Chew Kia Ngee v Singapore Society of Accountants

• Jurisdiction: Singapore
• Judge: L P Thean J
• Judgment Date: 28 December 1988
• Neutral Citation: [1988] SGHC 95
• Docket Number: District Court Appeal No 60 of 1987
• Date: 28 December 1988
• Published date: 19 September 2003
• Year: 1988
• Plaintiff Counsel: David Oliver QC and Helen Yeo (Chor Pee & Co)
• Citation: [1988] SGHC 95
• Defendant Counsel: Lee Han Yang and Chui Yin Yen (Lee & Partners)
• Court: High Court (Singapore)
• Subject Matter: Whether penalty of suspension from practice for five years manifestly excessive,Whether auditor's act amounts to act discreditable to an accountant,Maximum penalty of $500 sufficient and appropriate,ss 33(1)(b) 33(b) & 33 (c) Accountants Act (Cap 2),Whether delegation to subordinate to complete form reckless,Accountants,Professions,Administrative slip-up resulting in partially completed form being sent to MAS,Auditor signing partially completed statutory form and leaving instructions to subordinate to complete form before sending to Monetary Authority of Singapore ('MAS'),Act discreditable to accountant

Cur Adv Vult

This is an appeal from the decision of the Disciplinary Committee (the committee) of the Singapore Society of Accountants (the society) in which the committee found the appellant guilty of an act discreditable to an accountant and ordered that he be suspended from practice for a period of five years.

The appellant is a public accountant of Singapore and has been one since 10 June 1978. He is a partner of the firm of Coopers & Lybrand (Coopers), who are the auditors of the company Shearson Lehman Brothers Pte Ltd (Shearson). The appellant is the partner in charge of the audit of Shearson.

Shearson is a dealer in securities within the meaning of the Securities Industry Act but not a member of the Stock Exchange of Singapore Ltd. Its dealing in securities (should it wish to deal) is limited and governed by the terms of the licence issued to it by the Monetary Authority of Singapore (MAS). However, Shearson does not trade or deal in securities; its activities are confined to providing administrative and technical support services to its holding company in New York; it would transmit or channel to its holding company purchase or sale orders received from customers in this region and would transmit to the customers confirmation of the orders received by its holding company. It would receive from its holding company monthly statements of accounts which it would then forward to the customers, and periodically it would, upon receipt of information on markets in America and Europe, transmit the same to the customers. As Shearson itself does not really deal in securities (in the ordinary sense) in Singapore, it does not maintain any accounts such as trust accounts, margin accounts, records of securities and clients` ledgers. Nonetheless, its activities are governed by the Securities Industry Act and the Securities Industry Regulations 1986, in so far as they are applicable.

On the morning of 9 December 1986, Shearson sent to the appellant Forms 20 and 21 prescribed by the Securities Industry Regulations 1986 with a request that these forms be urgently completed as Shearson was already late in submitting them to MAS. Douglas Condon, the audit manager of the appellant, first attended to the forms and subsequently the appellant reviewed them with Condon. Form 20, except for a couple of errors, which were corrected, was found to be in order and the appellant signed it. As for Form 21 Condon had made a photocopy thereof and completed that copy manually based on a similar form submitted to the MAS the preceding year, as the activities of Shearson had not changed since then. That copy as completed by Condon was used as a working draft in their joint review of Form 21. As the appellant was leaving soon for a meeting in Jurong, he signed Form 21 and gave instructions to Condon to ensure that the form was completed in accordance with the draft before it was released. At that point Form 21 had been partially completed. The names of Shearson and Coopers and the date had already been inserted. That form has five paragraphs, of which the first paragraph is a statement that the auditors have inspected the dealer`s licence and noted the conditions or restrictions thereon, and the remaining four paragraphs require to be dealt with or completed. Paragraphs 4 and 5 of the form had been completed while paras 2 and 3 had not been dealt with and remained unanswered. Soon after the appellant had reviewed the forms with Condon, he left for the meeting. Unfortunately, Condon also left for an engagement, and both the forms were left on his table. In the meantime, Shearson telephoned the appellant`s office making inquiry for the forms. Condon`s secretary, who saw the forms on Condon`s table and that they had been signed, took the forms and sent them out without realizing that Form 21 had yet to be completed. In consequence, Form 21, partially completed, found its way to office of MAS.

Subsequently, the appellant was called upon by MAS to explain, inter alia, the reason for submitting a partially completed Form 21. An explanation was given by the appellant in the form of a lengthy letter dated 16 January 1987. MAS, however, did not appear to have accepted the explanation, and in a letter dated 5 March 1987 written to the managing partner of Coopers, severely reprimanded the firm for failing `to bring the necessary skills, care and diligence to bear on the audit of Shearson`s accounts relating to the year ended 31 December 1985`, and required the firm to enumerate the steps that they proposed to take in future to ensure that all the relevant requirements under the Securities Industry Act and the Regulations would be complied with. A copy of that letter was forwarded to the Singapore Society of Accountants, presumably, as a complaint against the appellant, being the partner in charge of the audit of Shearson. In consequence, the registrar of the society laid the complaint or matter before the investigation committee pursuant to the then s 33(3) of the Accountants Act (Cap 212, 1970 Ed), now s 32(3) of the Accountants Act (Cap 2) (the Act). The investigation committee investigated the matter and determined that it should be referred to the disciplinary committee. An inquiry was then held by the disciplinary committee.

Before the committee the charge against the appellant was as follows:

You, Chew Kia Ngee, PAS, are charged that:

(a) On or about 9 December 1986, you signed an auditor`s report without completing the said report as was required by the Securities Industry Act (Cap 289) and you submitted or caused to be submitted such report to the Monetary Authority of Singapore (the Authority).

(b) On or about 9 December 1986, you submitted on behalf of your client to the Monetary Authority of Singapore a statement of assets and liabilities, adjusted net capital and aggregate indebtedness on a form which you knew or should have known was an incorrect form.

(c) On or about 12 January 1987, you failed to comment on several items contained in Form 21 when you re-submitted such form to the Authority.

You have thereby committed an act or default discreditable to an accountant within s 33(l)(b) of the Accountants Act (Cap 2).

There was, in effect, only one charge against the appellant but the charge involved three acts or defaults. This was unequivocally stated by counsel for the society before the committee. At the conclusion of the inquiry, the committee accepted the explanation of the appellant in respect of the act or default described in (b); and as for that in (c), the committee found that the appellant could have commented on certain items contained in Form 21 and that he should have exercised greater care in completing such form and that his failure to do so could amount to professional negligence, but that was not the charge against the appellant. In other words, by implication, the committee found that in relation to the acts or defaults described in (b) and (c) of the charge the appellant had not committed any act or default discreditable to an accountant within the meaning of s 33(1)(b) of the Act. As for the act or default described in para (a) the committee found that the charge had been proved and that what the appellant did was `most discreditable to an accountant` and ordered that he be suspended from practice for a period of five years and further ordered him to pay all costs and expenses of and incidental to the inquiry held by the committee and the investigation held by the investigation committee.

Against that decision this appeal is now brought. Under s 34(2) of the Act, the procedure governing such an appeal is the same as that for appeals to the High Court from the decisions of District Courts in civil matters. Like an appeal from the District Courts, this appeal is in the nature of a re-hearing and the same principles apply as are applicable to an appeal to the High Court against the decision of the District Court. The question before me is whether, in relation to the matter complained of against the appellant, on the evidence before the committee, the appellant has been guilty of an act or default discreditable to an accountant within the meaning of s 33(1)(b) of the Act. It is a question of mixed fact and law: see Felix v General Dental Council [1960] 2 All ER 391 at p 397.

The evidence adduced before the committee was not in serious dispute. Mr Tan Kim Kway, an officer of MAS, gave evidence on behalf of the society, as it was he who lodged the complaint against the appellant to the society. His evidence, so far as relevant, is this. He said that Form 21 was one of the most important forms prescribed by the Securities Industry Regulations, and he went through the form as follows; he said that vis-a-vis Shearson, sub-paras (a)-(h) of para 2 were not applicable, that sub-paras (c), (d), (e), (f), (i) and (k) of para 3 were also not applicable, and save for these the other parts of the form were applicable and should be completed. He accepted that para 4 had been completed, but as for para 5 he said, `(5) it`s difficult to see what is made of this particular answer here ...`. On looking at para 5, 1 note that this paragraph was not very neatly or tidily completed; but completed it was. I do not find any doubt which could be entertained in respect thereof, nor do I have any difficulty in understanding it. Having dealt with these paragraphs, Mr Tan then continued and said, `Without a properly completed form, it is difficult for us to determine whether the dealer`s licence should be renewed. And it is also difficult for the Authority to supervise the dealer efficiently and to ensure that the clients` money will always be safeguarded.` This assertion of Mr Tan is, with respect, a generalization and somewhat exaggerated. I have two observations. First, notwithstanding the partially completed Form 21 submitted, the licence of Shearson was renewed and issued on 3 January 1987....