Articles

By Lovegrove & Cotton – Construction and Planning Lawyers

Most registration and licensing regimes use fit and proper person criteria to determine whether an individual is eligible for entry into a regulated vocation.

When a professional, intent on pursuing their chosen vocation, applies for registration or professional accreditation, a failure to pass a fit and proper person assessment can, from a professional and reputational point of view, be one of life`s  ‘game changers’.

Yet registration and licensing regimes do not always have sufficiently evolved licensing and assessment regimes. Sometimes the assessors comprise laypersons or volunteers, and sometimes the assessment systems are automated. An automated process is typically inflexible with in-built ‘red flags’ that are not capable of applying an expanded or non-core assessment criteria. Alternatively, some assessment regimes lack sufficiently enhanced rigors that would otherwise ensure that fit and proper criteria assessments are systematically capable of taking all relevant considerations into account.

An ideal fit and proper person definition is not a ‘one size fits all’ concept. There may be some prima facie pre-qualification ‘cull out’ disqualifiers, for example a history of recidivist criminality. Whilst such a history of criminal recidivism would ordinarily entail that one is not fit and proper to be, say, a policeman, a prior criminal conviction, as an isolated act, would not ordinarily be in itself the sole determining consideration as regards whether an applicant was fit or proper. It would be dependent upon the nature of that sole conviction. A more holistic and enlightened fit and proper assessment criteria would be capable of taking all factors and considerations into account and its virtue would not be its  rigidity.

Fit and Proper & Professional Misconduct – Two Professional ‘Gatekeeper’ Regimes

When one has regard to the criteria applied by Tribunals, Courts and other judicial bodies with regards to findings of professional misconduct, it is very similar to criteria used to ascertain whether an individual is fit and proper. Apart from findings of professional misconduct, there are very few instances where a professional loses their right to practice their trade or profession; hence, to reiterate, the gravitas of a finding that one is not sufficiently fit and proper is severe.

‘Disciplinary Hearings and Advocacy’ co-authored by Professor Kim Lovegrove MSE RML and Criminal Law Barrister Sav Korica, at page 26, highlights some consistent factors considered in determining whether a professional has engaged in professional misconduct:-

“If one looks at conduct that culminates in serious censure (i.e. professional misconduct) vis-à-vis conduct that culminates in lower end disciplinary censure (i.e. unsatisfactory professional conduct) the sorts of threshold ingredients that the tribunals and Courts and, in some instances, Acts of Parliament seem to have come up with include:

• a high degree of objective seriousness conducive to significant harm to the public;
• conduct that is considered to be disgraceful by practitioners of good repute and competency;
• conduct that is heinous or dishonourable;
• conduct that is wilful or reckless;
• conduct that is of a sufficient serious nature to justify suspension;
• grave conduct that poses significant harm to the community.”

When one considers the utility of the above criteria and the material effect of a finding of professional misconduct, namely to bar a professional from practising, it parallels to some degree with the utility and material effect of the fit and proper test, which serves to bar a prospective professional from practising at first instance, and which can, upon review by regulating authorities, be a ground for barring practise after licensing. Both embargoes are gatekeepers, if you will.

The “bestowers” of occupational licences are the guardians of “vocational ingress and egress”. They determine who gets in, who stays in and who is determined to be unworthy of staying in. A criterion for entry along with qualification (and often experience) is to be fit and proper. A criterion for forced exit or expulsion is that the licensee is no longer fit and proper. Both criteria should resonate and be compatible with one another. It follows also that in an ideal world, the assessment process for entry must be as exacting as the assessment process for expulsion. Budgetary cost constraints and the increasing use of ‘AI’ and automation can work against this.

Defining Fit and Proper

A definition of fit and proper person is not always found in statute. Most law-abiding and rational individuals would have a pretty good idea of that which is considered to be fit and proper. Such ideas however may not be universally relevant as they may be shaped by the history, the chapter or decade of history, the culture and the rule of law that is germane to the jurisdictional context.

The Definition of Fit and Proper Evolves

The concept of fit and proper is by no means static, it  evolves and adapts and has a tendency to reflect the mores and the most influential and pervasive thinking of the day. This is very effectively pointed out in a paper titled The Folly of Expecting Evil Reconsidering the Bars Character and Fitness Requirement by Leslie C. Levin BYU Law Review Volume 2014 Issue 4 at page 775. The author stated:-

“Richard Able has noted that as the number immigrants increased and ‘their sons sought to become lawyers, the profession tried to preserve its homogeneity and superior social status by requirement citizenship and imposing ‘character’ tests’. Nativists and ethnic prejudices during the nineteen twenties and economic pressures during the great depression fuelled renewed calls for barriers to entry to the legal profession and resulted in efforts to stiffen “character” screening. By raising admission standards through formal legal education requirements, bar examinations, and the character and fitness enquiry, the bar sought to signal that lawyers possessed the technical expertise and moral fibre to be viewed as a profession and to be entrusted with legal work. By 1928 virtually all of the states had a character and fitness requirements for bar admission…..[ in a later decade] Some applicants were denied admission because of their actual or suspected ties to the communist party, the character requirement was also used to exclude some applicants for conscientious objection to military service. Applicants were subjected to extended character enquiries due to sexual orientation and lifestyle choices such as cohabitation. In the nineteen seventies began to regularly enquire into mental health history and soon thereafter bar applicants were sometimes denied admission on that basis”.

The passage illustrates the metamorphosis, and some uncomfortable manifestations, of the fit and proper test over a number of decades in the 20^th century. That which would now be considered repugnant criteria or an anathema was persuasive in the second half of the last century in particular in some Western Societies. There resides the danger in dogmatic, rigid, potentially transient criteria. Whereas, criteria that is inherently balanced and objectively holistic concerns itself with a fitness to practice that is bespoke for the skills and responsibilities that characterize the practitioners’ forthcoming tasks at hand. It follows that it is thus important to recognise that a fit and proper criteria may not in all instances, from a humanistic perspective, be in vogue.

The legislature should thus always ensure that a regulated fit and proper criterion is, in itself ‘fit and proper’. This point was illustrated in a poignant article by Andrew Hill published in the Financial Times on September 24, 2012. Mr Hill asked the question “is the fit and proper test itself fit for purpose? …the assessment of fitness, propriety and other qualification is a judgemental matter”.

Mr Hill added that “US regulators lowered the threshold to disqualify company directors from substantial unfitness to mere unfitness after a rash of corporate scandals over 10 years”. Mr Hill observed that “courts still wrangle over the definition”. Indeed the Courts would, because many definitions of fit and proper have elements of the opaque. The assessment is based on judgment and judgments are not infallibly correct in every instance, nor are they immune from the shaping of the mores of the time.

Honesty, Integrity and Reputation are key Considerations

In the matter of Australian Broadcasting Tribunal v Bond (1990) HCA 33, Mason CJ found that one must have regard to all of qualities and characteristics of the subject individual that are relevant to the licence, approval, certificate or other authorisation sought by the individual. Mason CJ made particular mention of an individual’s character and reputation. The High Court authority stipulated that decision makers would need to consider ‘whether improper conduct has occurred, whether it is likely to occur, when it can be assumed it will not occur, or whether the community will have confidence it will not occur.’ The extract highlights the importance of public perception and the practitioner’s standing as a respected member of the community.

This is largely paralleled in case law governing the legal profession. The importance of a practitioner’s public standing is clearly outlined in the matter of Dixon v. Legal Practice Board of Western Australia [2012] WASC 79 whereby it was stated that “fitness to practice law requires that the practitioner must command the personal confidence of his or her clients, fellow practitioners and judges.”

These case law authorities support what many would consider to be axiomatic, namely the idea that one’s character and reputation go a long way to providing a decision maker or assessor a yardstick for determining whether one is fit or proper.

Fit and Proper in Regulatory Authority Guidelines

The import of one’s character and reputation is mirrored across a variety of regulatory authority guidelines. One example, relevant to the state of Victoria in Australia and pertaining specifically to the building industry is the Victorian Building Authority Fact Sheet August 2016 which outlines the ‘Fit and Proper Person Requirement’ and states that:-

“As part of assessing an application for registration, the VBA will have to satisfy itself that an applicant has sufficient moral integrity, honesty and good character to carry out their work and conduct themselves in a professional and honest manner.”

Establishing reputation and honesty requires authorities to take into account a range of factors, and these inevitably focus around the past conduct of the applicant and whether there is a history of ‘conduct unbecoming’, as it were. Generally, the guidelines will reflect this and will outline criteria to be taken into consideration in determining the moral integrity, honesty and reputation of an individual.

Prior Convictions or Proceedings against the Subject

On point, the VBA Fact Sheet refers to relevant criteria, or ‘relevant matters’, the VBA would have regard to in determining a person’s fitness and propriety:-

• “any disciplinary or legal action taken against the applicant by the VBA, the Building Practitioners Board, other regulatory body or person”
• “whether the applicant has provided any false and misleading information in support of an application for registration”
• “any requests or information received from the Director of Consumer Affairs Victoria, for example, a request to examine whether building work performed is defective”
• “any notifications received from the applicant’s insurer that the applicant has previously been refused insurance as a building practitioner”
• “any unsatisfactory reference check”
• “any physical or mental infirmity that may affect the applicant’s ability to practise as a building practitioner”
• “any adverse matter disclosed by the applicant, for example, having been convicted or found guilty of an offence involving fraud or dishonesty”
• “a failure to disclose an adverse matter described above that later becomes known to the VBA.”

These are largely universal criteria, (save for the defective building work criteria which is bespoke for the industry that the particular regulator presides over i.e. the building industry) and is mirrored across the fit and proper standards applied to a variety of other professions and vocations.

In the United Kingdom, the Financial Conduct Authority and Prudential Regulation Authority presides over an “approved persons regime”. The regime regulates individuals that carry out significant management functions within a regulated firm or business, such as directors. The assessment of whether an individual may be regarded an ‘approved person’, is contingent upon them meeting the criteria of a fit and proper test.

“The FCA or PRA will have regard to all relevant matters including, but not limited to, a specific list set out in the Handbook. To illustrate the breadth of the test, these include, in simplified form, whether:

• The person has been convicted of any criminal offence.
• The person has been the subject of any adverse finding or settlement.
• The person has been the subject of earlier investigations.
• The person is or has been the subject of disciplinary or criminal proceedings.
• The person has contravened the requirements or standards of the UK regulatory system or other UK regulatory authorities.
• The person has been a director, partner, or concerned in the management, of a business that has gone into insolvency, liquidation or administration.
• The person has been dismissed, or asked to resign and resigned, from employment or from a position of trust, fiduciary appointment or similar.
• The person has ever been disqualified from acting as a director or disqualified from acting in any managerial capacity.
• In the past, the person has been candid and truthful in all his dealings with any regulatory body.
• The person demonstrates a readiness and willingness to comply with the requirements and standards of the regulatory system and with other legal, regulatory and professional requirements and standards.”

(Quoted from a Thomson Reuters article by Giles Peel, Bridget Salaman, and Mathew Rutter, DAC Beachcroft, Directors: are you fit and proper? Trends in fit and proper person requirements and testing, 2015)

However, prior convictions and proceedings are not always regarded as relevant to the position sought in terms of assessing fit and proper. In determining the fitness or propriety of an individual, a Court, Tribunal or Authority will adhere to notions of natural justice.

On point, another statutory definition of fit and proper decision making is found in the New Zealand Electrical Workers Registration Board fact sheet on fit and proper. Section 3.14 of the fact sheet outlines the decision-making process.

3.14 The Board will apply and adhere to the principles of natural justice in coming to its decision as to whether a person meets the fit and proper person requirements of the Act. The Board may also take any of the following into consideration:

(a)    how serious the matter is or was;

(b)    what health and/or safety concerns it may raise;

(c)    how long ago it occurred;

(d)    any consequences for the applicant or any other person;

(e)    whether it was a one off incident;

(f)     how relevant it is to the applicant carrying out or supervising prescribed electrical work;

(g)    the implications of the matter; i.e. what does it show about the applicant;

(h)    the applicants attitude to the matter;

(i)     how a member of the public who engaged the applicant to carry out prescribed electrical work would view the matter

(Quoted from: Electrical Workers Registration Board, L-PO-12 Fit and Proper Persons, 2017)

Conclusion

In conclusion, when one reads the more seminal case law authorities and codified definitions of fit and proper person criteria, one can decipher and piece together that which is tantamount to universal fit and proper criteria. Some of the more universal yardsticks are as follows:-

A fit and proper person:-

• has a sound vocational reputation and is respected by his or her peers, colleagues, clients and superiors;
• Enjoys the confidence of peers, colleagues, clients, the public at large, in having no predisposition to engage in improper conduct in the discharge of their vocational duties;
• presents with a record devoid of any :-
  • criminal convictions;
  • professional censures for the provision of false or misleading information;
  • disqualification of registration, licence, or accreditation
  • professional misconduct;
  • convictions for fraud or dishonesty;

Additional considerations that decision makers should have regard to in their deliberations to determine whether someone is fit and proper are mitigating considerations such as whether the conduct in question:-

• was regarded as relevant to exercising duties required for the registration, licence, authorization, certification (or equivalent);
• occurred some time ago;
• was a one-off incident, and not recidivist;
• was of low-level severity;
• culminated in a prolonged change in professional disposition, such that the evidence pointed to the fact that the person had learnt, changed, improved and was on the overwhelming balance of probabilities unlikely to further offend.

Should one’s application for registration or occupational license be rejected on the basis of not being regarded a fit and proper person, despite meeting the above requirements, it is paramount that one considers instructing lawyers to assist in making submissions to review such a decision as, depending on the factual and legal mosaic, there may be sound appeal grounds.

Lovegrove & Cotton: Experts in building practitioner legal representation

Lovegrove & Cotton are experts in practitioner legal representation in Melbourne, Sydney, the ACT and Queensland. The firm also has had carriage of a great many administrative decision appeals. Justin Cotton has represented building practitioners and building surveyors successfully for over fifteen years and has established leading precedents in a number of Australian Tribunals. If the reader knows of anybody who needs legal representation in this complex and gravity-laden area, feel free to contact us via our website or by emailing enquiries@lclawyers.com.au.