NZICA offers a gamut of defences against defamation allegations

By Jenny Ruth

The NZ Institute of Chartered Accountants’ defences against allegations of defamation and Fair Trading Act breaches run the gamut from truth, genuine opinion and qualified privilege through to there being no pecuniary damage caused or that the offences were trivial.

Advertisements complained about by rival accounting organisation, CPA Australia, were mere “puffery,” NZICA’s barrister, Bruce Gray, QC, argued in the Wellington High Court.

But Alan Galbraith, QC, representing CPA, said those advertisements, which compared the two organisations using the words “first class” and “second class” were defamatory.

So were comments in two speeches by the institute’s chief operating officer Kirsten Patterson, who implied CPA’s education standards were inferior and that it was mis-spending members’ funds on marketing, as well as a flyer distributed to students at a university, Mr Galbraith said.

Mr Gray urged Justice Robert Dobson to remember the statements complained about in the speeches were made to audiences largely made up of NZICA members, although he conceded there were some CPA members present as well as some who didn’t belong to either organisation.

There was also a mis-match between the audience for Ms Patterson’s speeches and CPA’s target market, new accountants who don’t yet belong to either organisation, Mr Gray said.
He also emphasised the fleeting nature of oral comments.

“Much of the complaint is about semantics, the form versus the substance,” he said, adding that the NZICA comments were “about difference and not about superiority or inferiority.”

However, Mr Gray did argue NZICA’s training, though more rigid than CPA’s, aimed for a higher standard.

“The defendant says it offer an education programme which it teaches to a high level. The plaintiff teaches to a standard which is perfectly adequate,” he said.

Was NZICA an accountants’ trade union?

When Justice Dobson queried whether the background was that, over the last five years, “the accountants’ trade union has been partly broken down,” Mr Gray answered: “I think of it more as a guild than a trade union.”

Justice Dobson answered: “You’re right. I shouldn’t be derogatory about it.”

The judge also suggested the accounting technology such as MYOB and Xero “can now do the book keeping function” that accountants used to provide, causing them to expand the role of accountants into providing more general business advice.

Mr Gray agreed but said NZICA was arguing that while others could now offer such advice, its members had been doing so for a long time and have a track record of doing so.

Mr Gray said because NZICA was new to competition, some of its early attempts to promote itself were “a bit clumsy” and “this was an early days response to a new environment.”

Justice Dobson said NZICA had characterised CPA’s marketing as “aggressive” and “perhaps it was a clumsy response” but that it’s not difficult to see it as a reaction of “how dare they have the temerity to be here at all. The incumbent is defending its patch.”

Mr Gray said NZICA had participated in the legislative process that had opened the profession up to greater competition.

“There’s no suggestion in the evidence, your honour, that NZICA resisted competition” and Ms Patterson had said in her speeches she welcomed competition.

The judge added that “she said she was looking forward to an arm wrestle.”

Mr Gray said a salary comparison in the flyer, which said chartered accountants earned $40,000 a year more than CPA qualified accountants, was based on the best evidence NZICA could come up with, a combination of its own figures and independent consultant Hudson.

CPA 'gets a tail wind'

However, Justice Dobson noted CPA’s case “gets a tail wind” from Hudson’s objection to the way NZICA had used its figures.

Mr Gray said only 300 copies of the flyer were produced and that it was withdrawn and an unknown number destroyed after CPA complained.

Some of Ms Patterson’s comments, such as how CPA was spending its money, were said as an aside, “an attempt at humour which may or may not have been successful. There’s a question of whether it’s defamatory or whether it’s an expression of honest opinion,” Mr Gray said.

However, Mr Galbraith reminded Justice Dobson that, under cross examination, Ms Patterson had said she didn’t believe evidence given by CPA New Zealand country manager David Jenkins that the idea of giving iPads to new members had been discussed but discarded.

“I asked her if she was saying Mr Jenkins was lying. She agreed that was exactly what she was saying on the basis of nothing.”

Ms Patterson had admitted she got it wrong when she said CPA couldn’t belong to the Global Accounting Alliance because CPA’s education standards weren’t good enough, Mr Galbraith said.

“She did during cross examination, agree in one rare moment that, if you rely on what people tell you, you may get your facts wrong,” he said.

On her claim that CPA was sponsoring an entire series of the television programme, CSI, “there was absolutely no evidence” other than somebody had told her they watched a programme they said was sponsored by CPA.

“There was no such sponsorship of the CSI programs. Again, it’s a false statement,” he said.

“For a statement of opinion, you’ve got to found it on true facts.”

But on most other matters Ms Patterson had stuck to her guns, Mr Galbraith said.

The three activities complained of, the flyer, the advertisements and Ms Patterson’s speeches showed a pattern which was “quite clearly directed against CPA. This was an ambush of CPA. This is what it was aimed at.”

Mr Galbraith said CPA couldn’t prove it had lost an actual amount of money but it had lost an opportunity to recruit new members as a result of NZICA’s actions.

If Justice Dobson allowed NZICA’s argument, that would mean for anybody threatened by new competition “the best thing to do would be to defame them to billy-oh from day one” before they had a chance to establish themselves.

Justice Dobson has reserved his decision.

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