CHAO PAK KI RAYMUND AND ANOTHER v. THE HONG KONG SOCIETY OF ACCOUNTANTS

HCAL 134/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO.134 OF 2003

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J U D G M E N T

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Introduction

1. The respondent in this matter (‘the Society’) is a body incorporated in terms of the Professional Accountants Ordinance, Cap.50 (‘the Ordinance’), its purpose being the promotion, regulation and protection of the interests of the accountancy profession in Hong Kong.

2. At all times material to this matter, the first applicant was a professional accountant and the second was a firm of certified public accountants, both being registered with the Society in terms of the Ordinance.

3. In June 2002, an investigation committee (constituted in terms of s.42C of the Ordinance) submitted certain complaints to the Registrar of the Society that there was prima facie evidence that the applicants had been guilty of a failure to observe, maintain or apply professional standards.  The Registrar submitted the complaints to the Council of the Society.

4. The Council, acting pursuant to its powers under s.34 of the Ordinance, referred the complaints to the Disciplinary Panel of the Society.  In addition, acting pursuant to its powers under s.33(3)(a) of the Ordinance, the Council constituted a disciplinary committee to deal with the complaints and at the same time, in terms of that same section, appointed a chairman of the committee.

5. In terms of s.33(3)(b) of the Ordinance, the chairman appointed four persons to be members of the disciplinary committee.

6. By letter dated 16 December 2002, the applicants were informed of the names of the chairman and members of the committee.

7. Attempts were made to set a date for a disciplinary hearing.  However, before any such hearing could take place, the applicants were advised that two members of the disciplinary committee had been forced to step down and that the chairman, acting pursuant to his powers in s.33(3)(b) of the Ordinance, had appointed new members in their place.

8. The applicants objected to the reconstitution of the disciplinary committee.  It was their contention that, in terms of the Ordinance, if one or more members of a disciplinary committee were forced to step down, the committee itself had to be dissolved and a new committee formed.  There was no jurisdiction in the Ordinance for a chairman to appoint replacement members.

9. The applicants were concerned not only that the reconstituted committee would lack jurisdiction to continue its inquiry but also that a failure to dissolve the committee and appoint a new committee may result in an unfairness towards them.  In this latter regard, the applicants relied on Rule 6(1) of the Disciplinary Committee Proceedings Rules, made pursuant to s.51(1)(f) of the Ordinance, that rule reading :

“If upon consideration of any such documents transmitted to the Disciplinary Committee … the Disciplinary Committee is of the opinion that no prima facie case is shown for any disciplinary action, the Disciplinary Committee may dismiss the complaint without requiring the respondent to answer the allegations, and without hearing the complainant or the Registrar.”

The applicants were concerned that, unless a new committee was appointed, they could not be assured that the committee as a whole had looked to the papers before it to determine whether a prima facie case was shown warranting the continuance of the committee’s inquiry.

10. The applicants brought the matter before the Council, requesting that it dissolve the disciplinary committee.  By letter dated 3 December 2003, the Council informed the applicants that it declined to do so.  The relevant portion of its letter reads :

“The Council considers that the issues raised in your letters are matters to be dealt with by the Disciplinary Committee.  Further, the Council does not consider that there are grounds to dissolve the Disciplinary Committee.”

11. The matter was then brought before the disciplinary committee itself.  Having heard submissions, the committee informed the applicants by letter dated 10 December 2003 that in its reconstituted form it retained the jurisdiction to continue its inquiry into the professional conduct of the applicants and intended to do so.

12. In the result, judicial review proceedings were instituted by the applicants.  The applicants have sought orders of certiorari to bring up and quash the decision of the Council contained in its letter of 3 December 2003 and of the disciplinary committee contained in its letter of 10 December 2003.  Allied to this, they have sought orders of prohibition to prevent either the Council or the disciplinary committee from proceeding in terms of their decisions.  The applicant’s challenges have two foundations :

(i)    That in terms of the Ordinance the chairman of a disciplinary committee has no jurisdiction to appoint replacement members and that accordingly if any member must step down for any reason then the committee as a whole must be dissolved.

(ii)    Further or alternatively, in the present case the appointment of two replacement members has acted to the material prejudice of the applicants in that they can no longer be assured of a fair and impartial hearing.

The issue of jurisdiction

13. The Council’s powers to constitute a disciplinary committee are contained in s.33(3)(a) of the Ordinance :

“Where pursuant to section 34 a complaint is referred to the Disciplinary Panel, the Council shall constitute a Disciplinary Committee to deal with the complaint and appoint a member of the Disciplinary Panel who is a professional accountant to be chairman of such committee.”

14. It is therefore the Council which ‘constitutes’ a disciplinary committee and which appoints a chairman of the committee, that chairman chosen from those on the Disciplinary Panel.

15. A disciplinary committee must consist of a chairman and four other members who must be appointed by the chairman.  In this regard, s.33(3)(b) reads :

“Subject to section 33B(4), a Disciplinary Committee constituted pursuant to paragraph (a) shall consist of the person appointed by the Council to be its chairman and 4 other persons who, subject to paragraph (c), shall each—

       (i)   be a member of the Disciplinary Panel; and

       (ii)  be appointed to membership of such Disciplinary Committee by its chairman.”

16. The Disciplinary Panel of the Society consists of not less than 15 members of the Society of whom at least 12 must be professional accountants and 3 who are not so qualified : see s.33(1).

17. Although not directly relevant, it should be said for completeness that s.33(3)(c) of the Ordinance gives the Council the power to direct the chairman of a disciplinary committee to appoint one of the committee’s members from those members of the Disciplinary Panel who are not professional accountants.

18. S.33(3) of the Ordinance is subject to the provisions of s.33B(4).  That subsection can most easily be read in the context of s.33B as a whole, the first three subsections reading :

“(1)    Subject to subsection (2), the quorum for a Disciplinary Committee shall be 4.

(2)    If immediately before commencing to deal with a complaint, or if at any stage in the course of dealing with a complaint (being a stage at which the professional accountant against whom the complaint has been made is entitled to be present or represented) one of the members of the Disciplinary Committee is absent, such professional accountant or his representative may object to the complaint’s being dealt with in the absence of such member, and in case an objections is made pursuant to this subsection and is not withdrawn the Disciplinary Committee concerned shall neither commence to deal nor, where appropriate, further deal with the relevant complaint until either the objection is withdrawn or the member whose absence occasioned the objection is present.

(3)    Where -

(a)   (i)    a Disciplinary Committee, having given the professional accountant concerned or his representative an opportunity of being heard in the proceedings, is unable to decide whether an order under section 35, or what kind of such order, should be made; and

(ii)   the committee’s inability so to decide is because one of its members is absent or is otherwise unable to participate in the committee’s deliberations regarding the decision; or

(b)   the Council is of opinion that because an objection made under subsection (2) which has not been withdrawn or because of the death, illness or other incapacity or the absence from Hong Kong of the person who is the chairman of a Disciplinary Committee, it is impracticable for the committee to continue to deal with the complaint with which it is concerned the Council shall by resolution dissolve the committee.”

19. S.33B(4) itself reads :

“(4)   (a)   Where a Disciplinary Committee is dissolved pursuant to subsection (3), the following shall apply—

(i)    subject to paragraph (b), the Council shall at the same time constitute another Disciplinary Committee to deal with the complaint with which the dissolved committee was concerned; and

(ii)   in dealing with the complaint, the Disciplinary Committee constituted pursuant to the requirement of subparagraph (i) shall deal with it afresh and, accordingly, it shall not have any regard to the proceedings of the committee which before its dissolution under subsection (3) was concerned with the complaint.

(b)   Where a Disciplinary Committee is dissolved under subsection (3), a person who was a member of the dissolved committee and who participated in any way in its proceedings shall not be eligible for membership of the Disciplinary Committee constituted pursuant to the requirements of paragraph (a)(i).”

20. A disciplinary committee is constituted by the Council in order ‘to deal with’ complaints which are its terms of reference.  The phrase ‘to deal with’ is broad in meaning and imposes on the committee the obligation to proceed (in accordance with law) to determine the complaints.

21. The Ordinance is silent as to the powers of a chairman to appoint replacement members of a committee.  How then is it to be construed?

22. In my judgment, it is correctly construed in the manner contended by Mr Adrian Huggins SC, counsel for the Society.  I trust I do him no injustice in paraphrasing his contentions as follows :

(i)    It is clear on a reading of s.33(3)(a) and (b) that a disciplinary committee is constituted before any of its members (other than the chairman) are appointed.  The members are appointed after the committee itself has been constituted.

(ii)    A committee, once constituted, remains constituted even though not all of its members are yet appointed by the chairman.  It follows that, if one member of a committee steps down, the committee itself remains constituted and the chairman must have the power to appoint a replacement member to the committee so that it shall consist of sufficient members to discharge its statutory obligations.

(iii)    S.33(3) does not require the chairman to appoint all the other members simultaneously.  He may appoint one after the other.  If therefore, having appointed a first member, that member steps down, he may proceed to appoint a second member who takes the place of that first member.

(iv)    This process of appointment does not involve reconstitution of a committee.  The committee at all times remains constituted.  The process instead is simply one of ensuring that there are enough members appointed so that the committee can then deal with the complaints placed before it.

(v)    In summary, the constituted status of the committee is, to use Mr Huggins’ phrase “separate and separable from the life of its individual members (other than the chairman)”.

(vi)    That being the case, the replacement of one member with another does not result in the automatic dissolution of the committee itself.

23. In my judgment, in looking to a true construction of the Ordinance, there is nothing that can be read to the effect that a power given to the chairman to make appointments precludes the power to make any necessary substitute appointments so that a committee, already constituted by the Council, may set about its work.  If it was otherwise, it would mean that, if a member stepped down for any reason, even if the committee had not yet set about its work, the committee would have to be dissolved and an entirely new committee formed.  I can construe nothing in the Ordinance to suggest that this was the legislative intent.

24. Of course, if a committee, with its full complement of members, sets about its work and, when it is so involved, one of its members dies or stands down, then, subject to the provisions of s.33B(2), it may well be necessary for the committee to be dissolved and a new committee appointed.  But that requirement arises out of the need to ensure procedural and substantive fairness, an obligation on all public tribunals, it does not, on my reading of the Ordinance, arise out of any constraint contained in the statute itself.

25. Leading counsel for the applicants, Mr Ronny Tong SC, submitted that, in construing the Ordinance, the intention of the legislature must be reflected in the accepted fact that disciplinary proceedings against professional men and women place their livelihoods and reputations at stake.  That being so, to ensure a fair and impartial inquiry, the composition of a disciplinary committee must remain constant throughout.

26. It is axiomatic that a disciplinary committee must be constituted in a manner that enables it to ensure a fair and impartial inquiry and the Ordinance must be construed in that light.  But I fail to see how that leads to the conclusion that the chairman of such a committee has no power at any time whatsoever to appoint a replacement member.  As I have alluded to in para.23 of this judgment, what if the committee has not yet commenced its work?  A replacement appointment in such circumstances cannot prevent a fair and impartial inquiry.  Indeed, it may ensure that the inquiry is fair and impartial : for example, if an original member steps down because of a realisation that he may have a conflict of interest or in some way be perceived to be biased.

27. In support of his submissions, Mr Tong made reference to two authorities : R v. AB School and Camden Education Appeal Committee, ex parte S (1990) LGR 513 and Irish Land Commission v. Thomas Hession [1978] 1R 322.

28. In both of these judgments, however, the ratio, as I have read it, is to the effect that one tribunal cannot hear a matter while another tribunal determines it.  That is a matter of procedural and substantive fairness not statutory interpretation.  As Nolan J said in the first judgment :

“The plain fact of the matter in the present case is that B’s appeal was heard by a panel consisting of Sir Ashley Bramall, Mrs Markover and Mrs Grahame and was determined by a panel consisting of Sir Ashley, Mrs Markover and Mrs Wagner.  That cannot be right.  It was an unlawful procedure and the decision accordingly cannot stand.”

29. In his judgment, Nolan J went on to refer to the second authority cited by Mr Tong, saying that the court in that case had come to the same view as himself.

30. In seeking his restricted construction, Mr Tong placed reliance on the wording of s.33B(2) of the Ordinance which I have cited in para.18 of this judgment.

31. S.33B(2), said Mr Tong, made it plain that at any hearing at which a person made the subject of a complaint was entitled to be present (or represented) he was entitled to insist that all of the members of the disciplinary committee be present too and not merely four who would, in terms of s.33B(1), make up a quorum.  If he persisted in this demand, the committee could not continue with its inquiry until the absent member was present and the committee sitting with its full complement.

32. This demand of right, said Mr Tong, could not be frustrated by a chairman having the power to substitute an absent member with a new member, more especially as, in terms of his submissions, s.33B(2) looked not only to the right to demand a full complement but the right also to demand that the particular absent member should be in attendance before the committee continued its work.

33. I am not persuaded by this argument.  The section, as I read it in context, is to the effect that, notwithstanding the provisions of s.33B(1), which allows for a quorum of four, at any hearing at which a person made the subject of a complaint is entitled to be present (or represented) he can insist that a mere quorum will not be sufficient and can demand the presence of the one extra member required to make up the full complement of five.  The subsection therefore looks to protecting the rights of a person whose livelihood and reputation may be at stake by giving him the right to insist that all the members of a committee be present to hear him.  The focus of the subsection is therefore on the existing membership of a disciplinary committee, giving the right to the person who is the subject of a complaint to demand that all existing members be present.  This, in my view, is a different matter from the issue in dispute; namely, whether a chairman has the jurisdiction at any time to appoint a member to replace one who has died or who for bona fide reasons has had to step down.

34. Mr Tong submitted that s.33B(2) must be read as requiring a committee once formed to remain so constituted to avoid the risk of a chairman being able to substitute a member with another, for example, in order to ensure that a member whose views are contrary to those of other members is replaced by one whose views are not.  If that was allowed, said Mr Tong, it would be wholly contrary to the principles of natural justice and in that, of course, he is correct.  But it is not in any way suggested that the Ordinance gives the power to a chairman to remove and then replace a member.  That implies executive powers to ‘hire and fire’.  Clearly the Ordinance gives no such power to the chairman of a disciplinary committee.  The power that I am satisfied is to be construed, however, is the power to appoint a new member (provided any such appointment will not prejudice the ability of the committee to conduct a fair and impartial inquiry) after an existing member has died or for bona fide reason has had to step down.

35. As I have said earlier, a disciplinary committee must be constituted in a manner that enables it to ensure a fair and impartial inquiry and the provisions of the Ordinance must be read in that light.  Accordingly, any power reposing in the chairman of a disciplinary tribunal to ‘hire and fire’ his members will patently be offensive to the underlying intention of the legislation.  But the power to replace a member who has died or stood down does not of itself prevent a fair and impartial hearing.  As I have said, it may even ensure it.

36. Mr Tong further relied on the provisions of s.33B(3) of the Ordinance, cited in para.18 of this judgment.  In terms of this subsection, he said, if a person who is the subject of a complaint exercises his statutory right to demand that he be heard by all the members of a disciplinary committee, not merely a quorum, and this cannot be done then the committee must be dissolved.  It would be against the clear meaning and intent of s.33B(3), said Mr Tong, to allow a chairman to circumvent the strictures of the subsection by simply appointing a new member.

37. I am not persuaded by this argument.  S.33B(3) looks to certain defined circumstances :

(i)    where a committee is deadlocked as to any disciplinary order because of the inability of an existing member to participate in its deliberations;

(ii)    or where a committee cannot be fully represented at a hearing when a demand under s.33B(2) has been made that it be fully represented, the reason clearly being because of the absence of an existing member;

(iii)    or where the chairman himself has died, is incapacitated or absent from Hong Kong.

38. In all these defined circumstances the focus is again on the existing membership of a committee.  It is in these defined circumstances that, for palpably cogent reasons, the Council, which constituted the committee, is obliged to dissolve it and, in terms of s.33B(4), to constitute a new committee.  But this, in my judgment, is a different matter from the one in issue; namely, whether the chairman of a duly constituted committee has the statutory power (when it will not prejudice a fair and impartial hearing) to appoint a member in place of one who has died or for bona fide reason has had to stand down.  As Mr Huggins expressed it, this process of appointment by a chairman does not involve the dissolution of a committee and the constitution of a new one.

39. For the reasons given, I am satisfied that, on a true construction of the Ordinance, the chairman of a disciplinary committee does have the jurisdiction to appoint a member to the committee to replace one who has died or for bona fide reason has stood down.

The issue of unfairness

40. In the applicants’ notice of application for leave to apply for judicial review, the contention was made that :

“… the Applicants contend that they cannot secure a fair and impartial hearing before a panel whose membership has changed materially during the course of the disciplinary proceedings, (with 2 of the original members appointed to the Disciplinary Committee on 25^th June 2002 no longer being members of the panel) and a panel in which it appears any members, (save for the Chairman) is liable to be substituted at any time.”

41. No reason was stated, however, for why a change in membership — in the circumstances of the present case — has acted to deny the applicants a fair and impartial hearing.

42. As I have said earlier, a change in membership may well result in an unfairness.  But, as Mr Huggins put it, a tribunal’s fairness and impartiality does not necessarily depend on its membership remaining constant throughout.  The issue of fairness must depend on the facts of each case.

43. In the present case, as I understood the submission made on behalf of the applicants, it was to the effect that, in terms of Rule 6(1) of the Disciplinary Committee Proceedings Rules, cited in para.9 of this judgment, a disciplinary committee as a whole must be satisfied on the papers placed before it by the Council that there is a prima facie case revealed; if, however, the membership has changed there can be no assurance that the committee has so satisfied itself.

44. In the present case, however, the applicants made inquiry and were assured by the clerk to the committee that the committee, both as originally appointed and as appointed with two replacement members, did exercise its obligations in terms of Rule 6(1).  Nothing was placed before me to suggest that the assurance should in any way be doubted.

45. There was therefore no evidence that, in the factual circumstances of this case, the applicants were denied a fair and impartial inquiry by the disciplinary committee.

Conclusion

46. For the reasons given in the body of this judgment, the application for judicial review must be dismissed.

47. I see no reason why costs should not follow the event and costs are awarded to the respondent.