibit P-14 as evidence.Exhibit P-14 is itself an expression of opinion. Moreover, the letter purports to be a

summary of the KPMG report – the very documentthat the Institute now resists being admitted. Since the KPMG report is the foundational document for Exhibit P-14, and the DisciplineCommittee had already accepted Exhibit P-14, relevance appears to be uncontestable. [62] The Chambers judge found that the parties agreed Exhibit P-14 was only someone’s

summary of an opinion and, therefore, oflittle or no relevance to the proceedings. On my reading of the transcript, given the uses to which Exhibit P-14 was put, I do not reachthat conclusion. In any event, at the time of the Discipline Committee’s hearing, no one had reviewed the report’s contents. Counsel forMs. Kawula indicated at several points that he had no difficulty with Exhibit P-14 being entered as an exhibit as long as it was fairlyreflective of the contents of the ultimate report. At the time any concession was made, no one knew the extent to which Exhibit P-14 and

the final KPMG report diverged. [ 63 ] Third, an official with INAC initiated the complaint against Kawula & Kawula in 2004. INAC is also the agency that commissioned the KPMG report, sometime in 2008 – well before the Discipline Committee heard the matter – and the scope of the report extends beyond an assessment of the financial affairs of Wahpeton, to include INAC’s relationship with Wahpeton’s auditor. In the “Scope”

section of the report, KPMG indicates that it was asked to undertake the following (AB120): 3 SCOPE … Specifically, we were tasked with the following: • Review the overall funding management of [Wahpeton’s] education program during the period April 1, 1996 to March 31, 2004; • Review and assess the interaction between [Wahpeton’s] auditor (K&

K) and [INAC]; and • Review the circumstances surrounding the complaint made to the Institute of Chartered Accountants of Saskatchewan (ICAS) by [INAC] against [Wahpeton’s] auditor. Thus, the KPMG report is directed to the very issues that the Discipline Committee had to consider, notably the extent of the information that had been given to Kawula & Kawula and the circumstances surrounding the complaint. This evidence was directly relevant to the charges against Ms.

Kawula and the advocacy in which she had allegedly engaged. [ 64 ] Fourth, the KPMG report reveals the presence of additional documentation that was not available either to Wahpeton or its auditors and that was not presented to the Discipline Committee – notably worksheets relating to educational funding without which KPMG could not have arrived at its conclusion that the funding was in conformity with the Financial Transfer Agreement. This fact is directly relevant to Ms. Kawula’s claim that she had not been provided with full disclosure. b.

Effect on the result [ 65 ] The KPMG report had direct relevance to two decisions of the Discipline Committee: (

a) whether Ms. Kawula had been informed of the case against her (the missing pages issue); (

b) whether Ms. Kawula was guilty of the two counts against her. i. The Missing Pages Issue

a) Background [ 66 ] The evidence before the Discipline Committee shows that Kawula & Kawula met in person with INAC officials on May 21, 2004, two months before the firm signed off on the financial statements and five months before INAC complained to the Institute. According to the testimony of Mr. and Ms. Kawula, the INAC officials would not provide Kawula & Kawula with the critical pieces of documentation that they had requested. There was no other communication with INAC, which forced Ms.

Kawula to take the unusual step of making an access to information request for financial information. [ 67 ] In the October 18, 2004, letter of complaint from Mr. Korchinski to the Institute [ Complaint Letter ], he wrote the following: Department staff met with Frank and Audrey Kawula in their office on May 21, 2004.

At the meeting, supporting documentation was presented, and our position was communicated that additional funding was not payable to Wahpeton Dakota Nation and the invoices would not be paid by the Department. (AB 160) [ 68 ] It was not until three months later, on January 18, 2005, that the Institute notified Mr. Kawula that the Professional Conduct Committee had received a complaint filed against him. [3] He was told the complaint potentially showed he had violated bylaws 205 and 206 “with respect to the audit of the Wahpeton Dakota Nation financial statements for the year ended March 31/04”, but a copy of Mr.

Korchinski’s letter (with or without the attachments) was not given to him. [ 69 ] When the Institute did not provide a copy of the complaint, Ms. Kawula wrote to INAC under the Access to Information Act , RSC 1985, c. A-1, requesting a copy of the INAC complaint and supporting documents. On March 23, 2005, the Access to Information Coordinator wrote to Ms. Kawula: “Enclosed you will find the complete package of records that respond to this request. You will note that some information has been withheld from disclosure pursuant to section 20(1)(

b) of the [ Access to Information Act ] . A copy is enclosed for your information” (emphasis added, AB575). [ 70 ] The first attachment is Mr. Korchinski’s original complaint letter, dated October 18, and states the following on page 2: “Attached is documentation relating to this matter. Please note that all of the attached documentation is to be kept confidential to the parties involved ” (emphasis added, AB577). [ 71 ] The documents attached to Mr. Korchinski’s letter are listed: Annual Financial Statements – March 31, 2004 Auditors Management Letter – July 29, 2004

Letter from INAC to Wahpeton – October 18, 2004 INAC analysis of Provincial Tuition Funding Copy of Invoices from Wahpeton to INAC [ 72 ] Pages 3 to 79 are listed as being exempt from disclosure pursuant to s. 20(1) (

b) of the Access to Information Act (AB578). The next document is a six-page letter from INAC to Wahpeton, dated October 18, 2004, including a one-page attachment, showing changes in financial position from the 1996–1997 tax year to the 2003–2004 tax year. Anything pertaining to Wahpeton’s current financial status had been redacted from the letter. The next document indicates that pages 86 to 113 are exempt from disclosure pursuant to section 20(1) (b). (Subsequently, an un-redacted version of the October 18, 2004, letter from INAC to Wahpeton was produced to Ms.

Kawula: appeal book at 155–160). [ 73 ] On April 1, 2005, counsel for Ms. Kawula wrote to the Institute, asking for a copy of the complaint. When the complaint was not forthcoming, her counsel continued to press the Institute. [ 74 ] On April 6, 2006, Shelley Thiel, on behalf of the Institute, wrote to Ms. Kawula, saying “this is to clarify the contents of the complaint dated October 18, 2004” (AB265).

Her letter then goes on to list the documents that were “included in the letter received by the Institute”: • 2 page letter of complaint • Pages 3, 4, 5, and 11 of the financial statements for the Wahpeton Dakota Nation for the year ended March 31, 2004 • Auditors’ Report on Compliance with FTA No 1999-2004/1 • Notes to Auditors Report on Compliance with FTA No 1999-2004/1 (pages 1–13) • Letter to Chief Garry Standing dated March 4, 2004 (pages 1–3) • Auditors’ Management Letter Interim Audit for year to end March 31, 2004 (pages 1–10) • Letter to Chief Garry Standing dated April 6, 2004 (pages 1–3) • Notes to Auditors’ management letter March 4, 2004 (includes 3.1 Analysis – Introduction, 3.4 Audit Tests Showed and 3.4 Calculation Assumption) • Financial Information for years 96–97 to 03–04 (1 page document) • Invoice from Wahpeton Dakota Nation to Indian and Northern Affairs Canada dated March 31, 2004.

These pages total 39 pages, not the 113 referred to in the access to information reply. [ 75 ] The issue of the missing pages was front and center before the Discipline Committee. The only INAC witness called on behalf of the prosecution was Robert J. Harvey, Mr. Korchinski’s supervisor. Mr. Harvey was not at the May 21, 2004, meeting. He said he had reviewed the Complaint Letter , but he did not know what the “supporting documentation” was (transcript of the Discipline Committee hearing at 121).

Morgan Kennedy, one of the investigators, testified that he had not received any supporting documents from INAC and he had not seen the “supporting documentation” mentioned in the Complaint Letter (T362). [ 76 ] When counsel for Ms. Kawula was cross-examining John Harder, the other investigator, about whether the Committee had the “full complaint,” the Discipline Committee recessed to consider the point.

When it returned, the chairperson announced the following: “There is no evidence before this panel to suggest that the full complaint and the attachments, as received by the Institute of Chartered Accountants, has not been disclosed” (T271). [ 77 ] After this ruling, Ms. Kawula’s counsel was permitted to adduce further evidence showing the chronology of events and putting the results of the access to information request in evidence, but the Discipline Committee made no further ruling, notwithstanding the evidence received after its initial decision. [ 78 ] On appeal to the Council, Ms.

Kawula raised the issue of the missing pages again. The Council found as follows: [44] Ms. Kawula argued that the Discipline Committee erred in ruling that there was no evidence before the Committee to suggest that the full complaint and attachments, as received by the Institute of Chartered Accountants, had not been disclosed to the member .

In her argument, she maintained that the Professional Conduct Committee’s failure to provide her with full disclosure of the complainant’s complaint constituted a denial of fundamental justice. [45] Council reiterates that it finds no palpable errors on the part of the Discipline Committee in its

interpretation of the evidence presented at the discipline hearing and accepts all facts as found by the Discipline Committee. Having found that the full complaint, as received by the Institute had been disclosed to the member and formed the basis of the prosecution, there had in Council’s respectful view been no denial of fundamental justice in this case . (Emphasis added, Institute Decision ) [ 79 ] The missing pages issue was also one of Ms. Kawula’s grounds of appeal to the Court of Queen’s Bench. The Court of Queen’s Bench Chambers judge made no specific finding in relation to it. He simply reiterated Ms.

Kawula’s assertion that the “October 18, 2004, initial complaint of INAC was not disclosed to her in its entirety (that is, with all attachments) until April 29, 2009” ( Chambers

Decision at para 144).

b) Effect of the KPMG report on the ruling that Ms. Kawula had received all of the documentation [ 80 ] As I have indicated, the Discipline Committee ruled that “there is no evidence before this panel to suggest that the full complaint and the attachments, as received by the Institute of Chartered Accountants, has not been disclosed”. Clearly, the Discipline Committee thought that Ms. Kawula was raising a red herring. Even when additional evidence was led, the Discipline Committee did not revisit the issue. [ 81 ] However, the KPMG report refers to documentation that INAC had, but Ms.

Kawula did not have, and for which disclosure had not been made. From the quoted portions of the KPMG report referred to earlier, I note the following: While direct evidence of funding does exist, we note that it was not provided to the auditors [K&K] by [INAC (AANDC)]. Through [ Access to Information and Privacy Act ] requests, AANDC did provide an explanation of the approach used by AANDC to fund provincial students, however no evidence was provided to support that this additional amount was funded to WDN. KPMG was only able to verify the funding to worksheets provided by AANDC that were not provided to K&K .

In comparing Education Program funding including funding of students attending provincial schools in 1997–98 ($483,657) and 1998–99 ($541,487) to the planning variable amount for the Education Program in the [Financial Transfer Agreements] for 1999–00 ($749,577), we note a significant gap exists that could cause someone to legitimately question if the final two years of the [Alternative Funding Arrangement (AFA)] agreement are adequately funded, absent additional information.

We note that the difference includes $154,800 for post-secondary education funding, and various adjustments for changes to the nominal roll and other cost factors. In their letter, K&K stated in certain instances AANDC had provided little information that would allow them to verify that AANDC had met the Education Funding requirements. Based on the information we have reviewed, as well as comments from K&K and AANDC employees, these statements by K&K would appear to be largely factual .

KPMG has identified several AANDC documents that would appear to shed light on the issue at hand, and if appropriately shared may have allowed K&K to arrive at a different conclusion. (Emphasis added) [ 82 ] The question is whether this evidence, taken with the other evidence on point, could reasonably have affected the Discipline Committee’s conclusion that “the full complaint and the attachments, as received by the Institute of Chartered Accountants” had been disclosed.

In my view, having regard for the access to information evidence, which showed a much more extensive complaint, the KPMG report could reasonably be expected to have affected the Discipline Committee’s conclusion on this point. It is not possible to say, at this stage, what affect a different decision would have had on the overall result, but the question of proper disclosure was an important issue for the Discipline Committee.

Faced with the KPMG report, it is reasonable to conclude that the Discipline Committee could reasonably have made a different decision or, at the very least, directed inquiries in order to resolve the issue. ii. Effect of the KPMG report on the Discipline Committee’s finding of guilt [ 83 ] Count No. 1 of the Complaint against Ms.

Kawula charged as follows: [B]eing a member of The Institute of Chartered Accountants of Saskatchewan, did, as auditor of the Financial Statements for the years ended March 31, 2004 and March 31, 2005 for Wahpeton Dakota Nation Combined Funds issued an unqualified audit opinion on each of the financial statements and in so doing failed to provide a reservation in your audit report with respect to accounts receivable.

Further, you failed to obtain sufficient and appropriate audit evidence with respect to the appropriate evaluation of accounts receivable, particularly in light of the Indian and Northern Affairs Canada (INAC) confirmation that the receivable would not be paid by INAC . In so doing, you contravened

section 15 of The Chartered Accountants Act, 1986 , in one or more of the following ways: (

a) you did sign and associate yourself with reports, representations and/or financial statements which you knew, or ought to have known, were false or misleading, contrary to Institute Bylaw 205(a); (

b) you did fail to perform your professional services in accordance with generally accepted standards of practice of the profession, contrary to Institute Bylaw 206.1 … . [ 84 ] In finding Ms. Kawula guilty of this charge, the Discipline Committee made these findings: (

a) in view of INAC’s denial of the validity of the receivable and refusal of payment, “there was no factual basis to conclude that INAC would pay” ( Committee Decision at para 59); (b) “[Ms. Kawula] associated herself with reports, representations and/or financial statements which she knew or ought to have known, were false or misleading, contrary to ICAS bylaw 205(a)” (at para 57); (

c) the financial statements for the years ending March 31, 2004, and March 31, 2005, and the representations and the accompanying auditor’s reports “were false or misleading” (at para 58) and Ms. Kawula “knew or ought to have known that the statements and representations were false or misleading” (at para 59). [ 85 ] The Discipline Committee reached these conclusions based on evidence that included Exhibit P-14 and the expert’s evidence. Indeed, the expert considered the KPMG report, as described in Exhibit P-14, as being “an independent opinion as to whether there is, in fact a claim available”.

In that regard, note this exchange with the expert witness during his examination by counsel for the prosecution in relation to Exhibit P-14: [MR. WATSON:] -- from the auditor’s point of view, is this a prospective or a retrospective analysis, is what I’m concerned with. So the

focus -- to meet the standards applicable, do we look at the information that was available at the time the statements were prepared? Is that -- is that the process? [MR. GLASS (expert witness):] Basically, that’s what you’re restricted to, unless you solicit another expert’s opinion as is contained in here . [MR. WATSON:] Okay.

So when we get a document like this coming into the hands of an auditor several years later, okay, and if we assume the contents of that document are true, especially I think the top of page 3 where it says, “Based on its review, KPMG has concluded that education funding received by Wahpeton through the federal transfer agreement has been consistent with the terms of the agreement,” et cetera, et cetera. So there’s nothing owing? [MR. GLASS:] It’s an independent opinion as to whether there is, in fact, a claim available. [MR. WATSON:] So what does that trigger from the auditor’s point of view? [MR. GLASS:] Panic.

No, I’m just joking. That would give the auditor the comfort of knowing the resolution of the issue. [MR. WATSON:] Okay. [MR. GLASS:] It -- the auditor, they’re not to fall in love with the process but to merely form an opinion.

And if another independent opinion, as I read this, was based on looking at the funding throughout a number of communities and found them all to be in line and -- and in conformity with the FTA, financial transfer agreements, comprehensive funding agreements, whatever agreements were in place, the only thing you can do is accept it or go back and try and refute it. (Emphasis added, Discipline Committee hearing transcript at 503–505) [ 86 ] These findings were made based on evidence that included Exhibit P-14.

Yet, the KPMG report states the following: (a) “as the change to fund students attending provincial schools through the [Alternative Funding Arrangement] did not include an amendment to the agreement, or other documentation that would require formal approval by [Wahpeton First Nation], we have not been provided with any evidence to show that the method used to allocate funding for provincial students … was agreed upon between the parties” (s. 5.2.2); (b) “[w]hile the addition of provincial students is clear in the calculation worksheet, we note that the document does not appear to been made available to K&K in their review”; (c) “[w]hile direct evidence of funding does exist, we note that it was not provided to the auditors by [INAC]” (s. 5.2.3); (d) “KPMG was only able to verify the funding through worksheets provided by [INAC] that were not provided to K&K”; (e) “a significant gap exists that could cause someone to legitimately question if the final two years of the [Alternative Funding Arrangement (AFA)] agreement were adequately funded, absent additional information”; and (

f) if Ms. Kawula had received additional documentation, she “may have had an opportunity to conclude differently” (s. 5.4). [ 87 ] This is evidence from an agent, KPMG, that had been engaged by INAC – the very department of

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