Now Lougher, who owns Whakatāne accountancy firm Calc, has been fined $10,000 and ordered to pay costs and expenses of $21,681.41.
‘I don’t know what I’m doing’
Lougher, a 2022 Te Moana-a-Toi Bay of Plenty Kiwibank Local Hero medalist, was the accountant for a couple who were selling their gym franchise in the Bay of Plenty.
The complainant, who worked in two different gyms, heard that one of the franchises was for sale and commented to the franchise owner in early 2021 that she would “love to own a gym one day”.
In its recently released decision, the disciplinary tribunal stated that soon after, the woman received a phone call from Lougher advising that it might be possible for her and her husband to buy the gym.
Neither the woman nor her husband had any business experience, but Lougher said he would help her through and assist her with the books, wages, GST and other matters.
Over the following months, Lougher obtained finance for the couple through his contacts with a bank and mortgage broker.
Apart from a video call to explain the loan terms and to sign documents, the complainants had no contact with the bank and broker.
Most of the arranging was done by Lougher.
He also provided them with management accounts that he had prepared for the vendor company, however the woman did not understand them, and Lougher did not explain them.
Lougher then got the woman to sign a confidentiality agreement in favour of both the vendor and his firm.
Although the couple knew he was the vendor’s accountant, he never raised that with them, nor did he take any steps to manage the conflict or recommend that they seek independent advice.
In July 2021, he set up a company for the couple to purchase and operate the business without explaining the reasons, pros, or cons of a company structure.
When the woman expressed doubts, including “I don’t know what I’m doing, I have no idea”, Lougher encouraged her saying “we will get you there”, and “welcome to being a business owner, this is all part of it”.
The agreement was signed in August 2021 with a price of $565,000, $484,500 of which was a goodwill loan.
The complainants had no money to put in and instead had to borrow money from the woman’s parents and arrange an overdraft after their lawyer noted they had no financial buffer to fall back on.
Although it initially traded well, by mid-2024, the couple faced financial strife.
The woman had not paid herself a wage in three years and couldn’t pay the franchise fees.
It was acknowledged by the couple that there were “a range of external factors” that detrimentally affected the business.
Despite rebranding and developing an alternative business plan, the business didn’t recover and closed a year later.
In his response to the couple’s complaint, Lougher criticised their 2024 restructure, stating that “this raised serious concerns about the complainants’ integrity and willingness to engage ethically in commercial matters”.
Calc chartered accountancy firm owner, Jason Lougher. Photo / Alan Gibson
The couple were “understandably offended by this attack on their integrity, especially as they had acted on legal advice”, the tribunal said in its decision.
‘Should have been alert from the outset’
The tribunal ruled that Lougher was advising, assisting, and “indeed encouraging”, the complainants in their purchase, who were heavily reliant on his expertise.
“They should have received objective, independent advice and guidance, which [Lougher] clearly did not provide and could not have, given his connection with the vendor.”
The couple were vulnerable, given their lack of business experience and their financial situation.
“[Lougher] should have been alert to the conflict from the outset.
“It was so blindingly obvious that his failure to identify such an elementary point was a clear breach of fundamental professional standards.
“The confidentiality agreement was a further clear signal that he was in no position to independently advise the complainants and assist them with the due diligence they needed.”
Lougher’s enthusiasm for the sale to go ahead “clouded his judgment and objectivity”.
The second charge related to Lougher’s response and amounted to “unbecoming” conduct.
“The tribunal finds that [Lougher’s] conduct involved a substantial failure to observe proper standards of professionalism in both objectivity and professional behaviour, to such a degree as to amount to conduct unbecoming.”
In sanctioning Lougher, the tribunal also took into account Lougher’s other unblemished record, accepting responsibility, undertaking voluntary ethics training, and the several references attesting to his personal and professional character.
Lougher was also directed to undertake three micro-courses focusing on conflict of interest, essentials of the code, and professionals in practice, and update his firm’s system of quality management manual by the time of his next practice review.
Although the NZICA did not issue a suspension on Lougher’s Certificate of Public Practice [CPP] or his membership, it did order he consider updating his conflict of interest policies.
He declined to comment when approached by NZME.
Belinda Feek is an Open Justice reporter based in Waikato. She has worked at NZME for 11 years and has been a journalist for 22.