NZICA embarked on 'aggressive', 'deliberate' campaign against rival accounting body, lawyer says

Monday 6th July 2015

The New Zealand Institute of Chartered Accountants engaged in "professional denigration" that was "quite extraordinary and offensive" against rival accounting body CPA Australia when it was at its most vulnerable in the early stages of expansion in the local market, CPA's legal counsel claimed as part of High Court defamation proceedings.

The trial before Justice Robert Dobson at the High Court in Wellington began today, with Alan Galbraith QC outlining the case for CPA Australia, which alleges defamation and breaches of the Fair Trading Act covering statements in flyers, advertisements, news articles and at industry events. CPA Australia is claiming damages of $50,000, costs and other relief at the discretion of the court.

The rival accounting bodies both have long histories, dating back to about 1886. However NZICA had effectively held a statutory monopoly in New Zealand until 2012 when the newly established Financial Markets Authority accredited CPA Australia for auditing work, putting it on a more equal footing with NZICA, Galbraith said. NZICA's campaign, named 'project ambush' involved false comparisons and misrepresentations of issues such as potential earnings, numbers of accountants, global reach and educational standards, he said.

"The defendant embarked on a deliberate and aggressive public campaign of conduct designed to denigrate the plaintiff and its professional accounting designation," Galbraith told the court. "It's not cricket."

NZICA published advertisements in October 2012 to coincide with its rival's accreditation by the FMA, stating "in accounting there's best practice and then there's second best practice" which claimed only a member of NZICA had been exposed to the highest levels of industry training and development, which is why top CFOs and CEOs only employ chartered accountants. The accreditation was announced on Oct. 18, while the advertisements ran Oct. 17, 18 and 19 "obviously targeted at causing damage", he said.

Comments to an industry event by NZICA chief operating officer Kirsten Patterson about rival CPA Australia were recorded by an audience member on his pen recorder, with the audio played to the court.

The conduct "has had significant adverse consequences" for CPA Australia's operations in New Zealand and adversely affected its business, Galbraith said. Following the comments, it was more difficult to secure recognised employer partnerships with big accounting firms, more of its members resigned and turnout for its events was lower than expected.

NZICA, which has since merged with the Institute of Chartered Accountants Australia, is represented by Bruce Gray QC and will present its opening statement on Wednesday. NZICA declined to provide its statement of defence.

Galbraith said none of its proposed defences were tenable. They include that the comments were truthful, were an honest opinion and were made on an occasion of qualified privilege.

Former FMA chief executive Sean Hughes, who held that position when CPA Australia was applying for accreditation, is scheduled to give evidence for it at the trial next Monday, covering the process and the FMA's view of both parties.

Galbraith said NZICA intended to object to the relevance of Hughes' evidence, however he said Hughes would be able to speak to the robustness and integrity of CPA Australia.

The case is continuing.

BusinessDesk.co.nz

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