Not-for-Profit Disciplinary Processes
A well-drafted constitution for a society should include a robust suite of rules covering grievances and complaints, but even where comprehensive provisions are included difficulties will not uncommonly arise. That is illustrated by a recent Court of Appeal decision (which is the subject of orders “prohibiting publication of the names and identifying particulars of the Appellant and the Complainant,” and, as a result, this article is written to avoid infringing against those orders).
Factual background to the Court of Appeal decision
In brief, the appellant male employee of a charity was the subject of a decision by a disciplinary tribunal of the charity. The tribunal’s hearing was deferred until after a criminal trial, at which the appellant was acquitted on all charges of indecent assault and rape of the complainant, a female employee of the charity. Despite those acquittals, the disciplinary hearing proceeded. The appellant had argued that such a hearing would be an abuse of process, but that contention was rejected by the charity’s appeal body (with an application for judicial review of that rejection being dismissed).
The disciplinary tribunal then upheld a number of charges against the appellant of sexual impropriety and physical, verbal and emotional abuse. The appellant had an internal right of appeal against the disciplinary tribunal’s decision but did not exercise it, instead again seeking judicial review which was refused and appealed to the Court of Appeal.
Abuse of process
This article focuses on the assertion that it was an abuse of process for the disciplinary tribunal to hear the disciplinary charges when the appellant had been acquitted on the criminal charges. In response, it was argued that the appellant was estopped from pursuing the abuse of process argument because the High Court had previously conclusively determined this issue on review of the decision of the charity’s appeal body. In the Court of Appeal the appellant claimed that the disciplinary proceeding was an abuse of process because it was effectively a re-run of the criminal trial. The appellant claimed, in consequence, that the disciplinary proceeding was essentially a backstop way of seeking to punish the appellant for alleged criminal conduct after the criminal proceeding was unsuccessful.
Was there an “issue estoppel”?
The principle of issue estoppel is that finality in litigation should not be compromised by attempts to re-litigate issues previously determined. The importance of such finality was emphasised by the Supreme Court in Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd  NZSC 94 at :
… The rule reflects both the public interest in there being an end to litigation and the private interest of parties to court processes in not being subjected by their opponents to vexatious relitigation. The rule recognises, however, that a policy of absolute finality is unsafe. It accommodates exceptional situations by allowing final determinations to be revisited but within prescribed limits. For example, where there is no abuse of process involved, an application for recall of the judgment of a court can be made on grounds, which include “where counsel have failed to direct the Court’s attention to a legislative provision or authoritative decision of plain relevance”. Limitations on the exceptions ensure that they do not subsume the general rule of finality and conclusiveness of judgments. …
Citing the Redcliffe decision, the Court of Appeal upheld the High Court’s decision that the appellant was estopped from raising the abuse of process ground, but the Court of Appeal still had to consider whether the disciplinary tribunal proceedings were themselves an abuse of process.
Was the disciplinary tribunal proceeding an abuse of process?
The Court of Appeal noted the High Court’s analysis of the proceedings:
- Acknowledged that an abuse of process could arise if a disciplinary body acted outside the scope of its authority or exercised a power for an improper purpose (i.e. one for which it was not conferred),
- Considered that the disciplinary proceedings had been plainly within the scope of the disciplinary tribunal’s constitutional authority,
- Concluded that the disciplinary tribunal would be acting for a proper purpose by hearing the charges, and would not be attempting to repeat the criminal trial process,
- Had determined that the purpose of the disciplinary proceeding was not predominantly punitive, but was focussed on protection of those served by the charity and the charity itself,
- Recognised that the charges were also different in nature from the criminal charges, having a broader moral and ethical concern, and
- Accepted that the disciplinary tribunal process would also be inquisitorial and would apply the civil standard of proof.
The Court then referred to another Supreme Court decision, Z v Dental Complaints Assessment Committee  NZSC 55,  1 NZLR 1 (at ), which held that “…there will be an abuse of process only if the disciplinary proceedings are of the same nature and scope as the criminal proceedings that resulted in an acquittal. If the disciplinary proceedings substantially replicate the criminal proceedings, then allowing the disciplinary proceedings to go ahead would undermine the integrity of the criminal justice system. The Court must ask itself whether the disciplinary proceedings, looked at in the whole, are (in the words of the majority in Z) being “used simply as a reserve means of punishing conduct of a criminal nature after criminal proceedings have been unsuccessful”.”
How those statements applied in the case under review in this article is clear from the Court of Appeal judgment, which essentially accepted the High Court’s analysis. It concluded that an organisation like the charity concerned needed to provide a safe environment for those working for the charity and the charity’s clients. It accepted that this provided a fundamentally sound basis for the charity’s wish to ensure that such complaints were investigated and that necessary steps be taken to prevent similar conduct from occurring again. The Court of Appeal also noted that the criminal charges focussed on the non-consensual nature of the actions giving rise to the charges, while the disciplinary tribunal proceeding focussed on the propriety of alleged actions that occurred between the appellant and the complainant while the complainant was a junior employee to whom the appellant owed fiduciary responsibilities.
To some that may seem like splitting hairs, but to most lawyers it will make sense. The Court of Appeal’s judgment highlights the difficulties that can arise where not-for-profit’s disciplinary processes are invoked in respect of behaviour that may also have been actually (or allegedly) criminal.
The Law Commission’s report on the Incorporated Societies Act 1908 (due for public release shortly) will almost certainly recommend that the new statute contain a requirement that disciplinary processes be spelt out in society constitutions. However carefully constitutions may be drafted, challenges will still arise.