A SOLICITOR v. THE LAW SOCIETY OF HONG KONG

CACV 529/2018

[2021] HKCA 1662

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 529 OF 2018

(ON APPEAL FROM THE ORDER OF THE SOLICITORS
DISCIPLINARY TRIBUNAL DATED 2^nd OCTOBER 2018)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  The Appellant (“M”)  was a practicing solicitor.  He admitted various disciplinary complaints brought against him by the Law Society before a Solicitors Disciplinary Tribunal (“the Tribunal”), and was ordered to pay a fine and the costs of the disciplinary proceedings on an indemnity basis.  Restrictive conditions were also imposed on his practice as solicitor for a period of 3 years.  He lodged an appeal against the penalty and costs order made by the Tribunal.

2.  M now applies for leave to adduce further evidence, in the form of an affidavit made by him on 12 April 2021 (“the M Affidavit”), including an exhibit thereto, being a copy of an affidavit (“the F Affidavit”)  of F, a solicitor, made on 23 March 2021, in support of his appeal.  The further evidence sought to be adduced by M concerns an alleged improper attempt by the Chairman of the Tribunal to induce or pressurize him to admit all the complaints against him at an early stage of the disciplinary proceedings.

BACKGROUND FACTS

3.  For the purpose of considering the present application, the following brief summary of facts should suffice.

4.  M was a partner/sole practitioner of a law firm in Hong Kong during the period from 1 October 1999 to 31 December 2013 when the firm ceased practice.  On 22 October 2012, the Council of the Law Society passed a resolution to issue a notice of inspection (“the Notice of Inspection”)  on M under s 8AA of the Legal Practitioners Ordinance, Cap 159 (“the Ordinance”).  Subsequently, the Law Society preferred a total 10 disciplinary complaints (“the Complaints”), particulars of which were set out in a Complaint Sheet dated 29 March 2016, against M for inquiry and investigation by the Tribunal.  The Complaints included failure to comply with the Notice of Inspection (1^st Complaint), breaches of the Solicitors’ Accounts Rules, Cap 159F (2^nd to 7^th and 10^th Complaints), and breaches of the Hong Kong Solicitors’ Guide to Professional Conduct and the Solicitors’ Practice Rules, Cap 159H (8^th and 9^th Complaints).

5.  W was the Chairman of the Tribunal appointed to inquire into and investigate the Complaints.

6.  F had previously acted for M in his appeal against an earlier decision of the Law Society to refuse to issue a practising certificate to him, but not in relation to the Complaints.  W and F were, apparently, colleagues many years ago.

7.  According to F, shortly after W’s appointment as Chairman of the Tribunal, in around the beginning of August 2016, W on his own initiative called up F and had a telephone conversation (“the Telephone Conversation”)  with him which lasted for about 10-15 minutes.  F summarized the contents of the Telephone Conversation in a letter to W dated 3 October 2017 (“the Oct 2017 Letter”), as follows:

“[4] About a year ago and just after you had been appointed as Chairman to the Solicitors Disciplinary Tribunal to hear [M]’s case, you rang me out of the blue, the two of us not having spoken in years, about [M]’s case. The pretext for the call being that you had been appointed as Chairman of the disciplinary tribunal to hear the charges against [M], and had seen my name in some of the papers and knew that [M] was a former client of mine. But the conversation quickly moved on at your instigation from a ‘long time no see, how are you these days’, to the case itself. I mentioned immediately to you that I was not going to be acting for [M] in the disciplinary proceedings against him.

[5] Nevertheless you persisted in the conversation and I well recall you telling me that [M] had asked in writing for an adjournment of an upcoming tribunal hearing and you were not terribly happy about that, and were minded to refuse his request; because he had not, at that time, indicated whether he was going to admit or deny the charges against him.

[6] I distinctly recall you telling me that your view on whether or not to grant the adjournment requested by [M], would be very different if he was to enter a plea to all the charges against him. I think the words you used were something similar to ‘then that would be a wholly different matter’.

[7] You then initiated a conversation in general terms about the significant financial impact and hardship that adverse costs orders could have on solicitors who found themselves before a Solicitors Disciplinary Tribunal, making it ‘sensible’ for solicitors to plead guilty (so long as they were not looking at being struck off the Roll)  even if they had some defence to one or other of the charges against them; because it was just not financially worthwhile to do otherwise.

[8] You talked about how, if a solicitor failed in such a defence after trial, he would have a very substantial costs order made against him. And even if a solicitor succeeded in defending one or two charges, but admitted to others, what difference was it really going to make to the overall sentence (i.e. none or minimal).

[9] You mentioned to me that you did not see [M]’s case and his wrongdoing as matters that would result in him being struck off the Roll of Solicitors, so what the heck - why not plead guilty, and avoid running up costs for which he would be responsible.

[10]  And finally, having earlier mentioned the matter of an adjournment as stated above, in absolutely no uncertain terms, you told me that if [M] entered a plea to all the charges, you would give him the adjournment he had requested.”

8.  Pausing here, we should mention that, according to the Law Society’s submission, W accepts that the telephone call between him and F took place, but disputes the contents of the call as described by F[1].  It is plainly not possible to resolve this conflict in the present interlocutory application. For the avoidance of doubt, this judgment should not be read as the court either accepting or rejecting the veracity of what is stated in the Oct 2017 Letter.

9.  On 4 August 2016, M attended the first hearing before the Tribunal, during which he either did not admit, or denied, all 10 Complaints.  Subsequently, in his witness statement dated 27 October 2016 produced for the purpose of the disciplinary inquiry, M admitted the 7^th and 9^th Complaints.

10.  At the next hearing before the Tribunal on 23 November 2016, M admitted all 10 Complaints.  Mitigation took place on 28 February 2017 and 21 April 2017, and further written submissions by M and the Prosecutor were made in May 2017.

11.  About 17 months later, on 3 October 2018, the Tribunal handed down a written decision dated 2 October 2018 (“the Decision”), and made the following order (“the Order”)  against M:

(1)  payment of fines in the total amount of HK$370,000;

(2)  imposition of various conditions on M’s practice as a solicitor for a period of 3 years (details of which are set out in §27 of the Decision); and

(3)  payment of the costs of the disciplinary proceedings (including the costs of the Law Society in its investigation and the costs of the Clerk to the Tribunal)  on a full indemnity basis.

12.  By Notice of Appeal dated 24 October 2018, M appealed the Order made by the Tribunal on the grounds that (1)  it was manifestly excessive and/or “obviously and plainly wrong”, and (2)  the Tribunal erred or failed to consider adequately or at all a number of matters referred to in sub-paragraphs (a)  to (h)  of §2 of the Notice of Appeal.

THE PRESENT APPLICATION

13.  By Summons filed on 12 April 2021, the Applicant applies for leave to adduce the M Affidavit and exhibits thereto (including the F Affidavit)  as further evidence in support of his appeal.  M contends that the evidence sought to be adduced, in particular, the alleged Telephone Conversation between W and F, shows “apparent bias” on the part of W against him.  In the M Affidavit, he states as follows:

“[19]  … the Affidavit of [F] would shed light on the process by which the [Tribunal] determined to impose $370,000 in fines and a full indemnity costs order (which I estimate is likely to exceed HK$1.5 Million of joint claims by the Prosecutors, the Tribunal Clerk and the Law Society not including the fines or costs of this Appeal)  which does not make any distinction between charges and allegations which were not brought to trial and ultimately unsupported, and those which formed the (10)  Complaints before it and to which I had admitted on 23^rd November 2016.

[20]  I would further infer that the Chairman is naturally in the position to lead and influence the other members of the [Tribunal]. With the benefit of hindsight, the Chairman had already attempted to pressure me to admit all the complaints in order to obtain an adjournment of the first hearing on 4^th August 2016, and then evinced an apparent bias and indeed a potentially ‘hostile animus’ by intimating that if I failed to do so, then I would not be given any credit for admitting those complaints subsequently [and] I would instead receive a penalty of ‘significant financial impact and hardship’ even if partially successful in any defence.

[21]  The further evidence would therefore be relevant to and potentially determinative of, inter alia, paragraphs 1 and 2(g)  of the Grounds of Appeal set out in the Notice of Appeal herein…”

14.  M accepts that he had been apprised by F of the gist of the Telephone Conversation shortly thereafter and prior to the first hearing on 4 August 2016.  He says, however, that he did not, at that time, appreciate the apparent bias expressed or implied in W’s statement that he would not be given proper credit for admitting any of the (10) Complaints if he did not immediately plead guilty to all (10)  of them at the first hearing on 4 August 2016, and that he might even be punished for not doing so in costs. M only came to realise the full import of W’s statement after the Tribunal delivered the Decision[2]. In this regard, it may be noted that, at §21 of the Decision, the Tribunal expressed its agreement with the Prosecutor that M should not be given a full discount for his admission of the charges because, amongst other matters: (a)  M did not admit to any of the charges at the first disciplinary hearing on 4 August 2016, (b)  in his statement dated 27 October 2016, he admitted to only 2 of the Complaints, and (c)  M admitted all the Complaints only on 23 November 2016, by which time “[a] lot of time and efforts have been spent before he made such a decision”.

15.  In the Appellant’s written submissions dated 2 July 2021 in support of this application, it is argued that the further evidence sought to be adduced could be divided into 3 categories[3]:

(1)  Evidence which existed prior to the final hearing on 21 April 2017 and the Decision of 2 October 2018, but which could not be or was not adduced due to an irregularity in the proceedings, including (a)  the Telephone Conversation between W and F, (b)  exchanges between W and M during the hearings on 4 August 2016 and 23 November 2016 (which M contends gave the impression that the Tribunal would not look adversely upon him changing his position after the hearing on 4 August 2016, and that credit might still be given for admitting the Complaints later), and (c)  M’s motives and thought process up until the hearing on 21 April 2017.

(2)  Evidence of matters arising after the hearing on 21 April 2017 (which M was not in a position to adduce), but before the Decision of 2 October 2018, including (a)  the Oct 2017 Letter, and (b)  M’s motives and thought process up until the Decision.

(3)  Evidence which came into existence after the Decision (which M was not in a position to adduce prior thereto), including (a)  the M Affidavit, and (b)  the F Affidavit (excluding matters referred to in (1)  and (2)  above).

16.  The Law Society objects to the present application, arguing that[4]:

(1)  The court should apply the test in Ladd v Marshall when considering whether there are “special circumstances” to justify the court in receiving new evidence.

(2)  A “special ground” exists under Order 59, r 10(2)  of the Rules of the High Court, Cap 4A, in the event of (for example)  procedural irregularity that prevented the evidence being used at the first hearing.

(3)  In “certain exceptional categories”, further evidence of pre-trial matters or events may, at the discretion of the court, be admitted notwithstanding the fact that the Ladd v Marshall conditions are not satisfied.

(4)  Where the evidence concerns matters or events that occurred after the first hearing, the court has a wide discretion to admit the evidence, but the discretion should be exercised sparingly with due regard to the need for finality in litigation.

(5)  The fresh evidence that M now seeks to adduce -

(a)  was in existence at the time of the first hearing of the disciplinary proceedings (and subsequently);

(b)  was available to M at that time (and he knew the gist of it);

(c)  could have been obtained with reasonable diligence and then adduced at the hearings of the disciplinary proceedings;

(d)  most likely will not have an important influence on the result of the case, even if leave is given; and

(e)  does not fall into any “special category” or “exceptional category” and was not subject to any procedural irregularity that prevented it from being adduced.

(6)  In the premises, the court should not give leave for the evidence to be adduced.

DISCUSSION

17.  It is, in our view, artificial and unhelpful to seek to divide the proposed further evidence sought to be adduced by M into 3 categories as suggested by him.  In reality, the crux of the further evidence concerns the alleged Telephone Conversation between W and F which took place in around the beginning of August 2016.  If the application to adduce evidence of that conversation is refused, the other matters relied upon by M have no real significance.

18.  It is clear that evidence relating to the Telephone Conversation was in existence prior to the first hearing of the disciplinary proceedings on 4 August 2016, and it is not in dispute that M was aware of at least the gist of that conversation shortly thereafter.  The fact that the contents of the Telephone Conversation were not reduced into writing until October 2017 does not alter the position.  It cannot be said that the evidence could not have been obtained with reasonable diligence for use at the disciplinary hearings.  Accordingly, the first condition in Ladd v Marshall is not satisfied.  The fact that M did not, subjectively, appreciate the significance of the evidence is not relevant or material for this purpose.  Objectively speaking, we consider that if the Telephone Conversation did take place as alleged, it should be obvious at least to a solicitor that the propriety of W continuing to preside as Chairman of the Tribunal could be called into question.

19.  Since the first condition in Ladd v Marshall is not satisfied, it is unnecessary to consider the second and third conditions.  This is not, however, the end of the matter.  This is because even if the three conditions in Ladd v Marshall are not satisfied, the Court of Appeal retains a residual discretion to admit fresh evidence in exceptional circumstances.  In Dr Kwok-Hay Kwong v The Medical Council of Hong Kong (CACV 373/2006, unreported, 5 September 2007), Ma CJHC (as he then was)  recognised, in the context of public law proceedings, that “some flexibility” from the strict requirements of Ladd v Marshall may be allowed where the “interests of justice” so requires, and there is a discretion to depart from them in “exceptional circumstances”.  At §11 of his judgment, Ma CJHC (as he then was)  stated as follows -

“To that brief statement of principle, I emphasize the following points. First, the circumstances must be wholly exceptional before this wider discretion to depart from the Ladd v Marshall principles is exercised. Secondly, in most if not all cases, a strong public interest will need to be demonstrated. This probably explains why it is only in the sphere of public law (where the public interest is often engaged)  where the wider discretion has been exercised. It is difficult to conceive in a private law case how the wider discretion will ever be exercised if the Ladd v Marshall test is not satisfied. Thirdly, the burden is obviously on the party seeking the exercise of discretion to show cogently that exceptional circumstances exist. A mere general reference to the public interest will not suffice: the court is entitled to be provided with details of this.”

20.  As a matter of principle, we see no reason why the discretion to depart from the strict requirements of Ladd v Marshall can only be exercised in the sphere of public law, although it is not difficult to see why in practice such discretion is unlikely to be exercised in private law matters.  It is important to appreciate, moreover, that the distinction drawn by Ma CJHC lies not in the form of the proceedings, but in the nature of the issue(s)  involved.

21.  In Re China Fishery Group Ltd [2020] HKCA 169, at §26, the Court of Appeal (Barma and Au JJA)  stated the following relevant principles for admission of fresh evidence in relation to “evidence as to matter which have occurred after the date of the trial or hearing”:

“(1)  The Court of Appeal has a wide discretion in relation to admitting such fresh evidence but it should always be exercised sparingly with due regard to the need for finality in litigation: Hughes v Singh, The Times, 21 April 1989.

(2)  It is impossible to produce an exhaustive list of considerations relevant to the exercise of that discretion, but the following factors will always be material:

(a)  the extent to which the fresh evidence may affect the award of damage; the greater the extent the more likely and ready the Court of Appeal should be to admit the evidence;

(b)  the time element; it is not necessary that the fresh evidence should emerge before the case would ordinarily reach the Court of Appeal, but the closer to the date of trial the more likely it is that the evidence will be admitted; and

(c)  the conduct of the parties: any inequitable conduct on the part of a litigant will plainly be relevant, and other conduct may also be relevant.

(3)  The evidence should be admitted in all cases where it would be an affront to one’s sense of fairness not to admit it. In applying that test the court takes into account all the circumstances, before, during and after trial: Hughes v Singh.

(4)  The new evidence must substantially affect a basic assumption made at the trial: the matter is one of degree.”

22.  Although the present case is not one concerning “evidence as to matter which have occurred after the date of the trial or hearing”, the consideration in sub-paragraph (3)  above, ie whether it would be “an affront to one’s sense of fairness not to admit” the evidence, is, we believe, a relevant consideration in the exercise of the court’s residual discretion.

23.  In the present case, the following considerations are relevant:

(1)  The evidence sought to be adduced concerns the right of M to a fair hearing, which is a fundamental right under Article 10 of the Hong Kong Bill of Rights and a matter in the sphere of public law.

(2)  Although the current proceedings take the form of an appeal to the Court of Appeal, they constitute the first tier of legal proceedings before a court, unlike the ordinary application for admission of fresh evidence where a cause or matter has already been determined by the Court of First Instance or the District Court.

(3)  The proposed evidence, if ultimately accepted by the court, would potentially disclose a case of arguable impropriety by the Chairman (himself a solicitor)  of the Tribunal whose functions are to inquire into and investigate disciplinary charges against solicitors.

(4)  The proposed evidence is in the form of an affidavit by a solicitor (F), who is an officer of the court, and is apparently credible.

(5)  The failure of M to raise the matter of the Telephone Conversation with the Tribunal at the disciplinary hearings should be viewed in light of (i)  the fact that the relevant allegation was against the Chairman of the Tribunal who was at that time presiding over a disciplinary inquiry into the conduct of M, and (ii)  M’s explanation as to why he did not appreciate the significance of the contents of the Telephone Conversation until after the Tribunal delivered the Decision.

24.  In our view, it would be an affront to one’s sense of fairness or justice not to admit the proposed evidence for the purpose of the appeal.  The proposed evidence, if ultimately accepted by the court, is likely to have an important influence on whether the Order made by the Tribunal can stand, and thus whether the Court of Appeal should re-consider afresh the appropriate penalty and costs orders to be imposed.  We bear in mind M’s delay in making the present application, and the circumstances in which F came to write the Oct 2017 Letter[5], but these are matters more appropriately to be considered at the substantive hearing of the appeal.  In the special and exceptional circumstances of this case, we are prepared to exercise our discretion to admit the proposed evidence in the appeal, although we should make it clear that this judgment must not be read as a general relaxation against the Ladd v Marshall conditions for admission of fresh evidence in the Court of Appeal.

DISPOSITION

25.  We make the following orders:

(1)  leave to the Appellant to file and serve the M Affidavit (together with the exhibits thereto)  and F Affidavit (together with the exhibits thereto)  within 14 days;

(2)  leave to the Respondent to file and serve evidence, including in particular an affidavit/affirmation from the Chairman of the Tribunal, in response within 21 days thereafter;

(3)  leave to the Appellant to file and serve evidence in reply (if so advised)  within 14 days thereafter; and

(4)  no further evidence shall be filed or served without leave of the court.

26.  We would invite the parties to agree, after completion of the filing and service of evidence as aforesaid, on such directions as may be necessary for the resolution of any disputes of fact at the hearing of the appeal, with liberty to the parties to apply for further directions if necessary.

27.  Lastly, the costs of this application shall be reserved.