THE LAW SOCIETY OF HONG KONG v. A SOLICITOR

CACV 424/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 424 OF 2006

(ON APPEAL FROM THE SOLICITORS DISCIPLINARY TRIBUNAL)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  This was an appeal from a decision of the Solicitors Disciplinary Tribunal given on 22 November 2006 following a protracted series of hearings.  The Tribunal had found both the complaints against the solicitor had been proved.  On this appeal the solicitor, who appeared in person, sought to challenge the decision in respect of both complaints that had been found proved against him on grounds that he had been refused an adjournment of the hearing before the Tribunal and on the merits.  At the conclusion of the hearing of this appeal, this court dismissed the appeal with costs with reasons to be given in writing, which we now do.

Background

2.  In June 2000 the solicitor was the sole proprietor of a firm which bore his name.  He had employed the second respondent to the complaint as a clerk in his firm.  The whereabouts of that person are at present unknown and he cannot be located.  It would seem that that clerk had considerable responsibility in respect of the events which formed the subject charges.

3.  The firm acted for a Ronald S. Rarela (“Rarela”) (or that at least was the name used by the person for whom the firm acted).  Rarela wished to purchase a Letter B.  The second respondent joined the solicitor’s firm on the day that Rarela became a client of the firm.  He was put in charge of the transaction to purchase the Letter B.  The owner of the Letter B was a Lee Lai Kuen (“Lee”).  An unnamed person posed as Lee, the owner of that Letter B; all that is known is that the imposter was an old lady.

4.  A land search was apparently carried out on 7 June 2000 at the Shatin New Territories Land Registry in respect of the Lot.  An assignment of the Letter B was prepared dated 21 June 2000.  It was executed by the person calling himself Rarela and the old lady posing as Lee, the owner of the Letter B.  Although the clerk had asked the old lady to produce the original Letter B he was, apparently, fobbed off by the old lady telling him that it was unnecessary to produce the original document.  The supposed vendor of the Letter B was not legally represented.  The address given for the old lady on the assignment was a floor of an office building in Central.  The solicitor verified the signatures on the assignment and approved the assignment.

5.  The consideration for the purchase of the Letter B was $15 million and the payment was made by a personal cheque drawn by Rarela in favour of Lee.  Subsequently, a few months later, the Letter B was surrendered to the Government by the solicitor’s firm acting on behalf of Rarela and the sum of $24,040,020.42, which was inclusive of interest, was paid by the Government to Rarela.  It transpired that both the addresses of Rarela and of the old lady on the solicitor’s firm’s file were false.  The fraud eventually emerged but by that time Rarela had left Hong Kong, the old lady was not to be found and although the second respondent was later arrested by the Commercial Crimes Division he was subsequently released without charge.

6.  The complaints against the solicitor were as follows:

“1.    Breach of Rule 2(d) and Rule 2(e) of the Solicitors’ Practice Rules in failing to act competently or properly in handling a transaction involving the sale and purchase of the Letter B in respect of Lot No. 593 in Demarcation District No. 281.

Particulars

On divers dates between about 7^th June, 2000 and 21^st June, 2000, whilst acting as the handling solicitor for one Rarela, Ronald S. in the purchase of the Letter B in respect of Lot No. 593 in Demarcation District No. 281, the first Respondent failed to sufficiently enquire into the identities of the purchaser and the vendor and the title to the Letter B.

2. Breach of Rule 2(d) and Rule 2(e) of the Solicitors’ Practice Rules in failing to supervise or sufficiently supervise his clerk, the 2^nd Respondent.

Particulars

On divers dates between about 7^th June, 2000 and 21^st June, 2000, whilst acting as the handling solicitor for one Rarela, Ronald S. in the purchase of the Letter B in respect of Lot No. 593 in Demarcation District No. 281, the first Respondent failed to supervise or sufficiently supervise the work and conduct of his clerk, the second Respondent in the transaction of the sale and purchase of the Letter B.”

7.  The Tribunal considered that it had not been proved that the solicitor had failed to enquire into the identities of the purchaser and offender sufficiently.  However, it went on to consider whether the solicitor had made proper enquiries into the title to the Letter B.  In this respect the Tribunal said:

“ 2.   The Prosecutor and the 1^st Respondent agreed that the assignment of the Letter B was not a conveyancing or landed transaction.  The 1^st Respondent thus argued that the only duty that he had was to satisfy himself that the vendor was the rightful legal owner of the Letter B and he had no legal duty to check “title” to the Letter B.

  3.   The Prosecutor argued that the 1^st Respondent’s defence in (2) above was a red-herring.  Title means the legal right to the possession of property or the evidence of such right.  Therefore, even in a sale and purchase of a property other than land, the handling solicitor was under a duty to ascertain and check the “title” to the property, the substance of what the Purchaser was paying for.  This Tribunal believes this was rightly so.  The purchaser should be advised by his solicitor as to the “title” or substance that he was purchasing, defective or otherwise.  The ownership of the subject matter should be considered and checked by a prudent solicitor.”

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  7.   We agree that this was not conveyancing and therefore it was not a “must” for the 1^st Respondent to ask the Imposter Vendor to make a statutory declaration though it maybe preferable.  However, a statutory declaration does not automatically perfect a title.

    In any case, the statutory declaration may not reveal anything as the Imposter Vendor may provide false evidence.  However, even without a request for a statutory declaration, a prudent solicitor should have obtained certified copies of the title documents on the land register and check the same before the completion of the transaction.”

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  9.   There was no evidence to show the 1^st Respondent had considered or written to the previous solicitors of the owner as to whether they have the title documents in their possession.  There was no evidence to show the 1^st Respondent had done anything to check the title.  There was no proper enquiry by the 1^st Respondent.

  10. It is not the Tribunal’s consideration as to whether the fraud could be prevented.  It was the standard of work carried out by the 1^st Respondent that matters.  The lack of enquiry on title by the 1^st Respondent was not up to the standard expected from a prudent solicitor.

    The 2^nd limb of the 1^st Complaint was proved.”

8.  In respect of the second charge the Tribunal considered the statements made by the solicitor that he had supervised the second respondent throughout the transaction was a “blank assertion”.  There had been no proper particulars or evidence as to how the supervision was carried out.  The Tribunal acknowledged that it was perfectly proper for the solicitor to delegate duties to a clerk, nevertheless, he could not escape responsibility for work carried out in the course of his practice by leaving it to his staff, however well qualified.

9.  The Tribunal considered that, first, the solicitor should have been very cautious about delegating this particular Letter B transaction to the second respondent who had had no experience in that sort of work and was new to the firm.  The Tribunal went on to say that the solicitor should have given clear directions and guidance to the second respondent as to what he should do in relation to that transaction.  He should have supervised the second respondent more closely and carefully especially with regard to checking the title of the Letter B

This appeal

10.  The notice of appeal in this case was filed on 12 December 2006.  In the bundle before court there was an amended grounds of appeal dated 2 October 2008.  There was also a further document entitled perfected grounds of appeal dated 17 October 2008.  Although the amended grounds of appeal might have been in time had it been served on the respondent, service of that document was disputed.  In the week prior to the hearing, the respondent to this appeal drew this court's attention to the fact that the first occasion on which it had become aware of either the amended grounds of appeal or the perfected grounds of appeal was when the hearing bundle was served on 17 October.  That, according to the rules, was late.  The Law Society attempted to draw this to the solicitor’s attention both by mail and by telephone at all the known addresses but apparently that failed.

11.  In view of the challenge, this court called for a hearing last Friday, 24 October.  The best efforts of the court were also unable to reach the solicitor either by telephone or at the addresses at which he was allegedly contactable.  In view of the absence of satisfactory proof of service of either of these two documents within the time limited, this court did not consider it appropriate to give leave to the solicitor to argue any of the new points raised in either of those two documents.  That decision was taken in the light of the fact that the points sought to be introduced did not appear to have any merit.

12.  On this appeal the solicitor appeared in person.  The first point taken was that he had not been accorded an adjournment which he had requested so that the counsel of his choice could appear.  It was said that this was a breach of Article 35 of the Basic Law.  In my view, quite apart from the fact that it would appear that the Solicitors Disciplinary Tribunal was not a court of law, the position must be that a litigant is not entitled as of necessity to the counsel of his choice.  A court or tribunal would attempt to accommodate any reasonable request.  Provided a litigant or person appearing before a court or tribunal could obtain proper legal representation in adequate time there is no reason which requires that a litigant or person appearing before a court or tribunal should be entitled, as of right, to an adjournment to accommodate a particular counsel.

13.  On the main point of the appeal, the appellant sought to argue that it was sufficient simply for the solicitor handling the matter on behalf of the purchaser to verify the signatures of the supposed vendor and the supposed purchaser.  He was at pains to emphasise the point that the purchase of the Letter B was not a conveyancing transaction as such.

14.  As already pointed out the Tribunal accepted that in technical terms the purchase of the Letter B was not a conveyancing transaction.  Nevertheless it was the purchase of an item of considerable value and in my view the approach of the Tribunal was entirely correct.  It was the solicitor’s duty to make sufficient enquiries as to title and to ensure that all proper enquiries were made by the staff to whom the handling of the matter had been delegated.  That was not done.

15.  I would add that given that the amount of the purchase of the Letter B was considerably lower than its surrender value only a few months later, it would seem that the vendor should have been advised to seek legal representation.

16.  For these reasons I saw no merit in any of the points raised on this appeal.

Hon Le Pichon JA:

17.  I agree.

Hon Sakhrani J:

18.  I also agree.