Are industry and professional bodies’ disciplinary records protected from court scrutiny?

A liquidator had been the subject of disciplinary proceedings by ARITA in 2018. In later unconnected court proceedings, as a joint liquidator of a company, a challenge was made to the denial of an insurance cover for the company. The insurer raised a number of issues about not only the company itself, but also the individual liquidator in relation to the past and unconnected discipline proceedings.

The insurer issued subpoenas to ARITA, CPA Australia and CAANZ, and the NSW Police.

On the application of the liquidators, the Court set aside the subpoenas as irrelevant to the proceedings.

Stevenson J said that the insurer was engaged in a “fishing expedition” and was not “entitled to undertake the types of enquiries called for by the subpoena”, finding there was no connection any professional misconduct of the liquidator (about which no finding was made) could possibly have to the issues in the main proceedings.

See Jason Tang and Ozem Kassem in their capacity as joint and several liquidators of Elite Plant Hire P/L (in liq) v MECON Winsure Insurance Group P/L [2020] NSWSC 441.


ARITA has since advised[1] that the subpoena sought access to ‘all conduct files’ of a former member, in relation to proceedings in entirely unrelated matters.

It went on to say that

‘regardless of whether the proceedings were related or not, ARITA immediately sought to resist the subpoena on the basis that it would compromise all future conduct processes’.

Its ‘submission[2] highlighted that the work undertaken by ARITA is, inter alia, to promote, uphold and enhance world class ethical and professional standards and to promote the ideals of the profession to the public at large. In doing so, it is imperative that ARITA has protocols governing a disciplinary process, that enable a balance of the interests of the members and the privacy and confidentiality of a member and any investigations undertaken of that member.

The release of confidential conduct files would undermine the operation of ARITA’s professional standards’ enforcement and that may risk the future likelihood of ARITA members ascribing to professional standards’.

Professional discipline proceedings

Professional discipline proceedings are typically private with the outcome publicly reported, balancing the interests of members and the public interest. ARITA took the same privacy stance in its successful submission to government protecting section 40-100 industry notices, whereby ARITA and other bodies can refer misconduct to ASIC. ARITA said that if the change were not made, its view was that ‘industry bodies may choose not to lodge under this provision’. ARITA does not even disclose the number of such notices it has issued, if any.

ILRA changes

However, industry notices and other changes brought in by the Insolvency Law Reform Act 2016 (ILRA) have created responsibilities, and potential liabilities, for ARITA and the other industry bodies.

The issue by ARITA or an industry body of a section 40-100 industry notice is subject to the right of challenge by the person the subject of the notice and a claim for damages as to any lack of reasonable suspicion or good faith: s 40-105.   Industry bodies now have a role in receiving and giving confidential information to the regulators, information that is protected by way of penalty for breach. Individual practitioners chosen by ARITA to take part in registration and conduct proceedings have potential liabilities.

As to the broader scope for challenge, CAANZ has been subject to a claim by a person for a refusal to re-admit them as a member. The Court refused CAANZ’s application to summarily dismiss the claim[4] rejecting its argument that there was no arguable case that as a private professional body, it was not amenable to judicial review, more so in this case that it was a professional body created by Royal Charter.

Necessarily, general liabilities exist, for example in defamation or misrepresentation.

Professional and industry bodies offer significant benefits to their members, and by agreement, assume some controls over their members’ conduct. The right of the courts to intervene in disputes of a member with the body is determined by the membership contract.[5] However, that area of law that is evolving, in particular in light of the devolution from government to bodies to regulate their members in a co-regulation arrangement.[6]

The Court in Kassem set aside the subpoenas on the threshold ground of irrelevance. In other cases, the disciplinary records would generally have no protection from scrutiny if they are relevant to the matter in hand. What seems to be a claim a right of public interest immunity by ARITA, despite its proceedings having no statutory force, must await a clearer challenge.

[1] ARITA successfully contests access to conduct files, 27 April 2020.

[2] Apparently, to the Court.

[3] Treasury Laws Amendment (Measures for Later Sitting) Act 2019 (Cth).

[4] Vergara v Chartered Accountants Australia and New Zealand [2018] VSC 811.

[5] Agricultural Societies Council of NSW Ltd v Christie [2016] NSWCA 331.

[6] R v Panel on Take-overs & Mergers; Ex parte Datafin plc [1986] EWCA Civ 8. Generally, see Disciplinary Hearings: What is to be Done? (2015) 80 AIAL Forum 77, Robert Lindsay.

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