A SOLICITOR v. THE LAW SOCIETY OF HONG KONG

CACV175/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 175 OF 2009

(ON APPEAL FROM THE FINDINGS AND ORDERS OF
SOLICITORS DISCIPLINARY TRIBUNAL DATED 10 JULY
2008 AND 21 APRIL 2009)

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BETWEEN

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REASONS FOR DECISION

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1.  The applicant by summons dated 20 November 2009 applied for extension of time to appeal against a decision of the Solicitors Disciplinary Tribunal (‘the Tribunal’) dated 10 July 2008. The order imposing penalty and costs against the applicant was dated 21 April 2009 and handed down by the Tribunal on 23 April 2009. I granted the extension at the conclusion of the hearing. These are my reasons.

Background

2.  The applicant is a solicitor. He witnessed an agreement dated 16 March 2001 made between Madame Chuang Wen Hua (‘Madame Chuang’) and Fu Long Holding Company Limited (‘Fu Long’) in which Madame Chuang agreed to deposit US$150,000 with the applicant on the term that the applicant would only release the money to Fu Long if it produced an authenticated irrevocable pay order of Deutsche Bank to the applicant.

3.  Madame Chuang attended the applicant’s office together with one Mr. Tsai Chih Hsiang (‘Mr. Tsai’). When asked by the applicant how he could contact her, Madame Chuang replied that it was better for him to contact Mr. Tsai on her behalf.

4.  On 20 March 2001 Mr. Tsai informed the applicant that the relevant party was about to send the pay order to Fu Long and asked for the release of the money (together with another sum of money which was also deposited with the applicant by another party).

5.  The applicant said that he could not release the money unless Madame Chuang came to execute a supplemental agreement. Mr. Tsai replied that Madame Chuang was in Taiwan. The applicant then suggested that an authorization letter be drafted and signed for the release of the money.

6.  The next day, the applicant prepared the authorizations to be signed by Madame Chuang and Fu Long and faxed the documents to Mr. Tsai. On the evening of the next day, the applicant received a telephone call from Madame Chuang saying that she had received the authorisation from Mr. Tsai and she would dispense with the applicant’s obligation to authenticate the pay order and the applicant could release the money. Madame Chuang said that she would sign the authorisation and fax it back to the applicant.

7.  On 23 March 2001 the applicant received the two signed authorisations by fax: one was signed by Madame Chuang and the other was signed by Mr. Tsai on behalf of Fu Long. With the authorisations the applicant released the money. The applicant chased Mr. Tsai for the original of the authorisations. He later received a telephone call from someone claiming to be Madame Chuang who asked about the progress of the pay order.

8.  Madame Chuang then made a complain to the Law Society on 21 May 2001 and later two complaints were laid by the Law Society against the applicant. The complaint which was eventually upheld by the Tribunal is as follows:

‘ 1^st Complaints:

“That you, (X), breached Rules 2(c), (d) and (e) of the Solicitors’ Practice Rules in that you on or about 23^rdMarch 2001 released a sum of USD150,000 to one Choi Yuk Lun in circumstances which were unsafe and inappropriate.

Particulars

1.1.1.1  By an agreement of 16^thMarch 2001 signed by one Chuang Wen Hua (“Chuang”) on one part and Fu Long Holding Company Limited (“Fu Long”) on the other part in your presence, it was provided that you should only release a sum of USD150,000 to Fu Long if an authenticated irrevocable pay order of Deutsche Bank had been produced to you by Fu Long.

1.1.1.2  You however released on 23^rdMarch 2001 the said sum of USD150,000 to one Choi Yuk Lun on behalf of Fu Long by simply relying on faxed authorizations allegedly signed by Fu Long and, purportedly by Chuang and a telephone call from a lady claiming to be Chuang on 22^nd March 2001 when given the circumstances ofthe matter you should have insisted that either the parties signed a supplemental agreement in your presence; or the original authorizations as signed by Chuang and Fu Long be received by you before release of the said sum.”  ’

9.  The disciplinary proceedings commenced on 8 June 2004 and was only completed on 29 July 2006 after 12 sittings over a two year period. The decision was handed down two years later on 10 July 2008.

10.  Apart from the length of time taken by the Tribunal to hear the case and reach its decision, the unusual feature to the saga is that during the hearing, despite the prosecutor’s request to discontinue the proceedings because Madame Chuang had informed him that she would withdraw the complaint against the applicant, the Tribunal insisted to continue with the proceedings. Mr. Tsaiwho had given part of his evidence against the applicant on behalf of the Law Society also refused to attend the proceeding again on its resumed hearing.

Relevant factors

11.  The Court would take into account the following relevant factors in deciding whether extension of time should be given :

(1)  the length of the delay;

(2)  the reason for the delay;

(3)  the merits of the appeal; and

(4)  prejudice to the respondent if extension of time to appeal is granted.

Length of the delay

12.  There is a substantial delay in applying for extension of time. The order imposing the penalty and costs on the applicant dated 21 April 2009 was handed down by the Tribunal on 23 April 2009. The appeal period was 21 days. Mr. Cooney S.C., counsel for the Tribunal, stated that the last day to appeal against the finding on the one hand and penalty and costs on the other hand was 31 July 2008 and 12 May 2009 respectively. I have not been addressed whether the appeal period should start separately on 10 July 2008 or 23 April 2009. In any event the applicant said that he mistakenly thought the time limit was 28 days starting from 23 April 2009.

13.  His intention was to appeal against the conviction and he instructed counsel to prepare the notice of appeal after receipt of the order of 23 April 2009. However, when he eventually received the notice of appeal from counsel, he discovered that the appeal was only in respect of the costs order made by the Tribunal. He was not satisfied with it as he said he cherished a strong will that the conviction was wrong and was unsafe and unsatisfactory. However, at the end he deferred to the view of counsel and filed the draft notice of appeal against the costs order only. The filing was done on 12 May 2009.

14.  On 24 June 2009 the applicant was advised by Deacons, Solicitor for the Law Society, that leave was required to appeal against the costs order.

15.  On 28 July 2009 the applicant made an affirmation in support of an ex parte application for leave to appeal on costs and for extension of time to appeal.

16.  On 31 July 2009 the Court informed the applicant that the application must be made inter partes. The applicant immediately requested counsel to prepare the paper and on 18 August 2009 counsel supplied a set of draft inter partes summons and supporting statement. At that time because the applicant had lost confidence in counsel he sought the view of another senior counsel on the matter. However senior counsel was unable to provide him with advice after a long wait and he eventually instructed his present counsel Mr. C. Y. Li in early October 2009 who advised him to appeal also on conviction and sentence and not simply on costs. The present application was issued on 20 November 2009.

17.  There is without a doubt a substantial delay in the application. It was clear, however, that the applicant had always intended to appeal against the finding although he had at one stage deferred to previous counsel’s advice to proceed with the appeal against costs only.

Merits of the appeal

18.  What is more important, in my view, is the merits of the appeal. The test is whether the applicant has a reasonable prospect of success on the appeal. In my view, the applicant has indeed satisfied this threshold. The Tribunal’s view was that despite the absence of the evidence from Madame Chuang it could proceed on the basis of the evidence of the applicant and on his evidence the Tribunal held that the action undertaken by the applicant to release the money was unsafe and inappropriate.

19.  The starting point is that the applicant’s defence is that Madame Chuang had authorised him to release the money on the telephone and by the written authorisation which was faxed to him. Although the signature of Madame Chuang turned out to be a forgery, this only became an issue later on and at the time when the applicant released the money he proceeded on the basis of the authorisation given to him by Madame Chuang. Whether the release of the money was in the circumstances unsafe and inappropriate must consider in the context of Madame Chuang’s authorisation. By proceeding in the absence of Madame Chuang the Tribunal in effect precluded the applicant from putting forward his defence that she had authorised the release. The applicant was clearly entitled to question Madame Chuang on an issue which goes to his culpability and which will also have a substantial bearing on the penalty which the Tribunal might impose on him.

20.  Furthermore, when the prosecutor informed the Tribunal that Madame Chuang wished to withdraw her complaint, the prosecutor said that Madame Chuang had provided no reasons for her withdrawal when in fact in the letters written by Madame Chuang to the Law Society she actually said that she believed the applicant was innocent and that she did not make the complaint voluntarily. These two letters, the contents of which are identical, were not disclosed by the prosecutor to either the Tribunal or to the applicant. In my view the prosecutor must disclose what Madame Chuang had actually said in her letters notwithstanding counsel for the applicant had not asked for the letters at the hearing. What she said to be the reasons for withdrawing the complaint were clearly relevant matters to the issue whether she had authorised the release of the money in the first place.

21.  Likewise the failure by Mr. Tsai to continue with his evidence precluded the applicant from questioning him as to whether he was in fact an agent for Madame Chuang.

22.  In my view the applicant had amply demonstrated that he has a meritorious defence such that extension of time should be given to him to appeal against the decision notwithstanding the substantial delay.

Prejudice to the respondent

23.  Neither party addressed this Court on this topic.

Previous appeal on costs

24.  Mr. Cooney S.C. argued that the applicant had his earlier application for leave to appeal against costs dismissed by consent, hence an appeal on costs cannot be resuscitated. In my view there is a clear distinction between dismissing an appeal which does not require leave to appeal to be given in the first place and withdrawing an appeal when no leave to appeal has been obtained at all. In the latter there is no appeal at all and the dismissal is a technical step in order to put an end to the proceedings. It does not preclude the bringing of a fresh appeal when leave is obtained or where, as is here, there is an appeal on the merits of the case as well. In any event this is a point which should be fully canvassed in the appeal itself.

Conclusion

25.  Accordingly I granted the extension of time and ordered that the costs of the application be in the cause of the appeal.