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Lee Siu Hong T/a Hong Lee & Co (A Firm) v The Law Society Of Hong Kong And Others

Judgment Cited authorities 8 Cited in Precedent Map Related
Vincent
Judgment Date07 April 2016
Year2016
Judgement NumberCACV155/2014
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV155/2014 LEE SIU HONG t/a HONG LEE & CO (a firm) v. THE LAW SOCIETY OF HONG KONG AND OTHERS

CACV 155/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 155 OF 2014

(ON APPEAL FROM HCA NO. 2216 OF 2013)

________________________

BETWEEN
LEE SIU HONG trading as
HONG LEE & CO (a firm)		 Plaintiff
and
THE LAW SOCIETY OF HONG KONG 1st Defendant
NG SIU WING LUDWIG 2nd Defendant
ONC LAWYERS (a firm) 3rd Defendant

________________________

Before: Hon Kwan, Chu and Poon JJA in Court
Date of Hearing: 24 March 2016
Date of Judgment: 7 April 2016

________________________

J U D G M E N T

________________________

Hon Kwan JA (giving the judgment of the court):

1. The plaintiff, who is a solicitor acting in person, appealed against the judgment of Deputy High Court Judge Seagroatt given on 23 June 2014 striking out his claim in negligence against the Law Society of Hong Kong (the 1st defendant), Ng Siu Wing Ludwig (the 2nd defendant) and ONC Lawyers (the 3rd defendant).

2. The plaintiff was and is the sole proprietor and principal of Messrs Hong Lee & Co (“the Firm”). The 2nd defendant, who is a partner of the 3rd defendant, was appointed by the 1st defendant to intervene in the practice of the Firm at the material time under section 26A(1)(d) of the Legal Practitioners Ordinance, Cap 159 (“LPO”). The plaintiff’s claim was struck out as vexatious and an abuse of the process of the court.

The background

3. For present purposes, the background matters, taken largely from the judgment below and the judgment of the Court of Appeal in CACV 188/2012, 28 February 2014, may be stated as follows.

4. In February 2004, a bankruptcy petition was presented against the plaintiff by a former staff for unpaid commission. It was only on 6 October 2008 that a bankruptcy order was made on the petition. The Official Receiver took charge of the plaintiff’s office and, in effect, the practice. By virtue of section 6(7) of LPO, the plaintiff’s practising certificate was automatically determined when he became bankrupt.

5. On 8 October 2008, the Council of the 1st defendant passed a resolution that in accordance with section 26A(1)(d) of LPO, the practice of the Firm be intervened and an intervention agent be appointed to conduct the intervention subject to supervision by a monitoring committee comprising three Council members. It was further resolved that in accordance with the Second Schedule to LPO, the client and office accounts of the Firm be vested in the Council and all the documents in the possession of the plaintiff, the Firm or the Official Receiver in connection with the plaintiff’s practice be delivered to the intervention agent, and authorisation was given to the intervention agent, if necessary, to apply to court on behalf of the Council under section 7(6) of the Second Schedule to LPO, to enter any premises to search for and take possession of any document to which the order relates. The plaintiff was notified of the resolution and the appointment of the 2nd defendant as the intervention agent on 9 October 2008.

6. On 5 November 2008, the bankruptcy order was annulled with the consent of the petitioner. The defendants became aware of this shortly afterwards. The plaintiff alleged that at a meeting with the 1st defendant’s representatives and the 2nd defendant on 17 November 2008, the defendants acknowledged that the intervention should cease following the annulment of the bankruptcy order.

7. On 20 November 2008, the plaintiff submitted his formal applications to the 1st defendant for a practising certificate in 2008 and in 2009. On 25 November 2008, the 1st defendant reissued the 2008 practising certificate to the plaintiff, but the intervention continued. The plaintiff was allowed to return to the office premises of his practice on 12 December 2008 but was not allowed to contact clients or deal with any file. On 15 December 2009, the 1st defendant issued the 2009 practising certificate to the plaintiff. The plaintiff resumed control of the Firm’s bank accounts on 3 January 2009 and on 5 January 2009, the 1st defendant issued a circular announcing that the Firm was free to resume its practice.

8. One of the two major heads of complaint in the action brought by the plaintiff is that the defendants failed to terminate the intervention within a reasonably short time upon the annulment of the bankruptcy order.

9. The other complaint in the action related to the alleged failure of the defendants to handle with care a file relating to Sinoearn International Ltd (“Sinoearn”), for which outstanding fees were owed to a barrister. The salient facts are as follows.

10. The Firm acted for Sinoearn in a High Court action, which was set down for trial for eight days commencing on 25 February 2008. Senior and junior counsel were instructed to appear. The junior counsel caused a letter to be sent by his clerk to the Firm dated 12 September 2007, in which he recorded the agreement with the Firm as to his fees: a brief fee of $80,000 to be paid in three instalments, the latest by 26 November 2007, and a refresher of $30,000 per day. And if there was a settlement in the three weeks immediately prior to the first day of trial, half the refreshers were to be paid, whereas full refreshers were to be paid if the hearing date was vacated or adjourned on or after the first day of trial.

11. On 27 September 2007, a brief signed by the plaintiff was sent by the Firm to the junior counsel, stating the brief fee at $80,000 with a daily refresher of $30,000. There was no settlement of the action before the first hearing date, so the barrister was entitled to be paid all the refreshers.

12. The brief fee of $80,000 was paid by instalments by late December 2007. A further $80,000 was paid by cashier order on 25 February 2008 on account of refreshers. The remaining sum due for unused refreshers was not paid. Nevertheless, the barrister continued to act for Sinoearn and appeared before the trial judge on 27 February 2008 when the trial was adjourned.

13. On 12 March 2008, the barrister sent a fee note to the Firm in the sum of $138,750, made up of the brief fee, one refresher for attending court on 27 February, six unused refreshers and one conference with leading counsel and lay client, less $160,000 already paid.

14. From April to July 2008, the barrister’s clerk sent reminders to the Firm for payment of the outstanding fees. The plaintiff was reminded of an earlier circular issued by the 1st defendant to all solicitors which stated that counsel’s fees must be paid or challenged promptly, and in any event within two months of the submission of the fee note.

15. On 1 August 2008, the barrister lodged a complaint with the Hong Kong Bar Association against the plaintiff for the non-payment of his fees and requested the assistance of the Bar Association including referring his complaint to the 1st defendant. The Bar Association wrote to the plaintiff on 4 August 2008 stating that unless the outstanding fees were paid by 18 August, further action would be considered including referring the complaint to the 1st defendant as a disciplinary matter. In response to the Bar Association, on 8 August the plaintiff sought the barrister’s forbearance in allowing Sinoearn to come up with funds to pay the outstanding fees before October 2008. The barrister informed the Bar Association on 18 August he was prepared to allow indulgences for the Firm to pay in full before October 2008. The Bar Association wrote to the Firm on 19 August stating that if the outstanding fees should remain unpaid by 15 October 2008, the barrister’s complaint would be referred to the 1st defendant without further notice.

16. As stated earlier, the plaintiff was made bankrupt on 6 October 2008 and the 1st defendant appointed the 2nd defendant to intervene in the practice of the Firm on 8 October. The bankruptcy order was annulled on 5 November but the intervention continued until 5 January 2009. The outstanding fees of the barrister remained unpaid at all times.

17. On 22 October 2008, the new solicitors engaged by Sinoearn filed a notice of change of solicitors to replace the Firm in the High Court action. On 11 November 2008, the new solicitors provided to the 2nd defendant an undertaking signed by Sinoearn to pay any unsettled or unbilled costs and disbursements of the Firm in the High Court action and on 13 November the 2nd defendant released the papers in that action to the new solicitors.

18. On 11 November 2008, the Bar Association referred the barrister’s complaint for non-payment of fees to the 1st defendant. Letters were exchanged between the plaintiff and the 1st defendant between November 2008 and January 2009 regarding the non-payment of fees and to no avail, with the plaintiff suggesting that the barrister’s complaint should be referred to the 2nd defendant and alleging that the latter had passed the file of Sinoearn to the new solicitors without first having secured payment of the barrister’s fees. A letter of disapproval of the 1st defendant dated 8 July 2010 requesting him to pay the barrister’s outstanding fees within 14 days was not complied with. The 1st defendant brought disciplinary proceedings against the plaintiff in March 2011.

19. The plaintiff asserted in the disciplinary proceedings there was reasonable excuse for his failure to pay counsel’s fees, by two distinct factors, each one of which sufficed in itself:

(1) that he had entered upon an arrangement with the barrister that the brief would only be delivered on the understanding that he would assume no personal responsibility for the fees and that the barrister would have to look to Sinoearn...

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