THE LAW SOCIETY OF HONG KONG v. SOLICITORS

CACV 24/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 24 OF 1999

(ON APPEAL FROM THE SOLICITORS DISCIPLINARY TRIBUNAL)

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J U D G M E N T

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Nazareth V-P:

Introduction

1. This is an appeal by the five appellants against the financial penalties and costs order imposed upon them by the Solicitors Disciplinary Tribunal in disciplinary proceedings which commenced on 3 September 1998. The proceedings were in respect of four complaints made against the firm of solicitors of which they were the five partners, each of failure to comply with undertakings contrary to Principle 14.02 of the Hong Kong Solicitors Guide to Professional Conduct. The particulars of the complaints were as follows.

First complaint

2. That on 20 June 1997, an undertaking was imposed upon their firm (Richard Tai & Co) by Messrs Lee & Chow to return two assignments within 14 days from 20 June 1997; that on 23 July 1997 and 5 September 1997 Lee & Chow wrote reminders to the firm; that the firm failed to deliver the two assignments to Lee & Chow within 14 days from 20 June 1997.

Second complaint

3. That on 30 May 1997 an undertaking was imposed upon the firm by Messrs Daniel Wong & Partners to provide a release within 21 days from 30 May 1997; that they were reminded of this by Daniel Wong & Partners on 14 July and 14 August 1997; and that the firm failed to honour the undertaking in that the release was not delivered within 21 days of 30 May 1997.

Third complaint

4. That on 14 January 1991 an undertaking was imposed upon the firm by Messrs Lo, Chan, Chan & Leung to provide certain specified documents within a reasonable time; that they were informed on 27 February that Messrs Allen Chan & Co that the latter had taken over registration formality from the previous solicitors; that on 22 July 1997 Messrs Allen Chan & Co reminded the firm about the documents; and that the firm failed to honour the undertaking to deliver the documents within a reasonable time.

Fourth complaint

5. That on 31 July 1997 an undertaking was imposed upon the firm by Messrs Philip S.Y. Tang & Co to provide a re-assignment within 21 days from 31 July 1997; that the firm was reminded of this by Philip S.Y. Tang & Co on 21 August 1997; and that the firm failed to honour the undertaking in that the said re-assignment was not delivered to Messrs Philip S.Y. Tang & Co within 21 days from 31 July 1997.

Complaints admitted by the appellants

6. Each of the five appellants admitted the allegations in writing under their individual signatures, which were produced to the Tribunal.

Penalties

7. After hearing submissions on behalf of the appellants and the respondent, the Tribunal ordered each of the appellants to be censured in respect of the four complaints and in addition on the first, second and third complaints to be each fined $40,000, $30,000 and $10,000 respectively. The Tribunal did not impose any further penalty in respect of the fourth complaint other than the censure. The Tribunal also ordered the appellants to pay the costs of and incidental to the proceedings before the Tribunal, including all prior inquiries and investigations in relation to the matters before the Tribunal, such costs to be taxed on a full indemnity basis if not agreed, and the liability of the appellants to such costs to be joint and several.

Appellants' submissions

8. The appellants now appeal to this Court and seek to have the fines of $40,000, $30,000 and $10,000 and the costs order to be set aside and to be substituted by such new orders as the court thinks fit. They also ask for an order that the respondent pay to them the costs of the appeal.

9. For the appellants, Mr John Hemmings has focused upon a single point. He submits that the five partners accepted responsibility for an undertaking that was originally given by the sole proprietor of the firm before he retired and the firm passed in time to the present partners. I pause at that point to refer to the Law Society's Principles of Professional Conduct to which he called attention.

10. He took us first of all to the commentary on Principle 14.02 which is in the following terms:

"The wording and extent of any undertaking should be carefully considered before it is given since a solicitor becomes personally bound by any undertaking given by him, his partners or staff. The giving of an undertaking by a solicitor is not to be taken lightly and an undertaking should never be given unless the solicitor giving it is certain that he personally can comply with it."

He also referred us to Principle 14.12 relating to the relevant responsibility of partners, which is framed in the following way:

"Where a solicitor in partnership gives an undertaking in the course of his practice, all partners are responsible for it performance."

Also relevant to the matter is paragraph 3 of the commentary upon Principle 14.03:

"An undertaking will normally be required to be honoured only as between the giver and the recipient.

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3. Where a solicitor acquires a practice from another and consequently takes over the conduct of a matter in which there is an undertaking outstanding, the acquiring solicitor is not liable on the undertaking unless he accepts liability by expressly or impliedly adopting the undertaking. If he does adopt the undertaking, the giver of the original undertaking nevertheless remains liable under it until he expressly obtains a release form the recipient."

11. It appears to be the practice of the Law Society in respect of undertakings, in regard to which a solicitor or a firm is in breach, to proceed against the particular solicitor or supervising solicitor or partner who is responsible. That is apparent from a circular issued by the Law Society in 1997. In that respect, in the disciplinary proceedings Mr Colin Cohen who appeared for the Law Society remarked to the Tribunal that had the five partners not themselves indicated that they would accept responsibility for the matter, the Law Society may have proceeded against the former proprietor of the firm, who gave the undertaking.

12. In his submission Mr Hemmings stresses the fact that the five partners should not be penalised for having acted responsibly in all shouldering the responsibility. His submission proceeds upon the following basis. He has exhibited a schedule in which the penalties imposed by the Disciplinary Tribunal in several disciplinary cases had been analysed in respect of breaches of undertaking. It shows that penalties have ranged from about $24,000 to about $100,000. He submits that the variation seems to be related to aggravating factors in the particular cases and contends in this case that in the absence of any aggravating factors, the financial penalty should have been at the lower end of the range of penalties. Developing his submission he says that what the Tribunal appears to have done is identify the appropriate penalty in respect of the particular breach and impose it upon each of the five partners thereby increasing it fivefold in respect of one particular complaint. He submits that this is a matter of some importance as it affects the profession in particular all firms in which there may be a number of partners.

13. There is no dispute in the written submissions that this Court is slow to intervene in the decisions of the Tribunal and will not do so unless they are clearly wrong, unjustified or obviously out of tune with the evidence. Mr Hemmings submits, in the light of that no doubt, that the Tribunal erred in principle in assessing the penalty for the particular breaches and simply applying them to all the partners. He submits in effect that what should have been done was that it should have been apportioned between the partners who were responsible. That, he says, was an error of principle in respect of which this Court can and should intervene.

14. If one looks at the material before this Court and such reasons as appear in the findings of the Tribunal, it is not possible to discern upon what basis the Tribunal reached its decision to impose the penalties of $40,000 upon each of the partners. The Tribunal very properly addressed the responsibility of each of the partners. Indeed, that was the natural thing to do since it was they themselves who voluntarily accepted responsibility. Upon that basis, in my view, the Tribunal was entirely justified in imposing the same penalty in respect of the responsibility jointly accepted without varying apportionment. In other circumstances the Tribunal might have decided to vary the penalties. Mr Hemmings submits that there was evidence before the Tribunal upon which it could have apportioned the blameworthiness or responsibility for breach of the undertaking. He refers in particular to the fact apparent from the record that two of the partners were in charge of litigation and would have had little to do with conveyancing. That does not seem to me to establish an error of principle for it would still have been rationally open to the Tribunal to apportion blameworthiness and responsibility on the basis on which the five partners accepted it. In those circumstances I am unable to see any basis upon which I could conclude that there was an error of principle. If there was, it is certainly not apparent on the material before this Court.

Conclusion

15. I would therefore reject that submission which clearly fails. That leaves the only other matter that is raised in the appeal, the complaint about the costs order. However, upon Mr Hemmings commencing his submissions on this part of the appeal, it became clear that what he was seeking was a clarification of the costs order made by the Tribunal. Plainly that is a matter for the Tribunal, certainly in the first instance. If I understood him rightly, he accepted that view when it was put to him by the Court. Upon that basis there is no merit also upon that ground or complaint.

16. Accordingly, I would dismiss the appeal.

Mortimer V-P:

17. I also would dismiss this appeal.

18. The Tribunal had all the facts well in mind. The penalties imposed on each individual solicitor who had pleaded guilty to his breach were moderate. I entirely reject the submission that the fines imposed should be assessed for their severity by totalling them all and then comparing the total with the tariff imposed in other cases where only one solicitor was involved.

19. The principle we have to apply is clear. We interfere only if the Tribunal's decision was clearly wrong, or if it was unjustified, or was plainly and obviously out of tune with the evidence upon which it was acting.

20. Here, each solicitor charged had committed a breach. Each was fined for his breach. The fines were well within the range of penalty that had previously been imposed by this Tribunal. They accorded with the usual tariff for this breach which had no aggravating factors. In these circumstances the decision of the Tribunal has not been shown to be flawed or wrong in principle in the way necessary for this Court to interfere. I would dismiss the appeal.

21. Before I leave the matter however, I would add this. Part of the evidence which was put before the Tribunal in mitigation by the solicitors concerned was that breaches of this type of undertaking are commonplace within the profession, and - what was more - go unreported to the Law Society. An undertaking given by one member of the profession to another is a serious and solemn matter. So it never should be given unless it can be complied with. And if it becomes clear for reasons beyond the control of the person giving the undertaking that it may not be complied with, then the undertaker should take steps to have the matter regularised before the breach takes place. The Law Society has recognised the problem by announcing that it will take a more stringent approach to breaches of this kind. But it is clear that much more is required to remedy the serious situation which has arisen.

22. For my part, I can only hope that the Law Society will address the problem again.

Godfrey JA:

23. The penalty imposed on each of the appellants here was not out of tune with the penalty imposed in other similar cases. It is true that, since there were five of them, that penalty was here imposed five times over. But each of them has accepted responsibility for the offences charged. That responsibility is several as well as joint. That being so, for my part, I see nothing wrong in principle in each appellant being ordered to suffer the appropriate penalty.

24. I would only add this. I entirely agree with the observations of Mortimer, V-P in relation to the question of solicitors' undertakings. This present appeal reveals a very disturbing state of affairs. Speaking for myself, I think the Law Society would be well-advised to consider making it the duty of a solicitor to report a breach of an undertaking within, say, 24 hours after that breach comes to the solicitor's notice and to declare a failure so to report professional misconduct. In that way, at any rate some semblance of order might be restored. Solicitors' undertakings, once given, must be observed timeously and to the letter.

25. I, too, would dismiss this appeal.

Nazareth V-P:

26. The appeal is accordingly dismissed.