R v Institute of Chartered Accountants and Another

Wednesday 4th November 1998

The applicant is a chartered accountant and a licensed insolvency practitioner. He is a member of the Institute of Chartered Accountants in England and Wales. In May 1997 the Institute requested various undertakings from the applicant, and undertakings were given by him. One of those undertakings required him to repay certain outstanding funds and out-of-date cheques to the Department of Environment by 30th June 1997.

On 9th June 1998 the applicant received a letter from the Institute stating that the latest information received by the Licensing Committee suggested that not all of the monies that were the subject of that undertaking had been paid to the relevant Department in accordance with the undertaking. Details of the monies not so paid were given. The letter went on:

"The Committee considers that you have failed to meet the undertaking given to the Licensing Committee under regulation 5.4 of the Insolvency Licensing Regulations and, in accordance with regulation 5.5, the Committee has ordered that an immediate restriction be placed in your insolvency licence to the effect that you may not accept any new appointments as office holder until further notice.

This order will take effect two business days after posting of this letter (i.e. on 11 June 1998). The Committee may consider the matter further upon receipt of any written representations you may wish to make. Please ensure that any such representations include the explanation requested above."

That is to say an explanation for the apparent failure to repay the monies to the Department. That letter came apparently without warning and without any opportunity for the applicant to make prior representations. The applicant now seeks leave to apply for judicial review to challenge the decision of the Licensing Committee referred to in the letter. The application for leave has been opposed by the Institute.

Before I deal with the submissions raised on behalf of the applicant, I should recount certain features of the subsequent history. On 19th June 1998, the Institute wrote to the applicant thanking him for a letter sent by him, and referring to correspondence that had taken place since the letter of 9th June. It went on to state that the Committee had a number of outstanding concerns and was not satisfied with the explanations provided to date, and that the Committee considered that the applicant had not complied with the undertaking previously given to repay outstanding funds and out-of-date cheques to the Department. Reference is also made to certain other matters. The letter ends:

"I am instructed to advise you that the Licensing Committee has ordered that the restriction on your licence, to the effect that you may not accept new appointments as office holder, is to remain in place until such time that the Committee receives satisfactory explanations in respect of the above."

The applicant requested a review of the decision of 9th June. The review procedures are set out in regulation 5.21 and following of the Insolvency and Licensing Regulations, and provide for an initial review by a review Committee, and a subsequent appeal to an appeal Committee if dissatisfied with the outcome of the review. The applicant did not make his application for a review under those provisions within the time laid down.

However, on 17th September 1998 the Institute wrote to his solicitors confirming that the matter would be further considered on 24th September, and that any order or orders made by the Committee on that date would give rise to an opportunity for the applicant to apply for a review under regulation 5.21.

On 25th September the Institute wrote again to the applicant's solicitors. The letter indicated that the matter had been considered by the Licensing Committee, which considered that some of the explanations provided by the applicant were unsatisfactory. The Committee had noted that there was some outstanding information required from the applicant. It expressed its concerns that certain documents were not available for inspection, and considered that the applicant's explanation regarding destruction of those documents was unacceptable. It had noted what appeared to be certain false entries in a relevant cash book which the Committee considered to be a very serious matter. In all the circumstances, the Committee had ordered a targeted visit to the applicant's office. The letter stated:

"The current restriction on your client's licence is to remain in place pending receipt of the JIMU report following the targeted visit."

The letter ended with a reminder that the applicant was entitled to apply for a review of the order of the Licensing Committee, and that any such application should be made within the ten days laid down in the regulations. No request for a review was made.

The submissions advanced before me on behalf of the applicant by Mr Jones were first that the decision of 9th June was bad from the outset because it was not within the powers that the Committee purported to exercise, and the Committee had adopted an impermissible hybrid procedure. In order to explain the point made, I should read the relevant part of regulation 5.5 of the Insolvency Licensing Regulations:

"The Licensing Committee may impose such restrictions or conditions on the accepting of appointments by the licence holder as it decides are appropriate if it considers that:…

(c) the licence holder has failed to meet undertakings given to the Licensing Committee under regulation 5.4;….."

I omit (d), (e) and (f) but include the tail piece to regulation 5.5:

"The Licensing Committee may at any time vary or revoke an order made under this regulation."

That is the regulation pursuant to which the Committee purported to act. It is submitted on behalf of the applicant that what the Committee did was not to impose a restriction as permitted by regulation 5.5, but to place a ban or total prohibition on the acceptance of appointments. In consequence, it is said, the Committee has got into a procedural tangle. There is no right for representations to be made under regulation 5.5. One has to have recourse solely to the review procedure. By contrast, the provisions for withdrawal of an authorisation under regulation 5.12 and following do lay down detailed procedures for representations, a hearing and so forth. In this case,...