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A Solicitor v The Law Society Of Hong Kong

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
Judgment Date30 June 2015
Subject MatterCivil Appeal
Judgement NumberCACV182/2014
CourtCourt of Appeal (Hong Kong)
CACV182/2014 A SOLICITOR v. THE LAW SOCIETY OF HONG KONG

CACV 182/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 182 OF 2014

(ON APPEAL FROM AN ORDER MADE BY THE SOLICITORS

DISCIPLINARY TRIBUNAL DATED 13TH DAY OF AUGUST 2014)

________________________

IN THE MATTER of a Solicitor
and
IN THE MATTER of the Legal Practitioners Ordinance, Cap 159

________________________

BETWEEN
A SOLICITOR Appellant
and
THE LAW SOCIETY OF HONG KONG Respondent

________________________

Before: Hon Kwan, Barma and McWalters JJA in Court
Date of Hearing: 25 June 2015
Date of Judgment: 25 June 2015
Date of Reasons for Judgment: 30 June 2015

________________________

REASONS FOR JUDGMENT

________________________

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

1. This is an appeal of a solicitor against the sanction imposed by the Solicitors Disciplinary Tribunal on 13 August 2014. The solicitor admitted all the complaints against him in June 2014 only after he sought and obtained an adjournment of his trial in May 2014. We dismissed his appeal at the conclusion of the hearing and these are the reasons for our judgment.

The complaints and the penalties

2. There were four complaints against the solicitor. The complaints spanned nearly four years from April 2007 to early 2010 and comprised recurring breaches of the Solicitors’ Accounts Rules, Cap 159F (“SAR”), the Solicitors’ Practice Rules, Cap 159H (“SPR”) and conduct unbefitting a solicitor.

3. The first complaint related to breaches of Rules 10(1) and (2) of the SAR, as a result of the solicitor failing to keep properly written up books and accounts during the period from 1 April 2007 to 31 December 2009. The incomplete books and accounts kept by him failed to show all dealings with clients’ money held, received or paid by him and any other money dealt with by him through a client account, and failed to distinguish such money held, received or paid by him on any other account. He also breached the rule that all dealings with clients’ money held, received or paid by him should have been recorded in the books and accounts within three working days after the date of such dealings.

4. In relation to the first complaint, the Tribunal ordered the solicitor be fined $25,000. There is no appeal against this fine.

5. The second complaint related to the solicitor’s failure to provide monthly reconciliation statements of client accounts and listing of client ledger balances during the same period of 1 April 2007 to 31 December 2009, in breach of Rule 10A of the SAR.

6. For the second complaint, the solicitor was fined $15,000. There is also no appeal against the fine.

7. The third complaint concerned breaches of Rules 5B(1) and (2) of the SPR and Rules 11(1) and (2) of the SAR. The Investigation Committee of the Law Society had passed a resolution in January 2008 (“the 2008 Resolution”) requiring the solicitor to forward to the monitoring accountants every three months between January 2008 and December 2009 for scrutiny copies of various accounting documents to ensure his compliance with the SAR. Despite repeated reminders, the solicitor had either failed to comply fully with the 2008 Resolution and to the limited extent that he supplied some of the documents, it was only after undue delay.

8. For the third complaint, the solicitor was censured, fined $40,000 and suspended from practice as a solicitor for one year, and after the said period of one year, he was to be allowed to practise only as an assistant solicitor but not as a sole proprietor or partner, for a period of three years, under the supervision of a solicitor of not less than ten years’ good standing (“the Practice Condition”).

9. The solicitor appealed against the suspension and the Practice Condition, contending that the suspension period of one year was manifestly excessive and that the Practice Condition was disproportionate and unjustified as regards the public interest it sought to protect and the three-year period was manifestly excessive.

10. The fourth complaint alleged that the solicitor, on account of the facts in the first three complaints, was in breach of Rule 2(d) of the SPR and his conduct was unbefitting of a solicitor. Four “strong letters of disapproval”[1] were issued to the solicitor from September 2006 to October 2008. Despite the strong letters of disapproval and repeated requests of the Law Society in respect of the provision of accounting documents, the solicitor failed to rectify the various breaches of the SAR in respect of his firm’s accounting documents, failed to comply with the 2008 Resolution, and persistently failed to maintain proper accounting documents and records over a substantial period.

11. In respect of the fourth complaint, the solicitor was censured, fined $50,000, suspended from practice as a solicitor for one year and placed under the Practice Condition as mentioned above. The period of suspension was to run concurrently with the suspension ordered in respect of the third complaint.

12. The solicitor appealed against the suspension period and the Practice Condition on the same grounds as mentioned above.

13. The Tribunal further ordered that the solicitor shall over the period of 36 months, commencing from the date of his suspension, enrol in courses amounting to no less than 20 Risk Management Education (“RME”) points related to the practice of solicitors’ accounts under the Compulsory Professional Development programme run by the Law Society, in addition to the yearly RME requirements that the solicitor has to comply with.

14. Regarding the fines to be paid in the total sum of $130,000, the Tribunal ordered the solicitor to pay by 13 monthly instalments of $10,000.

15. There is no appeal against the above orders.

16. The Tribunal ordered the solicitor to pay the costs of the Law Society of the proceedings, and the costs of the Tribunal’s clerk, on an indemnity basis. The solicitor appealed against the costs order contending that the Tribunal had not applied the right standard and/or had not taken into account proper considerations and it was wrong in principle to award indemnity costs.

The agreed facts and the Tribunal’s findings

17. The agreed facts were set out in §§6.1 to 6.54 of the Statement of Findings of the Tribunal. We do not propose to repeat the details but merely mention some salient matters.

18. The solicitor was admitted as a solicitor in March 2003 and commenced practice as a sole proprietor in July 2005. In less than a year of his setting up his firm, the Law Society resolved to require him to produce accounting records for inspection by the inspectors. After three inspections conducted by the inspectors in June and July 2006, the Law Society wrote to the solicitor on 17 July 2006 to seek an explanation regarding his breaches of the SAR. This was followed by the first strong letter of disapproval on 14 September 2006 for the solicitor’s failure to deal with the correspondence or answer the queries of the Conduct Section promptly or at all.

19. The Conduct Section continued investigation of the solicitor in 2007 and issued a letter to him on 11 May 2007 setting out numerous possible breaches of professional conduct including Principle 6.04 of the Hong Kong Solicitors’ Guide to Professional Conduct (“the Guide”) and provisions of the SAR. Despite numerous requests, the solicitor only furnished the Law Society with some of the accounting documents of 2007 in February and March 2009. Some of the documents requested were not supplied by the solicitor. Various problems were detected in the books and accounts supplied by the solicitor as set out in the first report of the monitoring accountant for the period between April and December 2007.

20. The Law Society sent the second strong letter of disapproval to the solicitor on 31 January 2008 for his breaches of the SAR in that he had failed to maintain proper accounting records and Principle 6.04 of the Guide in that he had failed to respond to the Law Society’s request to produce adequate documentary evidence in support of the entry in the general ledger. The 2008 Resolution was also notified to the solicitor.

21. From March to July 2008, the solicitor failed to comply with the 2008 Resolution, citing various reasons including personal and family problems and asserting that his breaches had no adverse effect on the clients’ accounts. The Law Society issued the third strong letter of disapproval on 24 July 2008 for his breaches of the SAR in failing to provide a complete set of clients’ ledgers with transactions prior to January 2008, failing to maintain proper accounting records, failing to keep contemporaneous and accurate clients’ ledgers which were up-to-date on a three-day basis, and breaches of Principles 4.10 and 6.04 of the Guide.

22. As the vast majority of the documents requested by the Law Society were not produced, the fourth strong letter of disapproval was issued on 9 October 2008 for the persistent delay in producing accounting records from April to June 2008.

23. It was only in February and March 2009 that the solicitor sent to the Law Society various accounting documents in respect of all four quarters of 2008. As found by the monitoring accountant in her second report, the documents were incomplete making it impossible to verify the correctness of entries in the clients’ ledger or cash book. The accounts for 2008 were not recorded in a timely manner and not properly supported with vouchers and documents. Various problems were identified in the second report.

24. As for the accounting records for 2009, the respondent was late in...

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