Resignation as an Alternative To Discipline

When facing serious allegations, registrants may offer to resign, (and sometimes undertake to never reapply), in return for avoiding a discipline hearing and a formal finding of misconduct. While regulators often have discretion to consider this option, they will frequently refuse to do so where a public hearing is necessary to maintain public confidence in the regulator. The issue of whether a regulator could be forced to accept an offer of resignation arose in Sturt v Chartered Professional Accountants of Alberta, 2022 ABKB 801 (CanLII).

In that case, the registrant, an accountant, was alleged to have misappropriated funds from a former client. The registrant offered to resign and never again practise as a professional accountant. Under the applicable legislation the regulator could only accept this offer if the registrant admitted to the allegations. The registrant declined to do so in part because a complaint had been made to the police some years previously. Any requirement to admit the conduct, he argued, could affect his rights under the Canadian Charter of Rights and Freedoms to not incriminate himself. The registrant argued he was not able to afford a lengthy discipline hearing and the stress of a hearing would negatively affect his mental and physical well-being.

The registrant brought an application for an injunction against the regulatory from proceeding with the discipline hearing.

In deciding whether to order an injunction (or stay), the first part of the test is whether there is a serious issue to be tried. That test is quite low and is usually easily met. In this case, however, the Court concluded that there was no merit to the registrant’s arguments. There were no criminal proceedings pending or even imminent. The legislation required the registrant to admit the allegations before his offer to resign would be accepted. Even if there was discretion, there were no special circumstances, such as an abuse of process, to require the regulator to exercise any discretion in the registrant’s favour.

The registrant also argued that the investigation was procedurally unfair because the regulator did “not fully investigate the explanations or corroborating evidence suggested by him that would lead to his exoneration”. The Court found that the duty of procedural fairness was quite limited at the investigation and screening stages and that there was ample evidence to warrant a referral to discipline. The challenge was also premature as the sufficiency of the evidence would be tested at the discipline hearing.

The Court also found that the two other parts of the test for a stay (i.e., irreparable harm to the registrant and balance of convenience) strongly favoured the regulator. The Court said, in part:

having voluntarily entered into and enjoyed the benefits of the regulated profession of accounting, [the registrant] cannot now avoid the obligation of participating in a disciplinary hearing which is required under the Act. As such, the potential of a large financial commitment by [the registrant], and of health impacts such as they are, are not irreparable harm ….

The Court also found that the three-year period of time since the original complaint did not amount to an abuse of process under the test set out in Law Society of Saskatchewan v. Abrametz, 2022 SCC 29 (CanLII).

This case suggests that it would be rare for a regulator to be forced to accept a resignation of a registrant rather than to proceed with a discipline hearing if the regulator so chose.

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