Res judicata principle applies to disciplinary proceedings.
On 19 January 2011 in a unanimous decision the Supreme Court upheld an appeal by Mr Coke-Wallis, a chartered accountant and ICAEW member, against a decision of the Institute to exclude him from membership. Mr Coke-Wallis successfully persuaded the Supreme Court that in reaching its decision the Institute had considered the same conduct relied upon in an earlier complaint against him which had been dismissed for technical reasons. It was therefore contrary to the principles of res judicata to allow the Institute to proceed with a second complaint. Res judicata or double jeopardy is the principle that no person should be tried twice in respect of the same complaint.
What had Mr Coke-Wallis done?
Mr Coke-Wallis had been convicted by the Jersey courts of failing to comply with a direction from the Jersey Financial Services Commission that, amongst other things, no records and files of trust companies of which he was a director and shareholder be removed from the offices of the companies. In breach of the direction, Mr Coke-Wallis’s car was stopped by police at a Jersey ferry terminal and found to contain files relating to clients, together with computer equipment, network servers and back up tapes. He was prosecuted and convicted of the offence under article 20(9) of the Financial Services (Jersey) Law 1998 of failing to comply with the direction.
The ICAEW’s first complaint
The ICAEW’s Investigations Committee laid a complaint against Mr Coke-Wallis alleging that he was liable to disciplinary action under bye-law 4(1) (a) in that:
“in the course of carrying out professional work or otherwise he has committed any act or default likely to bring discredit on himself, the [ICAEW ]or the profession of accountancy in that he was convicted upon indictment ... of failing to comply with a direction issued on 18 December 2002 by the Jersey Financial Services Commission contrary to article 20(9) of the Financial Services (Jersey) Law 1998.”
The Institute, relying on bye-law 7(1), submitted that Mr Coke-Wallis’s conviction in Jersey was conclusive evidence of the commission of an act or default sufficient for the purposes of bye-law 4(1)(a). Bye law 7(1) provides that:
“The fact that a member.... has before a court of competent jurisdiction, pleaded guilty to or been found guilty of an indictable offence (or has, before such a court, outside England and Wales, pleaded guilty to or been found guilty of an offence corresponding to one which is indictable in England and Wales) shall for the purposes of these bye-laws be conclusive evidence of the commission by him of such an act or default as is mentioned in bye-law 4(1)(a)...”
A tribunal hearing was convened at which the complaint was dismissed on the grounds that the tribunal were not satisfied that the offence under Jersey law was an “offence corresponding to one which is indictable in England and Wales” as required by the language of byelaw 7(1). The evidential short cut on which the Institute sought to rely did not work in these circumstances.
The ICAEW’s second complaint
The ICAEW’s Investigation Committee then laid a second complaint seeking to restore the position. The second complaint started with the same language but by way of particulars set out the actions that Mr Coke-Wallis had taken that had led to his conviction rather than relying on the fact of the conviction.
A new tribunal was asked to determine a preliminary issue raised on behalf of Mr Coke-Wallis as to whether the second complaint should be summarily dismissed on the grounds that the same complaint had already been dismissed (relying on the res judicata principle). The tribunal dismissed Mr Coke-Wallis’s preliminary issue and he made an application for judicial review. That application was dismissed at first instance , then unsuccessfully appealed to the Court of Appeal. The Court of Appeal found that the first complaint was based on the fact of the Jersey conviction whereas the second complaint related to the underlying conduct itself.
Mr Coke-Wallis appealed to the Supreme Court. Pending hearing of the appeal the second complaint was heard by the new tribunal. The tribunal upheld the second complaint and ordered that Mr Coke-Wallis be excluded from membership.
The Supreme Court’s decision
The Supreme Court found that despite the different ways in which the complaints had been framed they were in fact one and the same: the act complained of in both instances was the underlying conduct. To say, as was submitted on behalf of the ICAEW, that the first complaint was based on the fact of the Jersey conviction was to misconstrue the bye-laws which did not allow for a qualifying conviction itself to amount to discreditable conduct.
The Supreme Court considered whether res judicata applied in the disciplinary context so as to lead to an absolute bar on the pursuit of the second complaint. The Supreme Court held that the principles of res judicata did apply to disciplinary proceedings, which are civil in nature. The finding of the first tribunal was a final decision made on the merits such that the second complaint should not have been pursued. If the tribunal had held that the Jersey conviction was based on an offence which corresponded to an indictable offence in England and Wales, it would have found the complaint proved and there could have been no doubt that such a decision would have been final and on the merits. It followed that the same was true of the decision to dismiss the complaint. The Supreme Court explicitly left to Parliament a novel proposition raised on behalf of the ICAEW at the eleventh hour that there should be a public interest exception to the doctrine of res judicata for successive disciplinary proceedings.
The decision highlights how important it is that complaints in disciplinary proceedings are formulated strictly in compliance with the applicable rules. The Supreme Court has confirmed that the principles of res judicata will apply in disciplinary proceedings – even where, as Lord Justice Collins observed, the effect of the decision is that: “a person who has shown by his discreditable conduct that he is not fit to practise may continue to do so".