Response to competition 'clumsy', not defamatory, says NZICA's lawyer

Tuesday 14th July 2015

The New Zealand Institute of Chartered Accountants was an incumbent threatened by and unused to competition, and while its response was "clumsy", it didn't defame its new rival, CPA Australia, the Wellington High Court has heard.

Bruce Gray QC, appearing before Justice Robert Dobson, defended NZICA's marketing campaign and speeches by chief executive Kristen Patterson, saying they were a "clumsy response" to a new environment.

NZICA's actions included a marketing campaign called "Project Ambush" in response to CPA Australia's appearance in New Zealand as a rival body for accounting professionals. NZICA effectively held a statutory monopoly in New Zealand until 2012 when the newly established Financial Markets Authority accredited CPA Australia for auditing work under incoming legislation, which put it on a more equal footing with NZICA.

"NZICA was faced with a new environment and it had to respond to something it hadn't had to respond to before, and its response was a bit clumsy," Gray said. "This was an early days response to a new environment."

CPA Australia claims NZICA defamed it in speeches at industry events and breached the Fair Trading Act in statements in flyers and advertisements, which included comparisons and allegedly misrepresented issues such as potential earnings, numbers of accountants, global reach and educational standards. CPA is seeking a declaration of defamation, but not a damages award, and $50,000 for the Fair Trading Act breaches.

Gray said the context of Patterson's speech needed to be kept in mind as the speech was more about NZICA needing to respond to new competition against a rival with more resources.

Patterson claimed that CPA Australia used iPad giveaways to lure members and that its advertising during prime time programming wasn't a good use of members' money. She also said the education pathways to gain a CPA designation weren't as difficult as NZICA's, and that is why it wasn't a member of the Global Accounting Alliance, like NZICA. CPA Australia has denied that, saying GAA only accepts one body per country, and NZICA's Australian counterpart had already taken that membership.

Justice Dobson said there had been no evidence of CPA Australia's own aggressive marketing, and while NZICA may have been clumsy, it sounded like the incumbent thought CPA Australia shouldn't be there.

Gray said Patterson's speech welcomed competition, as it would encourage the institution to be better. The incumbency of NZICA and the new regulation meant "others can now do it where previously they couldn't, but we've been doing it longer."

Responding to the defamation claim, Gray said the speech was Patterson's honest opinion based largely on true facts and was given in qualified privilege, meaning those listening had an interest in hearing from NZICA, but could also make their own minds up. Gray said there was no evidence of pecuniary loss and Patterson wasn't reckless or indifferent to the truth in giving her speeches.

"The law of defamation doesn't exist to cope with poor manners or minor mis-statements," Gray said. "The law of defamation exists to protect important wrongs, which in the case of companies have measurable and identifiable consequences."

Gray said statements on the flyers concerning the $40,000 gap in salaries between CPA Australia members and NZICA members was a false comparison, but asked if the court was "really litigating about a flyer produced 300 times, used once and then a number were destroyed?"

He said it wasn "aspirational advertisement" and that even the Commerce Commission notes advertising can include "puffery".

The hearing continues, with CPA Australia's legal counsel Alan Galbraith QC to give his closing address this afternoon.

BusinessDesk.co.nz

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