LACK OF BOARD OVERSIGHT MAY HAVE CAUSED PROBLEMS FOR THE COSTMETOLOGISTS

The decision in Cosmetology Industry Association of British Columbia v. Nguyen, 2010 BCSC 1051, may serve as a warning to regulatory boards, that they must pay attention to the activities of their employees and carefully consider how much authority ought to be delegated to their registrars or executive directors.
The province decided to deregulate cosmetologists in December 2003, at which point the cosmetologists incorporated pursuant to the Society Act. Therefore, a cosmetologist does not have to be a member of a professional organisation in order to work and use titles associated with the industry, but practically, most salon owners require certification from the Society before hiring. Unfortunately in this case, the Association's CEO and a former board member "ran amok" causing serious financial loss for the Association which it was unable to recover.
In an effort to make it easier for BC cosmetologists to work in the USA an examination process was developed. The Association contracted to an organisation known as "NIC" to administer NIC's examinations. It would charge candidates a fee to take the exams. The idea was that candidates who passed these exams would be qualified to work in most US states. The project was viewed as beneficial financially to the Association. It is important to note that the CEO was not required to obtain approval for this contract from the Board of Directors. It appears from the decision that the Board knew nothing about it.
The CEO and former director Nguyen produced a questionable list of candidates to NIC, obtained the first examination and answer sheet and completed the exams with the assistance of another employee. The candidates did not complete the exams at all! However, it was not long before NIC concluded that there had been cheating and who was responsible for it.
NIC sued the Association for its expenses to ($254,000.00) to develop a new examination. A compromise was reached and the Association paid NIC nearly $200,000.00 Canadian funds to settle the claim.
The Association fired the CEO and unsuccessfully sued the former director, Nguyen in fraud to seek to recover its losses. It tried to put the blame all on the shoulders of the former director despite the fact that its CEO was heavily involved in the scheme from the beginning. Since she was found to be the Association's directing mind and was authorized to enter into the contract without reference to the Board of Directors, it could not be said that she was acting on her own and no fraud occurred because the Association, through its directing mind, did not rely on Nguyen and was not deceived by him.
This decision is a reminder that boards must be careful about the extent of authority granted to employees. Further, a board is responsible to oversee its operations and act responsibly in doing so. It appears that the board of this Association, at least in respect of this matter, was not fulfilling its duties.

BCCA CONFIRMS AUTHORITY OF DISCIPLINE COMMITTEES TO SET STANDARD FOR PROFESSIONAL MISCONDUCT

In Salway v. Association of Professional Engineers and Geoscientists, 2010 BCCA 94, the B.C. Courth of Appeal had to consider the degree of deference owed to a discipline committee's assessment of whether certain behaviour constituted professional misconduct.



The member had been found guilty of professional misconduct for failing to respond to correspondence from clients in a timely manner. His clients had retained him to prepare a report in connection with a subdivision plan. They wanted to be exempted from the application of a city bylaw and required the report to support this application. The member was required to have his report peer reviewed before the city would accept it. The clients wrote or emailed him on 3 occasions regarding the peer review in a 3 month period, but the member did not respond. The discipline committee found that the behaviour constituted professional misconduct and imposed a reprimand and an order to pay for the costs of the hearing.



The member appealed on the basis that his behaviour was not severe enough to be characterized as professional misconduct. The Judge hearing the appeal in Supreme Court agreed and found that while the conduct was negligent, it was not "flagrant" and therefore was not professional misconduct.



The Association appealed to the Court of Appeal, which allowed the appeal. It found that the reviewing Judge had not given appropriate deference to the Discipline Committee's views following the decision in Dunsmuir v. New Brunswick [2008] 1 S.C.R. 190.



The Court of Appeal's reasons are of interest to lawyers in that they include a good review and analysis of the Dunsmuir decision.



The decision is very important to Colleges given that it clearly stated that the reviewing Judge had not paid sufficient deference to the tribunal's views and expertise. From a practical point of view, it confirms that as long as the conduct can be reasonably characterized as professional misconduct, that is all that is required: It clearly stated that the conduct did not need to be "dishonourable, disgraceful, blatant or cavalier" to be characterized as unprofessional. It said at paragraph 32:



.....it is the disciplinary body of the professional organization that sets the professional standards for that organization. So long as its decision is within the range of reasonable outcomes - ie., it is justified, transparent and intelligible - it is not for courts to substitute their view of whether a member's conduct amounts to professional misconduct.

3 CASES OF NOTE: JANUARY- MARCH 2010

We are only into the first half of March, and already, 3 important decisions, 2 from the BC Court of Appeal, all in the area of professional regulation, have come down.

On January 21, the BC Supreme Court rendered its decision in College of Opticians of British Columbia v. Coastal Contacts Inc. and Clearly Contacts Ltd. 2010 BCSC 104. This case deals with the significant impact of the College's lack of a bylaw requiring registrants to report their business location to the Registrar.

This case, is one of the decisions arising from the College's efforts to stop businesses from selling contact lenses and glasses over the internet. The College of Opticians does not have a bylaw requiring its registrants to provide the Registrar with his or her business address and telephone number. In this case, the College became aware that a registrant was employed by such an internet business, but it did not know who that registrant was. Efforts aimed at having the registrant disclose this information had failed.

The College brought an application asking the Court to require Coastal Contacts to provide it with the name of any licensed optician, optometrist or qualified medical practitioner engaged by them to supervise dispensing of corrective lenses. The application was not brought pursuant to S. 29 of the Health Professions Act, but sought the order relying on an equitable remedy of "pre-action discovery", or the Court's inherent jurisdiction.

The Court refused to make the order on both grounds. In the case of an order based on a right to pre action discovery, the Court found that the College did not meet the criteria. As to the Court exercising its inherent jurisdiction, the College argued that such an order was appropriate because the Court may aid a tribunal to administer justice fully and effectively preventing frustration of its statutory mandate. The argument was that the refusal to provide the College with the name of the registrant employed by Coastal, frustrated its attempt to fulfill its statutory mandate to protect the public.

The Court would not make such an order because the College has control over its bylaws and should have created a bylaw requiring registrants to provide this information.

On February 24, the BC Court of Appeal, rendered its decision in Salway v. Association of Professional Engineers and Geoscientists of B.C. 2010 BCCA 94.

This is an important decision because it confirms that professional tribunals have the right to interpret their own professional standards, regardless of whether they are written or unwritten.

In this case, the registrant had been retained to prepare a report to assist his clients to obtain an exemption from a municipal requirement for a restrictive covenant, as part of a subdivision approval. The clients contacted the registrant on 3 occasions over a 3 month period concerning a problem that arose with the report, and he did not respond to them. He was disciplined for unprofessional conduct on the basis that he had failed to respond. The discipline committee found that the offense had been proven. The engineer appealed to the Supreme Court where the Judge found that a failure to respond did not amount to unprofessional conduct, because such conduct had to be flagrant, disgraceful, blatant or cavalier.

The BC Court of Appeal restored the decision of the discipline committee. It found that the Judge had failed to properly analyze the case in light of the 2 step process for review set out in Dunsmuir v. New Brunswick 2008 SCC 9. Most importantly, it said that reviewing Courts must "adopt a significant degree of deference to disciplinary decisions... concerning ... professional standards, regardless of whether those standards are written or unwritten....[para. 30]..... it is the disciplinary body of the professional organization that sets the professional standards for that organization. So long as its decision is within the range of reasonable outcomes -ie, it is justified, transparent and intelligible - it is not for courts to substitute their view of whether a member's conduct amounts to professional misconduct....[para 32]."

Finally, on March 12, 2010, the BC Court of Appeal rendered a decision in Joshi v. British Columbia Veterinary Medical Association, 2010 BCCA 129.

This case has been ongoing for 6 years. Dr. Joshi applied for registration in the Association but was unable to meet the requirement in s. 11(5) of the Veterinarians Act, that he be a person of good character. The Association received complaints at the time his application was being considered, that Dr. Joshi had been performing surgery on animals while unlicensed and without supervision. Dr. Joshi denied the allegations. The Council of the BCVMA was willing to hold a hearing to determine whether the allegations were true, but Dr. Joshi took the position that it had no jurisdiction to do so. He refused to participate in such a hearing. The BCVMA refused to register him. He sought an order requiring the BCVMA to register him.

The Association's bylaws did not provide for an oral hearing on such a matter, but the Council decided to hold one, so that the matter could be fairly determined in accordance with the principles of procedural fairness. The Court of Appeal held that the BCVMA had authority in these circumstances to hold an oral hearing. Procedural fairness required that a discretion to do so existed. Although there was no explicit power in the bylaws, the authority to hold such a hearing was a necessary incidental power available to the Council in the circumstances (paras. 10 and 11).