KWOK PING SHEUNG WALTER v. THE LAW SOCIETY OF HONG KONG

HCAL 73 of 2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 73 OF 2012

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J U D G M E N T

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A. INTRODUCTION

1. In 2010, the applicant made a complaint (“the Complaint”) to the Law Society (the respondent) against a solicitor (“Mr Kwan”) for professional misconduct.  The Complaint arose in gist in the following way.

2. The applicant was the Chairman and Chief Executive of a listed company (“the Company”) in Hong Kong.

3. Mr Kwan has since 1999 been a non-executive director of the Company.  Mr Kwan has also been the managing partner of a law firm (“the Firm”) in Hong Kong.

4. There was an internal power struggle within the board of the Company involving the applicant and his two brothers, which started sometime in 2007.

5. As a result of the dispute, an ad hoc committee was also set up by the board in early 2008 to look into the management structure of the Company.  Mr Kwan was appointed as the convenor of this committee, while the other members of it were all directors of the Company, including the applicant.

6. In May 2008, a board resolution was passed to terminate the applicant’s office as the Chairman and Chief Executive of the Company, and re-designate him as a non-executive director.  Before the resolution was passed, the applicant had unsuccessfully sought to restrain the board from holding the relevant meeting by bringing an action in the High Court.

7. In November 2008, Mr Kwan circulated a paper (“the Paper”) amongst members of the ad hoc committee.  In the Paper, among other things, Mr Kwan made a number of statements (“the Statements”) to the effect that (a) for many years in the past, important decisions and the day to day management of the Company had been made collectively by an Executive Committee that had been set up by the board, and (b) recently, the applicant had been acting “out of character” and making decisions of the Company himself instead of through the Executive Committee.

8. The applicant alleged that the Statements were untrue and incorrect and Mr Kwan knew that they were so.  He had been demanding Mr Kwan to withdraw the Statements and to apologise by a series of correspondence exchanged between them from January 2009 to September 2010. Mr Kwan had not done so.

9. On 24 September 2010, the applicant made the Complaint to the Law Society against Mr Kwan in respect of the Paper.  It is the applicant’s case that in making the Statements, Mr Kwan had committed professional misconduct because:

(1)  He made untrue and incorrect statements knowing that they were so;

(2)  He sought to use his professional position as a solicitor to lend weight to the Statements; and

(3)  He made the Statements for an improper motive: that is to side with the majority side of the board to fight against the applicant so as to ensure that the Company would continue to maintain the retainer of the Firm as the company’s solicitors.

10. Under s 9A(1) of the Legal Practitioners Ordinance (Cap 159) (“the LPO”), the Council of the Law Society (“the Council”) should consider whether a complaint made against a solicitor for professional misconduct should be submitted to the Solicitors Disciplinary Tribunal Panel (“SDTP”) for further investigation.

11. The said power and duty of the Council under s 9A(1) is delegated to the Conduct Section, the ad hoc Investigation Committee and the Standing Committee on Compliance (“the SCOC”) of the Law Society.  They respectively perform the function of investigation, decision and review of the decision.  Based on the decision or the outcome of the review, the SCOC decides whether to submit the matter to the SDTP.

12. Thus, upon receiving the Complaint, an ad hoc Investigating Committee was tasked to look into it.  The initial handling of the Complaint was conducted by an Investigation Counsel.

13. Upon the Law Society’s request, Mr Kwan provided a written response to the Complaint in December 2010.  The applicant’s solicitors further made various written responses to Mr Kwan’s response subsequently.

14. By way of the SCOC’s letter dated 13 April 2011 to the applicant’s solicitors, it was stated that, in relation to the Complaint, the Investigating Committee resolved that:

“The [Complaint] involves a legal question that should appropriately be resolved by adjudication in court. In this regard, [the applicant] may consider seeking independent legal advice. After such adjudication in court, if there is any evidence of professional misconduct, [the applicant] is at liberty to report such misconduct to the Law Society.”

15. The applicant now seeks to judicial review the above decision (“the Decision”) of the SCOC.  Mr Dykes SC for the applicant says the Law Society is joined as a proper respondent as the SCOC is its Council’s delegate.  The Law Society has not taken any objection to its being joined as the proper respondent.

B.   GROUNDS OF JUDICIAL REVIEW

16. As will be explained later, effectively the only real ground pursued in this judicial review by Mr Dykes SC at the hearing is that the Decision was made in breach of the Council’s duty under s 9A(1) of the LPO.  I will refer this as “the first ground”.

17. The other grounds raised in the Amended Form 86 in support of the judicial review are all premised on the allegation that the Decision was tainted with illegality as it was made pursuant to an alleged policy (“the Alleged Policy”) of the Law Society not to investigate complaints against solicitors (or refer them to a SDTP) where the complaint involves on-going litigation, or could be made the subject of litigation, and which directly relates to the complaint.  I would refer these collectively as “the other grounds”.

18. However, before dealing with the merits of these grounds, I must first look at the Law Society’s primary objection to this application on the basis that the applicant has failed to exhaust an alternative remedy.

C.   THE FAILURE TO EXHAUST AN ALTERNATIVE REMEDY

19. It is well established that an applicant is generally required to exhaust available alternative remedies before seeking the court’s intervention by judicial review, and it is only in extraordinary or exceptional circumstances that the court would allow departure from the rule in requiring exhaustion of alternative remedies.  See: Stock Exchange of Hong Kong Ltd v New World Development Co Ltd (2006) 9 HKCFAR 234, paras 114-117 and 130 per Ribeiro PJ; Stock Exchange of Hong Kong Ltd v Onshine Securities Ltd [1994] 1 HKC 319 , 328G-329H per Power VP; Hong Kong White Book 2013, para 53/14/22.

20. It is not disputed that the Law Society provides a domestic review procedure to a complainant dissatisfied with the decision of the Investigation Committee.  Under this review procedure, the dissatisfied complainant may apply for review by the SCOC of that decision.  In the review, if engaged, the SCOC will consider the matter afresh.

21. In the present case, it is common ground that the applicant was fully aware of his right to apply for a review before the SCOC. This is particularly so as:

(1)  The Notes to Parties to a Complaint issued by the Law Society describe the right to apply for review at paragraph 9.  The Notes were sent to the applicant by letter.

(2)  The applicant himself in the Amended Form 86[1] makes reference to and accepts the existence of the right of review, but seeks to argue that he was not obliged to exhaust this particular remedy before seeking judicial review.

(3)  Following the Decision, the applicant in fact indicated that he intended to seek a review by the SCOC of the Decision.  His solicitors and the Law Society had exchanged various and extensive correspondence in respect of the proposed review.  However, the applicant eventually did not make any application to review the Decision before the SCOC, but rather proceeded directly to apply to the Chief Judge of the High Court (“the Chief Judge”) under section 9(A)(2) of the LPO, and then applied for judicial review.  I will explain more about the application to the Chief Judge later.

22. In the premises, Mr Yu SC for the Law Society says the applicant has not exhausted this alternative remedy of review and the judicial review should be dismissed.

23. Mr Dykes however argues that there are exceptional circumstances in the present case which justify the court to entertain the judicial review notwithstanding the applicant’s failure to exhaust the alternative remedy.  Counsel principally raises two arguments.

24. Mr Dykes’ primary argument runs as follows:

(1)  S 9A(2) of the LPO provides that, where the Council does not submit a matter to the SDTP Convenor under s 9A(1) within six months after the receipt of a complaint, the Chief Judge may (either on the complainant’s application or on his own initiative) submit the matter to the SDTP Convenor if he considers that the Council ought to have done so.  This is the statutory alternative remedy intended by the legislature.

(2)  The applicant has in the present case applied to the Chief Judge asking for the Complaint to the submitted to the SDTP. The Chief Judge in his reply has declined the application.

(3)  In the premises, given that the applicant has already exhausted the statutory alternative remedy, as a matter of policy, he should not be “prejudiced” by not having also engaged the review application, which is an “extra-statutory” alternative remedy not intended by the legislature.

25. I am unable to accept these submissions.

26. First, the justification for the general rule requiring an applicant in judicial review to first exhaust alternative remedies is, among others, that it is in the public interest to abate litigation[2].  Thus, as a matter of principle, for the purpose of this requirement, I do not see any good reasons or justification to distinguish between statutory and non‑statutory alternative remedies.  Unless otherwise shown, a non‑statutory alternative remedy is just as good and effective as a statutory one to abate litigation.

27. There is nothing in the present case to show that the review procedure is inadequate or ineffective in dealing with any incorrectness of the Decision alleged by the applicant.  As I mentioned above, under the review, the SCOC is to consider the matter afresh.  Further, there is also nothing to show that the review is not effective or as effective as the statutory remedy to avoid the need of litigation.  In particular, it is pertinent to note that that there is no time limit under the Law Society’s review procedure.  In other words, even as of today, the applicant is still entitled to apply to the SCOC seeking to review the Decision.

28. Second, Mr Dykes’ submissions are not backed by authorities.  Quite to the contrary:

(1)     The authorities in support of this general rule have not made any in principle distinction between statutory and non‑statutory remedies.

(2)     The authorities of Stock Exchange v New World and Stock Exchange v Onshine are all related to a domestic alternative remedy of appeal provided under the domestic rules of the Stock Exchange.

29. I therefore reject Mr Dykes’ first submissions on exceptional circumstances.

30. Mr Dykes’ second submissions on exceptional circumstances (as set out in the Amended Form 86) are that the applicant had not engaged the review remedy since he was wary of possible conflict of interest of the SCOC’s members, given that Mr Kwan is a very senior solicitor and many of those members might know him well.  Given this possibility, it was allegedly futile for the applicant to apply to review the Decision.

31. There is also no substance in these submissions:

(1)  It is entirely speculative at this stage to suggest that the SCOC’s review would be tainted by conflict of interest. As rightly submitted by Mr Yu:

(a)  In the context of the intended review, at his request, the Law Society provided the applicant with an updated list of members of the SCOC by letter dated 27 May 2011 and by letter dated 23 June 2011, the applicant indicated the members to whom he objected.  The Law Society repeatedly indicated to the applicant that his comments on conflict of interest would be brought to the attention of the SCOC, which would consider those comments if and when the applicant proceeded with the review.

(b)  In any event, any complaint of conflict of interest in respect of the intended review by the SCOC is premature, since the applicant has not pursued the review, with the consequence that the SCOC has not taken any decision on the review (and has not yet considered the applicant’s concerns in respect of conflict of interest). Indeed, the question of conflict of interest could only be finally and properly considered at the time of the review by the SCOC, since professional relationships change from time to time.  Accordingly, it is entirely speculative to suggest that the SCOC’s review would be tainted by conflict of interest.

(2)  A speculation that it may be possible or that there is a danger that the alternative remedy may not result in a fair and proper decision is not a good excuse not to pursue the alternative remedy.  See: Stock Exchange v Onshine, supra, at 329B‑330D.

32. I therefore also reject these submissions.

33. For these reasons, the applicant has not shown any exceptional circumstances to justify that the court should, in the exercise of its discretion, grant remedy in this judicial review (even if the grounds are established) even though the applicant has not exhausted the alternative remedy.

34. On this basis alone, I would refuse the judicial review application.

35. Strictly speaking, it is therefore unnecessary for me to consider the substantive grounds raised in support of the judicial review.  However, given that they have been argued fully, I would deal with them briefly as follows.

D.   THE GROUNDS OF JUDICIAL REVIEW

D1.   The first ground

36. S 9A(1) of LPO provides:

“(1) where the Council considers that the conduct of a person who is, or was at the relevant time, a solicitor … should be inquired into or investigated as a result of a complaint being made to it or otherwise, the Council shall submit the matter to the Tribunal Convenor of the Solicitors Disciplinary Tribunal Panel.” (emphasis added)

37. Mr Dykes SC for the applicant submits that under this section, if the Council finds a complaint of such substance that should be investigated or inquired into, it has no other alternative but must (given that it “shall”) submit it to the SDTP Convenor for further dealing.

38. In the present case, properly looked at, the Decision shows (says Mr Dykes) that the Council has effectively found the Complaint of such substance that should be inquired into or investigated.  As such, the Council in discharging its statutory duty must refer the Complaint to the SDTP for further dealing.  Therefore, in asking the applicant to go for litigation and keeping the Complaint in abeyance instead of submitting it to the SDTP, the Law Society is in breach of its statutory duty under s 9A(1), and the Decision is therefore tainted with illegality.

39. Mr Dykes contends that the Decision shows that the Council has found the Complaint requiring investigation is underlined and supported by the following:

(1)  Regulation 6 of the Solicitors Disciplinary Tribunal Proceedings Rules (Cap 159C) provides that, when a complaint has been referred to the SDTP, it can dismiss the complaint summarily on papers if it finds that there is not a prima facie case of professional misconduct.  In the premises, the standard of proof required under s 9A(1) of the LPO for finding a complaint that needs to be investigated or looked into before referring it to the SDTP must be one which is lower than that of a prima facie case.  This is a relatively low standard of proof.

(2)  The Investigation Counsel in her report (after carrying out the initial investigation of the Complaint and looking at the responses from Mr Kwan and the applicant) recommended to the Investigation Committee two options in reply to the applicant: they are (a) based on the information before the committee, no case of professional misconduct can be found against Mr Kwan in relation to the Complaint, or (b) the Decision itself.  The Investigation Committee (consisting three members) all opted for the Decision as the reply.  This shows that the Investigation Committee found that they could not dismiss the Complaint summarily for not involving any professional misconduct.  In other words, they must have found that the Complaint at least carried allegations of Mr Kwan’s professional misconduct that needed to be investigated or looked into.  This is particularly so given the low standard of proof required under s 9A(1).

40. Mr Yu however submits that all that the Decision shows is that the Investigation Committee has not made a final decision under s 9A(1) as to whether the matter warrants further investigation and be referred to the SDTP.  The Investigation Committee was just being cautious (or generous) in seeking and waiting for further evidence from the applicant (if that was forthcoming) to decide whether the Complaint merited to be submitted to the SDTP.

41. There is some force in Mr Dykes’ submissions.  However, after looking at the matters before me as a whole, I am not satisfied it has been shown that the Investigation Committee had already formed the view as contended by Mr Dykes.  My reasons are as follows:

(1)  It is accepted (rightly so) by Mr Dykes that the Investigation Committee is entitled to seek further information regarding a complaint before forming a view as to whether the matter should be referred to the SDTP for investigation.

(2)  In the Decision, it is stated that “if there is any evidence of professional misconduct” coming from the litigation (if that is taken against Mr Kwan), the applicant is “at liberty to report such misconduct to the Law Society”.

(3)  This part of the Decision, and the non dismissal of the Complaint at that stage, should however be viewed in the following context:

(a)  the extensive correspondence exchanged between the applicant and Mr Kwan before the Complaint was made to the Law Society.  The correspondence shows that (i) it is part of the applicant’s original allegations against Mr Kwan that, in making the Statements which were untrue and incorrect, Mr Kwan was defaming the applicant, and (ii) the applicant contemplated, among others, suing Mr Kwan for that;

(b)  in his replies made to the Law Society concerning the Complaint and Mr Kwan’s responses, the applicant emphasised, among others, that Mr Kwan was defaming him by the knowingly untrue Statements, and Mr Kwan therefore has no justification for writing them[3];

(c)   at the same time, the fundamental gist of the Complaint is also premised on the allegations that the Statements are knowingly untrue and incorrect to Mr Kwan.

(4)  When viewed in the above context, I am satisfied that it is objectively equally tenable to say that by way of the Decision, the Law Society was waiting and seeking for further information and evidence (which might be forthcoming if the applicant did take out an action against Mr Kwan for defamation as once contemplated) to show some substance that the Statements were incorrect or untrue to support the Complaint.  This does not mean that they have already come to a final view (with the information then before them) that the Complaint should be further investigated.

(5)  This is highlighted by the fact that the applicant has not even by now replied to the Law Society that he would not take out any litigation against Mr Kwan.  If he decides not to do so, he could so inform the Law Society, and by then, as submitted by Mr Yu, the Investigation Committee would have to come to a final decision on whether they would reject the Complaint summarily or refer the matter to the SDTP for investigation.

42. For these reasons, I would have rejected the first ground of the judicial review if this is called for determination.

D2.   The other grounds

43. These can be dealt with quickly.

44. As mentioned above, these grounds rest fundamentally on the allegation of the existence of the Alleged Policy.  The part of the Alleged Policy that is relevant and material to these grounds (as set out in the Amended Form 86) is that the Law Society would not investigate complaints against solicitors (or refer them to a SDTP) where the complaint “could be made the subject of litigation”.

45. In support of these grounds, it is the applicant’s case[4] that the existence of the Alleged Policy is shown and supported by Notes 2, 7(iii) and 8 of the “Notes to Parties to a Complaint” (“the Notes”) and the “Guidance Notes to the Complaint Form” (“the Guidance”), both issued by the Law Society.

46. However, it is clear that nothing in those paragraphs of the Notes and in the Guidance contain the above material part of the Alleged Policy.

47. Note 2 of the Notes provides as follows:

“2. The Conduct Section of The Law Society does not:

(i) investigate complaints against respondents who are not acting in their capacities as solicitors;

(ii) proceed with the investigation of a complaint if it involves an on-going litigation which directly relates to the complaint or the complaint is being investigated by other organizations or authorities;

(iii) normally handle complaints which are not set out in the Complaint Form;

(iv) give legal advice or adjudicate on legal issue(s) or disputes;

(v) take proceedings on behalf of the complainant for negligence cases …”(emphasis added)

48. Note 2(ii) relates to the situation where there is on-going litigation in relation to the subject-matter of the complaint, or the complaint is being investigated by other organisations or authorities.  It does not suggest that the Conduct Section does not investigate where there is the potential for litigation as alleged in the Alleged Policy.  Thus, even taking Note 2(ii) to the highest, the Alleged Policy does not form part of Note 2. Moreover and in any event, since, in respect of the Complaint, there is no on-going litigation or investigation by another body, Note 2(ii) does not even apply and is irrelevant.

49. Note 2(iv) of the Notes relates to the Conduct Section giving legal advice or adjudicating on legal issues or disputes.  Again, as rightly submitted by Mr Yu, that is very different to the Alleged Policy. Note 2(iv) therefore also does not support or show the existence of the Alleged Policy.

50. Notes 7(iii) and 8 of the Notes provide:

“7. Investigation Committees

…

(iii) are not performing a judicial function (on this basis, no reason will be given for their decisions);

…

8. Standing Committee on Compliance

(i) its powers are delegated by the Council of The Law Society;

(ii) is made up of practising solicitors who are not members of the Law Society Secretariat;

(iii) monitors the work of the Conduct Section in carrying out its policies;

(iv) considers of its own motion or upon recommendations from an Investigation Committee for submission of matters to the Tribunal Convenor of the Solicitors Disciplinary Tribunal Panel;

(v) considers and decides on allegations of professional misconduct that are of particular sensitivity, importance or complexity;

(vi)  oversees the work and considers all requests for review of decisions of the Investigation Committees.”

51. It is clear that Notes 7(iii) and 8 have nothing to do with the Alleged Policy.  They do not show or support the existence of the Alleged Policy.

52. Finally, as pointed out by Mr Yu, the only parts of the Guidance that may be said to be relevant to this issue are the 2^nd paragraph at page 2 and Questions 5 and 6 at page 3.  They respectively provide as follows:

“We do not:

- investigate complaints against solicitors who are not acting in their capacities as solicitors (eg. magistrates, judges, notaries, China Appointed Attesting Officers, trustees in bankruptcy etc.);

- normally handle complaints which are not in writing or set out in the complaint form;

- give legal advice;

- take proceedings on your behalf for negligence cases.”

“Question 5: On-going litigation proceeding

If your case involves an on-going litigation proceeding which directly relates to the complaint, we will hold the matter in abeyance until the conclusion of the proceeding. This is because we do not want to interfere with any court hearing.

Question 6: Other organizations or authorities

If your complaint involves issues the subject matter of which may involve other organizations or authorities (eg. the Hong Kong Police, ICAC, the Commissioner of Equal Opportunities etc.), we will normally not proceed with our investigation of your complaint pending conclusion of the investigation by other organization or authority but we will reserve the right to report such matter to the other organization or authority as we deem fit.  You may refer the matter back to us upon conclusion of the investigation by other organization or authority.”

53. These also do not support the existence of the Alleged Policy, in particular the relevant part alleging that the Law Society would not process a complaint that “could be made the subject of litigation”. The text under Question 5 relates to the situation of on-going litigation, not potential litigation.  The text explains that in that scenario the Law Society will hold the complaint in abeyance until the conclusion of the on‑going litigation, since the Law Society does not wish to interfere with any Court hearing.

54. In the premises, the applicant simply cannot show the existence of the Alleged Policy.  To be fair, I think Mr Dykes has not pursued with any enthusiasm these grounds at the hearing.

55. I therefore would have also rejected the other grounds.

E.   CONCLUSION

56. For all the above reasons, I dismiss this judicial review application.

57. There are no reasons why costs should not follow the event.  I would further make an order nisi that costs be to the Law Society, to be taxed if not agreed, with certificate for two counsel. Unless any of the parties applies to vary it by summons, this order shall become absolute 14 day after today.

[1]   At paragraphs 43 to 48.

[2]   See: R v Panels Take-overs and Mergers, ex p Guinness [1989]1 All ER 509, 531 as quoted in Stock Exchange of Hong Kong Ltd v Onshine Securities Ltd, supra¸ at 329E-F.

[3]   See the summary of this part of the applicant’s responses contained in the Investigation Counsel’s report, at pp 10-11.

[4]   See p 1 (paragraph 2 of the decisions of which relief is sought) and paragraphs 49‑56 of the Amended Form 86.