Association of Chartered Certified Accountants v Koumettou & Anor

Where a responsible professional body seeks to replace insolvency office-holders with reputable and independent practitioners, the court should presume that the body has properly considered the public interest. The burden then lies on those proposing alternatives to show positive reasons for a different appointment. Equal respectability or suitability is insufficient. The professional body’s judgment carries significant, and often decisive, weight, although the ultimate decision remains that of the court. A prior contentious relationship with a person whose conduct may require investigation does not necessarily disqualify an office-holder. It may reinforce the appearance of independence and support the appointment.

The Association of Chartered Certified Accountants applied to replace Costas Morfakis in various insolvency appointments and to appoint Ninos Koumettou and two independent practitioners, Mr Hunt and Mr Hellard, in specified appointments. The application followed concerns about the conduct and financial affairs of a former office-holder, Mr Papanicola, whose appointments had been transferred to successor practitioners without full disclosure of relevant matters.

The court considered whether Mr Hunt’s previous contentious relationship with Mr Papanicola made him unsuitable to undertake investigative work, and whether alternative practitioners should instead be appointed.

1. Application granted. Mr Hunt and Mr Hellard were appointed on the terms subsequently embodied in the order. Mr Morfakis was to stand down from the Schedule A and B appointments and act jointly with the new appointees in relation to the Schedule C appointments.
2. Where a responsible professional body seeks the appointment of reputable replacements, the court should presume that it has had due regard to the public interest and is well placed to identify suitable office-holders. The burden shifts to those opposing the proposed appointments to demonstrate positive reasons for an alternative. Identifying persons who are equally respected and suitable is insufficient. The court retains the ultimate decision, but the professional body’s judgment should carry significant and, often, decisive weight.
3. Mr Hunt’s previous contentious relationship with Mr Papanicola did not establish unsuitability. The court accepted the ACCA’s professional judgment that the relationship demonstrated Mr Hunt’s independence and made him suitable to undertake investigative work across the relevant appointments.
4. The court relied on the approach in Institute of Chartered Accountants for England & Wales v Webb [2009] EWHC 3461 (Ch), including the importance of an appointment being independent and perceived to serve the public interest. The court also required confirmation that the appointment would not cause significant depletion of the estates through avoidable costs.
5. No wrongdoing had been established against Mr Morfakis or Mr Koumettou on the evidence then available. Any later application concerning Mr Morfakis’s continued involvement would require a material change of circumstances and further evidence.