Conflict of interest lands NZ accountant with censure, $30k bill

According to disciplinary documents, Lougher was the accountant for Mr C and Ms D, who owned and operated a franchise gym in Rotorua. He was also a member of, and attended, the franchise’s Whakatane gym.

At the time, the complainant ‘Ms A’ was working as a part-time gym manager at the Whakatane gym, and a personal trainer at the Rotorua gym.

In early 2021, the gym’s owner mentioned that they were selling the Whakatane gym, and Ms A commented that she would love to own a gym one day. Soon after, she received a call from Lougher, who said it might be possible for her and her husband, Mr B, to buy the Rotorua gym.

Over the following months, he encouraged and assisted the couple to purchase the gym, telling Ms A that he would help her to do the books, wages, GST and other matters. In July, he set up a company for the couple to purchase the gym, without explaining the pros and cons of a company structure.

On several occasions, Ms A expressed doubts including “I don’t know what I’m doing, I have no idea,” but Lougher continued to encourage her, saying things to the effect of “we will get you there” and “welcome to being a business owner, this [is] all part of it.”

“The Member was advising and assisting (and indeed encouraging) the complainants in their purchase of another client’s business. The complainants were naïve and inexperienced in business matters and, as the correspondence shows, were heavily reliant on the Member to guide them,” disciplinary documents read.

In August 2021, the purchase agreement was signed, with an agreed price of $565,000, of which $484,500 was for goodwill alone. Ms A and Mr B had no money to put in, and had to borrow the entire purchase price.

This included borrowing from Ms A’s parents, and arranging an overdraft, which their lawyer noted they had no financial buffer to fall back on. The purchase was settled in December 2021.

“The price they were to pay, particularly for the goodwill, was a very substantial sum for a couple in their position, especially when entirely reliant on borrowings which the business would need to service,” disciplinary documents read.

In December 2021, Ms A left the Whakatane gym to operate the business, which initially traded well. However, by mid-2024, Ms A had not paid herself a wage in 3 years and the couple were unable to pay the franchise fees.

They relied on Mr B’s income as a mechanical engineer to cover living expenses, and to prop up the business. The couple rebranded the gym and developed a new business plan, but the business was closed a year later. In April 2025, they made a complaint with the NZICA.

The institute said that it was unclear whether the situation could have been avoided if Ms A or Mr B had acted on independent advice, but said Lougher’s optimistic advice had likely contributed.

“It is speculative as to whether the complainants would have proceeded with the purchase or avoided the collapse of the business had they been independently advised,” the disciplinary tribunal noted.

“However that advice should have tempered their enthusiasm with the reality of their position and recommended caution, rather than the optimism and enthusiasm conveyed by the Member.”

It added that Lougher should have been alert to the conflict of interest from the outset of the purchase, as the adviser for both the buyer and the seller in the transaction.

“It was so blindingly obvious that his failure to identify such an elementary point was a clear breach of fundamental professional standards,” disciplinary documents read.

In considering mitigating factors, the tribunal noted that Lougher had accepted full responsibility for his actions and voluntarily underwent further ethics training. He also had an otherwise unblemished record, and several references attesting to his personal character and accomplishments, including as a valuable contributor to the community.

“Although the conflict of interest in this case was serious, as were the Member’s failure to identify and address it, it was not such as to warrant a suspension either of his membership or his CPP,” disciplinary documents read.

“That is particularly so in this case where the Member has demonstrated insight into and remorse for his conduct, and has proactively taken steps to improve his awareness of and response to such situations as may arise in future.”