AU WING LUN, WILLIAM v. THE SOLICITORS DISCIPLINARY TRIBUNAL/LAW SOCIETY

HCAL 3475/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO. 3475 OF 2001

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D E C I S I O N

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Introduction

1. This is an application for leave to apply for judicial review out of time. It was taken out on 23 November 2001. The 1st applicant ("Au") is a practising solicitor with over 20 years' practice and the sole proprietor of a solicitors firm in Hong Kong. The 2nd applicant ("Chiu") is a clerk in Au's firm. They faced disciplinary proceeding together earlier. At the end of the disciplinary proceeding on 29 March 2000, the putative respondent ordered inter alia that Au was to pay the taxed indemnity costs of the proceeding relating to the complaints against Au and there be no order as to costs as between the Law Society and Chiu. The relief sought by the applicants in this application is in essence for the costs orders to be quashed, and for the matter of costs of the disciplinary proceeding to be remitted to the putative respondent for reconsideration.

2. Under s. 13(1) of the Legal Practitioners Ordinance, Cap. 159, the applicants are entitled to lodge an appeal against an order made by the putative respondent. S. 13(1) provides:-

"... an appeal against any order made by a Solicitors Disciplinary Tribunal shall lie to the Court of Appeal and the provisions of Order 59 of the Rules of the High Court ... shall apply to every such appeal ... ".

3. Au in fact made an application for extension of time to appeal against the order of the putative respondent on 12 March 2001 in HCMP No. 1378 of 2001 ("the CA application"). Para. II(c) of the draft Notice of Appeal dated 26 February 2001 (referred to in the affirmation filed) in the CA application sought to set aside the said costs order made by the putative respondent against Au. The CA application came to be heard by Hon Woo JA on 6 June and 12 July 2001. In a written judgment handed down on 18 July 2001, Hon Woo JA refused the CA application.

Res Judicata: Au's Application

4. At the beginning of the ex parte hearing on 26 February 2002, I asked counsel for the applicant whether he was aware that the doctrine of res judicata may be relevant to this application. Counsel's attention was drawn to my earlier judgment in Lo Li v. Lo Shing and Ors., unrep., HCA No. 4492 of 1996. The first decision referred to in Lo Li was the leading authority of Yat Tung Investment Co., Ltd. v. Dao Heng Bank Ltd. [1975] AC 581, 590 which reads:-

"But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings. The locus classicus of that aspect of res judicata is the judgment of Wigram V.-C. in Henderson v. Henderson (1843) 3 Hare 100, 115, where the judge says:-

'... where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.'

The shutting out of a 'subject of litigation'―a power which no court should exercise but after a scrupulous examination of all the circumstances―is limited to cases where reasonable diligence would have caused a matter to be earlier raised; moreover, although negligence, inadvertence or even accident will not suffice to excuse, nevertheless 'special circumstances' are reserved in case justice should be found to require the non-application of the rule. ...

The Vice-Chancellor's phrase 'every point which properly belonged to the subject of litigation' was expanded in Greenhalgh v. Mallard [1947] 2 All E.R. 255, 257 by Somervell L.J.:

'... res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but ... it covers issues of facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceedings to be started in respect of them.'." (emphasis supplied).

5. Another case referred to in Lo Li was the more recent House of Lords case of Arnold v. National Westminster Bank Plc. [1991] A.C. 93. The Judgment categorised the doctrine into two types: cause of action estoppel and issue estoppel. Lord Keith said this in his judgment (at pp. 104-5):-

"... Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. The discovery of new factual matter which could not have been found out by reasonable diligence for use in the earlier proceedings does not, according to the law of England, permit the latter to be re-opened. ... ";

"Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceeding between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re-open that issue." (emphasis supplied).

6. In a later part of his judgment, Lord Keith discussed the applicability of issue estoppel where in later proceedings a party has brought forward further relevant material which could not by reasonable diligence have been adduced earlier. At pp. 108-9 he said:-

"It is to be noted that there appears to be no decided case [on the point] ... But there is room for the view that the underlying principles upon which estoppel is based, public policy and justice, have greater force in cause of action estoppel ... than they do in issue estoppel ... In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings ... " (emphasis supplied).

7. It is true that the judgment of Hon Woo JA did not deal with the intended appeal against the costs order. I also accept counsel's indication that that aspect has not been referred to by the court or the parties during the hearing of the CA application. Be that as it may, the costs order affecting Au was expressly referred to in the draft Notice of Appeal and was thus clearly intended to be one of the matters which was to be raised in the CA application (and, if the CA application were successful, in the intended appeal). Accordingly, it was an issue which "... could and therefore should have been litigated in earlier proceedings ... ".

8. It was not (nor can it properly be) contended by the applicant that further material relevant to the correct determination of an appeal against (or judicial review of) the costs order which could not by reasonable diligence have been adduced earlier now becomes available.

9. By reason of the above matters, despite counsel's contention to the contrary, I find that the doctrine of res judicata is applicable. The application of Au should be refused on this ground alone.

Delay: Both Applications

10. There was a lapse of about 1 year and 8 months between the date of the costs order (29 March 2000) and the date of this application (23 November 2001). RHC Ord 53 r 4(1) provides:-

"An application for leave to apply for judicial review shall be made promptly and in any event within three months from the date when grounds for the application first arose unless the Court considers that there is good reason for extending the period within which the application shall be made". (emphasis supplied)

11. In the CA application, Hon Woo JA found that the period of delay was about 11 months (from 29 March 2000 to 12 March 2001): see para. 4 of the judgment dated 18 July 2001. The reasons given by Au for the delay were he did not wish to antagonize the Law Society or the Court of Appeal, he was concerned with the costs of appeal, he was depressed and did not want further stress and counsel engaged for the CA application needed time to peruse the documents. In the end, Hon Woo JA concluded that the reasons given were not valid: para. 7 of his judgment.

12. Au's reasons for the delay in this application can be summarized as follows. Au wanted to pursue the CA application first and that application was complicated. Further, Au has to prepare for another disciplinary hearing in September 2001. None of these reasons are valid. Ignorance of law is not a defence but the "reasons" given for Au's delay only make the matter worse because effectively Au is saying that he made a conscious decision to postpone this application until after the CA application and/or the other disciplinary hearing. Au's application should be dismissed because of the delay as a matter of discretion because of his decision to delay this application (when considered together with the length of the delay and the lack of any good reason for the delay).

13. Chiu has completely failed to adduce any evidence to explain the delay. There is accordingly no material upon which this court may exercise its discretion regarding the extension of time in Chiu's favour. His application should be refused on this ground alone. In the Form 86A, there is a statement to the effect that Chiu still is a clerk in Au's firm and Chiu felt he had to wait for Au to exhaust the alternative appeal procedure before Chiu would make this application. This is because the issues in the application of Au and Chiu are inter-related. The above statements were generally verified in Au's affirmation dated 23 November 2001 (see para. 3 thereof). Even if this were adequate evidence, I would still have rejected the reasons given as being inadequate. A conscious decision to allow time to expire rarely provides a good explanation for the delay. On the contrary, it usually worsens the matter.

Merits of Both Applications

14. In order to better understand the applicants' argument, the nature of the case before, and the decision of, the tribunal in the disciplinary proceeding regarding costs should be briefly mentioned.

15. Disciplinary proceeding was commenced because of a referral by the Court of Appeal following the quashing of the appellant's conviction in the District Court. Au represented the appellant in the District Court. The appellant's appeal focused on the conduct of his defence by Au and Chiu at trial, namely, Au failed to fully canvass the appellant's instructions at trial and Au failed properly to advise the appellant at that time. The Court of Appeal concluded that there had been flagrant incompetence on Au's part.

16. Au faced 4 charges before the tribunal whereas Chiu faced 2. At the end of the proceedings, the tribunal found Au guilty of a failure to accord his client a proper defence in failing to take or canvass his client's instructions or to properly advise his client. Au was also found guilty of having given misleading evidence to the Court of Appeal. He was also convicted of having failed to comply with rules relating to requirements for confirming particulars of instruction in writing and so on. However, Au was acquitted of 1 of the 4 charges. On the other hand, Chiu was acquitted of both charges. As stated above, the tribunal ordered Au to pay the indemnity costs of the disciplinary proceeding and that there be no order as to costs regarding Chiu.

17. The parts of the hearing before the tribunal relevant to the making the costs orders were:-

"[The prosecutor]: In respect of [Au], sir, the Law Society would ask for the usual order which is the costs be on a full indemnity basis. I accept that in respect of one complaint ... the Law Society effectively withdrew those as the hearing proceeded. I would remind you that it was after we had finally been given some evidence by [the applicants] as to what their position was. So I don't feel we should be penalised in respect of having pursued those complaints. I believe that [Au] should have a costs order against him in relation to all of the complaints ...

In relation to [Chiu], I am obviously in a somewhat more difficult position given that you have found the complaints not proven. ... Now it seems to me - and I have not been in this position before, and you will see in the last case I had which concerned a clerk I succeeded - but it seems to me that in the circumstances where you find that we should not even have put it before you ... the conduct of the clerk shouldn't even have been investigated or inquired into, that you may consider making a costs order against the Law Society, but unless you feel that ... perhaps more appropriately, neither side gets its costs in relation to those complaints.

[Applicants' then counsel]: ... can I just deal with [Chiu's] costs, I do ask you to make it very clear that your findings are that [the relevant rules do] not bind clerks ... If that be your finding, it's a matter of principle ... and really [Chiu] should not be expected to have to pay ... The Law Society should pay the bill ...

So far as the costs relating to [Au] are concerned, not much that I can say except to ask you to bear in mind that it was thanks to the co-operation of [the applicants] that most of the evidence in the case was agreed ...

Chairman: ... All costs of and incidental to these proceedings ... relating to the complaints against [Au] before the Tribunal, be paid by [Au], such costs to be taxed ... on a full indemnity basis if not agreed.

... The Tribunal disapproves the conduct of [Chiu], although it falls short of being disgraceful, dishonourable and discreditable. Therefore the Tribunal makes no order as to costs in relation to the complaints against [Chiu]".

18. The applicants' grounds advanced in this application are:-

(1) the costs order against Au is legally wrong because it is unfair and unreasonable. Au was justified in defending himself. Further, the time of the disciplinary proceeding was taken up equally by the 2 applicants. Au should only be liable for half of the costs on the usual party-and-party basis;

(2) as regards Chiu, having been acquitted of both charges, Chiu ought to be awarded the costs of the proceedings;

(3) further, most of the prosecution evidence was admitted and the applicants defended their case by offering explanation for what they did:

see the grounds set out in the Form 86A under the heading "Amended Grounds and Submissions".

19. Further grounds can be found in the written skeleton argument of counsel for the applicants:-

(a) the costs order would inhibit Au's basic right to defend themselves. Accordingly, it offends the Bill of Rights Ordinance, Cap. 383 and/or Au's basic human rights;

(b) the amount of costs ordered to be paid is (or may be) beyond Au's means and there was no enquiry of Au's ability to pay before the costs order was made;

(c) the costs order amounted to an additional punishment when considered together with the fine imposed against Au.

20. In relation to point (1) above, insofar as Au argues that the tribunal erroneously ordered him to pay all the costs of the disciplinary proceeding, his argument is based on the wrong facts. As has been quoted above, the order was only that:-

"... All costs of and incidental to these proceedings ... relating to the complaints against [Au] before the Tribunal ... " (emphasis supplied)

be paid by Au. The exact amount of costs payable is a matter of taxation. The tribunal's award of costs follows the usual rule of costs in civil litigation, namely, that costs are to follow the event. The award of indemnity costs was claimed by the prosecutor as the usual award in disciplinary proceedings relating to solicitors. This claim was not disputed by the applicants' then counsel. In any event, this is a matter within the tribunal's discretion.

21. The above point (2) raises the issue of whether it is within the discretion of the tribunal to make no order as to costs even when Chiu turned out to be the successful party. In ordinary civil litigation, it is within the discretion of a trial court to deprive a successful party of his costs where there are materials in the evidence to justify the exercise of the discretion: Hong Kong Civil Procedure 2002, para. 62/2/7 citing Civil Service Co-operative Society General Steam Navigation Co. [1903] 2 KB 756, Bevington v. Perks [1925] 2 KB 229 and Mayor of Bristol v. G.W. Ry. [1916] W.N 47. The matter which caused the tribunal to deprive Chiu of his costs was Chiu's conduct. It is unnecessary for this court to decide whether this is sufficient because Chiu's application can be decided on other grounds. I am inclined to think that it is within the tribunal's discretion to have concluded in the way it did.

22. In view of the conclusions reached in relation to points (1) and (2) above, there is no substance in the applicants' point (3) above.

23. In relation to point (a) above, Au relies on a line of authorities in criminal proceedings where it was observed that a defendant enjoys a right to defend himself and costs should not be awarded against him merely because he pleaded not guilty. Even though the standard of proof in disciplinary proceedings of solicitors sometimes resembles that for criminal prosecutions, that does not turn such disciplinary proceedings into criminal prosecutions. Disciplinary proceedings are matters between the Law Society and its members. There is no valid reason why costs in disciplinary proceedings should not be determined in accordance with principles relating to costs in civil litigation.

24. There is no requirement in civil litigation to inquire into the means or payment ability of an unsuccessful litigant before ordering him to pay costs. Hence, point (b) above has no merit.

25. In view of the conclusions reached relating to points (a) and (b) above, I disagree with the argument that costs constitute an additional penalty. It is trite law that costs in civil litigation should be awarded in accordance with the indemnity principle and therefore it is compensatory (and not penal) in nature. Accordingly, point (c) above has no merit.

26. Based on the complaints set out in points (a) and (c) above, Au complains that the costs order against him offends Articles 10 ["All persons shall be equal before the ... tribunals ... "] and 22 ["All persons are equal before the law and are entitled without any discrimination to the equal protection of the law ... "] of the Bill of Rights Ordinance. In view of the above paragraphs herein, I fail to see how it can be argued that Au has been discriminated against by the tribunal.

27. Complaint has also been made by Au in another application for judicial review regarding the costs order made by the tribunal in another disciplinary proceeding: Au Wing Lun William v. The Solicitors Disciplinary Tribunal and Anor., HCAL No. 1942 of 2001, particularly para. 29 to 39 thereof. The facts and decision of that disciplinary proceeding and application for judicial review are of course entirely different matters and, to avoid any doubt, have not affected this decision. Hon Hartmann J said in the course of his judgment about the real nature of the applicants' complaint against the costs order:-

"Mr Allan ... has made a number of criticisms of this order. But essentially ... the central thrust of his submissions was that the award, being a punitive award, was, in all circumstances, Wednesbury unreasonable.

Mr Allan was, of course, aware of the need to pitch his submissions at the highest end of the scale, namely, that the Tribunal's order was perverse or irrational ... But, with respect, it seemed to me that he was at all times essentially attacking the merits of the Tribunal's decision not the legality of it".

Unlike Au's earlier application for judicial review, some of the applicants' arguments in this application attempt to raise points which appear to relate to the legality of the tribunal's costs orders. As concluded above, none of them has any substance.

Conclusion

28. To conclude, even though the threshold burden for the applicants is low (since this application is only for leave to apply for judicial review), I find that they have failed to cross that threshold. This application is refused.