LI CHIU WAH JOSEPH v. HONG KONG SOCIETY OF NOTARIES

HCAL 2658/2019

[2020] HKCFI 1789

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 2658 OF 2019

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J U D G M E N T

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INTRODUCTION

1.  This is about the “roll-up” hearing[1] of the Applicant’s application for leave to apply for judicial review and the substantive application[2].  The Applicant is a solicitor and notary public practising in Hong Kong and a member of the Respondent, the Hong Kong Society of Notaries (“Society”).  Shortly stated, the Applicant’s challenge concerns a charge of HK$3,000 (“Late Charge”) which the Society levied on him for the late submission of a supporting document for the renewal of his annual Certificate of Membership and the Society’s refusal to waive that charge.

2.  In the Amended Form 86, the decision (“Decision”) in respect of which relief is sought is stated as follows:

“Decision of [the Society] dated 12^th June 2019 that:

(A) The Applicant’s application for waiver of the Society’s so-called “additional administrative charge” of HK$3,000 be refused;

(B) If the Applicant did not pay the additional administrative charge of HK$3,000 by 12:00 noon on 28^th June 2019, without further notice, the Council of the Society would, pursuant to Article 6(5) of the Articles of Association of the Society, amend the Applicant’s Current Certificate of Membership (i.e. for the 2019 Practice Year) by imposing a condition that payment of the additional administrative charge of HK$3,000 be made by 5^th July 2019 (“Condition”); and

(C) If the Applicant failed to observe [the Condition], the Council of the Society would consider revoking the Applicant’s Current Certificate of Membership in which event the Applicant would no longer be qualified to practise as a notary public.”

CONTENTIONS OF THE PARTIES

3.  In summary, the Applicant contends in the Amended Form 86[3] that:

(i)     The Late Charge was not a genuine estimate of the Society’s administrative costs in dealing with his late submission but a penalty in disguise which the Society exacted from its members in connection with its discharge of statutory functions in registering persons qualified to practise as notaries[4]. However, the Society has no power under either its Articles of Association or the Legal Practitioners Ordinance (Cap 159) (“LPO”) to impose such a penalty[5]. Further, the Society’s attempt or threat to impose conditions on the Applicant’s practicing certificate under s40E(5) and or (6) of the LPO is “an abuse of power for improper purpose and/or outside the statutory purpose of its power”[6]. Thus, the Decision is  ultra vires, hence illegal[7].  

(ii)    The Late Charge was also arbitrary in that it would apply across the board irrespective of the length of delay and is therefore Wednesbury unreasonable[8]. 

(iii)   The Council of the Society (“Council”) had “fettered its discretion” by rigidly adhering to the Late Charge[9].

(iv)   There was procedural impropriety in that the Decision was tainted with actual and/or apparent bias due to the involvement of certain members of the Council in the decision-making process[10].

4.  In terms of relief, the Applicant seeks an order to quash the Decision, as well as declarations that the Decision was unlawful and that the Applicant is entitled to the return of the HK$3,000 paid by him under protest[11].

5.  On the other hand, in gist, the Society contends that the Decision in fact consists of two different parts: (1) the refusal to waive the fees; and (2) what the Society would do in case the payment was not made as demanded.  It is submitted that neither of them is amenable to judicial review for different reasons.  The Society maintains that the Late Charge is a genuine administrative charge and not a penalty.  Therefore, the Applicant’s arguments on illegality are wrong and that in any event the Decision is not Wednesbury unreasonable.  Lastly, the Society denies that there was bias, actual or apparent, on the part of the Council.

AFFIDAVIT EVIDENCE

6.  There are three affidavits filed for this case:

(1)  the Applicant’s affidavit[12] (“Li Aff”);

(2)  Lau Suk Ying Margaret’s affidavit[13] filed on behalf of the Society (“Lau Aff”); and

(3)  the Applicant’s 2^nd Affidavit[14] (“Li 2^nd Aff”).

FACTUAL & LEGAL MATRIX

7.  The following, which I gratefully adopt from the written submission of Mr Dykes, SC (and with him, Mr Yeung), counsel for the Applicant and that of Mr Leung, counsel for the Society, is not largely in dispute.

The parties

8.  The Society is a company limited by guarantee[15] which was incorporated in Hong Kong in 1977 with the Articles of Association[16].

9.  The Applicant has been a solicitor practising in Hong Kong since 1987 and a notary public since 1995. He joined the Society as a member in 2005.

Statutory requirements for notary publics

10.  The current Part IV of the LPO was the product of the Legal Practitioners (Amendment) Ordinance 1998 (“the 1998 Amendments”) which came into effect on 30 June 2005[17].

11.  Pursuant to s40D(1)(d)[18] & (2)[19] of the LPO, membership of the Society is necessary in order for a person to practise as a notary public.  To practise as a notary public in Hong Kong, one must either:

(i)   hold a current Certificate of Membership from the Society and a current Practising Certificate as a Solicitor; or

(ii)  hold a current Practising Certificate as a notary public from the Society.

12.  A Practising Certificate for a notary public is issued under s40E of the LPO, and an applicant for which must have paid the membership subscription to the Society (hence be a member of the Society): s40E(4) of the LPO.  These provisions came into effect in 2005.

Articles of Association

13.  Members of the Society are contractually bound by the Articles of Association.  Membership in the Society is governed inter alia by at Art 2 to 9[20]. In particular:

•  Art 5 says, “A Notary Public shall be entitled to apply for membership of the Society, either as a Member or an Associate Member.”

•  Art 6(5) says, “The Council is entitled to prescribe conditions to a Certificate of Membership or amend a Current Certificate of Membership by imposing conditions to it.  The Council is entitled to revoke the Current Certificate of Membership of a Member on the ground that he has acted in breach or failed to observe the conditions to his Current Certificate of Membership.”

•  Art 7 says, “Every Member … shall be bound by the Memorandum and Articles of Association and Practice Directions, Practice Requirements, Guidance Notes, Circulars and any Rules made by the Council and they shall be deemed to have given an undertaking to the Society to abide by all such Memorandum and Articles of Association and Practice Directions, Practice Requirements, Guidance Notes, Circulars and any Rules made by the Council.”

•  Art 8(1) provides that membership in the Society expires at the end of each Practice Year (“PY”)[21]. 

•  Art 8(2) provides that in November of each year, every member intending to renew his membership for the next PY must make an application for a Certificate of Membership for the next PY.  Moreover, “Any Member who makes his application to the Society to renew his membership for the next Practice Year but fails to do so on or before 30 November of the current year shall pay to the Society such late processing fee as the Council may determine from time to time, without prejudice to the Council’s power to refuse such application in accordance with Article 6(5).”

•  Art 8(5) says, “Council shall have power in such circumstances as it thinks fit to waive and reduce any fees or membership subscription.”

14.  Powers of the Council are governed by Art 36 to Art 38:

•  Art 36 says, “The business of the Society shall be managed by the Council, who may exercise all such powers of the Society and do on behalf of the Society all such acts as may be exercised and done by the Society in furtherance of the objects of the Society….”

•  Art 37(7) says, “… The Council shall have power to issue Practice Directions, Practice Requirements, Guidance Notes, Circulars and any Rules made by the Council relating to the professional practice, membership, conduct and discipline of Notaries Public.”

•  Art 37(8) says, “Without prejudice to the general powers conferred by Article 36 hereof the Council shall have power:–

…

(8)To determine and prescribe from time to time administrative charges payable by Members or other persons and to waive and reduce the same in such circumstances as the Council may think fit.”

Society Circulars

15.  Following the pattern of previous years, by the Circulars dated 18 September 2018[22] and 3 October 2018[23], the Society informed its members that anyone who sought to practise as a notary public in PY 2019 by virtue of holding a Certificate of Membership and a Practising Certificate as a Solicitor had to:

(a)  submit a duly completed Application for 2019 Certificate of Membership (“Application Form”) on or before 5:30pm on Friday, 30 November 2018[24] (“1^st Deadline”).  A membership subscription fee of HK$9,000 needed to accompany the application[25]; and

(b)  honour the undertaking (“Undertaking”) contained in Part B1 of the Application Form by delivering a certified true copy of his Practising Certificate as a Solicitor issued by The Law Society of Hong Kong for PY 2019 to the Secretary General of the Council on or before 12 noon on Friday, 11 January 2019 [26](“2^nd Deadline”).

16.  In the Circular dated 18 September 2018, it was also stated that should a member fail to honour his or her Undertaking by the 2^nd Deadline,

“he/she shall be required to pay an additional administrative charge of HK$3,000[27]. Further, he/she may be subject to disciplinary proceedings for breach of undertaking, as the Council may decide.”[28]

17.  Attached to the Circular dated 3 October 2018 was a standard Application Form.  Part B1 of that form contained the following declaration:

“I AGREE and ACCEPT that breach of the above undertaking will incur an additional administrative charge AND that I may be further subject to disciplinary proceedings, as the Council may decide.”[29]

Facts leading to the present application

18.  On 19 November 2018, the Applicant submitted a duly completed Application Form (which contained the aforesaid standard declaration) for PY 2019 together with the membership subscription fee ahead of the 1^st Deadline[30]. In that Application Form, the Applicant gave the Undertaking as he had done in previous years.

19.  On 14 December 2018, the Society sent to all its members (including the Applicant) who had opted to practise on the strength of a solicitor’s practising certificate their PY 2019 membership certificate, together with an “Important Notice” reminding them to honour the Undertaking by the 2^nd Deadline, failing which the member: (i) would have to pay the additional administrative Charge; and (ii) may further be subject to disciplinary proceedings.  However, the Applicant inadvertently missed the 2^nd Deadline for delivering his certified true copy of his 2019 Law Society Practising Certificate.

20.  On 11 January 2019, the Society, via post[31] and email, informed the Applicant that he was in breach of the Annual Undertaking and he was therefore required to deliver a certified true copy of his 2019 Solicitor Practising Certificate, as well as to make payment of HK$3,000 (being the Additional Administrative Charge) by 21 January 2019.

21.  On 14 January 2019, the Applicant wrote[32] to the Society to apologise for the delay and sought a waiver of the Late Charge on the basis that the delay of one working day did not cause any prejudice and that he had not performed any notarial acts in the meantime[33].

22.  On 13 February 2019, the Council met and discussed[34] the Applicant’s letter dated 14 January 2019.  Then, by a letter dated 25 March 2019[35] signed by Mr Kenneth Sit as President of the Society, the Applicant was informed, amongst other things, that his request for waiver was refused.  The relevant part of that letter reads,

“I readily take it that it was due to mere oversight that you did not fulfill the Undertaking. On review, the Council finds the process to have been reasonably run by the Secretariat, with its modes set up, and the additional administrative fee reasonable. In the circumstances, the Council has decided not to waive the additional administrative charge of HK$3,000 on your breach of the Undertaking and I request that you pay it to the Society soon. It is now more than two months since it has become payable.”

23.  On 10 April 2019, the Applicant wrote[36] back to the Society, requesting a freshly constituted panel of the Council to review the decision refusing his request for waiver of the “additional administrative charge”.  He also requested three of the Council members (Mr Jesse Kwok, Mr Kenneth Sit and Mr Andrew Hart) not to take part in the decision-making process on the basis of his on-going and past dealings with them.

24.  On 8 May 2019, the Council discussed[37] the Applicant’s letter dated 10 April 2019.  The Council resolved to set up an ad hoc committee comprising the President (Mr Kenneth Sit), the Vice President (Ms Au Miu Po) and Mr Andrew Hart (the “Ad Hoc Committee”). The Ad Hoc Committee met on 17 May 2019[38]. 

25.  On 12 June 2019, the Council met[39] again and discussed, among other things, the matters concerning the Applicant’s complaint.  Mr Kwok did not take part in the deliberation of this matter, but Mr Sit and Mr Hart did.  The Council resolved inter alia to approve (subject to certain revisions) the draft letter (prepared by the Ad Hoc Committee) to the Applicant refusing to waive the Late Charge.  On the same date, the Society communicated the Decision to the Applicant by way of a letter[40] the relevant part of which reads,

“ Having given due consideration to the points in our said letter, the Council maintains the position that your application for waiver of the additional administrative charge be refused. Please be advised that if you do not pay the additional administrative charge of HK$3,000 by 12:00 noon on 28th June 2019, without further notice, the Council will, pursuant to Article 6(5) of the Articles of Association of the Society (copy enclosed), amend your Current Certificate of Membership (i.e. your Certificate of Membership for the 2019 Practice Year) by imposing a condition that payment of the additional administrative charge of HK$3,000 be made by 5^th July 2019. And if you fail to observe the said condition, the Council will consider revoking your Current Certificate of Membership in which event you will no longer be qualified to practise as a notary public.”

26.  On 27 June 2019, the Applicant paid the “additional administrative charge” “under protest”[41].  As a result, the Council did not in fact amend the Applicant’s PY 2019 Certificate of Membership and did not decide whether to revoke the Applicant’s PY 2019 Certificate of Membership.  Therefore, the Applicant’s practice as a notary public had not been interrupted. 

27.  On 11 September 2019, the Applicant filed the present application for leave to apply for judicial review.

AMENABILITY

Public function of the Society

28.  Notwithstanding that the Society is a limited company and that its relationship with the members is contractual in nature, it can hardly be disputed that the Society bears a public function in the regulation of notaries public.  In this regard, the Legislature, in passing the 1998 Amendments, clearly intended that the Society should be a self-regulating body given with monopolistic powers over the profession of notaries public so that a solicitor cannot practise as a notary public without submitting to the terms of membership of the Society.  This can be gathered from the speech of the then Secretary for Justice in moving the second reading of the amendment bill on 11 February 1998[42]:

“Madam President, I move that the Legal Practitioners (Amendment) Bill 1998 be read the Second time. The main purpose of the Bill is to establish a system of locally-appointed notaries.

Since 1 July 1997, it has not been possible to appoint notaries public in Hong Kong. The previous system of appointment by the Archbishop of Canterbury came to an end on 1 July 1997 as a result of the transition. Section 14 of the Hong Kong Reunification Ordinance has enabled notaries public appointed prior to 1 July 1997 to continue in such a capacity with all their previous powers. However, since the handover, it has not been possible to appoint new notaries.

A Bill to provide a local system for appointing notaries was introduced into the Legislative Council in February 1996. That Bill (the Legal Practitioners (Amendment) Bill 1996) was withdrawn after the carriage of a Committee Stage Amendment requiring notaries public to be members of the Hong Kong Society of Notaries. A review was subsequently conducted by the Administration of the proposed system of appointing and regulating notaries public. We consider that the best way forward is to establish some form of self-regulatory system for notaries public, similar to that of the two other legal professional bodies.

…

Membership of Hong Kong Society of Notaries and its role

The second feature concern membership of the Hong Kong Society of Notaries. The Administration considers that, if the law requires notaries to be members of the Hong Kong Society of Notaries but does not give the Hong Kong Society of Notaries a regulatory role in respect of them, this compulsory membership will probably infringe the notary's right to freedom of association under Article 22 of the International Covenant on Civil and Political Rights. It therefore proposes to give to the Hong Kong Society of Notaries a regulatory role that is similar to that of the Law Society and Bar Association.

 The Legal Practitioners Ordinance does not expressly require barristers and solicitors to be members of the respective professional bodies.  It does, however, require all practising barristers and solicitors to have a practising certificate issued by the professional body, and provides that a practising certificate shall not be issued unless the barrister or solicitor has paid to the professional body the membership subscription in respect of the year for which the practising certificate is to be issued.  The effect of these provisions is that membership of the relevant professional body is compulsory for all practising barristers and solicitors.  It is proposed that the Bill should follow this approach and provide that the membership of the Hong Kong Society of Notaries is compulsory for practising notaries and optional for non-practising notaries.”

29.  Then, at the resumption of the second reading on 7 April 1998, the Secretary of Justice said[43]:

“Under this Bill, the Society of Notaries will perform different functions, and in particular, will have a regulatory function. The Bill empowers the Society of Notaries to issue, suspend or cancel a notary public's practising certificate. The Council of the Society of Notaries is also empowered to make rules regulating the professional practice, conduct and discipline of notaries public. In this regard, the Society of Notaries performs similar regulatory functions as the other two legal professional bodies. Those are the Law Society and the Bar Association.”

30.  That the Society, albeit a company, has been imbued with a public function is, as submitted by Mr Dykes, further evidenced by the relevant statutory scheme in the LPO as follows:

(a)  the Society and its Council are both recognised in the LPO: s2, LPO[44];

(b)  the Council prescribes the examination and sets requirements for appointment as notaries public: s40A, LPO.  Membership in the Society is required in order to practise as a notary public: s40D, LPO.  The Society is responsible for issuing Practising Certificates as a notary public: s40E, LPO;

(c)  the Society is also woven into the statutory regime for the discipline of notaries public (e.g. see ss 40F(1)(c), 40H, 40K(6) and importantly 40M(3)).  The Council may even direct the Registrar to remove the name of any notary public from the register of notaries public: s40O, LPO.  The Articles of Association, in turn, recognises the LPO, especially in relation to the discipline of notaries public: see Art 37(5)[45] and Art 62[46];

(d)  the statute expressly provides for a number of powers for the Council of the Society to make rules, including, for the professional practice, conduct and discipline of notaries public: s73D, LPO; and

(e)  the statute expressly recognises the Articles of Association and provides that, in case of any inconsistency between the provisions of the LPO and the Articles of Association, the provisions of the LPO shall prevail: s40S, LPO.

Legal principles on amenability

31.  That said, it is not the case that every decision made by a body discharging a public function is amenable to judicial review: Financial Secretary v Wong[47].

32.  On the issue of amenability, it is well-established that the source of the power of the decision-maker to make the impugned decision, whether statutory or contractual, is a highly relevant factor: R v Panel on Take-overs and Mergers, Ex parte Datafin[48].  So much so, the source of power will often, perhaps usually be decisive: Hong Kong Rifle Association v Hong Kong Shooting Association (No 2)[49]. On the other hand, it has also been held that, “the existence of a contractual relationship is not inconsistent with judicial review”: R (Mullins) v The Jockey Club[50]. The crux of the matter is whether the impugned decision has a sufficiently weighty public element so that it falls within the public law domain: King Prosper Trading Ltd v Urban Renewal Authority[51]. 

33.  The general principles on amenability are comprehensively discussed in the judgment of A Cheung J (as Cheung PJ then was) in Anderson Asphalt Ltd v The Secretary for Justice[52].  In essence, only a decision made in the public law domain is amenable to judicial review and therefore the nature of the functions that the decision-maker was performing when making the decision under challenge is of crucial importance.  Put another way, the presence of a public element of sufficient significance in the decision-making process could turn an otherwise commercial decision into a public law decision, amenable to judicial review. What is sufficient is a matter of fact and degree, depending very much on individual cases.  As such, no hard and fast rule can be laid down. It is, in a borderline case, very much a matter of overall impression and one of degree[53].

The Decision

34.  Before applying the aforesaid legal principles to the present case, the first issue that this court has to decide is whether the Decision, as Mr Leung contends, actually consists of more than one decision.  In this regard, with respect, I agree with the submission of Mr Leung that the Decision can logically be separated into two different parts as follows:

Part (1):

(A)  The Applicant’s application for waiver of the Society’s so-called “additional administrative charge” of HK$3,000 be refused;

Part (2):

(B)  If the Applicant did not pay the additional administrative charge of HK$3,000 by 12:00 noon on 28^th June 2019, without further notice, then the Society … would amend the Applicant’s Current Certificate of Membership … by imposing a condition that the charge be made by 5 July 2019; and

(C)  If the Applicant failed to observe the said condition, the Council … would consider revoking the Applicant’s Current Certificate of Membership in which event the Applicant would no longer be qualified to practice as a Notary Public.    

(Emphasis supplied)

35.  In so doing, I have taken into account that Part (1) and Part (2) are contained in the same letter of the Society (dated 12 June 2019).  I have also taken into account that the Decision was a “staged” one the outcome of which could adversely affect the Applicant’s qualification to practise as a notary public.  However, I take the view that the two parts were separate decisions in the sense that Part (2) was the product of a separate conscious act different and distinct from Part (1) and that the natural consequences of not complying with either of them were also different.  The fact that the two parts were separate conscious acts of the Society is borne out by the following evidence:

(a)  Although the Society’s Circular (dated 18 September 2018) mentioned about the possibility of disciplinary proceedings for breach of the Undertaking, no specific forms of sanction were mentioned there.  Further, the Circular made a distinction between the “additional administrative charge of HK$3,000” on the one hand and “disciplinary proceedings for breach of undertaking” on the other[54], which suggests that the levying of the Late Charge was not to be taken as a disciplinary action.

(b)  The refusal to waiver contained in the 12 June 2019 letter was in fact the second refusal.  The first one took place on 25 March 2019.  As a matter of fact, when the first refusal was communicated to the Applicant, the Society had yet to make any resolution regarding Part (2).  All that the Society was asking the Applicant to do at that time was to pay the Late Charge. 

(c)  Part (2) only came into being on 12 June 2019 when the Council resolved to endorse the draft letter presented to it by the Ad Hoc Committee[55].

36.  Besides, the nature of the decisions in Part (1) and Part (2) are different in that Part (1) was a decision about an event which had already taken place and thus was certain, whilst Part (2) was conditional upon occurrence of certain incidents.  The consequence of Part (1) was that the Applicant remained liable to pay the Late Charge.  The consequence of not complying with Part (2) would bear adversely on the Applicant’s qualification to practice as a notary public.

37.  If I am right that Part (1) and Part (2) are different and separate decisions, then it cannot be assumed that each part bears a sufficiently weighty public element so as to render both of them equally amenable to judicial review.  As a consequence, it would be necessary for the court to examine each part separately in order to decide their respective amenability to judicial review.  

38.  When considering each part of the Decision, this court will take a broad and flexible approach as recommended by the learned authors of De Smith’s Judicial Review at •  3-059 and will take into account a host of factors including the source of the power or function exercised, the nature of the decision (whether it falls within the public domain), the relationship between the parties and the consequences of the decision.

Part (1) of the Decision

39.  I agree with the submission of Mr Leung that even though the Society bears a public function, Part (1) of the Decision simply does not have a sufficiently weighty public law element to render it amenable to judicial review.  In this regard, I have taken the following factors into consideration as a whole:

(1)  Part (1) relates to the Society’s power to impose charges and to waive them.  The related powers come from the Articles of Association which are contractual in nature.

(2)  As to the function of the Society being exercised in making Part (1) of the Decision, it is difficult to see any public element in it.  As noted above, Part (2) was not a natural and direct consequence of Part (1).  The natural and direct consequence of Part (1) was just that the Applicant remained liable for the late charge, the failure to make that payment might expose him to a civil claim.

(3)  Whether or not to waive the Late Charge was a matter of the Society’s internal management which involved consideration of the Society’s allocation of resources and operation such as allocation of manpower and procedures for handling late delivery of documents[56]. The nature and reasonableness of this charge, however, are separate issues and will be discussed in due course.

(4)  Whether or not the Society would agree to waive the Late Charge would affect only the Society and the Applicant.  Besides, the result of refusal was just that the Applicant would remain under an obligation to pay the late charge and that of itself did not have any public law consequences.

(5)  In levying and refusing to waive the Late Charge, the Society was not exercising any of its statutory regulatory functions on the notarial profession, practice or conduct: cf Leung Sze Ho Albert v Bar Council of Hong Kong Bar Association[57].

40.  In my judgment, Part (1) of the Decision is not amenable to judicial review.  As such, I refuse the Applicant leave to apply for judicial review in relation to that part of the Decision. 

Part (2) of the Decision

41.  As regards Part (2), Mr Leung’s objection is not that it lacks a sufficiently weighty public element.  With respect, he is right not to take any point on this.  In my judgement, it is plain that the Society was indeed exercising its function as the regulator of the notarial profession here.  Moreover, this part of the Decision could have the effect on the Applicant’s qualification to practise as a notary public. 

42.  What Mr Leung stresses in respect of Part (2) is that the Society had never actually amended the Applicant’s PY 2019 Certificate of Membership.  Even if it had, so the argument goes, that would still have been an “intermediary step” with no substantive legal consequence and a decisive or determinative effect.  If Mr Leung was correct on this, then it means that the Applicant would not be able to seek any judicial review unless and until the “threat” contained in the Society’s 12 June 2019 letter had materialised, ie, the Society had in fact imposed the Condition on his PY 2019 Certificate of Membership and/or revoked the said Certificate.

43.  As to this submission of Mr Leung on “intermediary step”, I readily accept as well-established law that judicial review, generally, is concerned with actions or other events which have, or will have, substantive legal consequences: for example, by conferring new legal rights or powers, or by restricting existing legal rights or interests.  Typically there is a process of initiation, consultation, and review, culminating in the formal action or event (“the substantive event”) which creates the new legal right or restriction: R (on the application of Shrewsbury and Atcham Borough Council and another) v Secretary of State for Communities and Local Government (Shropshire County Council, interested party)[58].  Therefore, intermediate steps will normally only be reviewed, if at all, as part of the entire process after the determinative and ultimate action is taken.  I also accept that given the finite capacity of the court in judicial review, this restraint is vital to sound judicial administration.

44.  However, it does not follow that a conditional decision can never be amenable to judicial review.  This point is illustrated by what had happened in R v Hammersmith and Fulham LBC, ex p Burkett[59].  In that case, on 15 September 1999 a Local Planning Authority resolved to grant planning permission for a development subject to a particular condition being satisfied.  On 6 April 2000, well after a three-month time limit had expired, the applicants sought leave to apply for judicial review of the resolution.  On 12 May 2000, the condition having been complied with by the developer, the Local Planning Authority granted the planning permission.  It was this grant which affected the applicant’s rights.  Richards J on a renewed application[60] accepted, as to the merits, that the applicants’ grounds for judicial review were arguable.  However, his lordship refused permission to apply on the ground of delay, holding that the date when grounds for the application had first arisen had been the date of the local planning authority’s resolution of 15 September 1999.  The Court of Appeal gave the applicants permission to appeal from Richard J’s decision but dismissed the appeal.  The House of Lords, however, reversed the judgment of the Court of Appeal.  That was on the basis that the grounds, in relation to an application for judicial review of a grant of planning permission, first arose on the date when permission was actually granted; that the application could be amended to substitute that the date for that of the local planning authority’s resolution; and that, accordingly, it was not out of time. 

45.  For the present purpose, it is important to note that the House of Lords did not allow the appeal on the basis that a conditional resolution could be amenable to judicial review.  The effect of the judgment of the House of Lords is that the applicants’ failure to challenge the resolution in time did not bar them from challenging the later grant.  Moreover, in the context of town planning, time runs when the actual planning permission is granted.  Lord Slynn of Hadley[61] had the following to say,

“5 In my opinion, for the reasons given by Lord Steyn, where there is a challenge to the grant itself, time runs from the date of the grant and not from the date of the resolution. It seems to me clear that because someone fails to challenge in time a resolution conditionally authorising the grant of planning permission, that failure does not prevent a challenge to the grant itself if brought in time, i e from the date when the planning permission is granted. I realise that this may cause some difficulties in practice, both for local authorities and for developers, but for the grant not to be capable of challenge, because the resolution has not been challenged in time, seems to me wrongly to restrict the right of the citizen to protect his interests. The relevant legislative provisions do not compel such a result nor do principles of administrative law prevent a challenge to the grant even if the grounds relied on are broadly the same as those which if brought in time would have been relied on to challenge the resolution.” (Underline supplied)

46.  Lord Steyn, whose speeches the other law lords[62] concurred, acknowledged that in law the resolution was not a juristic act giving rise to rights and obligations and that it was not inevitable that it would ripen into an actual grant of planning permission[63].  Nevertheless, his lordship said[64],

“38 Leaving to one side for the moment the application of Ord 53, r 4(1) on the running of time against a judicial review applicant, it can readily be accepted that for substantive judicial review purposes the decision challenged does not have to be absolutely final. In a context where there is a statutory procedure involving preliminary decisions leading to a final decision affecting legal rights, judicial review may lie against a preliminary decision not affecting legal rights. Town planning provides a classic case of this flexibility. Thus it is in principle possible to apply for judicial review in respect of a resolution to grant outline permission and for prohibition even in advance of it … It is clear therefore that if Mrs Burkett had acted in time, she could have challenged the resolution. These propositions do not, however, solve the concrete problem before the House which is whether in respect of a challenge to a final planning decision time runs under Ord 53, r 4(1) from the date of the resolution or from the date of the grant of planning permission. It does not follow from the fact that if Mrs Burkett had acted in time and challenged the resolution that she could not have waited until planning permission was granted and then challenged the grant.

39 As a matter of language it is possible to say in respect of a challenge to an alleged unlawful aspect of the grant of planning permission that “grounds for the application first arose” when the decision was made. The ground for challenging the resolution is that it is a decision to do an unlawful act in the future; the ground for challenging the actual grant is that an unlawful act has taken place. …

…

42 … For my part the substantive position is straightforward. The court has jurisdiction to entertain an application by a citizen for judicial review in respect of a resolution before or after its adoption. But it is a jump in legal logic to say that he must apply for such relief in respect of the resolution on pain of losing his right to judicial review of the actual grant of planning permission which does affect his rights. Such a view would also be in tension with the established principle that judicial review is a remedy of last resort.” (Underline supplied)

47.  Burkett’s case was discussed and explained in R (Nash) v Barnet LBC[65].  The issue in Nash’s case was the lawfulness of a decision and an impending decision of the defendant council to outsource to private sector organisations a high proportion of its functions and services, following an earlier public procurement process.  The claimant issued judicial review proceedings in January 2013 to challenge: (i) a decision made by the council’s cabinet on 6 December 2012 to award a contract to the first interested party, to provide a new support and customer service organisation; and (ii) a decision which would, but for the proceedings, have been taken by the cabinet on 31 January 2013 to award a contract to either the second or third interested party to provide development and regulatory services.  The council contended, inter alia, that the claim was out of time, having been brought more than three months after the grounds of claim first arose.  It maintained that its decisions in November 2010 and March 2011 to proceed with the procurement process for the outsourcing of the functions and services in question constituted the formal beginning of the process leading to the decisions under challenge, so that the grounds of claim had arisen when those decisions initiating the process had been taken.  Underhill J held that the claim was out of time and he refused permission to extend time[66].  Davis LJ, giving the judgment of the Court of Appeal upholding Underhill J’s decision, expressly approved the following dictum given at first instance:

“41.Mr Giffin developed those points clearly and cogently, but I do not accept them.  I do not believe that Burkett's case is authority for the proposition that in every situation in which a public law decision is made at the end of a process which involves one or more previous decisions -what I will refer to as “staged decision-making”- time will run from the date of the latest decision, notwithstanding that a challenge on identical grounds could have been made to an earlier decision in the series.  In my judgment it is necessary in such a case to analyse carefully the nature of the latest decision and its relationship to the earlier decision(s).  I believe the true position to be as follows.  If the earlier decision is no more than a preliminary, or provisional, foreshadowing of the later decision, Burkett's case does indeed apply so that the later, “final”, decision falls to be treated as a new decision, the grounds for challenging which “first arise” only when it is made.  But if the earlier and later decisions are distinct, each addressing what are substantially different stages in a process, then it is necessary to decide which decision is in truth being challenged; if it is the earlier, then the making of the second decision does not set time running afresh.  I accept that the distinction may in particular cases be subtle, but it is in my view nonetheless real and important.”  (Underline supplied)

48.  Davis LJ distinguished Burkett and said[67]:

“65 That simply is not the situation here. Here, the council was not provisionally resolving to enter any outsourcing contract at all, let alone a provisional contract relating to the DRS project or to the NSCSO project. What, as the context and the terms of the relevant decisions in November 2010 and March 2011 show, the council was doing was actually deciding to enter into a procurement process by way of competitive dialogue. That process then, and in accordance with the 2006 Regulations, proceeded in stages. Thus, in contrast with the initial resolution in Burkett's case, work here was lawfully and foreseeably done and money was expended precisely because of such decisions. The decisions thus had and were intended to have legal effect: not, of course, in terms of sanctioning a binding contract but in terms of authorising and causing the initiation of the procurement process, with attendant inevitable heavy expenditure and significant use of time and resources. Without such decisions, those things could not and would not have been done. Those decisions are thus, indeed, in my view properly to be regarded as substantive or, if you like, “final” (using Mr Giffin’s word) for that purpose. They are not to be regarded as contingent or provisional, even though there was no guarantee at all that any outsourcing contract or contracts might ultimately result. Mr Giffin did suggest that so to conclude would be tantamount to resurrecting “the real basis of complaint” approach put forward in the Greenpeace case but which was disapproved in Burkett’s case. In my view, however, it does no such thing: rather, as I have sought to say earlier in this judgment, it identifies the actual decision by reference to which the grounds of challenge first arose.” (Emphasis supplied)

49.  Based on Burkett and Nash, in my view in case of a “staged decision-making”, an earlier decision in a series is capable of becoming the subject matter of a judicial review, if it is not merely provisional or procedural in nature and if it also carries with it substantive public law consequences.  Of course, if the earlier decision has been subsumed into or overtaken by a later decision, then only the later decision should be the subject matter of a judicial review.  To borrow the words of the Court of Appeal in Keen Lloyd Holdings Ltd v Commissioner of Customs and Excise[68],

“Whatever substantive legal consequences impinged upon the rights of the applicants would be those stemming from [the latter decision].”

50.  Applying the above to the present case, I do not agree with Mr Leung’s submission that Part (2) of the Decision was a mere “procedural decision” or “intermediate step” so that the time had not become ripen for the applicant’s application for leave to apply for judicial review.  I am also unable to agree with Mr Leung that that time could never arrive now that the Applicant had paid.  My reasons are as follows:

(a)  As far as paragraph (B) of the Decision is concerned, there was an extant resolution by the Society to impose the Condition on the Applicant’s PY2019 Certificate of Membership, should he fail to pay the late charge (by 12 noon on 28 June 2019).  The mere fact that the resolution was conditional does not mean that it could not be amenable to judicial review.

(b)  Even if the Society chose not to do anything after imposing the Condition, the non-compliance of the Condition would automatic lead to the lapse of the Applicant’s PY2019 Certificate of Membership.  In which case, the Applicant would not be able to meet the requirements contained in s40D(2) of LPO and his practice as a notary would then be adversely affected.

(c)  As to paragraph (C) of the Decision, although it was couched in somewhat uncertain terms as to what the Society “would consider” doing in the future, as evidenced by the minutes of the Council Meeting on 12 June 2019, it is clear that the Society took a serious view of the Applicant’s breach of the Undertaking and the “threat” the Society made was not an empty one:

“It was thought that if Council is of the view that the imposition of the additional administrative charge is correct, there is no fallback as it would set a precedent on the Society’s other charges.”[69]

Immediately following the above paragraph, the Council resolved to endorse (subject to some minor amendments) the draft letter presented by the Ad Hoc Committee.  To view the situation objectively and realistically, had the Applicant insisted in not paying, then there would have been a real risk of the Society revoking his PY 2019 Certificate of Membership.  It is plain from the passage quoted above that the Council would not change its mind and the 12 June 2019 letter was basically an ultimatum.

(d)  Based on the above, Part (2) (which consists of both paragraphs (B) & (C)) of the Decision thus had and were intended to have legal effects: not, of course, in terms of immediate revoking the Applicant’s membership but in terms of authorising and causing the initiation of the process.  As such, Part (2) is in my view properly to be regarded as substantive.

(e)  It would not be reasonable to expect a person finding himself or herself in the Applicant’s position to ignore the “threat” from the Society and to “wait and see” until his or her notarial practice had in fact been interrupted and/or damaged.  It would also lie ill in the mouth of the Society to say that the Applicant cannot challenge its decision now that he has paid, albeit “under protest”.

51.  With respect, the case authorities on “intermediate step” relied upon by Mr Leung are clearly distinguishable from the present case:

(1)  In Television Broadcasts Ltd v Communications Authority[70], the respondent authority had not made any decision but just a recommendation to the Chief Executive in Council on pending application for licences.  Moreover, the grounds of the intended judicial review and the reliefs sought related to complaints about interlocutory procedures leading to the recommendation and the recommendation itself.  No extant final decision was challenged.

(2)  Similarly, it was held in Asia Television Ltd v Chief Executive in Council[71] that the recommendation made by the Broadcasting Authority (“BA”) per se would not constitute a decision in the exercise of a discretion conferred on BA.  The decision that would have substantive legal consequences was the Chief Executive in Council.

(3)  In Financial Secretary v Wong[72], the impugned decision was the intended use by the Insider Dealing Tribunal of certain evidence in dealing with Wong’s application for his costs wasted.  In that context, Bokhary and Chan PJJ[73] held that Judicial review should hardly ever be exercised to review decisions that go only to procedure rather than to the end result[74].  The situation in that case bears no resemblance to the present one.

(4)  In Keen Lloyd Holdings v Commissioner of Customs & Excise, ante, search warrants were applied for, issued and then executed.  In respect of the decisions of the C & E to make the applications for search warrants, the Court of Appeal held that those decisions would not by themselves bring about substantive legal consequences and were not amendable to challenge by judicial review in that they were overtaken by what happened after the warrants were issued and executed.  On the other hand, in the present case the Decision had not been overtaken by any other later decision of the Society or anyone else, save and except the Applicant’s decision to pay the late charge.  However, as discussed above, in my view the decision of the Applicant to yield to the pressure of the Society should not be a reason for barring him from making the application for leave.

52.  Based on the above, in my judgment Part (2) of the Decision is amenable to judicial review.

ILLEGALITY

Applicant’s contention

53.  In his written submission[75], Mr Dykes summarises his contentions under this ground are as follows:

(a)  The Society has no power to tie the payment of the “additional administrative charge” to a Certificate of Membership.

(b)  The so-called “additional administrative charge” was in reality not an “administrative charge” but a financial penalty imposed for the purpose of punishing or disciplining the Applicant for the alleged breach of Undertaking.

(c)  The Council has no power under the Articles of Association to impose a financial penalty, albeit disguised as an “administrative charge”.

(d)  In any event, any power of the Society or Council to impose a financial penalty is prohibited or removed by necessary implication of the LPO.

As to (a): tying payment to certificate of membership

54.  In his written and oral submissions, Mr Dykes, based on a general analysis of the various provisions of the LPO, the legislative history of the 1998 Amendments and a comparison with the regulatory regime for barristers and solicitors, submits that the Society is ultra vires the LPO in tying the payment of the “additional administrative charge” to the Applicant’s Certificate of Membership.

55.  Mr Dykes submits that the legislature, by empowering the Society to issue Certificates of Membership, did not intend to confer additional regulatory powers for entry into the profession of notaries public that were completely different from the regulatory powers for entry into the solicitors profession.  As such, it would be surprising if the Society had an independent power to regulate entry into the profession of notaries public by way of amending or revoking Certificates of Membership, and in doing so completely circumvent the safeguard of the right of appeal to the Chief Judge. Further, a power to impose an administrative charge as a condition in the Certificate of Membership (or to revoke a Certificate of Membership if such charge is not paid) is neither expressed or implied in the statute nor can it be incidental to the exercise of the statutory function: McCarthy & Stone (Developments) Ltd v Richmond upon Thames LBC[76].  Further or alternatively, the Society cannot rely on its private law power under the Articles of Association in a way that is consistent with its statutory function.  Alternatively, the Council’s power to amend or revoke Certificates of Membership under Art 6(5) must at least be construed such that it can only be exercised on the same grounds as those on which the Council is entitled to refuse to issue a Practising Certificate under Cap 159AF and failure to pay an additional administrative charge cannot be such a ground.

56.  Before dealing with the above submissions, there are a few observations to be made:

(1)  the above submissions relate solely to Part (2) of the Decision so that they can have nothing to do with Part (1); and

(2)  the above submissions aim at challenging the Society’s power to amend a member’s Certificate of Membership by attaching conditions to it and, if the submission are accepted as correct, then they would equally apply to a condition concerning non-payment of genuine administrative charges. 

57.  As regards observation (1), since I have already ruled that Part (1) of the Decision is not amenable to judicial review, I do not think it is necessary more on this.  It suffices for me to say that this aspect of Mr Dykes’ submissions does not affect my aforesaid ruling.

58.  However, as regards observation (2), as pointed out by Mr Leung, there is a problem in that the above submissions of Mr Dykes are fundamentally different from the way in which the illegality ground is pleaded in the Amended Form 86.

59.  Firstly, in the Amended Form 86, the impugned decision is said to be:

“the Society’s said decision in imposing the so-called “additional administrative charge”[77].

Nothing, however, was said that it is illegal for the Society to amend a member’s certificate of membership in a certain way.  The closest argument that one can find in that document is that:

“25B. The imposition of a punishment by attempting or threatening to impose conditions on the Applicant’s practicing certificate under s.40E(5) and/or (6) of the LPO is also an abuse of power for improper purpose and/or outside the statutory purpose of its power.”[78]

However, it refers to whether the Society’s power to impose conditions on a notary’s practising certificate pursuant to s40E(5) & (6), LPO rather than certificate of membership, which is a different animal.  Besides, in the sentence in quote, it is argued that the Society’s imposition of conditions (on a notary’s practising certificate) would be illegal if it was for the purpose of “punishment”.

60.  Secondly, the illegality ground as pleaded in the Amended Form 86 is premised solely on the proposition that the Late Charge is a penalty in disguise.  This can be gleaned from the following passages in the Amended Form 86:

““Fixed penalty” by way of “additional administrative charge”

24. The Applicant further pointed out that the “additional administrative charge” is not provided by statue and, therefore, has no statutory force at all. … This “additional administrative charge” of HK$3,000 … is [79]tantamount to a “fixed penalty ticket” but without any statutory backing or reference to any length of delay involved. It is trite law that the Society cannot unilaterally impose any “fixed penalty” or fine without statutory legislation.”

“25A. The Society also has no power under its Articles of Association … to impose a punitive “fixed penalty” or fine under the guise of a so-called “additional administrative charge”. The so-called “additional administrative charge” in question is not a genuine assessment or estimate of the Society’s administrative costs, but a punishment for a breach of the undertaking to provide the Applicant’s 2019 Practising Certificate by a deadline. …

25B. The imposition of a punishment by attempting or threatening to impose conditions on the Applicant’s practicing certificate under s.40E(5) and/or (6) of the LPO is also an abuse of power for improper purpose and/or outside the statutory purpose of its power.

25C. The Society’s imposition of such punishment under the guise of “administrative charge” is ultra vires the LPO and its Articles, hence illegal.” [80](Bold in original)

Thus, the argument now advanced in Mr Dykes’ written and oral submissions, if accepted, would have the effect rendering Part (2) of the Decision ultra vires even if the Late Charge was a genuine administrative charge rather than a punishment.  This is a new argument which has not been covered by the Applicant’s pleadings in the Amended Form 86. 

61.  However, by Order 53, rule 6(1), Rules of the High Court, no grounds shall be relied upon or any relief sought at the hearing except the grounds and relief set out in the Amended Form 86.  In this regards, the courts have consistently emphasised the importance of adhering to the pleaded grounds.  In Hong Kong Aircrew Officers Association v Director of Civil Aviation[81], Stock J (as he then was) said:

“Judicial review is not a vehicle for an infinite process of contestation. It is not an occasion where once the foot is in the door by reason of leave given on grounds originally filed, the court is then available, not merely for the purpose for which leave was extended but becomes an open house for whatever points counsel, upon closer examination or further thought, can extract from the evidence as it emerges. There must be good reason shown why a new case was not raised before, and why it should now be allowed to be raised, especially where the raising of the new point or a new case is likely to cause an adjournment”:

In Sunevision Holdings Ltd v Hong Kong Science and Technology Parks Corporation & Anor[82], G Lam J said,

“Judicial review is a focused process for reviewing the legality, procedural propriety and rationality of a specifically identified administrative decision based on pleaded grounds, and must not be allowed to mutate into a general inquiry over administrative conduct with a roving ambit as new materials emerge or arguments come to mind. … it is, with respect, necessary to remind oneself of the danger of the application becoming “portals to a playground of infinite possibilities” so famously deprecated by Litton PJ in Lau Kong Yung v Director of Immigration (1999) 2 HKCRAR 300 at 340G.”

In A v Secretary for Justice & 2 Ors[83], Chow J said,

“The proper “discipline of law” in judicial review proceedings requires that all matters relied upon by an applicant in support of a rationality challenge against a public law decision must be clearly, and succinctly (in a few numbered paragraphs), set out in the Form 86, as stated by Litton PJ in Lau Kong Yung v Director of Immigration [1999] 3 HKLRD 778, at 815.  This requirement has recently been emphasized by the Court of Appeal in Chan Tsui Yan v Social Workers Registration Board [2019] HKCA 279, at •  20.2 and 20.3, and by this court more than once, eg PVQ v Permanent Secretary for Security, HCAL 21/2017 (26 October 2017), at •  48.”

62.  Based on the above, I agree with Mr Leung’s submission that this new argument should not even be considered by this Court because it has not been properly set out in the Amended Form 86.

63.  However, for the sake of completeness, I will go on to deal with the merits of this new argument.  First of all, the Society (and the Articles of Association) has come into existence in 1977 which was long before the 1998 Amendments.  Art 6(5) of the Articles of Association expressly provides for the Council’s power to amend a member’s certificate of membership by imposing conditions to it.  This is a pre-existing contractual power.  Therefore, the Applicant’s reliance on McCarthy & Stone (Developments) Ltd v Richmond upon Thames LBC, ante, which is about the scope of powers of a body created solely by statute, is misplaced.

64.  Secondly, the present case is different from the case in Porter v Magill[84] which was about the misuse of a public power for an improper purpose.   Here, the power relied upon by the Society, which came from the Articles of Association, was contractual and private in nature.   Therefore, in order for the Applicant to succeed on the new argument, he must demonstrate show that the expressed powers conferred by the Articles of Association under consideration has been taken away or somehow restricted by the LPO: see s40S[85], LPO and Art 36[86] of the Articles of Association.  Moreover, since there is no express provision in the LPO which overrides the Council’s clear and pre-existing contractual power under the Articles of Association to amend a member’s certificate of membership, the Applicant has to argue for and rely upon the existence of a necessary implication to that effect.  However, this, as Mr Leung submits, is a high threshold to surmount.  As explained by Lord Hobhouse in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax & Anor[87]:

“A necessary implication is not the same as a reasonable implication as was pointed out by Lord Hutton in B (A Minor) v Director of Public Prosecutions [2000] 2 AC 428, 481. A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context. It distinguishes between what it would have been sensible or reasonable for Parliament to have included or what Parliament would, if it had thought about it, probably have included and what it is clear that the express language of the statute shows that the statute must have included. A necessary implication is a matter of express language and logic not interpretation.” (Emphasis supplied)

65.  Therefore, it would not be insufficient for the Applicant to show that it would be more convenient, more reasonable, more sensible, or otherwise preferable for the Society to be deprived of its contractual power under consideration which had existed long before the 1998 Amendments came into operation.  In order to succeed, the Applicant has to show that the legislature, despite not inserting any express provision in the LPO to that effect, must have intended for the Society to be so deprived.  This, with respect, the Applicant has failed to do for the following reasons.  

66.  Firstly, the legislature must be taken to have been aware of the terms of the Articles of Association (including Art 6(5)) when it enacted the 1998 amendments to confer on the Society a regulatory role over notaries public.  However, as can be seen from the Hansard, the requirement of mandatory membership of the Society was a considered decision[88].  Yet, no one in the legislature had expressed any concern about the pre-existing powers conferred on the Council by Art 6(5).

67.  Secondly, the Applicant’s heavy reliance on a comparison of the regulatory regime for barristers and solicitors with that of notaries public is misplaced:

(i)    Although it may be the legislature intent that the self-regulating regime for notaries should be “similar” to those of solicitors and barrister, there are clear differences between them so that they are not exact replicates.  To name a few, in contrast with the regime applicable to barristers and solicitors, the legislature has clearly intended to allow notaries to have two different pathways to the practice, ie, either by holding a notary’s practising certificate or a solicitor’s practising certificate.  Besides, both the Law Society and the Society have express statutory power to amend an already issued practising certificates by adding conditions[89]; whereas, there is no such provision for the Bar Council[90].

(ii)   It is not the case that only the Society can regulate practice of notaries through imposing conditions on membership.  For all practising barristers and solicitors, membership of the relevant professional body is also compulsory.  Therefore, the Law Society and the Hong Kong Bar Association can also regulate their respective profession by way of membership.

(iii)  A notary who chooses to practise on the strength of a notary’s practising certificate must still maintain membership of the Society.  In that sense, he is no different from a person who chooses to practise on the strength of a solicitor’s practising certificate.  As such, contrary to Mr Dykes’ submission, there is in fact no internally inconsistent regulatory regime for the two categories of practising notaries public.

(iv)  The fact that the Society has the power to amend certificates of membership would not give it an “unlimited” or “enormous” regulatory power to control entry into the profession via such amendments.  Any member aggrieved by the decision of the Society in respect of his or her certificate of membership could challenge the decision by the way of judicial review.  It may also possible to challenge the decision by way of ordinary civil proceedings.  It is now well-established that an apparently unqualified power or discretion given to a party to a contract should generally be construed as being subject to some implied restrictions regarding the exercise of that power or discretion like valid reason, good faith and rationality: see Tadjudin Sunny v Bank of America, National Association[91]; and FWD Life Insurance Co (Bermuda) Ltd v Poon Cindy[92].

(v)   In the case of a solicitor, if he is aggrieved by a decision of the Law Society in respect of his practising certificate as a solicitor, he has a statutory right of appeal to the Chief Judge[93]. The same applies to a notary who is aggrieved a decision of the Law Society in respect of his practising certificate as a notary public[94].  The fact that such a remedy is not available to a notary public practising on the strength of a Certificate of Membership, however, is neither here or there.  As aforesaid, notaries in the latter category could have different remedies available to them.  That difference does not give rise to the necessary implication that the legislature must have intended for the exact same remedies to apply to people in different situations.

68.  Based on the above, I refuse leave for the argument that it is illegal for the Society to tie the payment of the Late Charge to the Applicant’s certificate of membership.

As to (b) – (d): whether the Late Charge a penalty

69.  Contentions (b) to (d) under the illegality ground are premised on the common proposition that the Late Charge of HK$3,000 was a penalty in disguise, which amount is arbitrary and bears no relationship to the actual expenses incurred by the Society in dealing with his late submission of document. 

70.  In reply, Mr Leung does not seek to argue that the Society can impose a penalty on its members.  The essence of Mr Leung’s reply on this part of the Applicant’s case is that the Late Charge was a genuine administrative charge.  In this regard, it cannot be denied that the Society has indeed been given the power, under Art 37 of the Articles of Association, to levy administrative charge on its members. Therefore, if the Late Charge was a genuine administrative charge, then contentions (b) – (d) under this ground would fall apart. 

71.  With respect, Mr Leung is right not to argue that Part (2) of the Decision could still be justified if the Late Charge was in fact a penalty.  Notably, the Notaries Public Disciplinary Tribunal[95] does have power to order payment by a notary including payment of a financial penalty: s40J(2)(d)-(f), LPO.  However, that statutory power does not belong to the Society or the Council and therefore is not applicable in the present case.  As such, I will deal with contentions (b) to (d) on the basis that the Society does not have any power, whether by virtue of the LPO or the Articles of Association, to impose a financial penalty (as opposed to a genuine administrative charge[96]) on its members. 

72.  Determination of the true nature of the Late Charge calls for a detailed examination of the affirmation evidence.  For the purpose of the leave application, however, in view of the fact that the Late Charge (of HK$3,000) was a fixed sum which applied across the board without regard to the length of delay, it is in my assessment reasonable arguable that the Late Charge was a fixed penalty.  Therefore, applying Po Fun Chan v Winnie Cheung[97], I grant the Applicant leave to apply for judicial review on contentions (b) to (d).

The evidence

73.  Turning to the affirmation evidence, Ms Lau, the Secretary General of the Society, says that the Late Charge was a “reasonable fee which is a general approximation of the extra expense required to process all events in that category of work, without having to do an exact and unique calculation each time an event occurs”[98].  Support for her assertion can be found in the Minutes of the Council’s meeting on 13 February 2019, in which it was said that the Council was of the view that “additional work has been generated due to Li’s breach of his undertaking and it takes a grave view of his breach of undertaking despite it treats members with goodwill and respect”[99].  I note that the Late Charge was set at HK$3,000 in late 2016 and has never been changed since then[100]. 

74.  As regards the decision not to waive the Late Charge, Ms Lau said[101],

“The Society’s decision not to waive the Administrative Charge was consistent with its policy regarding the breach of members’ Annual Undertakings and not targeted uniquely against the Applicant. It was noted that the way in which the Applicant has conducted himself when being required to pay the HK$3,000 Administrative Charge due to his breach of the Annual Undertaking which he had given falls short of the standard and integrity expected of all members of the Society.”

75.  As regards the relevant internal records of the Society in handling the Applicant’s case, in the Minutes of the Council meeting on 8 May 2019[102], Mr Hart, one of the Council members, expressed the view that the “principal issue in the current case is the breach of undertaking and not the amount of $3,000 additional administrative charge”.  At Mr Hart’s suggestion, the Council formed the Ad Hoc Committee of which Mr Hart was also appointed as a member.

76.  In the Minutes of the Ad Hoc Committee meeting on 17 May 2019[103], Mr Hart reiterated his view that the “breach of undertaking is a disciplinary matter”.  He added that the Council should consider whether disciplinary proceedings would be an appropriate option.  Both Mr Sit and Ms Au agreed with Mr Hart’s view.  The Ad Hoc Committee decided to make recommendations to the Council which included a draft a letter to the Applicant “based on the discussion”, to be prepared by Mr Sit for the Council’s approval. 

77.  In the Minutes of the Council meeting on 12 June 2019[104], the Council considered the notes of the Ad Hoc Committee meeting on 17 May 2019 and Mr Sit’s draft letter.  The Council noted that the levying of the Late Charge “is a contractual matter between the Society and its member, Li, under the Society’s constitution which does not bear reference to costs”.  The Council also noted that “a number of default members had already paid this additional administrative charge without challenge”.  A suggestion was made that the Council should refute the Applicant’s allegation that the Society’s letter requesting for payment of HK$3,000 additional administrative charge being a fixed penalty ticket.  The Council eventually resolved to approve the draft letter with amendments.  It is plain that the suggestion to refute the Applicant’s allegation of a fixed penalty was accepted by the Council, as the final version of the letter (which contained the Decision) to the Applicant began with a refutation of the Late Charge being a fixed penalty:

“The additional administrative charge of HK$3,000 is levied on you as a member under Article 36 and Article 37(8) of the Articles of Association of the Society … There is nothing wrong in the circumstances for the additional administrative charge to be more than a mere reimbursement of the direct cost or damage arising out of your breach of undertaking. The Council has, as usual, taken great care in handling your application for waiver. … ”[105].

On the other hand, it is also noteworthy that there was no mention of any disciplinary proceedings in either the aforesaid Minutes of the Council Meeting or the aforesaid letter.

Consideration

78.  To start with, the view of Mr Hart expressed in the Council Meeting on 8 May 2019 has to be considered in context.  The purpose of that Council Meeting was to consider the Applicant’s letter dated 10 April 2019[106]. Prior to the aforesaid letter, the Council had refused the Applicant’s request that the Late Charge be waived.  In the aforesaid letter, the Applicant complained about the refusal and said:

“As this matter involves the fundamental issues of legality and/or Wednesbury reasonableness of your so called “additional administrative charges” in question.  …”

The Applicant referred to his on-going or past dealings with Mr Hart, Mr Kwok and Mr Sit and asked that his request be reviewed by an “impartial panel”.  The Applicant asserted that no prejudice had been caused by his one-day delay.  Whilst not accepting to pay an additional administrative charge, he argued that the charge was not “reasonably incurred” and that the one-page pro forma letter issued by the Secretary General was tantamount to a “fixed penalty ticket” which had no statutory backing and was Wednesbury unreasonable. 

79.  It is important to note, therefore, that the request of the Applicant had always been that the Late Charge against him be waived altogether rather than varied.  It is in this context that Mr Hart commented that the “principal issue … is the breach of undertaking and not the amount of $3,000 additional administrative charge.”  In my view, this comment of Mr Hart does not really assist one in deciding whether the Late Charge was a penalty.

80.  Secondly, I agree with Mr Leung that one should not attach too much weight to the back-and-forth deliberations as recorded in the minutes.  As explained by Cheung JA in Capital Rich Development Ltd v Town Planning Board[107]:

“Personally I do not consider that too much weight should be attached to the summary of the discussions by members of the [Town Planning Board]. When a decision-maker deliberated on an issue there would be expression of ideas and views which may not be fully articulated or necessarily correct. But it does not mean that when the decision-maker finally decided on an issue it would necessarily have relied upon one or more of the matters that had been discussed. It is far more important to see how the decision-maker articulated the reasons for the decision.”

The above dictum was followed in Hysan Development Co Ltd v Town Planning Board[108] where Lam VP said[109]:

“Further, the view expressed by one member in deliberations cannot be taken as evidence of the state of understanding of the issues by all other members. They might not even be sharing the same view. Neither can one infer from the fact that one member had taken an issue on board in deliberations that all other members were fully conversant with the same issue.”

81.  On the other hand, in its 2019 Circular[110] to the members, the Society clearly distinguished between the payment of the “additional administrative charge of HK$3,000” on the one hand and “disciplinary proceedings for breach of undertaking” on the other. Besides, the Late Charge had consistently been referred to as an “administrative charge” in all the internal minutes of the Ad Hoc Committee and the Council as well as the Society’s correspondence with the Applicant.  Therefore, as far as the evidence is concerned, there is nothing to suggest that the Council had treated the levying of the Late Charge as a disciplinary action.

82.  As regards the Applicant’s assertion that the amount of the Late Charge is arbitrary and that the Secretary General’s letter to him levying the charge was tantamount to a fixed penalty ticket, Ms Lau has explained in her affirmation[111] that there were a series of jobs to be done by different people before the demand letter could be issued:

(1)  checking of the names of those members who had failed to summit a certified true copy of his/her relevant solicitor practising certificate by the 2^nd Deadline;

(2)  arranging for the relevant information from the database record for report to the Council;

(3)  seeking instructions from the Chairman of the Standards and Development Committee as to the date and time when the defaulting member must deliver a certified true copy of his/her solicitor’s practising certificate;

(4)  preparing and sending individual letters to inform each defaulting member of their breach of the Annual Undertaking;

(5)  attending to follow-up attendances, correspondence and telephone conversations with the defaulting member (with each case being different);

(6)  giving instructions to deposit the cheque (for payment of the Additional Administrative Charge) and prepare a formal receipt with the Society's official chop for payment for posting to the defaulting member;

(7)  giving instructions to file the certified true copy of the defaulting member's solicitor’s practising certificate in his individual file, and reporting the same to Council; and

(8)  preparing notes and papers for the various Council Meetings and Ad Hoc Committee Meeting (as necessary) and the follow up thereof.

Ms Lau has not been cross-examined on the above and I can see no reason not to accept this part of her factual evidence.

83.  As regards the Applicant’s complaint that the Late Charge was a fixed sum without regard to the length of the delay, the explanation given by Ms Lau is that the amount of HK$3,000 was a general approximation of the extra expenses required to process a case in which a member breaches the Annual Undertaking.  Judging from the list of things that Ms Lau said would need to be undertaken before the demand letter was issued, the amount of extra administrative works does not really depend on the length of the delay in the sense that the same steps would have to be followed whether the delay concerned was in terms of days or months.  Therefore, I accept Mr Leung’s submission that it makes more sense for the Society to adopt a broad brush approach to charge a fixed sum rather than to calculate an exact amount based on the time cost concerned on every occasion.  In the circumstances, in my judgment a charge based on a general approximation is not of itself objectionable. 

84.  Furthermore, bearing in mind that the people who would be asked to pay the Late Charge are all notaries public practising in Hong Kong, if the HK$3,000 Late Charge were a penalty, then I do not think that that amount would likely to have any deterrent effect on those people.  This tends to weaken the inference the Applicant asks the court to draw that the Late Charge is a penalty.

85.  Having considered all the evidence in the round, I am unable to be satisfied that the Late Charge was a penalty in disguise.  To the contrary, I am satisfied that it is a genuine administrative charge based on a general approximation of the costs involved.  As a result, this grounds fails.

As to Ground (ii): Wednesbury unreasonableness

86.  The legal principles under this head are well-settled not in dispute. In judicial review proceedings, the court exercises a supervisory and not an appellate jurisdiction.  A high threshold needs to be cleared before a Wednesbury challenge can succeed.  As put by Lord Greene MR in Associated Provincial Picture Houses Limited v Wednesbury Corporation[112], it has to be so unreasonable that no authority properly directing itself on the relevant law and acting reasonably could have reached that decision.  Nevertheless, the court in dealing with a Wednesbury challenge must still examine the reasons and justifications relied upon to see whether they are capable of supporting the conclusion: Zestra Asia Ltd v Commissioner for Transport[113].

87.  Insofar as this ground concerns the Wednesbury unreasonableness or otherwise of the Society’s fixing of the Late Charge at HK$3,000, this ground overlaps to a large extent with the Applicant’s contention that the charge was a fixed penalty in disguise.

88.  As aforesaid, based on Ms Lau’s evidence as to the administrative works that were entailed before the Late Charge could be levied, there was a sufficiently objective basis for the level of the charge fixed.  Moreover, having taken into account that the steps and the number of people involved in the process, I am of the opinion that HK$3,000 as a general approximation is not unreasonable.  As the Society said in its 12 June 2019 letter,

“There is nothing wrong in the circumstances for the additional administrative charge to be more than a mere reimbursement of the direct cost or damage arising out of your breach of undertaking.”

89.  I note also the undisputed evidence that other members who had been late were also charged with the same amount, so that the Society had not targeted specifically at the Applicant.  Finally, I note that the sum of HK$3,000 has not been adjusted with inflation since late 2016. 

90.  Based on all of the above, in my judgment the Late Charge is not arbitrary and is not one which can be said to be so absurd or irrational to be Wednesbury unreasonable.  As a result, this ground also fails.  

As to Ground (iii): the Society fettering its discretion

91.  No argument has been advanced by Mr Dykes under this head in his written or oral submission.  Insofar as it relates to the Society’s decision not to waive the Late Charge, as I have said, it is not amenable to judicial review.  As to the amount demanded from him, the Applicant has never asked the Society to reduce the Late Charge.  In any event, I can find no basis for this ground.  This ground fails.

As to Ground (iv): Bias

92.  There is no evidence of actual basis in the present case.  The Applicant’s arguments under this ground is based on apparent bias.  In this regard, I note that Lord Nolan said in Ex p Pinochet Ugarte[114] that, “in any case where the impartiality of a judge is in question the appearance of the matter is just as important as the reality.”

93.  The test for apparent bias is not in dispute, namely, whether a fair-minded and informed observer, having considered the relevant facts, would conclude that there is a reasonable apprehension of bias: see Porter v Magill[115]; Deacons v White & Case LLP[116]; and Falcon Private Bank Ltd v Borry Bernard Edouard Charles Ltd[117].

94.  There has been judicial guidance as to what the fair-minded and informed observer is like: he is one who reserves judgment on every point until he has seen and fully understood both sides of the argument.  The observer is not unduly sensitive or suspicious.  The observer is also informed, in that he takes the trouble to inform herself on all matters that are relevant and is able to put whatever he has read or seen into its overall social context: ZN v Secretary for Justice[118].

95.  As to examples of what may constitute apparent bias, as discussed in De Smith’s Judicial Review at •  10-038,

“Normally a decision will be invalid for bias if the decision-maker takes part in a determination or appeal against one of his own decisions, or one in which he has participated. … At best he is likely to incline towards affirming his earlier decision; at worst, he can be depicted as a judge in his own cause.”

It is, however, remarked in the footnote[119] to the above passage that:

“An appeal process must be contrasted with the taking of multiple decisions by the same decision maker in a process, where there is review and second opinion but not an actual appeal”

There, the learned authors refer to  R (on the application of Hofstetter) v Barnet London Borough Council[120]; and O’Neill v HM Advocate (No 2)[121].

96.  Besides, it is commented in De Smith’s Judicial Review at •  10-48 that:

“Possibility of bias may arise because of professional, business or other vocational relationship of an adjudicator with a party before him. … In general, it is unlikely that proceedings could be successfully impugned on this ground unless the community of interest between decision-maker and party (or the conflict of interest between them) was directly related to the subject matter of the proceedings. … However, all the surrounding circumstances should be considered in evaluating the relevance of the relationship in question.”

97.  See also Taylor v Lawrence[122], in which the defendant complained that there was an appearance of bias on the basis that the claimants’ solicitors had drafted the will for the judge and his wife the night before judgment was given.  The Court of Appeal held that there was no apparent bias and commented that judges, solicitors and advocates are entitled to expect from a fair-minded and informed observer a corresponding recognition that they will endeavour to be true to the standards set by their respective professional codes[123].

98.  Taylor v Lawrence was applied in Jung Science Information Technology Co Ltd v ZTE Corporation[124], where DHCJ Lisa Wong SC (as she then was) held that the principle in Taylor’s case applies equally to the legal traditions and culture of Hong Kong.  In that case, there was no bias by the presiding arbitrator when he had an ordinary acquaintance relationship with the legal representative of one of the parties.  In particular, the Court observed that given both the arbitrator and the legal representative are senior and well-respected practitioners in the arbitration field, they could be expected to observe high standards of integrity.

99.  Similarly in A v B[125], the Court held that a fair-minded and informed observer, who was presumed to know how the legal profession works, would not consider that there was a real possibility of apparent bias when the arbitrator was actively involved as counsel in another piece of litigation for one of the firms of solicitors who were acting in the arbitration.

100.  Turning to the present case, the Applicant’s main complaint against Mr Hart is that the latter had been acting for the creditor in an ongoing bankruptcy litigation while the Applicant had been acting for the opposite party.  In the Applicant’s words[126]:

“… The High Court litigation (HCSD 18/2018) in which Mr. Hart and I are representing opposite parties is still ongoing and very much a live issue. … Suffice to say that Mr. Hart’s endeavour to bankrupt my client has been thwarted/blocked for the time being on grounds of substantive and procedural law.”

101.  In relation to Mr Sit, the Applicant’s complaint was that, on various occasions, the Mr Sit acted as the clerk to the Solicitors Disciplinary Tribunal while the Applicant acted as the prosecutor.  The Applicant also complains that Mr Kenneth Sit was the original decision-maker in refusing the request for waiver, and that he should not be involved in the subsequent consideration of the Applicant’s appeal against the original decision.

102.  As regards Ms Au, who was the last member of the Ad Hoc Committee, Mr Dykes did not advance any argument about her.  I note that Ms Au did not attend the Council Meeting on 12 June 2019[127]. 

103.  According to Ms Lau, the Council had considered the explanations given by Mr Hart and Mr Sit and decided that there was no justifiable reason to recuse them from the meeting:

(a)  Mr Sit explained to the Council that he was the Clerk to the Solicitors Disciplinary Tribunal of the Law Society in several proceedings in which the Applicant was the solicitor for the Law Society prosecuting.  In those proceedings, as the Clerk, he was responsible for clerical tasks.  The parties to those proceedings were the Law Society and the respondent solicitor, not the Clerk.  Mr Sit confirmed that noting in those proceedings led to any unpleasant feelings or conflicts of interests between him and the Applicant[128].

(b)  Mr Hart explained that, his firm had acted for clients in litigation where the Applicant’s firm had acted for an adverse party.  Nothing in the conduct of the litigation, which had in any event not proceeded for over a year, had resulted in any acrimony or conflicts of interests between him and the Applicant[129].

104.  I note also that even on the Applicant’s own account, in relation to Mr Hart, a call-over hearing had not yet been fixed pending further instructions from respective clients.^[130]

105.  Having considered the authorities and the evidence before me, I am not satisfied that the Applicant’s case for apparent bias is reasonable arguable.  To start with, the dealings which the Applicant referred to were all professional in nature and there is no evidence of any personal acrimony.  Secondly, as submitted by Mr Leung, the fair-minded and informed observer would be aware of the legal tradition in Hong Kong and that Mr Hart and Mr Sit are both senior members of the legal and notarial profession who can be expected to recognise the need to conduct themselves according to high professional standards.  As such, cogent evidence would be required to show a case of apparent bias: Kwok Cheuk Kin  Registrar of the High Court & Anor[131]. This, with respect, the Applicant has failed to do,as the evidence adduced by him in support of this ground is tenuous and bordering on speculation.

106.  As regards the Applicant’s complaint that Mr Sit was also the original decision maker of the refusal to waive the Late Charge, I agree with Mr Leung that the point is without merits. 

107.  Regarding the legal principles, as explained by Harman J in Hamlet v General Municipal Boilermakers and Allied Trades Union[132]:

“…[T]here is no rule of natural justice, or any justice, that a member of a body who has sat at first instance is thereby disabled from sitting upon appeal, or that, if an appeal is heard upon which such a person does sit, the appeal is in some way vitiated; that that was the law, both at equity and in the common law courts, is in my view beyond any question or doubt”

See also PS’s Application[133] which was about a challenge to the decision of a fostering panel where Hamlet’s case was applied.

108.  My attention has also been drawn by Mr Leung to AMEC Capital Projects Ltd v Whitefriars City Estates Ltd[134], where the English Court of Appeal held that the mere fact that the tribunal had previously decided the issue is not of itself sufficient to justify a conclusion of apparent bias.  It was said that Judges and adjudicators are assumed to be trustworthy and to understand that they should approach every case with an open mind.  There needs to be something of substance to lead the fair-minded and informed observer to conclude that there is a real possibility that the tribunal will not bring an open mind and objective judgment to bear, such as if the tribunal had made an extremely hostile remark about a party. 

109.  Lastly, there is the judgment of English Court of Appeal in Sengupta & Anor v Holmes & Ors[135], which was about the position of a judge who had refused permission to appeal on a paper application listening the appeal, where Law LJ said:

“It is not only lawyers and judges who in various states of affairs may be invited they may invite themselves to change their minds. Absent special circumstances a readiness to change one’s mind upon some issue, whether upon new information or simply on further reflection, and to change it from a previously declared position, is a capacity possessed by anyone prepared and able to engage with the issue on a reasonable and intelligent basis. It is surely a commonplace of all the professions, indeed the experience of all thinking men.”

Notably, Sengupta & Anor v Holmes & Ors HKSAR is cited with approval by the Court of Final Appeal in HKSAR v MD Emran Hossain[136].

110.  In the present case, although the refusal to waive was first communicated to the Applicant by a letter signed by Mr Sit as President, that decision was a result of the deliberation of the Council on 13 February 2019 rather than the decision of Mr Sit alone.  Mr Sit (and also Mr Hart for that matter) was subsequently appointed by the Council as a member of the Ad Hoc Committee on 8 May 2019.  After recommendations were made by the Ad Hoc Committee on 17 May 2019, Mr Sit presided the Council Meeting on 12 June 2019 discussing those recommendations. 

111.  When the governing body of an organisation forms a task force or sub-committee to look into certain matters, it would not be unusual, and in my view it also makes sense, for members of that “task force” or sub-committee to attend the meeting of the governing body when the report or recommendations of the former were presented to the governing body for discussion.  In case the member(s) of the “task force” or sub-committee is also a member of the government body, I can see no reason in general why he or she should not be allowed to take part in the deliberation of the governing body. This is because any valid objections (for example, on the ground of bias) would have already precluded that person from being appointed to the “task force” or sub-committee in the first place.  In the present case, as I have said, there are simply no basis for any allegations of bias against Mr Sit (and also Mr Hart for that matter) for his appointment to the Ad Hoc Committee.

112.  Furthermore, in the present case, there is no evidence that either Mr Sit or Mr Hart would disregard the proper professional standard and approach the Applicant’s argument with a closed mind.  Besides, there were other Council members[137] (who are all experienced lawyers) taking part in the deliberation on 12 June 2019 and there is nothing to suggest that they were not exercising their independent judgment in the matter.  In all the circumstances, I am satisfied that the prior involvement of Mr Sit (and Mr Hart for that matter) concerning the Applicant’s request for waiver would not cause a fair-minded and informed observer to conclude that there was a real possibility of bias which might taint the decision of the Council.

113.  Based on the above, this ground also fails.

CONCLUSION

114.  I refuse leave to apply for judicial review as regards Part (1) of the Decision.  

115.  Leave is granted as regards Part (2) of the Decision but only on the illegality ground based on contentions (b) – (d) above. Leave is refused on the other grounds put forward by the Applicant.  However, the substantive application is dismissed on the merits.

COSTS

116.  I make an order nisi that the Society shall have the costs of these proceedings, to be taxed if not agreed.  If there is no application to vary within 14 days of the handing down of this judgment, it will be made absolute.