THE LAW SOCIETY OF HONG KONG v. WAI TO TSUEN HAGON

CACV 502/2018

[2019] HKCA 618

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 502 OF 2018

(ON APPEAL FROM AN ORDER MADE BY THE SOLICITORS
DISCIPLINARY TRIBUNAL DATED 26^TH JUNE OF 2018)

__________________

__________________

__________________

_______________________________________________

R E A S O N S   F O R   J U D G M E N T   A N D

D E C I S I O N   O N   C O S T S

_______________________________________________

Hon Poon JA (giving the Reasons for Judgment and Decision on Costs of the Court) :

INTRODUCTION

1.  This is an appeal brought by the Law Society of Hong Kong against the penalties imposed by the Solicitors Disciplinary Tribunal on the respondent dated 26 June 2018 on the ground that they were manifestly inadequate.[1] At the hearing on 24 May 2019,[2] we allowed the appeal, set aside the penalties imposed by the Tribunal and ordered that the respondent be suspended from practising as a solicitor for 3 years, with the condition that if he resumes practice after the expiry of his suspension, his practice be subject to the following restrictions for 3 years :

(1)  he is prohibited from practice as a sole proprietor or partner of a solicitors’ firm;

(2)  his practice as a solicitor be subject to the supervision of a full-time solicitor of no less than 15 years’ standing and also of good standing.

We also ordered costs against the respondent.

2.  We now hand down the reasons for our judgment.

THE RESPONDENT

3.  The respondent was admitted as a solicitor in Hong Kong on 25 August 2001.  He commenced his practice as a sole proprietor in the name of Hagon Wai & Partners (“the Firm”) on 1 November 2003.  The Firm was intervened by the Law Society on 25 April 2012.

4.  Since 13 January 2014, the respondent no longer holds a practising certificate, after his application for a practising certificate for 2014 failed.  On 16 April 2014, the respondent was declared bankrupt.

COMPLAINTS

5.  The respondent faced a total of 21 complaints before the Tribunal.  Broadly, the respondent was alleged to have committed various breaches as follows :[3]

(1)  The 1^st complaint alleged that the respondent was in breach of Principle 6.04 of the Solicitors’ Guide to Professional Conduct, Volume 1, 2^nd edition and 3^rd edition (effective 1 January 2014) (the “Guide”) in failing to give prompt and satisfactory explanations or replies to the Law Society’s enquiries by its letters of 14 September 2011, 28 March 2012, 10 May 2013, 21 August 2013, 6 September 2013 and 24 June 2014 relating to a staffing issue.

(2)  The 2^nd to 5^th complaints

(a)  The 2^nd complaint alleged that the respondent was in breach of section 8 of the Legal Practitioners Ordinance, Cap. 159 (the “LPO”), Rule 8(2) of the Accountant’s Report Rules (the “ARR”) and Principle 2.03 of the Guide, as the principal of the Firm, in failing to deliver to the Council of the Law Society the accountant’s report of the Firm for the accounting period from 1 May 2010 to 30 April 2011 not more than 6 months after the accounting period specified in the accountant’s report, i.e., not later than 31 October 2011.

(b)  The 3^rd complaint alleged that the respondent was in breach of Rule 10 of the Solicitors’ Accounts Rules (the “SAR”), in failing to keep properly written up books and accounts of the Firm in compliance with Rule 10(1) of the SAR.

(c)  The 4^th complaint alleged that the respondent was in breach of Rule 10A of the SAR, in failing to prepare monthly comparison lists and reconciliation statements in compliance with Rule 10A of the SAR.

(d)  The 5^th complaint alleged that the respondent was in breach of Principle 6.04 of the Guide, in failing to give prompt and satisfactory explanations or replies to the Law Society’s enquiries by its letters of 2 March 2012 and 11 July 2013.

(3)  The 6^th to 8^th complaints

(a)  The 6^th complaint alleged that the respondent was in breach of Principle 6.04 of the Guide, in failing to reply fully and promptly to correspondence from former clients or on their behalf.

(b)  The 7^th complaint alleged that the respondent was in breach of Principle 6.04 of the Guide, in failing to give prompt and satisfactory explanations or replies to the Law Society’s enquiries by its letter of 13 February 2012 in relation to the clients’ complaints.

(c)  The 8^th complaint alleged that the respondent was in breach of Rules 2(c), (d) and (e) of the Solicitors Practice Rules (the “SPR”), on account of the facts set out in the 6^th and 7^th complaints.

(4)  The 9^th complaint alleged that the respondent was in breach of Principle 6.04 of the Guide, in failing to give prompt and satisfactory explanations or replies to the Law Society’s enquiries by its letters of 5 September 2012 and 3 June 2013 in relation to a client complaint.

(5)  The 10^th complaint alleged that the respondent was in breach of Principle 6.04 of the Guide, in failing to give prompt and satisfactory explanations or replies to the Law Society’s enquiries by its letter of 19 August 2013 in relation to a client complaint.

(6)  The 11^th to 13^th complaints

(a)  The 11^th complaint alleged that the respondent was in breach of Rule 11 of the SAR, in repeatedly failing to produce the books and accounts of the Firm at such time and place fixed by the Council for inspection by the Monitoring Accountants of the Law Society.

(b)  The 12^th complaint alleged that the respondent was in breach of Rule 10 of the SAR, in failing to keep written up such books and accounts in compliance with Rule 10 of the SAR.

(c)  The 13^th complaint alleged that the respondent was in breach of Principle 6.04 of the Guide, in failing to give prompt and satisfactory explanations or replies to the Law Society’s enquiries by its letter of 6 June 2013.

(7)  The 14^th to 17^th complaints

(a)  The 14^th complaint alleged that the respondent was in breach of Principle 14.02 of the Guide, as the then partner of the Firm, in failing to honour a professional undertaking to a client to return title deeds and documents relating to a property to the client.

(b)  The 15^th complaint alleged that the respondent was in breach of Principle 14.02 of the Guide, as the then partner of the Firm, in failing to honour a professional undertaking to a client to return title deeds and documents relating to another property to the client.

(c)  The 16^th complaint alleged that the respondent was in breach of Principle 14.02 of the Guide, as the then partner of the Firm, in failing to honour a professional undertaking to a client to return title deeds and documents relating to yet another property to the client.

(d)  The 17^th complaint alleged that the respondent was in breach of Principle 6.04 of the Guide, in failing to give prompt and satisfactory explanations or replies to the Law Society’s enquiries by its letter of 8 May 2014 relating to complaints of a client of the respondent for his failure to honour his professional undertakings and to return the title deeds and documents.

(8)  The 18^th to 21^st complaints

(a)  The 18^th complaint alleged that the respondent was in breach of paragraph 1 of Schedule 1 to the Solicitors (Professional Indemnity) Rules (the “SPI Rules”), as the principal of the Firm, in failing to settle the debit note of Hong Kong Solicitors Indemnity Fund Limited (“Company”) dated 30 July 2013 in the sum of HK$1,593 being adjustment to the reduction in contribution for the indemnity year 2010/2011.

(b)  The 19^th complaint alleged that the respondent was in breach of Rule 8(1)(a) of the SPI Rules, as the principal of the Firm, in failing to produce to the Company the final Gross Fee Income Report for the final accounting period, namely from 1 January 2011 to 23 April 2012, within the stipulated time.

(c)  The 20^th complaint alleged that the respondent was in breach of paragraph 1 of Schedule 1 to the SPI Rules, as the principal of the Firm, in failing to settle the debit note of the Company dated 17 January 2014 in the sum of HK$88,434 being the outstanding contribution.

(d)  The 21^st complaint alleged that the respondent was in breach of rule 2(d) of the SPR on account of the facts set out in the 18^th to 20^th complaints.

FINDINGS MADE BY THE TRIBUNAL

6.  The respondent did not appear before the Tribunal at the hearing on 6 November 2017.  After considering the matter, the Tribunal found each of the 21 complaints proved. Relevantly for present purposes, the Tribunal said :

“ 31. As the regulatory body, the Law Society has a duty to investigate complaints against its members for their alleged professional misconduct. The Tribunal considers that it is an important duty of every solicitor to respond to the Law Society’s enquiries promptly and candidly. The Tribunal is appalled by the fact that the respondent has repeatedly failed to answer the enquiries of the Law Society. The Tribunal considers that such failures were evasive, willful and disrespectful.

32. The Tribunal considers that the respondent did not have the requisite diligence and competence to run a solicitors’ firm. He was not acquainted with the relevant Legal Practitioners Ordinance, the Accountant’s Report Rules, and the Solicitors (Professional Indemnity) Rules. All of the breaches are serious, which reflect that the Respondent has not put a proper system in place to ensure that these rules are to be complied with by himself and his staff.

33. The Tribunal further considers the respondent was not qualified to act as a solicitor.  He failed to respond to clients’ enquiries, and to honour his professional undertakings.  The overall conduct of the respondent and the persistent breach of the Hong Kong Solicitors’ Guide to Professional Conduct seriously impair his duty to act in the best interests of his clients, his own reputation and the reputation of the legal profession, and a proper standard of work.”

PENALTIES

7.  Based on its findings against the respondent and in order to protect the interests of the public and maintain the reputation of the legal profession, the Tribunal imposed on the respondent the following penalties :

(1)  In respect of the 1^st complaint, the respondent be fined HK$12,500.

(2)  In respect of the 2^nd complaint, the respondent be fined HK$10,000.

(3)  In respect of the 3^rd complaint, the respondent be fined HK$15,000.

(4)  In respect of the 4^th complaint, the respondent be fined HK$15,000.

(5)  In respect of the 5^th complaint, the respondent be fined HK$12,500.

(6)  In respect of the 6^th complaint, the respondent be fined HK$12,500.

(7)  In respect of the 7^th complaint, the respondent be fined HK$12,500.

(8)  In respect of the 8^th complaint, the respondent be fined HK$10,000.

(9)  In respect of the 9^th complaint, the respondent be fined HK$12,500.

(10)  In respect of the 10^th complaint, the respondent be fined HK$12,500.

(11)  In respect of the 11^th complaint :

(a)  the respondent be censured;

(b)  with effect from the date hereof, the respondent’s practice as a solicitor be subject to the following conditions for three years :

(i)  that he cannot practice as sole proprietor or partner of a solicitors firm; and

(ii)  that his practice as a solicitor be subject to the supervision of a full-time solicitor of no less than 15 years’ standing and also of good standing.

(12)  In respect of the 12^th complaint, the respondent be fined HK$20,000.

(13)  In respect of the 13^th complaint, the respondent be fined HK$12,500.

(14)  In respect of the 14^th complaint, the respondent be fined HK$50,000.

(15)  In respect of the 15^th complaint, the respondent be fined HK$50,000.

(16)  In respect of the 16^th complaint, the respondent be fined HK$50,000.

(17)  In respect of the 17^th complaint, the respondent be fined HK$12,500.

(18)  In respect of the 18^th complaint, the respondent be fined HK$5,000.

(19)  In respect of the 19^th complaint, the respondent be fined HK$15,000.

(20)  In respect of the 20^th complaint, the respondent be fined HK$40,000.

(21)  In respect of the 21^st complaint, the respondent be fined HK$10,000.

8.  Lastly, the Tribunal ordered the respondent to pay the costs of and incidental the proceedings, including the costs of the prosecutor for the Law Society, the costs of the clerk to the Tribunal and the costs of the Law Society, summarily assessed at HK$179,200.98; HK$35,829.40 and HK$95,117.07 respectively.

OUR VIEWS

9.  We are fully conscious of the fact that the Tribunal as an expert and informed tribunal is well placed to assess what sanctions are required to deal with a default solicitor and to protect the public interests.  And we must pay considerable respect to its sentencing decision.  However, despite such respect, we are satisfied that the penalties the Tribunal imposed on the respondent in the instant case were manifestly and wholly inadequate.  They were clearly wrong and we must interfere : see A Solicitor v Law Society of Hong Kong [2015] 2 HKLRD 802, per Lam VP, at [67] – [68].

10.  The principles on imposing penalties of striking off or suspension in solicitor disciplinary matters are well-settled and may be restated as follows :

(1)  Where a solicitor has acted dishonestly, an order of striking off should generally be imposed, although there may be exceptional cases where suspension may suffice.

(2)  Where a solicitor has not acted dishonestly but has fallen below the required standards of integrity, probity and trustworthiness, suspension is generally the appropriate sentence although in an appropriate case, an order of striking off may be called for. 

(3)  It is only in the most exceptional cases that orders other than striking off or suspension should be imposed in cases covered by sub-paragraphs (1) and (2) above.

(4)  The rationale for these heavy sentences is four-fold :

(a)  to punish the solicitor;

(b)  to deter others from acting in the same way;

(c)  to ensure that the offender will not have the opportunity to repeat the offence;

(d)  to maintain the reputation of the profession and to sustain public confidence in the integrity of the profession.

(5)  If suspension is the appropriate remedy then it will not be an objection to impose it even though the solicitor may be unable to re-establish his practice when the period of suspension is past.

(6)  When considering the appropriate penalty, emphasis should be placed on the need to protect the public and maintain public confidence in the profession.

See A Solicitor v Law Society of Hong Kong [2004] 2 HKLRD 490, per Cheung JA at [61]; as modified in A Solicitor v Law Society of Hong Kong [2015] 2 HKLRD 802, per Lam VP at [70] – [79], in particular [78] – [79].

11.  Here, according to the findings made by the Tribunal, the respondent had committed very serious and flagrant breaches of his professional duties in almost every major aspect of his conduct as a solicitor continuously between 2011 and 2014.  It clearly shows, on his part, a wholesale disregard of his professional duties as a solicitor and a persistent defiance of the Law Society’s enquiries with a view to dodging possible investigations by the Law Society.  His conduct brought disrepute upon the profession.  He was demonstrably unfit to practice as a solicitor.

12.  The public interests involved in protecting the public and to maintain the public confidence in the profession clearly call for a suspension.  And we consider a period of 3 years’ suspension appropriate in the overall circumstances of the case.  Anything less would be wholly and manifestly inadequate.  The respondent also clearly needs supervision should he decide to continue practising as a solicitor after the expiry of his suspension.  Similarly, a 3 years’ period of supervision is necessary in light of his past misconduct.

13.  For the above reasons, we made the order as we did at [1] above.

COSTS

14.  As said, we ordered the respondent to pay the Law Society costs.

15.  There are two sets of costs.

16.  The first is in relation to the application for leave to appeal in CAMP 115/2018.  The Law Society claimed a total of HK$179,936.00.  We take the view that the time spent by the handling solicitor in Part C for communications (7.57 hours) excessive. We would only allow 2 hours.  Likewise, we find the time spent by the handling solicitor in Part D for preparation and perusal of documents excessive.  We would also allow 2 hours only.  The total costs that we would allow in CAMP 115/2018 is HK$70,656.00.

17.  The second set of costs concerns the appeal proper.  The Law Society claimed a total of HK$259,134.00. We find the time spent by the handling solicitor for communication in Part C (9.11 hours); for preparation and perusal of documents in Part D (6.24 hours); and for the work to be done after the date of the statement of costs (24/4/2019) (8 hours) excessive.  We would only allow 2 hours, 1 hour and 1 hour respectively.   We also find the brief claimed by the solicitor advocate (HK$120,000.00) excessive.  We would only allow HK$80,000.00 which we consider to be a reasonable sum.  The total costs that we would allow in the appeal proper is HK$106,904.00.

18.  In consequence, we summarily assess the Law Society’s costs for CAMP 115/2018 at HK$70,656.00 and for the appeal at HK$106,904.00 respectively.