CPA Australia Ltd v The New Zealand Institute of Chartered Accountants

• Jurisdiction: New Zealand
• Judge: Dobson J
• Judgment Date: 06 August 2015
• Neutral Citation: [2015] NZHC 1854
• Docket Number: CIV-2013-485-939
• Court: High Court
• Date: 06 August 2015

Under the Defamation Act 1992 and the Fair Trading Act 1986

Between

CPA Australia Limited

Plaintiff

and

The New Zealand Institute of Chartered Accountants

Defendant

[2015] NZHC 1854

CIV-2013-485-939

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

Application for a declaration under s24 Defamation Act 1992 (“DA”) (declaration) that statements made by the defendant were defamatory — claim for damages for breach of the Fair Trading Act 1986 (FTA) — both parties were professional bodies for accountants — the plaintiff complained that statements made by the defendant meant that (inter alia) its educational programme was inferior, that it had not been admitted to a global professional body because of that fact, and that it did not comply with internationally recognised standards of best practice for accountancy — consideration of burden of proof under s6 DA when proceedings were brought by body corporate — must prove statements had or were likely to cause pecuniary loss) — whether the statements were defamatory — whether the plaintiff had established loss pursuant to s6 DA — whether a minimum threshold of seriousness should be applied to protect the right to freedom of speech under s14 New Zealand Bill of Rights Act 1990 — whether the statements made at conferences were subject to s16 DA (qualified privilege) — whether there had been breaches of s9 FTA (misleading and deceptive conduct generally) and s11 FTA (misleading conduct in relation to services) and if so, what remedy should be given.

Counsel:

A R Galbraith QC, N J Russell and S I Jones for plaintiff

B D Gray QC, R K P Stewart and H L Coull for defendant

RESERVED JUDGMENT OF Dobson J

Contents

The two organisations	[2]
The statements complained of	[11]
The flyer	[11]
The advertisement	[19]
The conference addresses	[24]
The National Business Review article	[34]
The causes of action in defamation	[37]
Are the pleaded meanings made out?	[42]
Innuendoes pleaded	[61]
The requirement to make out loss	[65]
A threshold of seriousness?	[104]
Defences pleaded	[122]
Truth	[122]
Honest opinion	[140]
Qualified privilege	[171]
The Fair Trading Act claim	[183]
Summary	[222]
Costs	[225]

1 These proceedings involve two causes of action in defamation and one for breach of the Fair Trading Act 1986 (the FTA) brought by one professional body for accountants in respect of disparaging comments made by another.

The two organisations

2 The plaintiff (CPAA) has been in existence in Australia since the 1880s. It provides a range of services to its members, including continuing education and support for accountants providing a wide range of accounting services. It also administers the certification of appropriately qualified accountants and monitors the educational content required to attain certification.

3 CPAA has between 140,000 and 150,000 members worldwide. 1 Those members are predominantly in Australia but also in a number of Asian jurisdictions and, since about 2005, in New Zealand. When Mr David Jenkins, who is currently the New Zealand country manager for CPAA, joined the organisation in 2008 it was attracting about 15 new members a year in New Zealand. He thought that CPAA had got to 1,000 members in New Zealand by about mid 2013, and that membership had risen to about 1,800 by the date of the hearing. 2

4 CPAA's potential stature as a professional body in New Zealand increased from 2012 when it became accredited by the Financial Markets Authority (FMA) to license accountants who perform auditing assignments for restricted categories of audit such as those of public issuers.

5 CPAA has a permanent office in New Zealand with staff employed to canvass for new members and provide a range of services to its members. It is also supported by personnel from its more substantial offices in Australia.

6 The defendant (NZICA) was the only organisation in New Zealand providing services for professional accountants until CPAA set up here. The provision of a range of accounting services was, until 2012, reserved for those who were members of NZICA and its predecessors whose status was confirmed by statute. The situation

was analogous to that of legal work regulated by the New Zealand Law Society. NZICA certifies those appropriately qualified to practise, formerly as public accountants and, more recently, as chartered accountants

7 The sequence of cause and effect in the evolving relationship between the parties is difficult to discern and, in any event, is not critical. Throughout the period between 2011 and 2013, when the statements complained of were made, NZICA perceived CPAA as competing aggressively for new members among accounting students and accountants in New Zealand. It appears that the prospect that CPAA might offer students an iPad if they joined it, and the threat of expensive television advertisements, caused concern to some at NZICA. Otherwise, no actual instances of marketing by CPAA that competed aggressively with NZICA were cited in evidence.

8 The mere presence of another professional body attempting to set up in New Zealand, when NZICA and its predecessors had enjoyed a monopoly supported by successive forms of regulation of the accountancy profession, was likely to have been treated by the incumbent as “aggressive” competition. Certainly, the internal communications around the time of each of the statements complained of contemplated that NZICA should respond aggressively to the threat posed by CPAA.

9 During 2013, and possibly for some time before then, NZICA explored the prospect of merging with another established membership organisation for accountants in Australia, the Institute of Chartered Accountants in Australia (ICAA). In October 2013, the existing members of both NZICA and ICAA approved the merger and, since the events directly relevant to these proceedings, the merged entity has become Chartered Accountants Australia and New Zealand (CAANZ). 3

10 I find on the evidence that there has been a relatively co-operative working relationship between CPAA and ICAA in Australia. I was cited examples of the two organisations working jointly on the provision of guides on independence of

practice, and on joint submissions about proposed changes to accounting standards. 4 The relationship between NZICA and CPAA in New Zealand has been quite combative by comparison

The statements complained of

The flyer

11 The first initiative for NZICA that is complained of was a single page flyer produced to give to students attending a careers fair at Massey University's Albany campus in March 2011. A copy of the flyer is annexed to this judgment as Appendix A. 5 Both CPAA and NZICA were represented at the careers fair. It is generally accepted that once accountants have joined one of the professional organisations, there is relatively little movement of members from one to the other. This means that both organisations target their membership initiatives towards accounting students. The flyer was entitled “The Facts” under a heading:

Comparing New Zealand Institute of Chartered Accountants (NZICA) and Certified Practising Accountants Australia (CPAA).

12 The flyer contained five categories and compared features such as the average annual salary of members of NZICA and CPAA, the number of New Zealand members and the qualifications offered. It suggested that for chartered accountants who were full members of NZICA, the average annual salary was $140,000, compared with the average annual salary for CPAA members of $100,000.

13 In terms of numbers of members, it identified 32,000 for NZICA and 700 to 750 for CPAA. In comparing the qualifications offered, it stated there were three designations to choose from for NZICA members, but only one designation for members of CPAA.

14 In the last category addressing “Points of Difference”, the flyer invited an adverse view of CPAA by stating that:

• • CPAA only required three years of academic study (compared with four for NZICA);

• • CPAA was an Australian based qualification, new to New Zealand and not part of an international accounting alliance, whereas the NZICA qualification has international recognition and reciprocity;

• • NZICA had been established in New Zealand for over 100 years; and

• • graduates with NZICA qualifications were preferred by employers, including the big four accounting firms.

15 The average salary for CPAA members was attributed to a salary guide produced by Hudson Recruitment, a firm that conducted such surveys. Although the Hudson survey did not discriminate between salary levels for members of both organisations, the flyer drew on NZICA's internal research to provide the salary figure cited for its own members. It was therefore vulnerable to criticism for not making an accurate comparison as the average salaries came from different sources, and the Hudson survey did not support any differential in the amounts.

16 CPAA brought the terms of the comparison to Hudson's attention, and it promptly confirmed it had not given its consent to the salary guide being quoted in the manner it was. Hudson requested that NZICA cease representing its survey in that way.

17 The evidence from Mr McDougall, who was the director of marketing at NZICA at the time, was that NZICA stopped using the flyer as soon as it received the complaint from Hudson Recruitment, and destroyed the remainder of the approximately 300 copies of the flyer that had been produced. 6

18 In May 2011, CPAA made more detailed complaints to NZICA as to alleged misrepresentations in the flyer. In-house counsel at NZICA rejected the complaint and contended that the content of the flyer was not misleading or deceptive. 7

The advertisement

19 The second NZICA statement complained of by CPAA was the...