THE HONG KONG INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS v. YEUNG, KWONG TAT EDWARD

HCMP 428/2021

[2021] HKCFI 1811

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 428 OF 2021

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J U D G M E N T

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A. Introduction

1.  This is the hearing of the originating summons (“OS”) issued by the plaintiff (“Institute”), an affected party, for:

(1)    a statutory order under section 27(1) of the High Court Ordinance (Cap 4) (“HCO”) that no proceedings shall be commenced or instituted by the Defendant (“Mr Yeung”) without leave of the Court (“Section 27 Order”);

(2)     further or alternatively, a restricted proceedings order (“RPO”) to prohibit Mr Yeung from commencing, without leave of a Judge, fresh proceedings which abuse the Court’s process by seeking to re-litigate proceedings which have already concluded.

2.  In summary, the Institute’s case is that a Section 27 Order or an RPO, is justified on the grounds that:

(1)     Mr Yeung has habitually and persistently made vexatious claims against the Institute and others, all of which have been unmeritorious.  There have been 27 sets of proceedings, 6 of which have been brought against the Institute,[1] since 2011.  As recently as on 29 July 2020, he has commenced 3 claims in the Small Claims Tribunal.

(2)     It is in the public interest to restrain these abusive litigious activities, which are not only oppressive to the Institute and other parties, but also take up valuable judicial time and resources, causing unfairness to other litigants with bona fide claims before the Court.

3.  The OS and the supporting affirmation have been personally served on Mr Yeung on 30 March 2021.  Mr Yeung has not filed any acknowledgment of service.

4.  Mr Yeung has also been served with the Notice of Appointment to hear the OS on 14 April 2021 but has not filed an affirmation in opposition. 

5.  However, Mr Yeung has:

(1)     Faxed to the Court 4 sheets of paper appearing to seek an injunction, to have “HCMP Plaintiff orders/decisions discharged”, to have “CAMP 5/2019 order discharged or not”, to have “priority summon (payment out) before validation order, annualment (sic) bankruptcy order in HCB 261/2003”.

(2)     Sent unsolicited emails to the Institute and its legal representatives referring to the action number in this case.

(3)     Sent various documents with incomprehensible contents to the Court the day before this hearing.

6.  In view of paragraphs 3-5, I am satisfied that the OS and Notice of Appointment to hear the OS have come to the notice of Mr Yeung.  Given the nature of this claim, I consider it expedient to deal with the application without delay in Mr Yeung’s absence.

B.  Background

7.  I adopt the helpful summary of facts of Ms Mak, counsel for the Institute.

8.  The Institute is the statutory regulator of the accounting profession formed under the Professional Accountants Ordinance (Cap 50) (“PAO”).  Amongst other things, the Institute (i) issues practising certificates to certified public accountants who meet requisite requirements; and (ii) supervises members’ compliance with the Institute’s professional standards (including the code of ethics) and may bring disciplinary proceedings in the event that a certified public accountant fails or neglects to observe, maintain or otherwise apply professional standards, contrary to section 34(1) of the PAO.

9.  Mr Yeung was a certified public accountant and a member of the Institute.

10.  By an order dated 18 May 2011 (“Disciplinary Order”), a disciplinary committee of the Institute (“Committee”)ordered that Mr Yeung be removed from the register of certified public accountants for a period of five years with effect from 29 June 2011. The Disciplinary Order was made on the basis of Mr Yeung’s misconduct in the following two matters:

(1)     First, he had been adjudged bankrupt under HCB 261/2003 for the period from 20 March 2003 to 20 March 2007 but he made false declarations to the effect that he was not a bankrupt when he applied to renew his practising certificates for the years 2005, 2006 and 2007 (“False Declarations”).  For such conduct, the Committee found that Mr Yeung acted in breach of applicable codes and principles.

(2)     Second, the Committee found that Mr Yeung refused to cooperate in a review of his audit practice, in breach of section 32E(1)(a)(iii) of the PAO.

11.  Mr Yeung did not appeal against the Disciplinary Order.

12.  The Institute had also reported the False Declarations to the police as a case of “obtaining pecuniary advantage by deception”.  It led to criminal proceedings in ESCC 4304/2011.  On 7 February 2012, the Institute was notified by the Commissioner of Police that ESCC 4304/2011 was concluded when Mr Yeung was sentenced to a hospital order for 3 months by a Magistrate.

13.  This marked the beginning of a string of legal actions commenced by Mr Yeung against the Institute, as summarised below.

	Case	Date commenced	Subject matter of Mr Yeung’s claim	Decision
1	HCA 948/2011	Around July 2011	Claim against Registrar of the Institute and Practice Review Committee of the Institute for the following: “O.6, r.2c: CPA Members’ Remedy due to Edward Yeung CPA and third person HK citizen: The Plaintiff’s claim (and defence) to payment out forewith is money due and owning over Admissions Against Edward Yeung CPA and third persons Interest (civil, economic and political rights in the takings and in the civil money harassment) in a punitive sum of HK$6.6M per annum and 5 years forewith. The Defendants(s) [do] pay the Plaintiff and third person HK citizen herein… Leave to no Exparte HKICPA Registrar by Johnny Chan dated May 18, 2011 motion in dealt with/entertained.”	Indorsement of writ was struck out and action was dismissed by Registrar Lung on 11/7/2011, on the grounds that: (1) The indorsement was incomprehensible (§3). (2) Mr Yeung had not shown any reasonable cause of action against the Institute (§7). (3) Mr Yeung failed to appear to show cause why his writ should not be struck out (§9).
2	CAMP 5/2019	9/1/2019	Summons against the Institute: “1) Allegation of jurisdiction or Plaintiff's Appeals (Section 41 Cap 50) with rule of law. 2) Appeal against convictions/ charges ESCC4304/2011 (police record). HCB261/2003. Plaintiff discharged from any/all debt due etc. to HKSAR and HKICPA (USA rulings). No execution due. 3) Appeal to set aside Disciplinary Order dated May 18, 2011 etc. (Grounds: no rule of law, errors of fact and law from Complainant 1 and Disciplinary Committee). 4) Appeal to recover membership (licenses) (A08786) (P02783). (Ground: seeking economic necessity). 5) Appeal to recover CPA firms income/estate. HCA948/2011. Violation on Article 142 of HKSAR Basic Law.”	Master Au-Yeung (Registrar of Civil Appeals) opined that the Summons was bound to be dismissed on the grounds that (i) the Summons was incomprehensible and (ii) leave to appeal was required for some orders sought. Preliminary Directions Hearing held on 14/3/2019, at which Master Au Yeung ordered that the Summons be referred to CA for dismissal unless Mr Yeung filed and served a Form 86 to seek leave for an application for judicial review by 28/3/2019. Summons was dismissed by the Court of Appeal on 4/4/2019 on the bases that: (1)     The Summons was incomprehensible and did not seek reliefs which could be granted by the Court of Appeal. (2)     Mr Yeung failed to comply with directions of Master Au Yeung. (3)     The Summons was an abuse of process. (4)     The Summons was totally without merit.
3.	HCAL 1005/2019	April 2019	Leave to apply for judicial review against (inter alia) the Institute for (inter alia) commercial tort damages, misconduct in public office and miscarriage of justice at HK$8M. “Allegation of jurisdiction under section 17 Cap 4 and Section 21K(4) Cap 4 & Article 35 of HKSAR BASIC LAW, (Probable) miscarriage of justice and misconduct in public office in mismanagement of property of the bankruptcy estate (mismanagement of memberships, CPA firms licenses etc.) due to debtor petitioner and related parties, non civil procedures.  Objections and Appeal by Yeung – non summary case inside your computer records.”	Applications for leave to apply for judicial review was dismissed by Chow J on the grounds that: (1)     The applications were not supported by verifying affidavit (§11). (2)     Remedies sought were not reliefs which could properly be granted in judicial review (§12). (3)     Unintelligible and incomprehensible grounds of judicial review (§13).
4	SCTC 18587/20	29/7/2020	Claim against the Institute for expenses in relation to Mr Yeung’s response to the Institute inquiries following his applications for restoration to the register of public accountants.	Claim was struck out on 25/9/2020 by Adjudicator Mr. G. T. Lung for want of prosecution.
5	SCTC 18588/20		Claim against the Institute for expenses in relation to Mr Yeung acting as a respondent in the Institute’s disciplinary proceedings.	Claim was struck out on 25/9/2020 by Adjudicator Mr. G. T. Lung for want of prosecution.
6	SCTC 18589/20		Claim against the Institute for expenses for Mr Yeung acting as a defendant in ESCC 4304/2011.	Claim was struck out on 25/9/2020 by Adjudicator Mr. G. T. Lung for want of prosecution.

14.  Additionally, before commencing proceedings against the Institute, Mr Yeung had taken out 21 actions against various banks in 2010 (collectively “Bank Actions”).  The contents of the indorsements (which were the same except for the amounts claimed) were as follows:

“The Plaintiff’s money claim is for case indemnification to developments and profession. This MDO diversity money action to constitutional relief over ethics, set-off, duress and state action debt collection caused by economic liberties of the Defendant at HK$ quantum meruit [auditor and accountant money paid in the Defendant’s possession, excluding interest paid before this date ^2 *0.07/2/150- outstanding balance due to the Defendant or HKD4,040,000 ,whichever is higher]; by standing instruction of an auditor Plaintiff’s money in the Defendant’s possessory takings in compensation and services rendered and money had and received payable forewith to the Plaintiff, not a party/no related party and outstanding balance to RE: HCB 261/2003 & RE:B10/261/2003 & Statement of Financial Affairs filed; The Plaintiff in person holding registration of birth and death replaced the Petitioner in person. Diversity money collection action or defence out of time replaced the petition of rights. “No state shall deny to any person within its jurisdiction the equal protection of the laws”. “No state shall make or enforce any law shall abridge the privileges or immunities of citizen of the H.K.” “If a state law conflicts with a congressional act regulating commerce, the congressional act is controlling.” “Congress has the power to regulate intrastate commerce when it impacts interstate commerce.” No Form 46A and no Petitioner’s creditors’ objections. The Congress assessed reasonable cause of action and state law or the matter is a long way out of time, including antitrust action etc. No winding-up order.”

15.  As set out in the decision of Registrar Lung dated 25 November 2010 dealing with the Bank Actions, HCA 1628, 1655, 1656, 1657, 1658, 1659, 1668, 1669, 1670, 1671, 1672, 1673, 1674, 1675, 1677, 1680, 1691, 1692, 1693, 1694 and 1695/2010:

(1)     The contents of the indorsements were not comprehensible (§2).

(2)     Registrar Lung declined to enter default judgment and had called upon Mr Yeung to attend the hearing to show cause why his indorsements should not be struck out and his action dismissed, but Mr Yeung failed to appear (§§5-8).

(3)     Mr Yeung had sent 21 copies of Notices of Discontinuance to the Court, but did not file them with the Court (§9).

(4)     As the indorsements disclosed no reasonable cause of action, they were struck out on the Court’s own motion and the 21 actions were dismissed (§11).

16.  Still further, over the past 10 years, Mr Yeung has repeatedly sent to the Institute and its legal representatives unsolicited emails and documents (“Unsolicited Documents”).  These documents purported to be court documents and/or letters from the Judiciary, but they were in fact old or unfiled court documents which contained incomprehensible comments from Mr Yeung.  In the month of January 2021 alone, Mr Yeung sent at least 74 unsolicited emails and/or faxes to the Institute and its legal representatives, which were representative of the amount of documents received by the Institute.

17.  Out of concern that the Institute might overlook genuine correspondence from the judiciary, the Institute had to consider such Unsolicited Documents.  It wasted the time and resources of the Institute.

C.  Legal principles

18.  Ms Mak has fairly summarized the applicable principles, which I adopt below.

D1. Section 27 Order

19.  The evils of abusive proceedings include unfair oppression and stress (including financial pressure) caused to the opposite parties and wastage of limited judicial resources.  See Secretary for Justice v Ma Kwai Chun [2006] 1 HKLRD 539, §30.

20.  Under section 27 of the HCO, the Court of First Instance has the power to restrain a vexatious litigant from engaging in abusive litigation. The exercise of the statutory power is regulated by Order 32A of the Rules of the High Court (Cap 4A) (“RHC”).

21.  A person subject to such an order has to submit to judicial screening before any fresh legal proceedings by him can be instituted or any existing proceeding can be continued.  The rationale for such measure is that the right of access to the court is subject to the power of the court to adopt proportionate measure in preventing the abuses of its own process: Secretary for Justice v Ma Kwai Chun, §29.

22.  Section 27 provides as follows:

“ (1) The Court of First Instance may, on the application of the Secretary for Justice or an affected person, make an order that –

(a) no legal proceedings shall without the leave of the Court of First Instance be instituted by the person against whom the order is made; and

(b) any legal proceedings instituted by that person in any court before the making of the order shall not be continued by him without the leave of the Court of First Instance.

(2) The Court of First Instance may not make an order under subsection (1) unless—

(a) it is satisfied that the person against whom the order is to be made has habitually and persistently and without any reasonable ground instituted vexatious legal proceedings, whether in the High Court or in any inferior court, and whether against the same person or against different persons; and

(b) it has heard the person against whom the order is to be made or given him an opportunity of being heard.

…” (underline added)

23.  Under section 27A:

“Leave for the institution or continuance of any legal proceedings by a person who is the subject of an order for the time being in force under section 27(1) shall not be given unless the Court of First Instance is satisfied that –

(a) the proceedings are not an abuse of the process of the court in question; and

(b) there are reasonable grounds for the proceedings.”

24.  An “affected person” is defined to include a person who is or has been a party to any of the vexatious legal proceedings: section 27(5)(a).

25.  The meaning of “vexatious” under section 27(2) has been comprehensively summarised in Secretary for Justice v Ma Kwai Chun:

(1)     The categories of abuse of process and vexation are never closed. It is wider than in the context of Order 18 rule 19 of the RHC and includes proceedings which are scandalous, discloses no reasonable cause of action, oppressive, embarrassing, or otherwise an abuse of process of the Court (§37).

(2)     The vexatious nature should be apparent from reading the reasoned judgment and orders made in those proceedings.  The fact that previous proceedings had been struck out by the Court was good evidence of their vexatious nature (§41).

26.  As to the meaning of “habitual” and “persistent”:

(1)     It involves an element of repetition though it needs not be over a long period, but it is essential to establish a course of repetitious abusive conducts in the whole history of the defendant’s litigious activities.  Whilst in many cases, the activities focus on a particular adversary or a particular grievance, repetition can also manifest itself in the form of a number of unfocussed vexatious claims against a wide range of persons.  See Secretary for Justice v Ma Kwai Chun, §33.

(2)     Even when the number of separate actions is quite small, if the whole circumstances and history of the litigious activities demonstrate an attempt to re-litigate an issue already conclusively determined, coupled with such attempts being pursued in a vexatious manner (eg with extravagant, scandalous or wild allegations without any prospect of the same being justified), the requirement of “habitual” and “persistent” activity is also met (§34).

(3)     It usually involves one or more of the following features: (i) the litigant sues the same party repeatedly, in reliance on essentially the same cause of action after it has been ruled upon; (ii) the litigant relies on essentially the same cause of action after it has been ruled upon in actions against successive parties who, if they were to be sued at all, should have been joined in the same action; (iii) automatic challenge of every adverse decision on appeal; and (iv) refusing to take any notice of or give any effect to orders of the court: Hong Kong Civil Procedure 2021, §32A/1/4.

27.  On an application to have a person declared as a vexatious litigant, the civil standard of proof applies, but regard must be had to the seriousness of the issue at stake: Attorney-General v Hayward [1995] The Times 20 November (CA).

28.  When the pre-conditions in section 27(2) are satisfied, the Court will exercise its discretion to make an order depending on its assessment of where the balance of justice lies.  It is possible to make a Section 27 Order even though the defendant has not been subject to an RPO granted under Practice Directions 11.3.  As a Section 27 Order is more draconian than an RPO, in line with the requirement of proportionality, the court must weigh whether a less draconian measure is sufficient to deal with the case before it: Secretary for Justice v Ma Kwai Chun, §§32 and 51.

29.  Under section 27(3), a Section 27 Order “(a) may be made on such terms and conditions as the Court of First Instance thinks just, and (b) may provide that it is to cease to have effect at the end of a specified period, but shall otherwise remain in force indefinitely”.  Such directions should be proportionate to the seriousness, magnitude, frequency and impact of the abuse: Hong Kong Civil Procedure 2021, §32A/1/3.

D2.  RPO

30.  Under the common law and the Court’s inherent jurisdiction, the Court has the power to make an RPO to prohibit a litigant from commencing any fresh proceedings concerning any matter “involving or relating to or touching upon or leading to the concluded proceedings” specified in the RPO without leave of a designated Judge.

31.  The circumstances to justify an RPO need not meet the high statutory threshold under section 27, but it has to be shown that the litigant has abused, and is likely to continue abusing, the Court’s process by seeking persistently to re-litigate in fresh proceedings, without viable legal grounds, matters which have already been determined by the Court.  It has also to be shown that an RPO would be a proportionate response.  See Practice Directions 11.3/C(1).

32.  An RPO requires a qualitative assessment of the intended fresh proceedings by a designated judge with some familiarity with the background to see whether they fall within the class of proceedings requiring leave.  The intended defendants are entitled to but not obliged to do respond to a notice of the intended application for leave to institute fresh proceedings: Practice Directions 11.3, §10(3).

33.  Thus, an RPO is narrower in scope than a Section 27 Order:

(1)     An RPO is limited by reference to a class of proceedings, whereas a Section 27 Order bars institution of any new proceedings. 

(2)     A claim that falls within the prohibited class of proceedings under an RPO may nevertheless be allowed to go forward (Practice Directions 11.3, §11(3)); whereas under a Section 27 Order, leave to commence proceedings will only be granted if the proceedings are not an abuse of process of the court and there are reasonable grounds for the proceedings: section 27A(1) of the HCO.

34.  Apart from the general principles in assessing the vexatious nature of the litigant’s activities set out above, the Court could also take into account unsolicited letters from the litigant to the court, the solicitors and other parties which contained unsubstantiated and incomprehensible allegations.  See Lee Chick Choi v Best Spirits Co Ltd [2018] HKDC 445, §§34 & 35, His Honour Judge Andrew Li.

E.  Application of the legal principles

35.  The Institute, having been defendant to 6 sets of proceedings commenced by Mr Yeung, is plainly “an affected person” within the meaning of section 27(1).

36.  The vexatious nature of proceedings commenced by Mr Yeung is apparent from reading the reasons for dismissal of the proceedings summarised in the table in paragraph 13 above.  It is clear that Mr Yeung’s claims were manifestly groundless and incomprehensible.  In particular:

(1)     The first 3 sets of proceedings were struck out or dismissed on the grounds that they were incomprehensible, disclosed no reasonable cause of action, and/or sought reliefs which that Court could not grant.

(2)     In CAMP 5/2019, the Court of Appeal dismissed Mr Yeung’s summons also on the ground that it was an abuse of process. It was also highlighted that Mr Yeung failed to comply with the orders of Master Au Yeung.

(3)     The Bank Actions were against banks unrelated to one another and the Institute.

37.  Further, Mr Yeung has commenced proceedings with no intention to prosecute them.  This was evident from:

(1)     His claims in the Small Claims Tribunal; and

(2)     The Bank Actions; wherein he sent but did not file Notices of Discontinuance to the Court, showing that he knew he had no case against the banks.

Such conduct was plainly to vex the named defendants.

38.  The fact that many of these proceedings have been struck out is good evidence of their vexatious nature.

39.  The “habitual and persistent” element of D’s litigious activities is evident from:

(1)     The frequency with which Mr Yeung has instituted legal proceedings against both the Institute and Banks; and the 27 sets of legal proceedings over 9 years; and

(2)     The repetitive nature of the causes of action. Allegations relating to the Disciplinary Order, as well as the related proceedings in HCB 261/2003 and ESCC 4304/2011 have been conclusively determined.  Yet Mr Yeung has been repeatedly suing the same party (ie the Institute).

40.  Further, the scope, scale and content of the Unsolicited Documents indicate the obsessive nature of Mr Yeung’s conduct and the likelihood that his efforts to re-litigate the matter would continue.

41.  The pre-conditions in section 27(2) of HCO have been met.  Mr Yeung’s litigation conduct in the past years demonstrated that he has been abusing the process of the Court and vexing his opponents.

42.  The Institute has been forced to (i) instruct legal representatives to oppose the summons in CAMP 5/2019; (ii) prepare a written defence and appearing in the Small Claims Tribunal; and (iii) consider the Unsolicited Documents (which purported to be court documents) to avoid overlooking genuine correspondence from the judiciary.  The Institute has been forced to incur costs for which there is no reasonable prospect of recovery.

43.  Mr Yeung has been given an opportunity of being heard today but he chooses not to appear. 

F.  The appropriate order to make

44.  Bearing in mind the issue of proportionality, I have considered whether a lesser measure than a Section 27 Order is appropriate to curb Mr Yeung’s litigation conduct.  He has never been subject to an RAO (ie restricted application order) or RPO.

45.  An RAO is inappropriate because Mr Yeung’s actions have been struck out or dismissed before he had the chance to take out abusive interlocutory applications.

46.  An RPO is inappropriate because, whilst his actions against the Institute were all about the Disciplinary Order, HCB 261/2003 and criminal proceedings in ESCC 4304/2011, his actions against the banks were not.  The Bank Actions demonstrated that Mr Yeung was ready to sue any entity on incomprehensible causes of action.  It is not possible to limit the subject matter of his intended fresh proceedings in an RPO.

47.  Considering all the circumstances, I am of the view that a Section 27 Order is appropriate.  It should cover proceedings in the Small Claims Tribunal which is a court of record with jurisdiction and powers conferred by the Small Claims Tribunal Ordinance: section 3(2) of the Small Claims Tribunal Ordinance, Cap 338.

48.  I have considered the duration of the Section 27 Order.  This is not a situation where Mr Yeung would hopefully stop his litigation when the limitation period of a cause of action expires.  Given that Mr Yeung has been a bankrupt and there is lack of evidence of his financial means, a condition requiring his intended fresh action to be supported by counsel’s opinion would not have much meaning.

49.  However, having 27 sets of legal proceedings adjudged incomprehensible reflected the mental imbalance in Mr Yeung in making those claims.  His written response to the present action and sending of Unsolicited Documents to the Institute indicate that he would persist in his vexatious conduct.

50.  Taking all circumstances into account, I do not consider it appropriate to limit the duration of the Section 27 Order.

G.  Order

51.  For the reasons set out above, I make an order as follows:

(1)     No legal proceedings in any court (including, for the avoidance of doubt, the Small Claims Tribunal) shall, without leave of the Court of First Instance, be instituted by the Defendant;

(2)     Any legal proceedings instituted by the Defendant in any court before the making of the order shall not be continued by him without leave of the Court of First Instance;

(3)     If the Defendant, without first obtaining leave, commences or issues a fresh claim or proceeding, that fresh claim or proceeding shall automatically be dismissed without further order of the Court or action by any other party or person (including any person named as a defendant, respondent or other patty to the fresh claim or proceeding);

(4)     Where the Defendant seeks leave, he shall follow the procedure in Order 32A of the High Court Ordinance;

(5)     No documents faxed by the Defendant to a court, if not authorised by the court/tribunal, will be responded to;

(6)     Pursuant to section 27(4) of the High Court Ordinance, a copy of this Order shall be published in the Gazette;

(7)     A sealed copy of this Order be served on the Registrars of the High Court, the District Court and the Small Claims Tribunal;

(8)     There be a stay as against the Plaintiff of any proceedings, or alternatively of proceedings referred to in sub-paragraph (2) above, which the Defendant may commence in the interim after issuance of this Originating Summons but before this Order is made;

(9)     Costs be to the Plaintiff, to be summarily assessed; and

(10)   On a nisi basis, costs are summarily assessed at $100,000, to be borne by the Defendant.

52.  I thank Ms Mak for her assistance.