THE LAW SOCIETY OF HONG KONG v. A SOLICITOR

CACV 2435/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 2435 OF 2001

(ON APPEAL FROM SOLICITORS' DISCIPLINARY PROCEEDINGS)

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1. This is an appeal from the order made by the Solicitors Disciplinary Tribunal (" the Tribunal") dated 9 August 2001 dismissing, inter alia, the 1st to 6th Charges (inclusive) set out in the revised complaint sheet and filed by the Law Society against Ip Kin Fan, a solicitor, in disciplinary proceedings. The respondent did not appear at the hearing of the appeal. The appeal was allowed and an order in terms as prayed for in the notice of appeal was made with no order as to costs. The court indicated that written reasons would be handed down in writing later and this we now do.

Background

2. In October 1998, the Law Society received complaints from Ms Cheung Yu Lam and Ms Au Shing Tai ("the 2nd complainants") about the conduct of the respondent who was then in the employ of Messrs Kevin L H Kwong and Co. in relation to a loan of $300,000 made by the 2nd complainants to one Law Kin Hung. Then in May 1998, the Law Society received a similar complaint from one Leung Kam Tong ("the 1st complainant") on behalf of himself and his brother Leung King Tao about Mr Ip's involvement in two loan transactions, the first having been made by Mr Leung and the second by Mr Leung's brother. It was alleged that Mr Ip's involvement consisted of:

(a) the introduction of the borrowers to the lenders in return for a commission paid by the lenders;

(b) the drafting of the loan agreements; and

(c) the drafting of legal charges as security for the loans.

The back sheet to the legal charges bore the name and address of Mr Ip's firm as well as what appeared to be his reference. Mr Ip, as solicitor, also witnessed the execution of the legal charges by the borrowers/mortgagers. On Mr Ip's own admission the loans involved money lenders who were not licensed.

3. Having looked into the complaints, the Council of the Law Society ("the Council") submitted them to the Tribunal convenor pursuant to section 9A of the Legal Practitioners' Ordinance, Cap. 159. The charges related to alleged breaches of Principle 5.02 of the Hong Kong Solicitors' Guide to Professional Conduct Vol. 1 (1st Edition) and Rules 2(a) and (d) of the Solicitors' Practice Rules. These read as follows:

Principle 5.02 Breach of law or misconduct

A solicitor must not act or must cease to act where to do so would involve him in a breach of the law or in professional misconduct.

Rule 2(a) and 2(d) of the Solicitors' Practice Rules

A solicitor shall not, in the course of practising as a solicitor, do or permit to be done on his behalf anything which compromises or impairs or is likely to compromise or impair -

(a) his independence or integrity;

(d) his own reputation or the reputation of the profession.

4. Under Rule 6(1) of the Solicitors' Disciplinary Tribunal Proceedings Rules, the Tribunal has power to summarily dismiss a charge if it is of the opinion that no prima facie case is shown for any disciplinary action without requiring the respondent to answer the allegations and without hearing the Law Society. The Law Society appealed against the summary dismissal of the 1st to 6th charges. Before considering the merits of that appeal, a preliminary question which arises is whether this court has jurisdiction to entertain the appeal.

Jurisdiction

5. Mr Burns, counsel for the Law Society, invited the court's attention to the issue of jurisdiction of the Court of Appeal to hear an appeal from a dismissal under Rule 6. That question arose in the recent case of the Law Society of Hong Kong v A Solicitor CACV 2112/2001, unreported, 1 February 2002 heard by a different division of this court. In that case, some doubt was expressed as to whether an appeal would lie from a Rule 6 summary dismissal, the court opining that it was "an important and difficult question". However, it left the question open since it was able to dispose of the matter before it on another ground. In an earlier case, Tse Wai Chun Paul v Solicitors Disciplinary Tribunal, unreported, 27 August 2001, it was held (at [40]) that:

"... section 13(1), which allows for an appeal against 'any order' of the Tribunal, must mean any order made under section 10(2); that is, a final order determining culpability and imposing a sanction ..."

Hartmann J appeared to have been influenced by section 12(1) of the Ordinance which directed that "an order shall include a statement of findings in relation to the facts of the case" and observed that:

"the orders of the Tribunal from which an appeal could be made would not be orders made in the course of the proceedings but orders which, because they required a statement of factual findings, would be orders related to the final determination of the issues."

6. Section 13 of Cap. 159 provides (save for an exception which is immaterial for present purposes,) that an appeal against any order made by a Tribunal shall lie to the Court of Appeal. Further, under subsection (2A), the Council may, with the leave of the Court of Appeal, appeal an order of a Tribunal under subsection (1). The wording of section 13 is certainly broad. To what orders does the provision relate? Section 10 empowers a Tribunal "to make such order as it thinks fit" on completion of its inquiry and investigation including the matters listed in the paragraphs under section 10(2) and section 10(3) provides that every order made under subsection (2) shall be filed with the Secretary of the Law Society and be available for inspection. Prima facie, the 'order' in section 13 must mean orders made under section 10.

7. Is an order made under Rule 6 an order for the purposes of section 10? Rule 6 itself is subsidiary legislation. The source of the power to make a summary order has to come from Cap. 159 itself. Section 10 is the only empowering provision in this regard. In my view, a power to make any order it thinks fit must necessarily include an order dismissing a complaint.

8. It should be mentioned that section 12(1) provides that an order of the Tribunal shall include a statement of its findings in relation to the facts of the case and shall be signed by the chairman or member authorised by the Tribunal and section 12(2) provides for the signed copy of an order of a Tribunal to be filed with the registrar who is required to enter a note of the order on the role of solicitors in connection with the name of the solicitor. It might be thought that a Rule 6 order does not sit comfortably within section 12 because of the absence of findings. But Rule 6(2) specifically provides as follows:

" (2) If required so to do either by the applicant, the Society or the respondent, the Solicitors Disciplinary Tribunal shall make a formal order dismissing such application and the clerk shall file the order pursuant to section 10(3) and section 12(2) of the Ordinance."

In those circumstances, it is clear that an order for summary dismissal under Rule 6 is an order for the purposes of both sections 10 and 12 of the Ordinance and is accordingly an order to which section 13 applies.

9. In the Tse Wai Chun case, Hartmann J appeared to consider that there could not be a final order without a determination of the issues. Suffice to say that he was not there concerned with the effect of a Rule 6 dismissal. Rather, he was concerned with and gave a decision in respect of a matter of procedure.

10. For these reasons, I have no difficulty in coming to the conclusion that this court does have jurisdiction to entertain appeals from summary dismissals by the Tribunal under Rule 6.

Merits of the appeal

11. The reasons why the Tribunal considered that the six charges in question did not disclose a prima facie case are set out in its letter of 9 August 2001 in these terms:

"... there is no evidence that the relevant lenders were convicted of any criminal offence under the Money Lenders Ordinance. Without such convictions, to hear the complaints, the Tribunal would have to determine whether a criminal offence has been committed under the Money Lenders Ordinance by the relevant lenders who are members of the general public and not of the legal profession. The word 'might' in the charges also invites/requires the Tribunal to make such determination. In so doing, the Tribunal's hearing would become an investigation into alleged commission of specific criminal offences by individuals of the general public usurping the exclusive domain of the criminal courts and ultra vires the ambit and jurisdiction of the Tribunal."

Underlying the reasons given was the premise that because the lenders had not yet been convicted of offences under the Money Lenders Ordinance, the complaint about Mr Ip's conduct could not be determined without a determination or investigation into the alleged commission of specific criminal offences by individuals. But, properly understood, the misconduct with which Mr Ip is charged is not dependent upon a criminal offence having been committed by the lenders in question. On 23 August 1999, Mr Ip had written to the Law Society commenting that the complainants were "money-lenders without holding a money-lender licence. Before making the loan to Mr Cheung Hon Wa, they had through my introduction lent out at least 6 or 7 other loans. The interests (sic) they charged are extremely high." The question, quite simply, is whether a solicitor who was involved in transactions in the manner outlined in [2], has acted in a manner likely to have compromised or impaired his independence or integrity and his own reputation or the reputation of the profession thereby breaching Principle 5.02 and Practice Rules 2(a) and (d). It is Mr Ip's conduct rather than that of the lenders that is in issue.

12. The Tribunal had placed considerable reliance on the Canadian decision of Re Stromberg and Law Society of Saskatchewan et al. 132 DLR (4th) 470. The primary issue in that case was whether disciplinary proceedings instituted by the Law Society were ultra vires because they offended Parliament's exclusive jurisdiction over criminal law as provided by the Constitution Act of Canada. The complaints alleged influence peddling by two individuals one of whom was not a lawyer. The police were conducting a parallel criminal investigation into the matter. In the disciplinary proceedings, Stromberg was charged, inter alia, with assisting one B in breaching section 121 of The Criminal Code. Because in that case it was found that the net effect, focus and dominant feature of the proceedings had been and would continue to be whether B or Stromberg had committed acts in the nature of frauds on the Government prohibited by section 121 of The Criminal Code, the proceeding in pith and substance was a substituted police investigation and not a disciplinary proceeding and therefore ultra vires.

13. The Stromberg case is plainly distinguishable. First, one of the complaints was that Stromberg had assisted B in breaching section 121 of The Criminal Code. So, central to the determination of that complaint was in fact a determination of whether or not a criminal offence had been committed. That is not the present case. In fact, no criminal proceedings of any kind are pending here. Second, the case involved a constitutional issue i.e. the vires of a provincial jurisdiction determining a criminal matter which is the exclusive preserve of the federal parliament which does not arise in the present case. In my view, the Tribunal erred in placing reliance on the Stromberg case which involved different issues and has no relevance to the facts of the present case.

Hon Chung J:

14. I agree and have nothing further to add.

Hon Rogers VP:

15. I agree.