The Registrar of the Hong Kong Institute of Certified Public Accountants and Another v. Chan Yui Hang and Others

CACV 226/2019

[2022] HKCA 517

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 226 OF 2019

(ON APPEAL FROM THE DISCIPLINARY COMMITTEE OF THE

HONG KONG INSTITUTE OF CERTIFIED PUBLIC

ACCOUNTANTS PROCEEDINGS NO. D-17-1231P AND D-17-1231C)

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Before:  Hon Kwan VP, Cheung and Chu JJA in Court

Date of hearing and judgment:  23 March 2021

Date of Reasons for Judgment:  14 April 2022

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REASONS FOR JUDGMENT

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Hon Chu JA (giving the Reasons for Judgment of the Court):

A. Introduction

1.At a disciplinary hearing held on 22 October 2018, at which the 1^st respondent (“Mr Chan”) was absent, the Disciplinary Committee (“Disciplinary Committee”) of the Hong Kong Institute of Certified Public Accountants (“Institute”) found four disciplinary complaints (see [6] below) proved against him. On 29 April 2019, the Disciplinary Committee imposed the following sanctions and costs order against Mr Chan:

(1)  The practising certificate issued to Mr Chan be cancelled;

(2)  A practising certificate shall not be issued to Mr Chan for a period of 24 months; and

(3)  The costs of the disciplinary proceedings be shared by the three respondents, and the amount to be paid by Mr Chan is HK$62,207.

2.This is Mr Chan’s appeal against the finding and the sanctions of the Disciplinary Committee[1]. The core issues are whether the Disciplinary Committee erred in deciding to proceed with the disciplinary hearing in Mr Chan’s absence, and whether fairness requires that Mr Chan be allowed to re-open the disciplinary hearing and be given an opportunity to be heard. At the conclusion of the appeal hearing, we allowed the appeal and remitted the matter to be determined by a newly constituted Disciplinary Committee with no order as to the costs of the appeal. We now give our reasons for the judgment.

B.  Background

3.Mr Chan is a certified public accountant. At the material time, he and the 2^nd respondent were the two practising partners of the 3^rd respondent (“the Practice”). The Practice did not employ any staff; its audit work was carried out by a service company.

4.The Practice was selected for an initial practice review in March 2014, and various deficiencies relating to its quality control system and audit engagements were identified. In April 2016, a follow-up practice review was conducted, at which various deficiencies in its quality control system and audit engagements were found, some of which were the same or similar to those identified in the first review.

5.Based on the findings of the second practice review, the 2^nd Complainant, the Practice Review Committee of the Institute (“the Complainant”), submitted a complaint to the Council of the Institute against Mr Chan and the other respondents on 1 September 2017. Prior to that on 30 November 2016, Mr Chan was already notified of the Complainant’s decision to make a complaint against him. Subsequently, the Institute resolved to refer the complaint to the Disciplinary Committee.

6.Before the Disciplinary Committee, there were altogether four disciplinary complaints against Mr Chan as follows[2]:

(1)  1^st complaint

“Section 34(1)(a)(vi) of the Professional Accountants Ordinance, Cap. 50 (‘PAO’) applies to Mr Chan for having failed or neglected to observe, maintain or otherwise apply a professional standard, namely, Hong Kong Standard on Quality Control 1, in that being the managing partner responsible for the Practice’s quality control system, the Practice had not implemented adequate quality control, policies and procedures in respect of the safe custody of engagement documentation, assignment of engagement teams, file assembly, and engagement performance.”

(2)  2^nd complaint

“Section 34(1)(a)(vi) of the PAO applies to Mr Chan in that he had failed or neglected to observe, maintain or otherwise apply a professional standard namely, paragraph 6 of Hong Kong Standard on Auditing (‘HKSA’) 500, in that he had failed to design and/or perform audit procedures that are appropriate for the purpose of obtaining sufficient appropriate audit evidence in relation to the audit of the financial statements of Client G for the year ended 31 December 2014.”

(3)  3^rd complaint

“Section 34(1)(a)(vi) of the PAO applies to Mr Chan in that he had failed or neglected to observe, maintain or otherwise apply a professional standard namely, paragraph 6 of HKSA 500, in that he had failed to design and/or perform audit procedures that are appropriate for the purpose of obtaining sufficient appropriate audit evidence in relation to the audit of the financial statements of Client A for the year ended 31 March 2015.”

(4)  4^th complaint

“Section 34(1)(a)(vi) of the PAO applies to Mr Chan for having failed or neglected to observe, maintain or otherwise apply a professional standard namely, paragraphs 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants, in that he did not maintain professional knowledge and skill at the level required to ensure that clients receive competent professional services; and/or diligently carry out professional services, in accordance with the applicable professional standards.”

7.Notice of Commencement of Proceedings was given to Mr Chan on 8 February 2018. The Complainants’ Case was submitted on 8 March 2018. Thereafter three time extensions were sought by Mr Chan as follows:

(1)  On 23 April 2018, Mr Chan and the Practice requested a six months’ extension to file the Respondent’s Case due to his ill health. The Disciplinary Committee gave an extension of ten weeks to 16 May 2018.

(2)  On 28 May 2018, Mr Chan and the Practice through their legal representative requested a further extension up to 20 July 2018 to file the Respondent’s Case on the ground that there was going to be a restructuring of the Practice. The Disciplinary Committee found a second time extension not justified but gave a short extension up to 8 June 2018. Mr Chan and the Practice submitted the Respondent’s Case on 6 June 2018 (see [8] below).

(3)  The Disciplinary Committee directed on 25 June 2018 that the Checklists be submitted by 10 July 2018. The Complainants filed their Checklist on 9 July 2018. On 18 July 2018, Mr Chan and the Practice requested an additional six weeks to file their Checklist due to Mr Chan’s health and study problems. The Disciplinary Committee did not find the reasons satisfactory and only allowed an extension up to 25 July 2018. Mr Chan filed the Checklist on 25 July 2018 (see [9] below).

8.In the Respondent’s Case, Mr Chan denied the complaints against him but did not set out any specific defence. Instead, he set out the measures adopted by the Practice since 2017, which included employment of audit staff, discontinuation of the arrangement with the service company and the drawing up of an updated revised Quality Control Manuel. The Respondent’s Case further stated that the Practice had a solid plan to de-register in the fourth quarter of 2018.

9.As for the Respondent’s Checklist, it indicated that expert evidence on the Partnership Ordinance was required, and that the audit manager of the Practice, Mr Lo, was required to give evidence and be cross-examined by Mr Chan or his counsel.

10.On 13 September 2018[3], the Disciplinary Committee, having considered the representations made by the Complainant and Mr Chan and after reviewing the Respondent’s Case, decided that expert evidence was not required and Mr Lo needed not be summoned. It further fixed the substantive hearing of the complaints on 22 October 2018.

11.On 12 October 2018, Mr Chan, through his solicitors, Michael Pang & Co, requested to reschedule the hearing for the reason that time was needed for (i) the solicitor to consider the hearing bundle; and (ii) engaging counsel and for counsel to review the matter, in particular whether Mr Chan’s case papers were in order and whether further evidence had to be filed. The Disciplinary Committee considered that ample time had been given to Mr Chan to prepare his case, and refused to reschedule the hearing.

12.At the hearing on 22 October 2018, Mr Chan was absent. Neither did his legal representative attend. The Disciplinary Committee decided to proceed with the hearing in Mr Chan’s absence. At the conclusion of the hearing, the Disciplinary Committee found all four complaints against Mr Chan proved[4]. On 31 December 2018, the Disciplinary Committee provided the Reasons for Decision. By its decision given on 29 April 2019, the Disciplinary Committee imposed the sanctions mentioned in [1] above.

C.  Grounds of appeal

13.The Supplementary Notice of Appeal[5] set out two grounds of appeal as follows:

(1)  The Disciplinary Committee failed to ensure the interests of fairness to Mr Chan by failing to adjourn the hearing when he was absent from the said hearing because of illnesses; and

(2)  The Disciplinary Committee failed to consider or sufficiently consider all the relevant circumstances which were beneficial to Mr Chan when imposing sanctions on him and/or the sanctions imposed on Mr Chan are excessive.

14.In our view, two issues fall to be considered under Ground (1), namely,

(1)  Whether the Disciplinary Committee erred in deciding to proceed with the hearing in Mr Chan’s absence in light of the information it had at the material time.

(2)  Irrespective of the correctness of the Disciplinary Committee’s decision, whether fairness requires that Mr Chan be afforded an opportunity to present his case before the Disciplinary Committee.

15.Ground (2) does not arise for consideration given our decision allowing the appeal and remitting the matter to the Disciplinary Committee.

D.  Did the Disciplinary Committee err in deciding to proceed with the hearing in Mr Chan’s absence?

16.We will first set out the events shortly before and at the hearing before the Disciplinary Committee on 22 October 2018. In this regard, Mr Chan had applied, and was given permission by this Court (Kwan VP and Yuen JA)[6], to adduce fresh evidence at the appeal. The fresh evidence consists of three affirmations made by Mr Chan, his son Chan Lok Cho, and a friend (“Mr Ho”)[7] all made on 10 October 2019, and also a medical report of Mr Chan prepared by Dr Stephen Chan Chau Sing[8] (“Dr Chan”) dated 5 October 2019. There is no evidence in response from the 2^nd complainant or the Disciplinary Committee.

  D1.  The Disciplinary Committee’s understanding of the circumstances of Mr Chan’s absence and its decision to proceed

17.From the transcript of the hearing[9] and the Reasons for Decision[10] , what was known to the Disciplinary Committee when the hearing commenced is as follows:

(1)  Mr Chan was absent. His legal representative also did not turn up.

(2)  The Clerk to the Disciplinary Committee (“the Clerk”) had telephoned Mr Chan who told her he was in hospital, and that his legal representative, Michael Pang & Co, would deal with the matter.

(3)  The Clerk called Michael Pang & Co, and was told they had no instruction to act for Mr Chan or to appear at the hearing.

18.The General Counsel for the Institute proceeded to address the Disciplinary Committee in these terms:

“… it’s not unusual that respondents do not turn up at hearings and it is not unusual that a Disciplinary Committee will then carry on with the proceeding in the absence of the respondent. It is normal and it is always important that the committee bears in mind the natural justice, the fairness of the proceedings. The fact is every party has a right to be heard and I stress the word ‘right’. If they don’t turn up, if they don’t want to turn up then this committee can and does carry on because it’s given the respondent every opportunity to be heard.”[11]

“… I think bearing in mind that this committee has to do the right thing to ensure that there is a fair proceedings; that the respondent has every right to respond; he had every right to get a legal representative; the legal representative is not here; he had every right to turn up today to give his personal representations, he’s not here today. So I think the committee should bear that in mind when it makes that decision but it is a decision it will have to make.”[12]

19.Against such background, the Disciplinary Committee decided to proceed with the hearing. The Chairman said:

“On 12 October, the DC has already rejected the application to refix the hearing and there’s no application or evidence saying that the respondent, Mr Chan Yui Hang, was sick at the time and was not able to instruct legal representatives, and what we heard this morning is that the alleged legal representative of Mr Chan, that the law firm, Michael Pang & Co, told us that he or the firm does not have instruction to represent Mr Chan. And Mr Chan also did not tell us what was his condition when he said that he’s going to see the doctor. So, we think that we have given Mr Chan due time to prepare and seek legal representation to attend today’s hearing and given sufficient time. So we think that this DC proceeding should continue. We will give due consideration with all the materials and submissions that Mr Chan has filed up to date and then it’s also for the complainant to make good the complaints in the two proceedings.”[13]

20.As the hearing went on, at about 10:13 am, the Clerk received a telephone call from Mr Ho[14]. She then duly informed the Disciplinary Committee as follows:

“[Mr Chan’s] friend called me just now and he said that he has delivered some documents to the committee earlier this morning. I think it is a referral letter which [was] signed by a doctor yesterday.”

When asked by the Chairman whether there was any explanation as to the purpose of the doctor’s letter, the Clerk replied that there was no explanation from Mr Chan’s friend.

21.The documents that were handed to the Disciplinary Committee were (i) a referral letter, and (ii) a Patient Referral Form to the Hospital Authority Specialist Clinic/A&E, both dated 21 October 2018 and signed by Dr Chan (collectively “the Two Documents”). The referral letter recorded Mr Chan to have “known severe CAD and HT” and angina for a few days and was found to have ankle edema, and the doctor’s provisional diagnosis was “acute coronary syndrome”. It also stated that Mr Chan requested to be discharged against medical advice, he and his son had been explained the risks of acute myocardial infarction and sudden death, and a referral to Yan Chai Hospital was given. The referral form, which contained similar information, also mentioned that Mr Chan had “symptoms of heart failure”, “palpitation” and “chest wall injury”.

22.General Counsel for the Institute addressed the Disciplinary Committee on the Two Documents as follows[15] :

“… Now we do know that, I think from previous records, that there had been some suggestion that Mr Chan had a medical problem but what I suppose is clear if I look at the second page and I’m no doctor - but Mr Chan did refuse admission but obviously he had been admitted, forced to admit, and the doctor actually discharged him after giving the appropriate caveats. Obviously if he had been admitted it would have been more serious and that is certainly something that I would say, would weigh in a factorial matter. But no, he was considered fair and healthy enough to be discharged and one can see that in the second paragraph of the second page, ‘Findings: general condition fair’.

Now there are obviously the standard risks that are explained, you know, sudden death explain myocardial infarctions, but as I said again, there’s nothing to suggest that he required immediate admission. It required a referral and I’m assuming that he’s gone to see a doctor the next day, but again I would say that the timing is rather coincidental. There is a hearing this morning, he could have turned up this morning, he hasn’t turned up this morning.

I would really say that, I mean it is a matter for the DC to consider. It does have its paper before it, it should consider it properly but as I do say that ‘Heart sound normal’, if one looks at the ‘Findings’, ‘General condition: fair’. The rest I’m not too sure exactly, I’m not a doctor so I don’t know what’s an ECG, RBB, T-inversion 3VR V1' means, I’ve never been in that position, but as I say he was discharged, he wasn’t admitted and he wanted to discharge himself, it was his own voluntary request.”

23.The Disciplinary Committee decided to continue with the hearing. The Chairman said[16] :

“... I take note of this copy of doctor’s letter allegedly sent to us by a friend of the 1st respondent, Mr Chan, but without any reference to any application or application for adjournment. The DC take note of this and as the complainant has rightly mentioned, Mr Chan was discharged and it appears that also it happened on 21 October, that was yesterday, and there’s no indication that his medical condition has impaired his ability to instruct a legal representative to attend today’s hearing. So DC will take note of this letter and we should proceed with the hearing.”

24.In the Reasons for Decision, the Disciplinary Committee recounted the matter as follows:

“47. On 22 October 2018, neither Chan nor Chan’s legal representative turned up at the substantive hearing. The Clerk of the Disciplinary Committee (the ‘Clerk’) telephoned Chan and he represented that he was in the hospital and his legal representative, Michael Pang & Co, would deal with the matter. The Clerk telephoned his legal representative who represented that they did not have any instructions from Chan to act for Chan in the substantive hearing.

48. During the hearing at around 10:13 am, someone who claimed that he was Chan’s friend, called the Clerk and represented that he had delivered a medical report of Chan to the Institute. Neither Chan nor his friend represented the purpose of providing the medical report to the Institute. The medical report was copied to the Disciplinary Committee and the Complainants.”

“50. The Complainants submitted that Chan ... had been given ample time and notification about the substantive hearing and to prepare for it. The medical report showed that Chan was not hospitalised and there was no indication from Chan or anyone that he would not turn up at the substantive hearing or any application that the substantive hearing should be adjourned because of his health condition. The Complainants suggested that the substantive hearing should be continued even though Chan ... [was] absent.

51. The Disciplinary Committee agreed with the Complainants’ submissions and directed that the substantive hearing be proceeded in the absence of Chan ... As Chan … [was] absent, the Disciplinary Committee directed that that due consideration would be given to all the documents and submissions made and filed by Chan …, including the Respondent’s Case and the Respondent’s Checklist …”

  D2.  Mr Chan’s explanations for his absence

25.Mr Chan’s case as to the circumstances of his absence is that he was unwell on 21 October 2018 and went to see Dr Chan whose provisional diagnosis was that he had acute coronary syndrome. As he wanted to attend the hearing on the following day, he acted against Dr Chan’s advice and refused to be admitted to hospital. He was given the Two Documents by Dr Chan so that he could receive further medical treatments from public hospital afterwards. Later that day, he gave the Two Documents to Mr Ho, telling him to pass them to the Disciplinary Committee and to ask for an adjournment of the disciplinary hearing in the event he was unwell the following day. In the following morning, Mr Chan woke up feeling extremely unwell; he had dizziness, difficulty in breathing and palpitation. His son then called Mr Ho and asked him to take the Two Documents to the Disciplinary Committee to seek an adjournment of the hearing.

26.According to Mr Ho, after receiving the call from Mr Chan’s son at about 8:30 am, he took the Two Documents to the Disciplinary Committee. He described what he did in his affirmation as follows:

“9. At about 09:00 a.m. on the same day, I arrived the Address. I saw a female receptionist there. I then walked to her and told her (1) I was a friend of the 1^st Respondent; (2) there were disciplinary proceedings against the 1^st Respondent at the Address on that day; and (3) the 1^st Respondent could not attend the disciplinary proceedings because he was ill and would like to have the disciplinary proceedings adjourned.

10. I then gave the [Two Documents] to the female receptionist and asked her to give them to the Disciplinary Committee so as to prove the medical illnesses of the 1^st Respondent.

11. I further requested the female receptionist to help ask the Disciplinary Committee to adjourn the disciplinary proceedings because of the 1^st Respondent’s illnesses.

…

15. At about 9:15 a.m. on the same day, I told the 1^st Respondent’s son by phone that I had already given the [Two Documents] to the Disciplinary Committee and asked it to adjourn the disciplinary proceedings in view of the 1^st Respondent’s illnesses.”

27.In Mr Chan’s affirmation, he related his telephone conversation with the Clerk that morning as follows:

“21. At about 10:00 a.m. on the same day, a staff member of the Disciplinary Committee called me by phone and asked why I had not attended the disciplinary proceedings. I replied that I could not attend as I felt extremely unwell that morning and I had asked my friend, Mr. Ho, to take the documentary proof to the Disciplinary Committee to prove the existence of my illnesses.

22. I further told the staff member that I intended to act for myself in the disciplinary proceedings and the law firm, i.e. Messrs. Michael Pang & Co., previously acted for me was no longer representing me at that time.”

28.The medical report dated 5 October 2019 provides details of Mr Chan’s health condition and the tests and examination carried out on 21 October 2018 and also explains some of the abbreviations in the Two Documents that the General Counsel said he did not understand (see [22] above). It does not, however, describe Mr Chan’s conditions on 22 October 2018. In fact, it is not clear from the evidence adduced by Mr Chan in this appeal which hospital or doctor he went to on 22 October 2018.

29.In short, Mr Chan’s case is that he had all along wanted to appear and defend the disciplinary proceedings, but could not do so due to his health condition, and that he had, through Mr Ho, provided the Two Documents to the Disciplinary Committee and requested an adjournment of the hearing. It is, however, to be noted that Mr Chan’s affirmation did not say he had told the Clerk that he requested an adjournment of the hearing during their telephone conversation. Similarly, Mr Ho’s affirmation also did not indicate that he had told the Clerk that Mr Chan wished to adjourn the hearing. In fact, it made no mention of the telephone conversation between Mr Ho and the Clerk.

  D3.  Counsel’s submissions

30.The primary submission of Mr Ma for Mr Chan is that the Disciplinary Committee’s understanding of Mr Chan’s health condition was incorrect. It is said that Mr Chan was genuinely prevented from attending the hearing due to his serious health problem and that he had in fact requested to adjourn the hearing. It is further submitted that, as Mr Chan was unrepresented, an adjournment was necessary to enable him to give evidence, make submissions and personally defend himself. Relying on paragraph 37 of the Guidelines for the Chairman and the Committee on Administering the Disciplinary Committee Proceedings Rule (“the Guidelines”), Mr Ma argued that Mr Chan had the right to submit further written material or evidence to defend himself at the hearing, which he could not have exercised without an adjournment, in light of his poor health condition on 22 October 2018.

31.Mr Lau for the Complainant, on the other hand, put forward three submissions. First, he submitted that the Disciplinary Committee was entitled to take into account all it knew, and that the decision to proceed with the hearing in Mr Chan’s absence was well justified, having regard to (i) the statutory objectives and public interest that disciplinary proceedings should be proceeded expeditiously and effectively, (ii) the procedural history of the case, (iii) the failure to disclose any defence in the Respondent’s Case, and (iv) Mr Chan’s failure to discharge his duty to engage with the Disciplinary Committee in that he could have instructed Michael Pang & Co to appear on his behalf to seek an adjournment, or told the Clerk directly when she called him that he wanted an adjournment. There was no explanation as to why he did not do any of these. Likewise, there was no explanation why Mr Ho did not inform the Clerk that Mr Chan wanted an adjournment, and why Mr Chan himself did not follow up on his request for adjournment afterwards. Mr Lau also alluded to the inconvenience that an adjournment would occasion to the five members of the Disciplinary Committee.

32.Second, it is submitted that the medical evidence adduced by Mr Chan fell short of showing that he was unable to participate in the hearing or to instruct his legal representatives to deal with the matter.

33.Third, it is submitted that the Disciplinary Committee’s decision to proceed with the hearing in Mr Chan’s absence was an exercise of case management discretion, and that the Court has to be satisfied that a high hurdle has been surmounted before it would intervene.

34.In support of the first submission, Mr Lau referred to the long title of the PAO which provided that the ordinance was enacted to establish the Institute and to provide control of the accountancy profession, and the statutory objects of the Institute in section 7, which included the regulation of the practice of the accountancy profession (s.7(b)) and the preservation and maintenance of the reputation, integrity and status of the accountancy profession (s.7(g)).

35.Mr Lau also referred to the Disciplinary Committee Proceedings Rules[17] (“the Rules”) made under section 51(1)(f) of the PAO. In particular, he referred to rule 19 which required the Respondent’s Case to follow the form in Schedule 3, rule 17 which required the Respondent’s Case to set out the submissions on all material matters and annex all documentary evidence relied upon, rule 22 which provided that the parties’ Cases shall constitute submissions of the parties and evidence in the proceedings, and also rule 23 which stipulated that no further written submissions or documentary evidence shall be admitted without the leave of the Disciplinary Committee. He also placed reliance on rule 27, which stated that the principal purpose of the oral hearing is to allow the Disciplinary Committee to ask questions of the parties and clarify matters, as well as rule 36 which provided that where a party has failed to appear at the hearing, the Disciplinary Committee may take such steps as they consider appropriate.

36.In response, Mr Ma drew assistance from paragraph 37 of the Guidelines which provided that a party may request to submit further written material or evidence after the time of filing such material has lapsed, and the Disciplinary Committee should grant the request unless it appears clear that the new material is irrelevant, that the party seeking to submit the material is acting in bad faith with a view to delaying the proceedings, or there is some other compelling reason to act otherwise. It was argued that the Disciplinary Committee should readily grant requests to submit further material or evidence, such that Mr Chan was entitled to put forward new evidence and advance further arguments in defence at the hearing.

37.We have no doubt that the Rules set out the primary obligations to be complied with by a respondent, and the Guidelines merely give the Disciplinary Committee flexibility in regulating the disciplinary proceedings. As stipulated in the Rules, a Respondent’s Case ought to contain all the submissions on the material aspects of the case together with all the documentary evidence relied upon. A respondent cannot thereafter adduce further submissions or evidence unless leave has been given by the Disciplinary Committee. As provided in rule 27, the oral hearing is primarily an occasion for the Disciplinary Committee to ask questions and clarify matters having regard to the parties’ Cases and Replies. Notwithstanding paragraph 37 of the Guidelines, it is clear from the framework laid down in the Rules that the oral hearing before the Disciplinary Committee is not intended to be a full-blown hearing at which parties are at liberty to adduce new evidence and traverse new matters or issues not canvassed in the parties’ Cases.

38.In further support of his submission, Mr Lau has also referred to a number of authorities. Mr Ma did not take issue with the principles set out in those cases. In summary, they establish that:

(1)  There is a difference between continuing a criminal trial in the absence of the defendant and the decision to continue a disciplinary hearing in the absence of the respondent. The latter decision must be guided by the objective of the disciplinary body and the consideration that fair, economical, expeditious and efficient disposal of allegations made against a professional is of very real importance. While fairness encompasses fairness to the affected professionals, it also involves fairness to the complainants: General Medical Council v Adeogba [2016] 1 WLR 3867 at [17].

(2)  There is a burden on all professionals subject to a regulatory regime to engage with the regulator, both in relation to the investigation and the ultimate resolution of allegations against them: General Medical Council v Adeogba, supra, at [20].

(3)  The onus is on a party applying for an adjournment to prove the need for the adjournment: Law Yin Pok Bosco v Dr Chan Yee Shing (unreported) HCMP 2256/2012, 11 February 2012, at [11].

(4)  Where the adjournment is sought on the basis of ill health, there must be evidence that the individual is unfit to participate in the hearing: General Medical Council v Hayat 167 BMLR 78, [2018] EWCA Civ 2796 at [37].

(5)  The standard of evidence required is detailed in Levy v Ellis-Carr [2012] EWHC 63 at [36], which was expressly approved in Forresters Ketley v Brent & Another [2012] EWCA Civ 324 at [26][18]. It is that:

“Such evidence should identify the medical attendant and give details of his familiarity with the party's medical condition (detailing all recent consultations), should identify with particularity what the patient's medical condition is and the features of that condition which (in the medical attendant's opinion) prevent participation in the trial process, should provide a reasoned prognosis and should give the court some confidence that what is being expressed is an independent opinion after a proper examination. It is being tendered as expert evidence. The court can then consider what weight to attach to that opinion, and what arrangements might be made (short of an adjournment) to accommodate a party's difficulties. No judge is bound to accept expert evidence: even a proper medical report falls to be considered simply as part of the material as a whole (including the previous conduct of the case).”

(6)  The tribunal has a discretion, but not a duty, to make further enquiries if the medical evidence does not meet the required standard. A party who seeks to criticise the tribunal for not undertaking further enquiries must demonstrate that those further enquiries would have been material and would have been likely to have led to a different decision: General Medical Council v Hayat, supra, at [142] and [143].

(7)  Whether to continue or adjourn a hearing is a matter of case management discretion for the tribunal. The appellate court should only intervene if the decision was plainly wrong in the sense of being outside the generous ambit where reasonable decision makers may disagree, such as having taken into account irrelevant matters, ignored relevant matters or made a mistake of principles. It is a high threshold: Law Yin Pok Bosco v Dr Chan Yee Shing, supra, at [22] and [25]; Forresters Ketley v Brent & Another, supra, at [25]; General Medical Council v Hayat, supra, at [62], [66] and [71]; and Simou v Salliss, supra, at [59].

  D4.  Our view on the Disciplinary Committee’s decision

39.We have no disagreement with the legal principles set out above. We wish also to emphasize that it is the statutory objectives of the PAO as well as in the public interest that disciplinary proceedings should proceed fairly, expeditiously and effectively, and that this is an important consideration for the Disciplinary Committee. However, being a case of management discretion, the Disciplinary Committee’s decision to continue or adjourn a hearing has also to be informed by the facts and circumstances of the case.

40.In the present case, as noted above, Mr Chan had sought several extensions of time to comply with the procedural steps and also an adjournment shortly before the day of the disciplinary hearing. The Respondent’s Case filed by him did not disclose any defence of substance. These are matters that the Disciplinary Committee was entitled to, and should, take into account when considering whether to proceed with the hearing in Mr Chan’s absence.

41.There is also force in the submission that Mr Chan had failed to discharge his duty to engage with the Disciplinary Committee, a matter that should also be taken into account. On the evidence admitted in this appeal, Mr Chan had anticipated the possibility of not being able to attend the disciplinary hearing due to his health condition. This being the case, he should have made arrangement for a proper adjournment application to be made on his behalf to the Disciplinary Committee in the event he was prevented by his health condition from attending the hearing. It is not a proper way to seek an adjournment to hand the Two Documents to the receptionist, without even a covering note, and ask the receptionist to relay a message to the Disciplinary Committee. The evidence adduced by Mr Chan does not explain why he could not have instructed Michael Pang & Co or asked Mr Ho to appear at the hearing to explain to the Disciplinary Committee his health condition, submit the Two Documents and make a proper request on his behalf to adjourn the hearing. It is also inexplicable that when they spoke to the Clerk over the telephone, neither Mr Chan nor Mr Ho saw fit to tell her specifically and directly that an adjournment was sought.

42.That having been said, it is clear from the Two Documents as elaborated by the medical report dated 5 October 2019, that Mr Chan was diagnosed to have a serious and potentially life threatening heart condition the day before the hearing, which required him to be hospitalized. We note that no evidence has been adduced as to his medical condition on the day of the hearing. There is also no evidence as to whether any, and if so what, medical treatment was received by him on the day of the hearing, although he had told the Clerk, during her telephone call, that he was in hospital. However, the health problem suffered by Mr Chan, namely, acute coronary syndrome, heart failure and chest wall injury, would not have significantly improved or gone away in the span of one day. In any event, given his serious health condition, he probably would not be able to participate fully and effectively in the proceedings even if he were present at the hearing. We are of the view that, on the basis of Dr Chan’s findings and diagnosis as contained in the Two Documents and as elaborated in the medical report dated 5 October 2019, an inference can be drawn that Mr Chan was unfit to participate in the hearing.

43.Unfortunately, when the Two Documents were put before the Disciplinary Committee, their content and purport were not fully and correctly understood. In his submission, the General Counsel of the Institute focused predominantly on the fact that Mr Chan had discharged himself from the hospital. He highlighted the part of the Two Documents which stated that Mr Chan’s “general condition was fair” and “the heart sound was normal”, and made the submission that Mr Chan was considered fair and healthy enough to be discharged and there was nothing to suggest that he required immediate admission. This, in our view, is not an accurate reading of the Two Documents in that the submission failed to address Mr Chan’s serious heart problem, which was the doctor’s key finding and diagnosis. We note that the General Counsel had indicated that he did not have medical knowledge and did not know what was “an ECG, RBB, T-inversion 3VR V1'” referred to in the Two Documents, yet he went on to emphasize that Mr Chan was not hospitalized and that he discharged himself voluntarily.

44.The Disciplinary Committee similarly focused solely on the fact that Mr Chan had discharged himself and was not hospitalized on the day of the hearing. There was no mention of the doctor’s finding and diagnosis of Mr Chan’s heart problem in either the transcript of the hearing or the Reasons for Decision. It does not appear that consideration had been given to the Mr Chan’s heart problem when the Disciplinary Committee found there was no indication that he was prohibited by his health condition from attending the hearing. In our view, the findings and diagnosis on Mr Chan’s heart problem are material aspects of the Two Documents, which the Disciplinary Committee ought to have considered before forming a view as to Mr Chan’s health condition and whether it impacted on his ability to attend and/or participate in the hearing.

45.In deciding to press on with the hearing, the Disciplinary Committee was also influenced by the fact that there was no application for adjournment. We have already observed that the manner in which Mr Chan sought to adjourn the hearing leaves much to be desired, and that he should have done more to make known his request for adjournment. In our view, however, had consideration been given to the findings on Mr Chan’s heart condition, it should have occurred to the Disciplinary Committee that he might be unfit to attend the hearing and the Two Documents were tendered in support of an adjournment application. In any event, having regard to the diagnosis in the Two Documents, the Disciplinary Committee should have through the Clerk made further enquiries to find out more about Mr Chan’s health condition, his purpose in providing the Disciplinary Committee with the Two Documents and what did he want to do about the disciplinary hearing. This is particularly so having regard to the potentially grave impact of the outcome of the hearing on Mr Chan.

46.For the above reasons, we are of the view that the Disciplinary Committee erred in failing to consider the findings and diagnosis on Mr Chan’s heart condition in the Two Documents when it decided to proceed with the hearing in his absence. Its decision to continue the hearing in Mr Chan’s absence is accordingly flawed. This, however, is not determinative of Ground (1) and this appeal. The pivotal question remains as to whether Mr Chan has been prejudiced by the decision to proceed in his absence such that he should be given an opportunity to re-open the disciplinary hearing. This brings us to the second issue in Ground (1).

E.  Does fairness require that Mr Chan be afforded an opportunity to present his case before the Disciplinary Committee?

47.In Mr Lau’s submission, Mr Chan’s absence at the hearing did not prejudice his defence because he has no defence to the four complaints against him, as demonstrated by the Respondent’s Case. Accordingly, no useful purpose would be served by allowing the appeal and the re-opening of the disciplinary hearing.

48.Mr Ma, on the other hand, argued that but for his health condition which prevented his presence at the hearing, Mr Chan would have put forward arguments and materials that he had prepared in defence to the complaints against him. In this connection, he relied on a letter dated 28 January 2019 from Mr Chan to the Disciplinary Committee in response to the Complainant’s submission on sanctions and also the Respondent’s Submissions on Sanctions dated 11 March 2019 submitted by Mr Chan to the Disciplinary Committee.

49.In the letter dated 28 January 2019, Mr Chan furnished additional information in respect of his role in the Practice and commented on the findings with regard to Client A in the two practice review reports. He disputed the conclusions in the reports that the audit work was grossly insufficient to support the audit opinions given and contended that the reviewers had not conducted further work to ascertain whether the mistakes/misstatements identified were “qualitatively material”, and whether they had any financial impact on the Financial Statements and the auditor’s opinion. In the concluding paragraphs, Mr Chan stated that he did not consent to the sanctions proposed by the Complainant and asked that the Disciplinary Committee be dissolved by reason of rule 35(2) of the Rules[19] . In this regard, Mr Chan had clearly misunderstood the rule and there was no basis for his request to dissolve the Disciplinary Committee.

50.The Complainant objected to the arguments in Mr Chan’s letter, pointing out that it was not open to him to challenge the finding of facts in the Disciplinary Committee’s Reasons for Decision and that his arguments were in any event irrelevant as the Disciplinary Committee was inviting submissions on sanctions. It was further said that the appropriate forum for Mr Chan to challenge the findings of the Disciplinary Committee was the Court of Appeal by way of an appeal under section 41 of the PAO.

51.By letter dated 28 February 2019, the Disciplinary Committee rejected Mr Chan’s request that it be dissolved. It further stated that if Mr Chan and the Practice wished to challenge its findings, they could apply to the Court of Appeal. It also gave Mr Chan seven days to put in his submission on sanctions.

52.In the Respondent’s Submissions on Sanctions, Mr Chan, among other things, raised the following points about the Complainant’s Case in respect of the 2^nd and 3^rd complaints:

A.  2^nd complaint: Client G

(1)  The Complainant was mistaken when it stated that 2014 was the first year audit of Client G by the Practice such that audit work should have been performed to determine whether the opening balances contained misstatements that would materially affect the financial statement in question. In fact, the Practice has since 2007 been Client G’s auditor as shown in Client G’s auditor’s report for the year ending 31 December 2013[20].

(2)  The Complainant was wrong to state that there was no evidence of procedures being carried out to (i) ascertain the existence of inventories by testing the inventories movement in the period between the inventory count date (i.e. 5 January 2015) and the year-end date (i.e. 31 December 2014); and (ii) ensure that inventories were appropriately applied and recorded in accordance with the company’s accounting policy. There were only four days between the year-end date and the date of stock taking, of which three days were holidays. The stock count sheet[21] showed no movement in the stock value between the two dates.

B.  3^rd complaint: Client A

(3)  In respect of the service income and costs of services, the Complainant found no evidence of audit work done to (i) verify the validity of the transactions; and (ii) determine whether the relevant amounts were appropriately recognized for the period. However, the Practice has been Client A’s auditor since 2010, and its associate was the bookkeeper. The highest and lowest amount of the transactions (i.e. HK$72,500 and HK$300) and the costs of services (i.e. HK$105,000 and HK$68) as shown in the general ledgers[22] were such that it was difficult in practice to fully comply with the audit standards. Further, the Practice had sufficient monthly information of the updated sales and costs of services when performing the audit work for the year ending 31 March 2015. In these circumstances, the cut-off testing was not necessary.

(4)  In respect of trade receivables, the Complainant found no evidence of audit procedures to (i) ascertain the existence of the balance; and (ii) determine whether the carrying value of trade receivables require provision. However, the amount of trade receivable as at 31 March 2015 was HK$66,260, and the highest and lowest amount of the transactions (i.e. HK$24,300 and HK$2,050), as shown in the general ledger, were such that it was difficult in practice to fully comply with the audit standards. Further, the Practice had sufficient monthly information of the trade receivables status when performing the audit work for the year ending 31 March 2015.

53.In the Decision on Sanctions and Costs, the Disciplinary Committee did not deal with the arguments concerning the complaints that were raised by Mr Chan in the 28 January 2019 letter and the submissions on sanctions.

54.Mr Lau sought to convince us that even if there were the factual inaccuracies identified by Mr Chan, nothing really turned on them as it had not been shown that they were substantial errors that would have had a material impact on the Disciplinary Committee’s conclusion that the four complaints had been proved. He pointed out that there was no explanation why Mr Chan did not raise these matters in the many months leading to the disciplinary hearing or ask Mr Ho to pass on written arguments to the Disciplinary Committee. It was said that there was no basis for allowing Mr Chan a second chance to re-open his case.

55.Mr Ma accepted that Mr Chan could have included the arguments and additional materials in the Respondent’s Case and that it would have been better had he done so. It was, however, submitted that there would be no breach of the audit rule if the 2014 audit of Client G was not a first year audit, and that the challenges made to the practice review reports and the Complainant’s Case involved technical accounting matters which could not be readily resolved in this appeal. Mr Ma further argued that the matters raised by Mr Chan were, in any event, relevant to the extent and seriousness of the breach and could justify imposing less stringent sanctions.

56.In our view, Mr Chan should have, in the first place, properly complied with the Rules and included in the Respondent’s Case all the arguments and materials relied on in defence to the four complaints. Alternatively, he should have, prior to the disciplinary hearing, sought leave from the Disciplinary Committee to put in, by way of additional materials, the arguments in the 28 January 2019 letter and the submissions on sanctions and the documents attached. At the very least, he should have reduced his arguments into writing and asked Mr Ho to pass them to the Disciplinary Committee for consideration at the hearing. Much of the difficulties he subsequently faced was the result of his unsatisfactory conduct in the course of the disciplinary proceedings.

57.That said, on the face of it, we do not feel able to say that the matters and materials put forward in the 28 January 2019 letter and the submissions on sanctions are immaterial and/or irrelevant to the Disciplinary Committee’s consideration, both with regard to the substance of the complaints against Mr Chan and the sanctions to be imposed. Nor do we think this Court is an appropriate forum to adjudicate on the accounting issues and factual disputes raised by Mr Chan. They are matters for the specialized tribunal. We are therefore driven to the conclusion that fairness requires Mr Chan be given an opportunity to properly present his case before the Disciplinary Committee.

F.  Disposition

58.For the above reasons, we had allowed the appeal and set aside the Disciplinary Committee’s decision of 31 December 2018 and its decision on sanctions and costs of 29 April 2019 and remitted the matter to be heard by a differently constituted Disciplinary Committee on an expedited basis with consequential directions[23] .

59.We made no order as to costs of the appeal as this appeal was largely the result of the unsatisfactory way in which Mr Chan conducted his case in the disciplinary proceedings and made his adjournment application. The costs of the previous disciplinary proceedings are reserved to be dealt with by the newly constituted Disciplinary Committee.

Mr Lau Ka Kin, instructed by MinterEllison LLP, for the 2^nd complainant.

Mr Duncan Ma, instructed by Yu Hung & Co., for the 1^st respondent up to 14 May 2021.

The 1^st respondent unrepresented, acted in person as from 14 May 2021.